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ANNUAL
REPORT
2020
INNOVATION TO THE CORE
CONTENTS
BUSINESS AND STRATEGY
Corporate Profile
Chairman’s Statement
Chief Executive Officer’s Review
Strategy of the Group – Business Model and Strategy
Strategy of the Group – Principal Risks and Uncertainties
Chief Financial Officer’s Review
GOVERNANCE
Board of Directors
Key Management
Directors’ Report
Directors’ Statement on Corporate Governance
Audit Committee Report
Nominations Committee Report
Remuneration Committee
Statement of Directors Responsibilities
Corporate Responsibility
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59
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FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
SEPARATE FINANCIAL STATEMENTS
OF THE COMPANY
Company Statement of Financial Position
Company Statement of Cash Flows
Company Statement of Changes in Equity
Notes to the Company Financial Statements
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B
1
CORPORATE
PROFILE
Mincon Group Plc (“the Company” or “the Group”)
is an Irish engineering Group with its shares trading
on the AIM market of the London Stock Exchange
and the ESM market of Euronext Dublin.
The Company specialises in the design,
manufacture, sale and servicing of rock
drilling tools and associated products.
The Company’s strategy is to increase its
share of the global rock-drilling consumables
market through organic growth and
acquisitions. Its manufacturing facilities are
located in Ireland, the UK, Finland, the USA,
South Africa, Canada, Sweden and Australia.
The Company also maintains a network of
sales and distribution companies in a number
of international markets to provide after
sales support and service to customers.
DIRECTORS:
Hugh McCullough – Non Executive Chairman (Irish)
John Doris – Senior Independent Non-Executive Director (Irish)
Patrick Purcell – Non Executive Director (Irish)
Paul Lynch – Non Executive Director (Irish)
Joseph Purcell – Chief Executive Officer (Irish)
Thomas Purcell – Regional Executive – Americas (USA)
COMPANY SECRETARY:
Barry Vaughan (Irish)
REGISTERED OFFICE:
Smithstown Industrial Estate, Shannon, Co. Clare, Ireland
NOMINATED ADVISER,
ESM ADVISER AND BROKER: Davy, 49 Dawson Street, Dublin 2, Ireland
LEGAL ADVISERS TO
THE COMPANY:
William Fry, 2 Grand Canal Square, Dublin 2, Ireland
AUDITOR:
KPMG, Chartered accountants, 1 Stokes Place,
St. Stephen’s Green, Dublin 2, Ireland
REGISTRAR:
Computershare Investor Services (Ireland) Limited
Heron House, Corrig Road, Sandyford Industrial Estate,
Dublin 18, Ireland
PRINCIPAL BANK:
Allied Irish Banks plc, Shannon, Co. Clare, Ireland
COMPANY WEBSITE:
www.mincon.com
TICKER SYMBOLS:
ESM: MIO.IR
AIM: MCON.L
2
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33
MINCON
GLOBAL
REGIONS
AMERICAS REGION
North and South
American Continents
EME EUROPE & MIDDLE
EAST REGION
All European Countries
Middle East Countries
MINCON GROUP
FOUR GLOBAL
REGIONS:
Americas Region
Europe and Middle East Region
Africa Region
Australia Pacific Region
These regions are being led by regional
VPs – proven leaders with Mincon, each
with a history of working effectively
and collaborating within the Group.
AFRICA REGION
African Continent
APAC AUSTRALIA
PACIFIC REGION
Australia, Papua New Guinea, Indonesia
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5
5
CHAIRMAN’S
STATEMENT
Our drive for continuous excellence
in technical innovation has led to us
being awarded two new contracts
recently by two of the largest copper
mining companies in Chile.
On behalf of the Board
of Mincon I am delighted
to present the Annual
Report for the year ended
31 December 2020.
When my fellow director, Paddy Purcell and his late wife Mary,
founded Mincon forty three years ago, their guiding principles
were to create a company that produced only the best rock
drilling tools in their field and to back it up with the best after
sales service and support in the business. The third core
principle was to always recognise the importance of our people
in achieving those objectives. It is fair to say, that in the years
since, these three guiding principles have been steadfastly
followed and respected, and I believe that our demonstrable
success, especially in recent years, has been a result of our
adherence to this policy.
Mincon has always been an engineering-led company, designing
superior drilling consumable products that are best-in-class,
coupled with a service in the field that ensures that our products
meet specification and the client’s needs and expectations.
Our ambition was never about making and selling as many bits
and hammers as we could and pushing them on to distributors’
shelves. It has always revolved around the quest to continue to
improve and to innovate so that we truly live up to our motto –
“The Driller’s Choice”.
Since those early days, Mincon has grown into a company with
a worldwide reach with factories and service centres across the
Americas, Europe, Africa and the Australia-Pacific regions. When
we became a public company, we stated that our strategy was
to become a ‘one stop shop’ for rock drilling consumables. Over
the last seven years, we have widened our product range from
bits and hammers so that we now can supply the full drill string
to customers, supported by excellent service. This enables us to
deal directly with the major mining companies worldwide rather
than having to sell into the main distributors who then serviced
those companies. We have 552 employees and we currently
supply our products to over 1,600 customers in 81 countries.
Our drive for continuous excellence in technical innovation has
led to us being awarded two new contracts recently by two of
the largest copper mining companies in Chile. These contracts
involve the provision of full-time teams in the pits overseeing and
supporting the drilling operations. They also involve the provision
of automated rod-handling systems to enhance safety and
reduce installation time for the drill string components, ultimately
reducing the overall drilling time at the mines. This is the first
time such systems have been used in Chile and they are proving
highly successful.
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7
CHAIRMAN’S
STATEMENT
CONTINUED
Although our early business was predominantly in the mining
I would like to pay tribute to all our dedicated and committed
sector, we then diversified into the waterwell and geothermal
staff across the globe. Each one has played a part in our
fields. In recent years we have developed a substantial
steady growth and success. In particular, I would like to thank
presence in the construction drilling sector. The breakdown
our four regional managers and of course, our executive
of our business in 2020 was 51% mining (2019 53%), 30%
management for their passion for, and expert guidance of our
construction (2019 25%), 18% waterwell/geothermal (2019
business. I am also extremely grateful for the informed and
20%) and 1% other (2019 2%). The spread of sectors helps
valuable contribution of my fellow directors on the Board.
to insulate us from the upswings and downswings in the
It is a pleasure to be associated with the development of
business cycles of particular sectors. With our particular
Mincon in the knowledge that all staff, managers and Board
focus on innovative, eco-efficient engineering, we expect our
share the same passionate desire to see the Group continue
construction and non-mining business to continue to grow
to excel as a technical innovator in an expanding range of
strongly. We have a number of new, problem-solving, highly
drilling tools and products which are sold across the world.
effective drilling products in the design pipeline, some of which
we expect to commercialise during the first half of 2021.
Hugh McCullough
Chairman
Our revenue in 2020 was €130 million, a very creditable
19 March 2021
performance given the COVID-19 related circumstances
which prevailed during most of the year and an 8% increase
on the prior year (excluding exceptional items). Our profit was
€14.4 million compared to €12.4 million the prior year,
a 16% increase. Whilst we saw significant business
interruption in many of our markets due to COVID-19, we
nonetheless managed to maintain service and supply to
our key customers while observing both our own stringent
COVID-19 safety policies and those of our main customers.
Our diversification across markets and sectors has enabled
us to offset business interruptions in some markets with gains
in others. One unfortunate consequence of the COVID-19
pandemic is that the field testing of the Greenhammer has
been delayed, but it will be resumed as soon as conditions
allow. As we can anticipate that the COVID-19 global
pandemic will be gradually brought under control, I am
confident that our business across all sectors will continue
to grow and I am especially positive about the prospects for
some of the new products we hope to launch this year.
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9
CHIEF
EXECUTIVE
OFFICER’S
REVIEW
I am pleased to report that
Mincon was able to remain
operational throughout 2020.
In 2019, Mincon implemented a
regional management structure to
reflect the Group’s vision, culture,
and ambition. As the pandemic
unfolded, this Group structure
enabled us to be proactive rather than
reactive. As a result, the pandemic
had a more muted impact on the
Group’s bottom line, and we ended
2020 with a positive profit growth.
2020: LOCAL CHALLENGES, GLOBAL RESILIENCE
During 2020 the world faced a pandemic that was unprecedented
in modern times. Almost nobody went untouched by this global
health crisis: whether it was illness, or lockdowns imposed as
authorities responded to contain the spread of COVID-19.
These measures also affected businesses to varying degrees,
however Mincon was able to remain operational throughout 2020.
Mincon equipment is widely used for essential projects and
services, so in many markets our manufacturing facilities were
able to continue operating. Similarly, Mincon’s direct-to-market
approach meant that our service centres remained productive
and continued to deliver excellent, customer service – safely
and responsibly.
Our involvement in full-service mining and large geotechnical
contracts has led to an increase in direct end user revenue,
the direct approach now accounts for 77% of total turnover.
In addition to our direct sales model, we will continue to work
through distributors to serve the market in areas where the direct
model is unviable, or where we already have strong distributor
partnerships in place.
In 2019, Mincon implemented a regional management structure
to reflect the Group’s vision, culture, and ambition. As the
pandemic unfolded, this Group structure enabled us to be
proactive rather than reactive. As a result, the pandemic had a
more muted impact on the Group’s bottom line, and we ended
2020 with a positive profit growth.
This growth took place on the backdrop of challenging trading
conditions across the world. Global restrictions prevented us
from being on-site at customer operations, impacting both
product development and sales. Additionally, pandemic-related
lockdowns in certain markets saw the temporary closure of our
manufacturing facilities in those countries.
When local governments imposed restrictions to contain the
COVID-19 pandemic our businesses in those markets reacted
with the health and safety of the workforce as the primary
concern. Where necessary, operations were temporarily
suspended until health authorities felt it was safe for work
to continue.
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CHIEF EXECUTIVE
OFFICER’S REVIEW
CONTINUED
Due to our global footprint and our cohesive regional
who each have many decades of experience in the rock-drilling
Direction of these new products and technologies is
NEW PRODUCTS TO MARKET
management structure, Mincon was able to shift manufacturing
industry. The experience in the Group is broad and includes
spearheaded by the Technology Steering Group. Development
to our other factories where restrictions were less severe,
expertise in mechanical design and simulation; metallurgy and
takes place at the Group’s R&D facility near our headquarters
as required – a successful example of the Group operating
heat-treatment, market and application knowledge; and
together to benefit the overall business.
hands-on drilling.
At the start of the pandemic Mincon enacted a groupwide ban
PRODUCT DEVELOPMENT
Mincon’s product development takes place in the following
areas:
1. Product maintenance
in Shannon, Ireland, where we have dedicated manufacturing
capabilities and capacity to ensure our engineers’ designs are
machined into reality in a timely fashion. Results from field
testing are then incorporated into improved design so that new
revisions can be rapidly manufactured and sent back for field
testing, without interrupting day-to-day production.
As with the Greenhammer project in Australia, development
of Mincon’s other technologies and products faced some
setbacks in 2020 – mainly due to travel restrictions limiting
testing opportunities. However, where it was safe to do so,
successful tests were conducted for new drill bit designs,
evolutions of our next-generation MP-series DTH hammers,
and new material technologies that promise improved
wear resistance.
THE HYDRAULIC SYSTEMS
In addition to using customer feedback for the continuous
Ongoing product development and continuous improvement
The pandemic affected product development of our
improvement of existing products, we are always working
of existing product lines, ensuring that we remain the industry
Greenhammer technology in Australia. Site access was – and
on developing new technologies that will lower drilling costs
benchmark. We also focus on identifying areas for optimisation
continued to be – limited to essential personnel only, primarily
for customers by focusing on products that deliver better
at customer operations by closely working with them on site.
due to strict lockdowns imposed by the Australian government.
efficiency, faster penetration rates, and improved longevity.
While waiting to get on site, we have developed a smaller,
2. New product design and development
New designs and iterations of existing technologies.
10” system that is fitted to our own drill rig. This is ready to
Mincon also has an ambition to push the limits of drilling
go on site when restrictions are eased. We have also sourced
technology. We want to innovate and disrupt the market with
Over the coming years, this development will include work on:
our own rig for the larger, 12” system, which has already been
unique uses of our existing technologies in new applications,
• New DTH hammer and bit developments with a focus on
developed. This will be commissioned after we get the
or by partnering with service providers to develop all-new
speed and efficiency;
10” system running.
solutions that draw on our extensive expertise.
on international travel, with any exceptions requiring high-
level approval on a case-by-case basis. Mincon businesses in
each market ensured full compliance with guidance from the
relevant health authorities and took steps to protect staff from
transmission of COVID-19. This included installation of health
monitoring equipment, provision of PPE and cleaning materials,
and the use of specialised sanitation providers, as well as
modifying work practices in our plants, which were designed to
limit the number of employees on site at any one time and that
any staff circulation around the plants was strictly limited and
controlled. We also invested in infrastructure and technology to
enable remote working for non-manufacturing staff.
The COVID-19 pandemic was a pressure test of our resilience,
business systems, preparedness, and management. Although
the global mass vaccination programme is a positive
development, we believe that travel restrictions and social
distancing will be a part of life for at least for the rest of the year.
EFFICIENCY IN INNOVATION
• Continuous improvement for our range of open, and
sealed-bearing, rotary drill bits, to deliver market-leading
performance in terms of life and penetration rates;
• Optimising drill-rod performance and durability;
• Further development to the performance and range of
cushion subs; and,
Mincon has a strong background in design, manufacture,
• Carbide grade developments
delivery, and service of high-quality surface drilling solutions.
We have strategically grown our product line-up to offer a
3. New technology development
Mincon remains committed to the commercialisation of
this exciting technology that will transform the hard-rock
surface mining market. It is notable that our involvement in
this project has had an enormously positive impact on the
Group, increasing our engineering capacity and advancing our
technical understanding of rock drilling. The skillsets that have
been honed in the development of the Greenhammer project
are being deployed in other projects and areas of the business,
comprehensive range of products for the whole drill string
Spearheaded by Mincon’s Technology Steering Group, which
which will be of significant benefit to the Group’s business
and for use in multiple industries. We pride ourselves on
is exploring several new technologies and concepts for
as a whole.
innovative engineering and superior manufacturing and service,
development, including:
something that has always been at the core of what we do.
• Greenhammer (working name) – Mincon’s flagship
technology for single-pass, hard-rock blasthole drilling,
Although the past year had its challenges for our engineering
using a high-performance DTH hydraulic percussion
teams, due to limited testing opportunities, we were able to use
system;
this to our advantage. We are now even more ambitious when it
• Drilled foundation product developments particularly for
comes to helping our customers improve safety and reduce the
sensitive ground conditions;
effect of their operations on the environment, which includes
• Plans for advancing hammer technology to encompass
using less energy. Our engineers are focused on developing
larger hole size capabilities than ever, while maintaining
the next generation of drilling tools aimed at energy-efficient
the focus on efficiency and productivity; and,
drilling, with a reduced impact on the environment and, in some
• All-new drilling technologies and approaches for
cases, a transformational effect on Mincon and our customers.
new industries
Our primary engineering objectives continue to be driven by
our Technology Steering Group, comprising senior engineers
12
13
CHIEF EXECUTIVE
OFFICER’S REVIEW
CONTINUED
STRATEGIC ACQUISITIONS
CONCLUDING COMMENTS
Growth through strategic acquisitions remains part of the
2020 was a challenging year for Mincon but we successfully
Group’s strategy. This approach allows for organic growth
tested the resilience and cohesiveness of our regional
as well as procuring the correct skills, products, and
management structure. Throughout the year this shone
manufacturing capacity in line with market demand and
through, and I would like to thank all who stepped up
management’s ambitions.
to the tasks that a very unusual year threw their way.
Our acquisitions in 2020 brought more value to our
The capacity of our engineering teams grew, through
construction and geotechnical offering. Through the
guidance from the Technology Steering Group. We will
acquisition of Lehti Group, we now own the entire value
continue to nurture that talent through our ambitious goals
chain associated with the manufacturing and sales of all our
to develop and commercialise innovative and transformative
geotechnical products. The talented and committed team in
solutions for the industries we target. We will also continue to
the Lehti factory has fully integrated with the proven team
look at diversifying our revenue streams, while growing core
at Mincon Finland. Both businesses have been physically
business activities in the mining, construction, and waterwell/
consolidated, by moving our business and service team to
geothermal industries.
the factory in Ylöjärvi, Finland. This consolidation has created
a dynamic, cohesive and talented team with engineering and
To support and manufacture our expanding product range,
manufacturing excellence, as well as an excellent customer
we will continue to review and update our well-invested
service capability that will ensure the business thrives both
factories, ensuring that quality, throughput, and energy
locally and globally.
efficiency is at the core of any investment decision.
Whilst having a market leading product and manufacturing
The upcoming vaccination programmes do not mean
capacity for the Geotech industry, of equal importance is
that we will be less vigilant or relax our fight against the
the ability to provide on-site support and training to ensure
transmission of COVID-19. The health and safety of all our
product performance is maintained at or above customer
people continues to be my primary concern and I would urge
expectations. With that in mind, the acquisition of RocDrill in
everyone to take all the necessary precautions to best ensure
France adds significantly to this skillset as well as expanding
that we emerge safely from this crisis and get back to some
our customer base through the additional clients and
semblance of normality. To that end I would like to thank all
potential projects list that RocDrill brought. Since joining
for perseverance in this and I look forward to better
the group in May 2020, the team at RocDrill has integrated
days ahead.
well and has been instrumental in helping to advance our
geotechnical ambitions.
Joseph Purcell
Chief Executive Officer
We will continue to explore the market for acquisitions that fit
19 March 2021
our strategic goals, and which help us take opportunities that
we believe are present in our industries and in new industries.
We will continue to explore
the market for acquisitions
that fit our strategic goals,
and which help us take
opportunities that we
believe are present in
our industries and
in new industries.
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15
The Group’s overall strategic
objective is to develop long term
sustainable competitive advantage
with our products and services for
customers, for the benefit of our
shareholders and all stakeholders.
STRATEGY OF THE GROUP
BUSINESS MODEL
AND STRATEGY
The Group manufactures and sells rock drilling consumable
products, and the timely supply and service of these products
is paramount to our business model. Since the markets that we
serve across the world are geographically dispersed, and the
lead times for delivery are set by customer requirements and
competition to a large degree, we have built a wide network
of customer service centres backed by manufacturing plants
in key markets. We continue to review our factory operations
and from time to time we relocate the manufacture or part
manufacture of some products from one factory to another, in
some cases, to achieve better economies of scale, and in other
cases, to manufacture products with long lead times closer
to their markets so that we can adapt to changing customer
needs in a more timely fashion. These factory reviews are
ongoing as part of the company’s rolling strategic plan.
We continue to look for opportunities to increase our
geographical footprint and the vertical integration of supply
lines where they add strategic value for the Group and add
margin. However, in the immediate years ahead the company
will focus more closely on organic growth of existing products
in the regions that we service, and on bringing new drilling
technologies, currently in development, to the market.
In executing the Group’s strategy and operational plans,
management will typically confront a range of day-to-day
challenges associated with key risks and uncertainties, and
through compliance, audit, risk management and policy
setting, we will aim to mitigate these risks and maximise the
sustainable opportunity for success.
We are committed to:
•
•
•
•
innovative engineering and industry leading quality
the creation of new drilling products and technologies and
associated intellectual property, supported, inter alia, by
patents
industry leading field service delivery, and
improving the skill sets of our teams
The Group has a five-year rolling strategy,
which is reviewed by the Executive and
the Board each year, and as necessary.
We examine and reflect on our decisions,
continually review our processes and act to
mitigate adverse outcomes.
The Group’s strategy and business model and amendments
thereto, are developed by the Chief Executive Officer and
his Executive team, and approved by the Board. The senior
management team, led by the Chief Executive Officer, is
responsible for implementing the strategy and managing the
business at an operational level.
The Group’s overall strategic objective is to develop long term
sustainable competitive advantage with our products and
services for customers, for the benefit of our shareholders and
all stakeholders.
The Group focus has been on manufacturing hammers and bits
for surface drilling for mining production, mining exploration,
horizontal drilling, geotechnical projects, waterwell and
geothermal applications. We continue to diversify our income
streams by extending our addressable market into those
industries. We continue to extend the ranges of hammers and
bits that we offer, not only to further our market reach, but also
to complement our complete range of surface drilling solutions.
We continue to develop the drill string components that
support a full product range and service offering. Our strategic
direction is to provide market leading products, manufactured,
supplied and serviced by the Group, to a diversified range of
industries. The diversification of income streams into industries
with differing business cycles is designed to minimise volatility
in earnings growth.
We seek to market competitive products centred on an ethos
of innovative engineering and service, and are committed to
adding value for our customers by partnering with them to
find lower total drilling cost solutions. We supply markets and
customers across the world. Our broad geographical spread
enables us to obtain feedback from the use of our products in
a wide range of drilling environments. This constant iteration
from the end customer to engineering and back to the market
drives our design and process improvements. We continue to
devote significant resources to refining and improving current
products.
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STRATEGY OF THE GROUP
PRINCIPAL RISKS AND
UNCERTAINTIES
Any of the above factors could result in disruptions to the
While the Group continuously invests in research and
FINANCIAL CONDITION RISKS
The Group’s principal risks and uncertainties
are outlined in this section. Mincon has
adopted appropriate controls and recruited
management with the necessary skills and
experience to manage and mitigate these risks
where possible and thus enable execution of
the Group’s business strategy as outlined in
this section.
Group’s business, increased costs or reduced future growth
development to develop products in line with customer
opportunities. Potential losses caused by these disruptions
may not be covered by insurance.
The Group operates in countries with less developed
legal systems
The countries in which the Group operates may have
less developed legal systems than countries with more
demand and expectations, if it is not able to keep pace with
product development and technological advances, including
also shifts in technology in the markets in which it operates, or
to meet customer demands, this could have a material adverse
effect on the Group’s business, results of operations and
financial condition.
established economies, which may result in risks such as:
The Group’s products may be duplicated by competitors or
• effective legal redress in the courts of such jurisdictions,
its intellectual property may be misappropriated
PRINCIPAL RISKS RELATING TO THE GROUP’S INDUSTRY
whether in respect of a breach of law or regulation or in an
The Groups proprietary products may be duplicated either
The Group’s products are used in industries which are either
ownership dispute, being more difficult to obtain;
cyclical or affected by general economic conditions
• a higher degree of discretion on the part of governmental
The demand for the Group’s products and services is affected
authorities;
directly or by misappropriation of intellectual property. The
Group files patents where appropriate and limits access to
technical information on Research and Development. However
by changes in customers’ investment plans and activity levels.
• a lack of judicial or administrative guidance on interpreting
some jurisdictions, in which the Group operates and in which
Customers’ investment plans can change depending on global,
applicable rules and regulations;
our competitors manufacture, may not have the same level of
• an inability on the part of the Group to adequately protect
patent protection as others and enforcement of patents may
regional and national economic conditions or a widespread
financial crisis or economic downturn. The demand for the
its assets in these jurisdictions;
Group’s products is affected by the level of construction and
•
inconsistencies or conflicts between and within various
be a lengthy process. If competitors’ duplicate the Groups
proprietary products, it could have a material adverse effect on
mining activities as well as mineral prices. A financial crisis
laws, regulations, decrees, orders and resolutions; or
the Group’s revenues and results.
may also have an impact on customers’ ability to finance their
•
relative inexperience of the judiciary and courts in
investments. In addition, changes in the political situation in
such matters.
a region or country or political decisions affecting an industry
or country can also materially impact on investments in
consumable equipment. Although the Group believes that its
sales are well diversified with customers located in disparate
geographic markets and industry segments, it is likely that
the Group would be affected by an economic downturn in the
markets in which it operates.
The Group is exposed to risks associated with operations in
emerging markets
The Group’s international operations may be susceptible to
political, social and economic instability and civil disturbances.
• disruption to operations, including strikes, civil actions,
international conflict or political interference;
• changes to the fiscal regime including changes in the rates
of income and corporation taxes;
•
reversal of current policies encouraging foreign investment
or foreign trade by the governments of certain countries in
which the Group operates;
limited access to markets for periods of time;
increased inflation; and
•
•
• expropriation or forced divestment of assets.
In some jurisdictions, the commitment of local business
people, government officials and agencies and the judicial
system to abide by legal requirements and negotiated
agreements may be more uncertain, creating particular
concerns with respect to licences and agreements for
If the Group’s manufacturing and production facilities are
damaged, destroyed or closed for any reason, our ability to
distribute products will be significantly affected
The Group has eight manufacturing facilities located in Ireland,
the UK, Sweden, Finland, Australia, South Africa, Canada
and the United States. Should any of these facilities be
destroyed or closed for any reason, or the equipment in the
business. These may be susceptible to revision or cancellation
facilities be significantly damaged, the Group is likely to face
and legal redress may be uncertain or delayed. There can
be no assurance that joint ventures, licences or other legal
arrangements will not be adversely affected by the actions
setbacks in our ability to manufacture and distribute products
to customers. Such circumstances, to the extent that it is not
possible to find an alternative manufacturing and production
of government authorities or others and the effectiveness of
facility, or transfer manufacturing to other Group facilities
and enforcement of such arrangements in these jurisdictions
or repair the damaged facilities or damaged equipment in a
If the Group fails to develop, launch and market new
In addition, the availability of manufacturing components
products, respond to technological development or compete
is dependent on suppliers to the Group and, if they suffer
effectively, its business and revenues may suffer
interruptions or if they do not have sufficient capacity, this
The Group’s long-term growth and profitability is dependent
could have an adverse effect on the Group’s business
on our ability to develop and successfully launch and market
and results.
new products. The Group’s revenues and market share may
suffer if it is unable to successfully introduce new products in a
timely fashion or if any new or enhanced products or services
are introduced by our competitors that customers find more
advanced and/or better suited to their needs.
Risks of the Group operating in such areas may include:
cannot be assured.
timely and cost-efficient manner, could have a material adverse
effect on the Group’s business, results and financial condition.
Future Revenues
The Group relies on the ability to secure orders from new
customers as well as maintaining relationships with existing
customers to generate most of its revenue. Investors should
not rely on period to period comparisons of revenue as an
indicator of future performance.
Competition
The markets for the Group’s products are highly competitive in
terms of pricing, product design, service and quality, the timing
and development and introduction of new products, customer
services and terms of financing. The Group faces intense
competition from significant competitors and to a lesser extent
small regional companies. If we do not compete successfully in
all of our business areas and do not anticipate and respond to
changes in evolving market demands, including new products,
we will not be able to compete successfully in our markets,
which could have a material adverse effect on the Group’s
business, its results and financial condition.
The Group is subject to competition in the markets in which
it operates and some of its competitors are significantly
larger and have significantly greater resources than the
Group. The Group’s principal competitors are Epiroc which
is headquartered in Stockholm, Sweden, with a global reach
spanning more than 150 countries and Sandvik, which is also
headquartered in Stockholm, Sweden, with business activities
in more than 160 countries. There can be no guarantee that
the Group’s competitors or new market entrants will not
introduce superior products or a superior service offering.
Such competitors may have greater development, marketing,
personnel and financial resources than the Group. Should
these or other competitors decide to compete aggressively
with the Group on price in the markets and industries in which
it operates while offering comparable or superior quality
products, this could have a material adverse effect on the
Group’s financial position, trading performance and prospects.
18
19
STRATEGY OF THE GROUP
PRINCIPAL RISKS AND
UNCERTAINTIES
CONTINUED
FINANCIAL CONDITION RISKS (CONTINUED)
The Group is exposed to fluctuations in the price of
raw materials
The Group’s operations give rise to risks due to changes in
the price of market-quoted raw materials, mainly steel and
tungsten. The prices can vary significantly during a year. If the
market does not permit a transfer of the effects of changing
raw material prices into the end-price of the products, this may
have a material adverse effect on the Group’s business, results
of operations and financial condition.
Risks related to COVID–19 pandemic
The Group is exposed to risks to business interruption caused
by the global COVID–19 pandemic. These risks may relate
to interruptions in raw materials supply, interruptions in end
user markets through work stoppages or shipping difficulties
or interruptions in manufacturing capacity caused by a
potential outbreak of infection in one or more of our plants with
consequent material adverse effect on the Group’s revenue
and results.
The Group is exposed to the risk of currency fluctuation
The Group’s financial condition and results of operations are
reported in euro but a large proportion of its revenues are
denominated in currencies other than euro, including the US
dollar, the Canadian dollar, the Australian dollar, the Swedish
Krona, Sterling and the South African rand. Adverse currency
exchange rate movements may hinder the Group’s ability to
procure important materials and services from vendors and
suppliers, may affect the value of its level of indebtedness,
and may have a significant adverse effect on its revenues and
overall financial results. In the past, the Group has experienced
gains and losses from exchange rate fluctuations, including
foreign exchange gains and losses from transactions risks
associated with assets and liabilities denominated in foreign
currencies, including inter-company financings. The Group
has introduced measures to improve its ability to respond to
currency exchange rate risks. However, these measures may
prove ineffective, and exchange rate volatility, particularly
between currency pairs that have traditionally been rather
stable, may develop. As a result, the Group may continue to
suffer exchange rate losses, which could cause operating
results to fluctuate significantly and could have a material
adverse effect on the Group’s business and financial condition.
Contractual Arrangements
The Group derives some of its revenue from large transactions
(which may be non-recurring in nature). Prospective sales are
subject to delays or cancellation which the Group has little
or no control and these delays could adversely affect results.
Also, to address the non-recurring nature of some of these
transactions, the Group needs to focus on securing new lines
of business on a regular basis.
Customer Concentration
During 2020 the Group’s top ten customers have accounted
for approximately 27% of its revenues. If, in the future, these
customers fail to meet their contractual obligations, decide not
to purchase the Group’s products or decide to purchase fewer
products, this could disrupt the Group’s business and require
it to expend time and effort to develop relationships with new
customers, which could have a material adverse effect on the
Group’s business, results of operations and financial condition.
There can be no assurance that, even if the Group could find
alternate customers, the Group could receive the same price
for its products.
20
21
21
CHIEF FINANCIAL
OFFICER’S REVIEW
Notwithstanding the challenges brought about by the
COVID-19 global pandemic, Group revenue in 2020 increased
by 8% (11% on a constant currency basis) compared with
2019 (pre-exceptional items). This was due, in part, to the
expansion of the Group’s core operations as identified in the
2019 review. During 2020, we expanded these core operations
organically and through acquisitions. Our acquisitions of Lehti
and RocDrill provided us with €6.2 million revenue growth
during the year.
The global reach of the Group grew in 2020, mainly through
the acquisition of RocDrill. This subsidiary sells into Europe,
Australia Pacific, South America, and Africa, expanding the
Group’s customer footprint to 81 countries.
Price increases of precious metals and iron ore improved
the performance of the mining industry during 2020. Mincon
experienced growth of 2% in this industry during the year,
although activity was hampered when local government
COVID-19 restrictions forced temporary closures of our
businesses in South Africa and Peru during Q2. Also,
significantly impacted on planned business development in
Australia throughout the year.
Most of our 2020 growth in the mining industry was
experienced in the Americas and Africa regions. We gained
market share through securing new customers early in 2020,
with deliveries to those customers commencing later in the
year. The mining growth in Africa occurred in northern Africa,
where COVID-19 restrictions were not as severe as those in
southern Africa.
Our revenue growth in mining was held back somewhat by
a weaker performance in the Australia Pacific region. Travel
restrictions made it difficult to service mining customers
outside of Australia, with the spread of the virus allowing only
intermittent access to our customers in remote areas.
In recent years, we have gained significant traction in the
construction industry. Our first major step was acquiring PPV
in Finland, a geotechnical development company, in 2017. We
developed our geotechnical IP further to give us our current
geotechnical products. This allowed us to expand our sales
into the industry through our existing sales networks in the
Americas and Europe. Our construction revenue continued to
grow in 2020 and accounted for 30% of our overall revenue,
representing year on year growth of 33%.
The waterwell/geothermal industry is predominantly
concentrated in Europe and North America for our Group.
Our waterwell/geothermal revenue declined by 3% in 2020,
due to several prolonged COVID-19 government lockdowns
across many European countries. These lockdowns continued
from Q2 through Q4 2020.
Revenue outside our three main industries accounted for 1%
of our overall revenue. This revenue was generated to ensure
efficient utilisation of a manufacturing plant that supplies
Group companies. In 2020 this revenue stream declined due
to a strategic decision to increase supply of Mincon carbide
product to our newly acquired manufacturing in Finland, rather
than supplying Mincon carbide to DTH/RC manufacturing
competitors. We view our carbide manufacturing capabilities
and quality as part of the IP suite for our drilling products.
OUR THREE MAIN INDUSTRIES ARE MINING, CONSTRUCTION AND WATERWELL/GEOTHERMAL.
2020
2019
Other 1%
Other 2%
Mining
51%
Construction
30%
Waterwell/
Geothermal
18%
Mining
53%
Construction
25%
Waterwell/
Geothermal
20%
GROSS MARGIN
OPERATING PROFIT
Our gross margin increased to 35.2% in 2020 from 33.6%
Operating profit grew by 55% compared with the 2019 figure
(pre-exceptional items) in 2019, with no material change in the
(pre-exceptional items). The contributing factors were revenue
mix of Mincon and non-Mincon product sales year on year. The
growth, higher gross margin, and lower operating costs during
acquisition of Lehti in Finland, an outsourced manufacturing
the year.
supplier for the majority of our geotechnical products, assisted
the Group in achieving much of the additional gross margin
In 2019 we removed €2.4 million of operating costs by
percentage in 2020. We subsequently merged this company
discontinuing unprofitable operations and reorganising the
with our operations in Finland.
Group, giving us a better footing to contain operating costs as
a percentage of revenue in 2020.
The increase in volumes through our factories reduced the
manufacturing overhead per unit, which led to an improvement
During the year, the Group availed of COVID-19 related
in the gross margin of manufactured products.
government grants totalling €1.3 million. These grants
During the year we reorganised all our hammer production
the pandemic in Australia, Canada, Sweden and the UK. The
to our Shannon facility to drive further efficiencies. This
grants received were largely due to employee related schemes,
consolidation of hammer production was completed towards
where the cost of doing business had increased drastically due
the end of Q4 2020.
to the pandemic. A large portion of that extra cost has been
compensated for the Group being affected by the impact of
detailed in the gross margin section above.
The manufacturing of DTH and RC drill bits is strategically
located closer to our customers. Drill bit engineering and
The Group also incurred substantially lower travel costs than
manufacturing processes are very dynamic, therefore long
previous years following the implementation of a Group-wide
sea freight times are not feasible for a product that has rapidly
international travel ban introduced early in 2020. Though this
evolving requirements to meet varying ground conditions.
inability to travel hindered us in seeking new opportunities and
prevented us from rolling out new products to the market, it
Over the past few years, Mincon has acquired new
was done to ensure the safety of the Group’s employees.
manufacturing facilities, IP, and designed new products in a
bid to be better positioned as a preferred OEM partner capable
of supplying a complete drill string solution. This has allowed
us to adopt a direct sales approach. The current product
offering and after-sales service has given us a better footing for
Mincon Products
Third-Party Products
Operating Profit
selling directly to large mining and construction contractors,
enabling us to get better prices for our products which leads to
improved gross margins for the Group.
The COVID-19 global pandemic had an adverse impact on our
gross margin during 2020 due to significantly increased freight
costs for the Group. Early in the pandemic, we relied on air
freight to meet our commitments to customers due to difficulty
at seaports, where local government restriction slowed the
movement of product. Air freight is significantly more expensive
when compared to sea freight. This higher freight cost reduced
the Group’s gross margin by 0.6% in 2020.
135.0
120.0
105.0
90.0
75.0
60.0
45.0
30.0
15.0
21.3
108.6
17.4
19.9
100.3
100.8
22.3
75.0
19.8
56.3
10.2
14.0
16.4
18.2
11.8
2016
2017*
2018*
2019*
2020
* Before exceptionals and write-offs.
22
23
CHIEF FINANCIAL
OFFICER’S REVIEW
CONTINUED
BALANCE SHEET
Our balance sheet grew €13.4 million in 2020. Excluding a €2.2
million dividend to shareholders, the balance sheet would have
grown to €15.6 million. We generated cash of €19.3 million
through the operating activities of the Group, a year-on-year
increase of 55%.
Our inventory carrying amount increased during the year,
the acquisition of Lehti and RocDrill brought €3.6 million of
inventory onto our balance sheet. At year-end, inventory
valuation was €4.4 million higher than 2019. At the beginning of
Q2 2020, when we began to witness the impact the COVID-19
Global pandemic was having on the freight industry, we
planned to increase inventory of high volume selling Mincon
We now have 100% control of all Group subsidiaries. These
investments were the largest cash outlay for the Group during
the year. Deferred payments on 2020 acquisitions and minority
interest takeover added €2.3 million to further future liabilities.
We borrowed €5 million to fund the €7 million cash
consideration for Lehti at the date of acquisition in January
2020 (total consideration was €7.7 million). A further €1.3
million was borrowed to fund specific plant and equipment
purchases during the year, while Lehti had €5.7 million of loans,
finance leases and ROU leases on its balance sheet at the date
of acquisition.
GROWTH
manufactured product through that quarter, to ensure we could
The reorganisation of the Group in 2019 removed unprofitable
meet customer requirements throughout the difficult period
high-risk operations and has given the Group room to invest in
ahead. However, by improving our systems and procedures,
clear opportunities such as Lehti , in Finland, and RocDrill, in
we decreased inventory of products that have lower volume
France. Despite 2020 being a turbulent year due the pandemic,
turnover. Overall, the number of weeks of inventory held
we achieved organic growth in regions such as the Americas
decreased slightly on 2019.
and Africa.
Several countries in which we operate had prolonged lockdown
The growth experienced during 2020 was achieved within the
periods during 2020 which had a detrimental effect on some of
backdrop of an unprecedented global health emergency. We
the businesses operating in our markets. However, the Group
grew revenue and reached new levels of profitability, while
had zero occurrence of debtor write-offs during the year, and
using available government supports to cushion the blow of
the value of debtors at year end remained in line with 2019.
postponing new opportunities, which the pandemic has forced
Debtor days decreased by 6% compared with 2019.
on us.
Creditors decreased during the year, mainly through the
In the coming years, we will plan to invest in new
purchase of Lehti in Finland as this was a vertical acquisition.
manufacturing techniques to continue the improvement in
That debt owed to Lehti was brought in-house and converted
our production efficiencies, while also increasing capacity.
to an intercompany balance following the acquisition of this
These manufacturing investments are also targeted to give our
company.
products added advantages in the market.
We invested further into new methods of manufacturing,
while disposing of less efficient machinery. This led to a net
Mark McNamara
Chief Financial Officer
increase of €6.9 million in property, plant and equipment. Our
19 March 2021
prepayments decreased as we commissioned the new heat
treatment facility in Australia, €3.2 million was included in
prepayments in 2019 in respect of this system.
We invested a total of €10.9 million in acquisitions including
taking control of minority interest holdings in the Group and
payments of deferred consideration.
These manufacturing
investments are
also targeted to give
our products added
advantages in the market.
24
2525
EME EUROPE & MIDDLE
EAST REGION
AVERAGE
STAFF
NUMBERS
COUNTRIES
OFFICES
290
06
Ireland
Finland
Sweden
UK
France
NUMBERS OF
CUSTOMER SERVICE
CENTRES IN REGION
FACTORIES
MOST ACTIVE
CUSTOMER
MARKETS
03
04
• Factory floor space:
15,184 SQM
• Manufacturing:
DTH Hammers,
RC Hammers, DTH Bits,
Large-Diameter Hammers,
Drill Pipes, Drilling
Accessories, Tungsten
Carbide Buttons
• Construction
and Technical
• HDD
• Waterwell
• Production Mining
• Quarrying
26
26
27
27
APAC AUSTRALIA
PACIFIC REGION
AVERAGE
STAFF
NUMBERS
57
COUNTRIES
WITH DIRECT
REPRESENTATION
03
Australia
Papua New Guinea
Indonesia
NUMBERS OF
CUSTOMER SERVICE
CENTRES IN REGION
FACTORIES
MOST ACTIVE
CUSTOMER
MARKETS
03
• Production Mining
• Exploration Mining
• Quarrying
• Construction and
Geotechnical
• Waterwell
01
• Factory floor space:
6,850 SQM
• Manufacturing:
DTH Drill Bits
RC Drill Bits
RC Drill Pipes
Drilling Accessories
28
28
29
29
AMERICAS
REGION
AVERAGE
STAFF
NUMBERS
COUNTRIES
WITH DIRECT
REPRESENTATION
132
04
Canada
USA
Peru
Chile
NUMBERS OF
CUSTOMER SERVICE
CENTRES IN REGION
FACTORIES
MOST ACTIVE
CUSTOMER
MARKETS
12
02
• Factory floor space:
7,900 SQM
• Manufacturing:
DTH Drill Bits
Rotary Drill Bits
• Construction and
Geotechnical
• Waterwell
• Geothermal
• Production Mining
• Exploration Mining
• HDD
• Quarrying
30
30
31
31
AFRICA
REGION
AVERAGE
STAFF
NUMBERS
73
COUNTRIES
OFFICES
03
Las Palmas, Regional
Headquarters
South Africa
Namibia
NUMBERS OF
CUSTOMER SERVICE
CENTRES IN REGION
FACTORIES
MOST ACTIVE
CUSTOMER
MARKETS
04
• Production Mining
• Exploration Mining
• Waterwell
• Quarrying
01
• Factory floor space:
8,112 SQM
• Manufacturing:
Drill Pipes
Drilling Accessories
32
32
33
33
BOARD OF
DIRECTORS
NON-EXECUTIVE
DIRECTORS
At 31 December 2020, the Board of
Mincon comprised of four non-executive
directors and two executive directors.
Details of the directors are set out on the
left and below:
COMPANY
SECRETARY
Hugh McCullough
Age 70
Non-Executive Chairman
John Doris
Age 74
Senior Independent Non-Executive
Patrick Purcell
Age 83
Non-Executive Director
Paul Lynch
Age 54
Non-Executive Director
Barry Vaughan
Age 38
Company Secretary
Hugh has over 40 years’ experience in gold and base
John joined the Board in February 2017. He has broad
metal exploration, principally in Ireland, Ghana, Mali and
experience across a number of sectors including
Papua New Guinea. Having previously worked as a project
manufacturing, lending and corporate finance. He has
geologist, in 1982 he became chief executive of Glencar
been an independent consultant and a non-executive director
Mining plc. Hugh was responsible for the management,
for over twenty years. Prior to becoming an independent
financing and strategy of Glencar for over 27 years until it
consultant, he was a director of ABN Amro Corporate Finance
was acquired by Gold Fields Limited in September 2009.
(Ireland) Limited where he managed the successful Riada
Business Expansion Funds.
Hugh is a geologist and holds an honours degree in
geology from University College Dublin and a degree
John graduated from University College Dublin with a
of Barrister-at-Law from the King’s Inns, Dublin.
B.Sc. in physics in 1969 and returned to University College
Dublin to complete his M.B.A. in 1977. He qualified as an
ACCA in 1974 and is a former president of ACCA Ireland.
Barry qualified as a Certified Public
Accountant in 2009 having commenced
his finance career in public practice.
He has held various management
roles within both public practise and
industry. This included four years
providing business partnering and
financial management support to
executives within an international
telco company based in Australia.
Having joined Mincon in August 2017
as Financial Controller of Mincon
International Ltd, Barry currently
oversees the Group’s Financial
Compliance across the regions.
Patrick served an apprenticeship in
the Irish Air Corps in the 1950s and
later qualified as an accountant in
Australia in 1961. When he returned
to Ireland in 1967 he joined Shannon
Diamond & Carbide Ltd, (later Boart
Longyear) and worked in various
capacities with their European Group
Companies for the next 10 years.
His roles with Shannon Diamond
& Carbide included that of cost
accountant, sales and marketing
director and a period as a general
manager of their manufacturing
plant in Norway before becoming
their director for European sales
companies and product development.
Patrick set up Mincon in 1977 and
developed the Group, firstly in Ireland
and then into overseas areas including
USA, Canada, Australia, South Africa
and Sweden. Patrick remained as
executive chairman until 2012 but
continued to work with the company
as an adviser on new projects.
Paul currently acts as strategic adviser
for a number of companies having
recently served as Chief Financial
Officer of Applegreen plc, a quoted
petrol forecourt retailer in the Republic
of Ireland and the United Kingdom,
between 2014 and 2017.
Paul qualified as a chartered
accountant with Arthur Andersen in
1990, after which followed a wide-
ranging career in corporate finance
and senior management across a
number of industry sectors. He was a
director of Heiton Group plc for seven
years, from 2000 to 2007, initially as
Head of Corporate Development and
subsequently as Managing Director of
its Retail Division. Paul served as chief
executive of large-scale businesses
in the retail, manufacturing, waste
management and facility services
sectors and he has led and concluded
over 20 M&A transactions across
diverse industries and jurisdictions.
34
34
35
35
BOARD OF
DIRECTORS
EXECUTIVE
DIRECTORS
Mincon has a highly experienced
team of senior managers
that has helped to drive the
development of the Group
across its global locations.
Brief profiles of the Mincon
senior management team are
set out below:
KEY
MANAGEMENT
Joseph Purcell
Age 54
Chief Executive Officer
Thomas Purcell
Age 49
Regional Executive - Americas
Mark McNamara
Age 40
Chief Financial Officer
Stephen Atkinson
Age 59
Regional Executive - Australasia
Martin van Gemert
Age 56
Regional Executive - Africa
Jussi Rautiainen
Age 56
Regional Executive - EME
Joseph qualified as a mechanical
Thomas Purcell had a background in
engineer in 1988 at University College
accounting prior to emigrating to the
Galway, in Ireland and since then
USA to work with Mincon on a new
has worked with Mincon in various
joint venture opportunity in the country.
capacities. DTH hammer design has
He worked for the Mincon Group
been his main area of specialisation
in the dimensional stone quarrying
although he has extensive experience in
industry during which time he was
manufacturing methods, heat-treatment
key in setting up operations in Virginia
and process development. His hammer
and North Carolina. In 1996, Mincon
design work has included seven years
sold its investment in the quarrying
in Perth, Australia where he developed
entities to Marlin Group of South
a successful range of reverse circulation
Africa. He worked in various positions
and conventional DTH hammers for
with their USA subsidiary from
local and export markets. Joseph
Purchasing and Safety Manager of
was appointed as chief technical
four quarrying companies, to CFO and
officer for the Mincon Group on his
Operations Manager for their Atlanta
return from Australia in 1998. In May
based operation, Stone Connection.
2015, Joseph was appointed Chief
He re-joined the Mincon Group in
Executive Officer of Mincon Group plc.
1999 as President of Mincon, Inc.
Mark began his finance career in public
practice in 2004 where he qualified
as a Certified Public Accountant
(“CPA”). He began working with Mincon
as Financial Controller of Mincon
International Ltd. in March 2010. He
moved into the position as Group
Financial Controller in 2013 prior to
the IPO of Mincon where he was
the lead accountant. Preceding his
finance career Mark worked in airline
operations and holds a bachelor’s
degree in Information Technology.
Jussi joined Mincon Group in January
2017. He was chief executive officer
of Robit Rocktools Ltd. from 2005 to
January, 2016. Prior to that, he held
international management positions
at Huhtamäki Oyj and UPM Kymmene
Corporation. Jussi holds a Bachelor
of Economics degree and has also
an Executive Master of Business
Administration degree.
Stephen joined Mincon in 2016 after
the acquisition of OZmine, where he
was the CEO. He has over 35 years’
experience in manufacturing and
servicing the oil, gas and mining
sectors. Stephen has formed many
successful start-up businesses
throughout his career, one such
business began in 1991, where
Stephen together with his business
partner and 700 employees, traded
through their company Oilmin
Tools, a company specialising in
manufacturing drilling consumables
and selling direct to the end user,
Oilmin Tools had five manufacturing
facilities across Australia, Indonesia
and Singapore securing contracts
with blue chip companies throughout
those regions. Stephen completed
his Boilermaker First Class Welding
Apprenticeship In 1980.
Martin joined Mincon in 2010, when
he set up the Mincon West Africa
business and started the Group’s
expansion into Africa. He has more
than three decades of experience
in the construction, geotechnical,
exploration, and mining industries,
in various operational management
capacities with drilling contractors and
drilling equipment manufacturers. In
2007 he established a country office
for Sandvik in Mali and was appointed
as the country manager for that
business, where he managed a team
of technicians and sales personnel,
as well as the supply of capital mining
equipment and consumables to three
large gold mines. He has managed
drilling and blasting operations at major
construction projects and opencast
gold mines across Southern Africa,
where his operational experience
includes operating drilling equipment,
specialised geotechnical, ground
stabilisation, controlled construction,
and opencast mine blasting techniques.
36
36
37
37
DIRECTORS’
REPORT
The Directors present the directors’ report
and the consolidated financial statements
of Mincon Group plc (“Mincon”) for the year
ended 31 December 2020.
PRINCIPAL ACTIVITIES OF THE GROUP
Mincon is an Irish engineering Group, specialising in the
design, manufacture, sales and servicing of rock drilling tools
and associated products. The Group’s manufacturing facilities
are located in Shannon, Ireland, in Sheffield, in the UK, in
Sunne, Sweden, in Tampere, Finland, in Perth, Australia, in
Johannesburg, South Africa, in Benton, Illinois in the USA, and
in North Bay, Ontario in Canada.
Mincon has a clear vision and determined focus giving
priority towards:
• Highest design specifications
• Best manufacturing methods and processes
• Delivery of superior products to our customers
Mincon also maintains a network of sales and distribution
companies in a number of international markets to provide
after-sales support and service to customers. Products,
comprising both Mincon manufactured products and third party
products that are complementary to Mincon’s own products,
are sold directly to the end user or through distributors.
Mincon manufactured product can be broken down into
seven distinct product lines:
1. Conventional down the hole (DTH) product
2. Reverse circulation (RC) product
3. Horizontal directional drilling (HDD) product
4. Rotary drilling product
5. Geotechnical product
6. Drill pipe product
7. Tungsten carbide product
Mincon manufactured hammers, bits (including rotary bits)
DIVIDEND
and pipes are used in a variety of drilling industries including
production and exploration mining, waterwell, geothermal,
construction, quarrying oil and gas and seismic drilling. Mincon
also provides a hard-rock HDD system to provide access
for fibre optic cable laying and similar activities. In addition,
Mincon, through its subsidiary Mincon Carbide Limited,
manufactures tungsten carbide inserts, its core markets being
mining, construction and the oil & gas industry.
DTH, RC & HDD products have distinct sales lines for
associated parts, namely hammers, spares, bits and pipes.
Bits and pipes can be sold separate from the hammer.
Mincon manufactures a range of bits and pipes to an industry
standard size which can be used in conjunction with hammers
manufactured by competitors. Rotary bits are made to industry
standard size and are used in the same mining applications as
Mincon’s DTH hammers and bits. Ring bits, pilot bits, casing
systems and forepoling systems are generally sold with DTH
products but can be sold separately. Tungsten carbide high
quality impact buttons are used on the face of DTH, RC, HDD
& tricone drill bits and ring and pilot bits.
In September 2020, Mincon Group plc paid a final dividend for 2019 of €0.0105 (1.05 cent) per ordinary share. In September
2019, Mincon Group plc paid an interim dividend for 2019 of €0.0105 (1.05 cent) per ordinary share. In June 2019, Mincon Group
plc paid a final dividend for 2018 of €0.0105 (1.05 cent) per ordinary share.
DIRECTORS AND SECRETARY
The dates of appointments and resignations of the Company’s directors and secretary are set out in the table below:
DIRECTOR
DATE OF APPOINTMENT
DATE OF RESIGNATION
Patrick Purcell
16 August 2013
John Doris
16 February 2017
Hugh McCullough
13 December 2016
Joseph Purcell
23 September 2013
Thomas Purcell
23 September 2013
The Mincon hammers, bits, casing systems, forepoling systems
Paul Lynch
05 December 2019
and pipes are considered consumable items in the drilling
industry in contrast with capital items such as truck/track-
mounted drilling rigs and large air compressors. As products of
a consumable nature, Mincon products have a shorter life cycle
than capital goods (such as rigs and compressors).
BUSINESS REVIEW
Commentaries on performance in the year ended 31 December
2020, including information on recent events and likely future
developments, are contained in the Chairman’s Statement,
Chief Executive Officer’s Review and Chief Financial Officer’s
Review. The performance of the business and its financial
position together with the principal risks faced by the Group
are reflected in the Chief Financial Officer’s Review as well as
the risk review section.
COMPANY SECRETARY
Jonathan Clancy
13 March 2019
13 March 2020
Barry Vaughan
13 March 2020
38
39
DIRECTORS’
REPORT
CONTINUED
SUBSTANTIAL SHAREHOLDERS
RESEARCH AND DEVELOPMENT
The Group has completed a sensitivity analysis of the
As at close of business on 19 March 2021, in so far as is known to the Company, the following persons are, directly or indirectly,
The Group’s strategy around research and development is set
interested in 3% or more of the issued share capital of the Company:
ORDINARY SHARES AS AT THE
DATE OF THIS DOCUMENT
PERCENTAGE OF ISSUED
ORDINARY SHARE CAPITAL
SHAREHOLDER
Kingbell Company
Setanta Asset Management
119,671,200
27,927,580
Invest fur Langfristige Investoren
18,773,990
FMR LLC
18,324,129
56.54%
13.19%
8.87%
8.66%
out in the Strategy section of this Annual Report. The Group
invested €3.7 million on research and development in 2020
(2019: €3.2 million), €1.1 million of which has been capitalised
(2019: €1.4 million).
RESEARCH AND
DEVELOPMENT
INVESTMENT
2020
€3.7m
consolidated income statement, consolidated balance sheet
and consolidated cashflow forecasts. The Group is exposed to
risks to business interruption caused by the global COVID-19
pandemic. These risks may relate to interruptions in raw
materials supply, interruptions in end user markets through
work stoppages or shipping difficulties or interruptions in
manufacturing capacity caused by a potential outbreak of
infection in one or more of our plants with consequent material
adverse effect on the Group’s revenue. The sensitivity analysis
conducted by the Group incorporates effects on trading being
disrupted as a result of the COVID-19 global pandemic. The
directors believe that the Group has sufficient reserves to
enable it to adjust its operations to absorb this decrease in
trading activity.
None of the Group’s major shareholders, as listed above, have different voting rights attaching to ordinary shares held by them
in the Group. The Purcell family vehicle, Kingbell Company, have certain Board nomination rights for so long as their respective
shareholdings remain above certain thresholds.
FINANCIAL RISK MANAGEMENT
The Group’s operations expose it to financial risks including credit risk, interest rate risk and foreign currency risk. The Group
manages risk in order to reduce the impact of these risks on the performance of the Group and it is the Group’s policy to
manage these risks on a non-speculative manner. The Group does not utilise derivative financial instruments to hedge economic
exposures. Details of the Group’s financial risk management objectives and policies are set out in note 23 to the financial
statements.
COMPLIANCE STATEMENT
The directors acknowledge that they are responsible for securing compliance by Mincon Group plc (the ‘Company’) with its
relevant obligations as are defined in the Companies Act, 2014 (the ‘Relevant Obligations’). The directors further confirm the
Company has put in place appropriate arrangements or structures that are, in the directors’ opinion, designed to secure material
compliance with its relevant obligations including reliance on the advice of persons employed by the company and external
legal and tax advisers as considered appropriate from time to time and that they have reviewed the effectiveness of these
arrangements or structures during the financial year to which this report relates.
POLITICAL CONTRIBUTIONS
The Group and Company did not make any contributions during the year disclosable in accordance with the Electoral Act 1997.
CORPORATE GOVERNANCE
The Board of Mincon is committed to achieving high standards
Mincon Group also has identified a number of mitigating
of corporate governance, integrity and business ethics for all
factors that can be implemented to preserve cash and other
activities as set out in the Directors’ Statement on Corporate
resources in the event of any decline in operations. The
Governance of this Annual Report.
directors believe that sufficient financial resources are available
ACCOUNTING RECORDS
The directors believe that they have complied with the
requirement of Sections 281 to 285 of the Companies Act 2014
with regard to maintaining adequate accounting records by
employing accounting personnel with appropriate expertise
to enable the Group meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial
statements. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
DISCLOSURE OF INFORMATION TO THE AUDITOR
and by providing adequate resources to the financial function.
Each of the Directors individually confirm that:
The accounting records of the company are maintained at the
company’s offices at Smithstown Industrial Estate, Shannon,
•
in so far as they are aware, there is no relevant audit
information of which the Company’s statutory auditor is
Co Clare.
SIGNIFICANT EVENTS SINCE YEAR-END
unaware;
• and that they have taken all the steps that they ought to
have taken as a Director in order to make themselves aware
Details of significant events since year-end are set out in note
of any relevant audit information and to establish that the
29 to the financial statements.
Company’s statutory auditor is aware of such information.
GOING CONCERN
AUDITOR
The directors, having made enquiries, have a reasonable
KPMG, Chartered Accountants continue in office in accordance
expectation that the Group and the Company have adequate
with Section 383(2) of the Companies Act 2014.
resources to continue in operational existence for the
foreseeable future.
On behalf of the board
Mincon Group continues to monitor the COVID-19 global
Hugh McCullough
Joseph Purcell
pandemic and review the procedures that we have in place to
Chairman
Chief Executive Officer
mitigate the effects the global health emergency is having on
19 March 2021
our operations.
40
41
As with Mincon’s product
engineering, its energy
consumption efforts will
be subject to an ethos of
continuous improvement,
with the eventual goal
of achieving a carbon-
neutral status.
42
42
43
43
STATEMENT OF DIRECTORS
CORPORATE GOVERNANCE
The Board of Mincon is committed to
maintaining the highest standards of
corporate governance. The Group is required
to apply the principles of a recognised
corporate governance code, and the
Board acknowledges the importance
of adhering to this code.
They confirm that the Group complies with the principles
and provisions of the QCA Corporate Governance Code,
as issued by the Quoted Companies Alliance in April 2018.
This includes a code of best practice for AIM companies,
comprising principles intended as a minimum standard, and
recommendations for reporting corporate governance matters.
The directors recognise the importance of sound corporate
governance and have taken account of the main principles of
the QCA Guidelines, wherever possible and as appropriate
to the size, nature and resources of the Group. It is also our
intention to be as open and transparent about our governance
arrangements as possible and use the annual report to give
details of changes and improvements made during the year.
performance of the business, and to be updated on strategic,
The Audit Committee meets with the auditors both separately
to meet existing and prospective shareholders and analysts/
commercial, product and service matters. All key capital
investment decisions, and acquisitions, new activities and
distribution points are subject to approval by the Board
of Directors.
The Board considers itself to be sufficiently independent. The
QCA Code suggests that a board should have at least two
independent non-executive Directors. One of the four non-
and with invited executive management attendance, to
commentators on an individual and collective basis. It also
consider such matters as may be reported on formally
occurs during any particular year on an ad hoc basis with the
and regularly, but also to discuss the business compliance
announcements of key events around contracts, products, and
with, and the development of systems, risk mitigation and
corporate transactions. We have introduced a specific investor
commercial procedures.
review document on our corporate website, to update both
existing and prospective shareholders on the Groups business
The directors have outlined in the Principal Risks and
and performance.
Uncertainties section the key risks facing the Group and
executive directors, Mr. Patrick Purcell, is the company founder
strategies to manage these risks.
We provide further updates as required on acquisitions,
and majority shareholder through a trust. None of the rest of
performance of key elements, products and markets as may be
the Board is a significant shareholder, save through that trust
A comprehensive budgeting process is completed once a year
necessary and which may be important to the understanding
for certain executive members. The Senior Independent Non-
for the coming year, and this sits within an updated rolling
of the strategy, the market position, the business, the products
Executive director is Mr. John Doris, who is also the Chairman
three-year plan. It is reviewed and approved by the Board. The
and the team. In addition, though there is no regulatory
of the Audit Committee.
Group’s results, compared with the budget and the prior year,
requirement for it, the Group has decided to provide detailed
Non-Executive Directors receive their fees only in the form of
in detail to the Board on a monthly basis.
insight for stakeholders, and to provide a platform for more
cash emoluments fully taxed in compliance with the income tax
informed decision making and questioning by stakeholders.
regime of the Irish residence of the Mincon Group plc. Certain
The Group maintains appropriate insurance cover in respect of
Attention is drawn to these announcements on the corporate
receipted travel expenses are also paid to accommodate the
actions taken against the directors because of their roles, as
website. In addition to this, shareholders are actively
attendance at Board meetings.
well as against material loss or claims against the Group. The
encouraged to visit key sites, meet key people and discuss the
together with any foreseen risk and other matters, are reported
quarterly updates over recent years to provide more timely
The Board is responsible for formulating, reviewing and
approving the Group’s strategy, budgets and corporate
insured values and type of cover are comprehensively reviewed
business of the Group.
on a periodic basis.
The Company is also a regular presenter at invited investor
THE BOARD
actions. The Board has delegated responsibility for the day
The compliance, audit, risk and policy matters are reported
events, providing an opportunity for investors to meet with
The Company is controlled through its Board of Directors.
to day management of the Group to the Group’s executive
to the executive as they occur, are discussed among the
representatives from the Group in a more informal setting. The
The Board comprises four non-executive directors and two
management. There are clear divisions of responsibilities
executive and reported on to the Board and to the Chair
contact numbers for the relevant executives are provided with
executive directors. Biographical details on the Board members
between the roles of the Chairman and Chief Executive Officer.
together with the actions taken and proposed to respond
company announcements.
are set out in the section entitled “Board of Directors.” The
appropriately to the matter flagged.
Board’s primary roles are to create value for shareholders,
MANAGING AND COMMUNICATING RISK AND
NECESSARY UP-TO-DATE EXPERIENCE,
to provide leadership to the Group, to approve the Group’s
IMPLEMENTING INTERNAL CONTROL
CORPORATE COMMUNICATION AND
SKILLS AND CAPABILITIES
strategic objectives and to ensure that the necessary financial
and other resources are made available to the Group to enable
them to meet those objectives.
All of the directors are subject to election by shareholders
at the first Annual General Meeting after their appointment
to the Board and seek re-election at least once every three
years. When a director retires or resigns the Board seat is
filled through the nominations committee of the Board and the
individual is also subject to regulatory approval by the Stock
Exchange, and the support of our Nomad.
The Board is responsible to the shareholders for the proper
management of the Group and the directors hold Board
meetings at least six times per annum and at other times as
and when required to review the operational and financial
The Board is responsible for putting in place and communicating
INVESTOR RELATIONS
The Board considers that all of the Non-Executive Directors
a sound system to manage risk and implementing internal
The Group recognises the importance of shareholder
are of sufficient competence and calibre to add strength and
control.
communications. The Group seeks to maintain a regular
objectivity to its activities, and bring considerable experience
dialogue with both existing and potential new shareholders in
in our industry, and in the general operational and financial
The Board is responsible for reviewing the effectiveness of the
order to communicate the Group’s strategy and progress and
development of our companies. This may be direct experience
systems of risk management and internal control. The internal
to understand the needs and expectations of shareholders
of corporate finance and investment and the mining industry in
controls are designed to manage rather than eliminate risk
and provide reasonable but not absolute assurance against
material misstatement or loss. Through the activities of the
Beyond the Annual General Meeting, the Chief Executive
Officer, Chief Financial Officer, and such other key executive
The Board regularly reviews the composition of the Board to
general from hands on experience.
Audit Committee, the effectiveness of these internal controls
members as may be relevant to the matter, meet regularly
ensure that it has the necessary breadth and depth of skills to
is reviewed annually, progress is reported on as systems and
with investors and analysts to provide them with updates on
support the ongoing development of the Group.
procedures are developed, and explanations are requested
the Group’s business and to obtain feedback regarding the
from management on such matters as may come or be brought
market’s expectations of the Group.
The Chairman, in conjunction with the Company Secretary,
to the attention of the committee.
ensures that the directors’ knowledge is kept up to date on key
This follows on from the half year and full year announcements
issues and developments pertaining to the Group, and on its
of the results for the Group when the Chief Executive Officer,
operational environment and to the directors’ responsibilities as
Chief Financial Officer and certain other key executives travel
members of the Board.
44
45
STATEMENT OF DIRECTORS
CORPORATE GOVERNANCE
CONTINUED
BOARD EVALUATION
The Board has established an Audit Committee, a
The Board engaged an external party to conduct a review of
the Board and its effectiveness in 2019 that ran in to the early
part of 2020. The main recommendations arising from the
review were implemented during 2020. The Committee will
have another independent review carried out during 2021.
DIRECTORS’ INDEPENDENCE
Remuneration Committee and a Nominations Committee with
formally delegated duties and responsibilities. The Board deals
with matters relating to health and safety and risk through the
Board (as opposed to through a separate committee).
The ultimate responsibility for reviewing and approving the
annual financial statements and interim statements remains
with the Board. The Audit Committee works with the executive
The Board has determined that Hugh McCullough, John Doris
team to obtain such explanations and information as it
and Paul Lynch are independent within the meaning of the
requires, and may, supported by the external auditors, ask that
QCA Guidelines. Patrick Purcell is not considered independent
the executive amend, adjust or provide explanations to the
within the requirements of the QCA Guidelines by virtue of his
Board, through the Board to the Stock Market, on our website,
shareholding in the Company. The two executives on the Board
or in the annual or other reports as it may see fit.
are Joseph Purcell and Thomas Purcell.
GOVERNANCE STRUCTURES AND PROCESSES
COMMUNICATION ON HOW THE GROUP IS GOVERNED
The Group places a high priority on regular communications
The Board has overall responsibility for promoting the
with its various stakeholder groups and aims to ensure that all
success of the Group through the management team. The
communications concerning the Group’s activities are clear,
Executive Directors and the executive team have day-to-day
fair and accurate. The Board communicates on such matters
responsibility for the operational management of the Group’s
and on how the Group is governed through the annual report,
activities. The Non-Executive Directors are responsible for
and may also give updates through announcements and
bringing independent and objective judgment to Board
presentations to shareholders on an individual or Group basis.
decisions.
The Group’s website is regularly updated, and users can
There is a clear separation of the roles of Chief Executive
register to be alerted when announcements or details of
Officer and Non-Executive Chairman. The current CEO is the
presentations and events are posted onto the website. The
chief engineer and is the principal designer of the current
Group’s financial reports and notices of General Meetings of
range of products. The Chairman is responsible for overseeing
the Company can be found on the website.
the running of the Board, ensuring that no individual or group
dominates the Board’s decision-making and that the Non-
The results of voting on all resolutions are posted to the RNS
Executive Directors are properly briefed on matters. The
section of the Group’s website, including any actions to be
Chairman has overall responsibility for corporate governance
taken as a result of resolutions for which votes against have
matters in the Group.
been received.
The Chief Executive Officer has the responsibility for
AUDIT COMMITTEE
implementing the strategy approved by the Board and
managing the day-to-day business activities of the Group. In
addition the CEO has primary responsibility for engagement
with the shareholders and other stakeholder Groups. The
Company Secretary is responsible for ensuring that Board
procedures are followed and that the Group complies with
applicable rules and regulations.
Further details on the duties and activities of the Audit
Committee can be found in the Audit Committee Report on
page 50 to 52.
NOMINATION COMMITTEE
Further details on the duties and activities of the Nomination
Committee can be found in the Nomination Committee Report
on page 53 to 55.
46
47
47
STATEMENT OF DIRECTORS
CORPORATE GOVERNANCE
CONTINUED
REMUNERATION COMMITTEE
Further details on the duties and activities of the Remuneration Committee can be found in the Remuneration Committee Report
on page 56 to 58.
Share Ownership and Dealing
Mincon has adopted a share dealing policy that complies with Rule 21 of the AIM Rules and Rule 21
of the ESM Rules relating to directors’ dealings as applicable to AIM and ESM companies respectively.
Mincon takes all reasonable steps to ensure compliance by applicable employees.
Directors’ Remuneration
Details of individual remuneration of directors are set out in the Remuneration Committee Report page 56 to 58.
DIRECTORS’ AND COMPANY SECRETARY’S SHARE INTERESTS
The beneficial interests of the directors and Company Secretary (including those of their spouses and children) who held office at
31 December 2020 in the share capital of the Company was as follows:
NAME
ORDINARY
SHARES HELD
PERCENTAGE OF ISSUED
ORDINARY SHARE CAPITAL
Kingbell Company
119,671,200
Hugh McCullough
29,263
Paul Lynch
35,000
56.54%
0.01%
0.02%
STAKEHOLDER’S AND SOCIAL RESPONSIBILITIES AND
Mincon Group plc’s energy management policy aims to:
THEIR IMPLICATIONS FOR LONG-TERM SUCCESS
• avoid unnecessary energy costs
The Group understands that a number of different stakeholders
have an interest and are impacted by the activities of the
Group. Amongst those stakeholders are the direct owners
and employees of the Group, investors and dependents, and
our suppliers and customers. There are also the regulatory
authorities in the jurisdictions in which we have activities,
employees and customers, and legal and environmental
frameworks with which our businesses are required to comply.
The Group is aware of its corporate social responsibilities and
the need to maintain effective working relationships across
a range of stakeholder Groups. These include the Group’s
• monitor overall electricity, gas, oil, process gases and
lubricant oils usage on a regular basis
• monitor electricity usage of the significant energy using
equipment
•
report energy performance indicators (EnPIs) at monthly,
quarterly and annual management review meetings
•
improve the cost effectiveness of producing a safe,
comfortable working environment
• comply with current energy and environmental legislation
and protect the environment by minimising CO2 emissions.
CORPORATE CULTURE
employees, partners, suppliers, regulatory authorities and
The Board seeks to maintain the highest standards of integrity
the customers involved in the Group’s activities. The Group’s
and probity in the conduct of the Group’s operations. These
operations and working methodologies take account of the
values are preserved in the written policies and working
need to balance the needs of all of these stakeholder groups
practices adopted by all employees in the Group. An
while maintaining focus on the Board’s primary responsibility
open culture is encouraged within the Group, with regular
to promote the success of the Group for the benefit of its
communications to staff regarding progress and staff feedback
members as a whole.
regularly sought. The Executive Committee regularly monitors
the Group’s cultural environment and seeks to address any
The Group endeavours to take account of feedback
concerns that may arise, escalating these to Board level
received from stakeholders, making amendments to working
as necessary.
arrangements and operational plans where appropriate and
where such amendments are consistent with the Group’s
The Group seeks to act with fairness towards its stakeholders,
longer-term strategy.
and its competitors, in the conduct of its business, and expects
that this would be reciprocated.
Kingbell Company, is a company controlled by Patrick Purcell and members of the Purcell family (including Joseph Purcell and
The Group takes seriously the well-being of its employees
Thomas Purcell).
No director or member of a director’s family has a related financial product referenced to the Company’s share capital. There are
consistent with the guidelines in the various jurisdictions and
The Group is committed to providing a safe environment for
industries within which it works.
its staff and all other parties for which the Group has a legal
or moral responsibility in this area. The Executive operates a
no outstanding loans as at 31 December 2020 (2019: €Nil) granted or guarantees provided by any company in the Group to or
The Group takes due account of any impact that its activities
Health and Safety Committee in each of the manufacturing
for the benefit of any of the directors other than amounts disclosed in note 28 to the financial statements. There have been no
may have on the environment and seeks to minimise this
facilities which meets monthly to monitor, review and make
changes in the interests of the other directors and the Company Secretary in the period to 19 March 2021.
impact wherever possible. Through the various procedures
decisions concerning health and safety matters.
Other transactions with the directors are set out in note 28 to the consolidated financial statements.
and systems, that it operates, the Group works to ensure
full compliance with health and safety and environmental
The Group’s health and safety policies and procedures are
legislation relevant to its activities. The Group reviews its
enshrined in the Group’s documented quality systems, which
environmental footprint, across our manufacturing sites, with
encompass all aspects of the Group’s day-to-day operations.
goals being set and targets to be achieved.
The Board asks for a quarterly report on health and safety
matters encompassing the compliance, audit, risk and policy
The objectives are to reduce our footprint, to reduce the energy
development of the Group and the subsidiaries.
and waste costs of our business, and to achieve a higher rating
for environmental considerations while also reducing the cost
associated with our production.
48
49
AUDIT COMMITTEE
REPORT
As chairman of the Audit Committee,
I am pleased to present the report of the
Committee for the year ended 31 December
2020. This report details how the Audit
Committee has met its responsibilities,
as per the committee’s Terms of Reference,
in the last twelve months.
ROLE OF THE AUDIT COMMITTEE
The role, responsibilities and authorities of the Audit Committee
(‘the Committee’) are clearly communicated in our written
Terms of Reference’ as displayed on our corporate website.
The Committee is responsible for providing oversight and
confidence to the Board regarding the following:
• monitoring the integrity of the Group’s financial statements
•
•
including reviewing significant financial reporting
judgements/estimates and changes in accounting policies
reviewing internal control and risk management systems
reviewing periodically the requirement for an Internal Audit
function and the performance of Internal Audit duties in the
absence of such a specific function
• making a recommendation to the Board in relation to the
continued appointment of the External Auditor and the
remuneration of the External Auditor
• assess the performance of the External Auditor, including
their independence and objectivity.
MEMBERSHIP
Members are appointed to the Committee by the Board,
based on the recommendations of the Nomination Committee
in consultation with the Chairman of the Committee.
The Audit Committee comprises John Doris (Chair), Hugh
McCullough, Paul Lynch and Patrick Purcell. The Board is
satisfied that the members of the Committee bring a wide
range of skills, expertise and experience in commercial,
financial and audit matters arising from the senior positions
they hold or held in other organisations. The Board is satisfied
that the mix of business and financial experience enables
the Committee to effectively fulfil its responsibilities. The
Company Secretary or his nominee acts as the secretary to
the Committee and the Committee may obtain, at the Group’s
expense, outside legal or other professional advice needed to
perform its duties. The Committee has unrestricted access to
the Group’s Finance team.
MEETINGS
The Committee meets at least three times a year in line with
the Committee’s Terms of Reference and otherwise as is
required. During 2020, the committee met on five occasions
and all members were present at these meetings. Meetings
are generally scheduled around the financial reporting cycle
to allow the Committee to carry out its duties in relation to
the financial statements. Meetings are called by the Secretary
at the request of any of the Committee members or at the
request of the Group Auditor (KPMG). Reports are circulated
in advance of the meetings to allow the Committee access to
information in a sufficiently timely manner. The Committee also
regularly invites the Chief Financial Officer and other members
from the finance function to attend the Committee meetings.
The Group Auditor is invited to attend some meetings of the
Committee on a regular basis. In general, the Committee
meets in advance of Board meetings and reports to the Board
on the key outcomes from each meeting. The Committee has
unrestricted access to the Group’s Auditor, with whom it meets
at least three times a year. The Committee meets with the
Group Auditor, without Executive Management being present
on an annual basis in order to discuss any issues which may
have arisen during the year.
GOING CONCERN
The Committee considered the use of the going concern
basis of accounting and reviewed the assessment prepared
by management. The Committee was comfortable with the
assessment and has a reasonable expectation that the Group
have adequate resources to continue in operation for the
foreseeable future.
FINANCIAL REPORTING AND SIGNIFICANT
FINANCIAL ISSUES
The Audit Committee considers significant accounting policies,
any changes to them and any significant estimates and
judgements. The Committee also considers the methods used
to account for significant or unusual transactions where the
accounting treatment is open to different approaches. Pending
the Group Auditor’s view, the Committee considered whether
the Group, in its financial statements, has adopted appropriate
accounting policies and, where necessary, made appropriate
estimates and judgements.
The Audit Committee also reviewed the transparency and
integrity of disclosures in the financial statements. The
Committee reviewed in detail the below areas of significant
judgement in respect of the financial statements for the year
ended 31 December 2020. The Committee also had detailed
discussions on these matters with senior management. In this
regard the Committee considered a report from the Group
Auditor on its work undertaken and conclusions reached. A
summary of this report is included in the Audit Report set out
on pages 66 to 70.
GOODWILL IMPAIRMENT ASSESSMENT
The Committee considered the goodwill impairment
assessment carried out by management, in accordance with
the requirements of IAS 36 ‘Impairment of assets’ as set out in
note 12 of the financial statements.
In performing their impairment assessment management
determined the recoverable amount of the Cash Generating
Unit (“CGU”), and compared this to the carrying value at
the date of testing. The recoverable amount of the CGU is
determined based on fair value less cost to sell calculation.
The Committee considered and discussed with management,
the key assumptions to understand their impact on the CGU’s
recoverable amount.
The Committee was satisfied that the methodology used by
management and the results of the assessment, together with
the disclosures were appropriate.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board has a responsibility for maintaining effective
systems in relation to risk management and internal control.
On behalf of the Board, the Audit Committee has a role in the
continued development of a risk awareness culture by driving
the integration of risk and strategy, and behaviours and beliefs
at all levels of the organisation.
The Committee receives and reviews the Group’s risk register.
As the Group continues to grow, there is particular focus
on ensuring that any changes to the Group’s risk profile are
matched by appropriate mitigating factors. The Group’s
principal risks and uncertainties are outlined on pages 18 to 21.
The Committee also engages regularly with both the Group
Finance Team and the Group Auditor to ensure that appropriate
measures are taken to address risks as they are identified or as
their risk profile changes.
The Committee continues to encourage the development
of policies, procedures, management systems and internal
controls that are designed to enhance the existing risk
management framework.
INTERNAL AUDIT
The Committee reviewed the need for an Internal Audit function
during the year through engagement with the Groups Finance
Team and the Senior Management team. The Committee
approved that compliance reviews would be performed using
the existing resources available to the Group Finance team,
by way of performing tests of control, tests on adherence to
company policies and business risk reviews at subsidiary level.
WHISTLEBLOWING ARRANGEMENTS
The Group has an independent and confidential whistleblowing
policy which allows employees through an anonymous
submission to raise concerns regarding all aspects of the
business. The Committee ensures that arrangements are
in place for a proportionate, independent investigation and
appropriate follow up of such matters.
The Committee and the Board reviewed the Group’s
whistleblowing policy during the year to ensure that it meets
the needs of the Group, in particular as the business continues
to grow and expand.
50
51
AUDIT COMMITTEE
REPORT
CONTINUED
NOMINATION COMMITTEE
REPORT
EXTERNAL AUDITORS
The Committee has an important role in supporting the Board
discharge its duties by providing independent oversight over
Group audit.
Independence and Provision of Non-Audit Services
The Committee is responsible for ensuring that the Group
Auditor (KPMG) is objective and independent. KPMG has been
the Group’s Auditor since 2013. KPMG as Group Auditor is
prevented from engaging in certain non-audit services that
would compromise its independence, violate any laws and
regulations, and affect its appointment as Auditor.
The Committee performed a review of the audit and non-audit
services provided by the External Auditor and the fees charged
for those services in respect of the year ending 31 December
2020. Following this review and the confirmation in writing
received from the Group’s Auditor reaffirming its independence
and objectivity, the Committee is satisfied as to KPMG’s
independence and objectivity.
Effectiveness
The Committee assessed the Auditor’s performance at our
December 2020 meeting when the audit plan for the year
ended 31 December 2020 was presented in December 2020.
The Committee discussed the significant audit risks and key
audit matters, audit scope and materiality amongst other
matters. The Committee reviewed and appropriately challenged
the Auditor before agreeing the proposed audit scope and
approach. KPMG presented an interim finding report in August
2020 and presented a final detailed report of their audit
findings to the Committee at our meeting in March 2021. These
findings were reviewed and appropriately challenged by the
Committee. In determining the appropriateness of the Auditor,
the Committee had full regard to the Auditor’s competence, the
quality and efficiency of the audit, and whether the audit fee is
appropriate in relation to size, complexity, and risk and control
profile of the Group. On reviewing all of the above factors, the
Committee continues to be satisfied with the performance of
KPMG and has informed the Board accordingly.
On behalf of the Audit Committee
John Doris
Chairman of the Audit Committee
19 March 2021
On behalf of the Nomination Committee and
the Board, I am delighted to present the
report of the Committee for the year ended
31 December 2020.This report details the
Nomination Committee’s responsibilities and
how the Committee discharged these duties
in 2020.
ROLE OF THE NOMINATION COMMITTEE
MEETINGS
The Committee meets at least twice a year in line with the
Committee’s Terms of Reference and otherwise as is required.
During 2020, the Committee met on two occasions and all
members were present at these meetings. The matters dealt
with by the Committee during 2020 included the following:
Terms of Reference of the Board Committees
The terms of reference for the three Board Committees were
updated, reviewed by the Committee, and presented to the
Board who approved them. The updated terms of reference for
The duties, responsibilities and authorities of the Nomination
each of the Committees were then uploaded to the
Committee are clearly communicated in our written Terms
Group website.
of Reference as displayed on our corporate website. These
include, but are not limited to, the following:
Boardroom Diversity
•
reviewing the structure, size and composition of the
Board compared to its current position and make
recommendations to the Board with regard to any changes
•
identifying and nominating candidates for approval by the
Board to fill Board vacancies, considering candidates on
merit and against objective criteria and with due regard to
the benefits of diversity on the Board, including gender,
taking care that appointees have enough time available to
devote to the position
The Board is keen to ensure the Group benefits from the
existence of a high-quality Board comprising of individuals
with an appropriate balance of skills and experience. During
the year discussions were had as to whether there was a
need to appoint a new, independent, Non-Executive Director.
Agreement was reached that the Board was well balanced at
present and that there was no immediate need to enlarge it.
It was acknowledged that future plans for enlargement of the
Board should take account of the need for gender balance on
• considering succession planning for the Directors and
the Board.
Senior Executives in the course of its work, accounting for
the challenges and opportunities facing the Group, and the
skills and expertise needed on the Board and by the Group
in the future
• evaluating the balance of skills, knowledge, experience, and
diversity on the Board
• carry out a biennial performance evaluation of the Board, its
Committees, and individual directors.
Board Performance Evaluation
The Board engaged an external party to conduct a
performance review of the Board and its committees
in 2019 that ran in to the early part of 2020. The main
recommendations arising from the review were implemented
during 2020. The Committee will have another independent
review carried out during 2021.
MEMBERSHIP
Members, including the Chairman, are appointed to the
Committee by the Board. The Nomination Committee
comprises Hugh McCullough (Chair), John Doris and Patrick
Purcell. The Board is satisfied that the members of the
Committee are Independent. The biographical details of each
member are set out on pages 34 to 35. Only members of the
Committee have the right to attend Committee meetings,
however, the Chief Executive Officer and external advisers may
be invited to attend, as and when appropriate. The Company
Secretary or his nominee acts as the Secretary
to the Committee.
Succession Plan
During the year, the Nomination Committee reviewed Senior
Management’s succession plan to ensure that the Company
has the appropriate level of skills and diversity. The plan
was completed for all critical roles in place, and this will be
maintained on an ongoing basis. This allows Mincon Group to
proactively plan and react to any senior management changes,
help retain critical talent in the organisation, protect and sustain
our financial targets and ensure the optimal foundation for
future business expansion.
52
53
NOMINATION COMMITTEE
REPORT
CONTINUED
BOARD COMMITTEES AND DURATION OF TENURE
The appointment dates, of the Directors, on the three Board Committees as at 31 December 2020
can be seen below.
NOMINATION COMMITTEE
Hugh McCullough (Chair)
Appointed 2018
Independent
Patrick Purcell
Appointed 2013
John Doris
Appointed 2020
Independent
AUDIT COMMITTEE
John Doris (Chair)
Appointed 2018
Independent
Hugh McCullough
Appointed 2016
Independent
Paul Lynch
Appointed 2019
Independent
Patrick Purcell
Appointed 2013
REMUNERATION COMMITTEE
Paul Lynch (Chair)
Appointed 2020
Independent
Patrick Purcell
Appointed 2013
John Doris
Appointed 2017
Independent
On behalf of the Nomination Committee
Hugh McCullough
Chairman of the Nomination Committee
19 March 2021
54
55
55
REMUNERATION
COMMITTEE REPORT
On behalf of the Remuneration Committee and
the Board, I am pleased to present the report of
the Committee for the year ended 31 December
2020.This report details the Remuneration
Committees responsibilities and how the
Committee discharged these duties in 2020.
RESPONSIBILITIES OF THE REMUNERATION COMMITTEE
The role, responsibilities and authorities of the Remuneration
Committee are clearly communicated in the Committee’s Terms
of Reference’ as displayed on our corporate website. The
primary duties include the following:
• ensuring that remuneration policy and practise is aligned to
the Groups values and is clearly linked to the delivery of the
Groups long term goals
•
in arriving at this policy ensuring all factors such as relevant
legal and regulatory requirements are followed, these
factors should include the suggestions and provisions in the
Quoted Companies Alliance Corporate Governance Code
for Small and Mid-Size Quoted Companies
• establish and agree with the Board the framework for
the remuneration of the Chief Executive Officer and the
Chief Financial Officer. The Committee can recommend
and monitor the level and structure of remuneration for
other Senior Executives as determined by the Board. The
Committee Chairman, together with a Committee of the
executive directors, shall make recommendations to the
Board in relation to the remuneration of Non-Executive
Directors that will be within the limits set by shareholders
• determine the total individual remuneration package of the
Chief Executive Officer, the Chief Financial Officer and other
Senior Executives, including bonuses, incentive payments
and share options or other share awards
• direct and approve targets for performance related pay
schemes to be implemented by the Group and approve the
total annual payments under such schemes
MEMBERSHIP
Members, including the Chairman, are appointed to the
Committee by the Board on the recommendation of the
Nomination Committee. At least two members of the
Bonus scheme for senior management
The CEO presented to the Committee a proposal to award
The Committee agreed a short-term incentive program for the
Options to subscribe for 3,981,250 Ordinary Shares to 40
2020 financial year through which the senior management team
employees. The Committee recommended the approval of
could earn up to 50% of their salary based on:
these awards to the Board. On the 09th April 2020 the Board
Committee shall be independent non-executive directors of
• The achievement of budgeted profit after tax for the year
the Group. The Remuneration Committee comprises Paul
(up to 40% of salary)
Lynch (Chair), John Doris and Patrick Purcell. Only members of
• The delivery of targeted number of weeks’ inventory being
the Committee have the right to attend Committee meetings,
carried at the end of the year (up to 7.5% of salary)
however other individuals including external advisers may be
• The delivery of a targeted number of debtors days (up to
invited to attend, as and when appropriate. The Company
2.5% of salary)
Secretary acts as the secretary to the Committee.
Issuing of Awards under The 2013 Long Term Incentive Plan
OUR APPROACH TO REMUNERATION
(‘the 2013 Plan’)
The Committee’s overall remuneration philosophy is to ensure
Executive Directors and Senior Executives of the Group
are incentivised to implement the Board’s strategy and that
remuneration is aligned with the interests of shareholders and
other stakeholders over the longer term.
MEETINGS
The Committee meets at least three times a year in line with the
Committee’s Terms of Reference and otherwise as is required.
During 2020, the committee met on four occasions and all
members were present at these meetings. The matters dealt
with by the Committee during 2020 included the following:
Remuneration structure
The Committee reviewed the remuneration for the Senior
Executive team and determined that it should incorporate a mix
of salary, benefits along with participation in a short term bonus
schemes and the Long Term Incentive Programme (LTIP).
The Committee considered a range of alternative awards that
could be issued under the 2013 Long Term Incentive Plan. It
recommended that they should take the form of options to
purchase ordinary shares in the Company which would vest
in three years from the date of grant on meeting the following
conditions:
• The employee receiving the award remains in the Group’s
employment at the conclusion of the vesting period
• The compound annual growth rate in the EPS (as defined
in the rules of the 2013 Plan) of Mincon Group PLC for the
three years ending 31 December 2023 would be equal to or
in excess of 5% plus the average CPI over the same period
•
the options will lapse 7 years after the award date
The Remuneration Committee noted that this proposal was in
line with the rules and parameters laid out in the 2013 Plan. The
Committee and Board approved the adoption of this proposal.
approved the award of 3,781,250 options to 37 employees
and on the 06th May 2020 approved the award of a further
200,000 options to 3 employees. According to the rules of
the 2013 Plan the exercise price is deemed to be the closing
market price on day before the award. The Exercise price for
the options awarded on the 9th of April 2020 was therefore
determined to be €0.80 while the Exercise Price for the options
awarded on 6th May 2020 was €0.845.
Vesting of 2017 share awards
The Committee considered whether the vesting conditions
associated with the 2017 Share awards were met by reviewing
calculations prepared by management on the reported earnings
for the previous three years. The Committee determined that
the criterion for the vesting of 701,922 shares was met and
accordingly recommended that the Board approve the issue of
a corresponding number of shares.
PERFORMANCE OUTCOME AND REMUNERATION FOR
2020
The Group’s performance for 2020 was very good, particularly
in light of the difficulties associated with the coronavirus
pandemic.
56
57
REMUNERATION
COMMITTEE REPORT
CONTINUED
DIRECTORS’ REMUNERATION
Details of individual remuneration of directors are set out in the table below:
31 DECEMBER 2020
31 DECEMBER 2019
NAME
SALARY
BONUS
FEES
PENSION
TOTAL
SALARY
BONUS
FEES
PENSION
TOTAL
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
€’000
Non-Executive Chairman
Hugh McCullough
Non-Executive Director
Patrick Purcell
Non-Executive Director
John Doris
Non-Executive Director
Paul Lynch
Non-Executive Director
Jussi Rautiainen
-
-
-
-
-
-
-
-
-
-
Chief Executive Officer
Joseph Purcell
200
85
204
85
Regional Executive-
Americas
Thomas Purcell
Total executive
and non-executive
remuneration
60
-
55
50
-
-
-
-
-
-
-
-
60
-
55
50
-
-
-
-
-
-
29
314
250
-
-
-
-
-
-
27
316
206
55
57
30
55
4
46
-
-
-
-
-
-
-
57
30
55
4
46
30
280
27
288
404
170
165
56
795
456
55
192
57
760
Evaluation of the Remuneration Committee
The performance of the Committee is evaluated by the Nomination Committee as detailed in the terms of reference
(7.1.11) of the Nomination Committee as displayed our corporate website.
On behalf of the Remuneration Committee
Paul Lynch
Chairman of the Remuneration Committee
19 March 2021
STATEMENT OF
DIRECTORS’
RESPONSIBILITIES
Statement Of Directors’ Responsibilities In
Respect Of The Annual Report And The
Financial Statements
The directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time
the assets, liabilities, financial position of the Group and Parent
Company and the profit and loss of the Group and which
enable them to ensure that the financial statements comply
The directors are responsible for preparing the annual report
with the provision of the Companies Act 2014. The directors
and the Group and Parent Company financial statements in
are also responsible for taking all reasonable steps to ensure
accordance with applicable law and regulations.
such records are kept by its subsidiaries which enable them
to ensure that the financial statements of the Group comply
Company law requires the directors to prepare Group and
with the provisions of the Companies Act 2014. They are
Parent Company financial statements for each financial year.
responsible for such internal controls as they determine is
As required by the AIM Rules, they are required to prepare
necessary to enable the preparation of financial statements
the Group financial statements in accordance with IFRS as
that are free from material misstatement, whether due to fraud
adopted by the EU. The directors have elected to prepare
or error, and have a general responsible for safeguarding the
the Company financial statements in accordance with IFRS
assets of the Company and the Group, and hence for taking
as adopted by the EU and as applied in accordance with the
reasonable steps for the prevention and detection of fraud
Companies Act 2014.
and other irregularities. The directors are also responsible
for preparing a directors’ report that complies with the
Under company law the directors must not approve the
requirements of the Companies Act 2014.
Group and Parent Company financial statements unless they
are satisfied that they give a true and fair view of the assets,
The directors are responsible for the maintenance and integrity
liabilities and financial position of the Group and Parent
of the corporate and financial information included on the
Company and of the Group’s profit or loss for that year. In
Company’s website. Legislation in the Republic of Ireland
preparing each of the Group and Parent Company financial
governing the preparation and dissemination of financial
statements, the directors are required to:
statements may differ from legislation in other jurisdictions.
• select suitable accounting policies and then apply them
On behalf of the Board
Hugh McCullough
Joseph Purcell
Director
19 March 2021
Director
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether applicable Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
• assess the Group and Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless they
either intend to liquidate the Group or Parent Company or
to cease operations, or have no realistic alternative but to
do so
58
59
The CDP will help identify trends and areas where investments
WASTE MANAGEMENT
HUMAN RIGHTS POLICY
CORPORATE
RESPONSIBITIES
Mincon has a vision to build a sustainable,
long-term business. Included in this is a
responsibility to take the necessary steps
for reducing our carbon footprint by through
environmentally-friendly practices and
advancements in the products that we
develop and manufacture.
The process of rock drilling is extremely energy-intensive and
Mincon’s meets this challenge by designing and manufacturing
highly efficient rock-drilling solutions to make the most of
the planet’s limited natural resources. Mincon’s rock-drilling
solutions offer ongoing savings for fuel and energy, rather than
single, one-time savings. Additionally, Mincon’s solutions are
increasingly being used for the installation of environmentally
friendly geothermal energy systems. This emphasis on
efficiency and sustainability will also give Mincon a business
advantage as our customers start favouring suppliers that can
help reduce their own carbon emissions.
In our own business practices Mincon’s environmental
policy comprises three pillars: energy management, waste
management, and sustainable practices.
ENERGY MANAGEMENT
can be made to allow a more efficient use of energy.
Successful measures and technologies will be shared with
other businesses in the Group for implementation, where
possible, to reach the Group-wide goal of reducing emissions
and energy consumption.
Potential solutions for energy optimisation are continuously
being evaluated by Mincon facilities, in conjunction with
independent suppliers. Solutions under consideration include
heat-treatment equipment that will help reduce reliance on
natural gas as a fuel source, which will bring a commensurate
reduction in carbon dioxide emissions. In areas where it is
feasible, heat reclamation technologies are being considered
to harvest wasted energy from the heat-treatment process
and use it for heating water in facilities. Investigations are
also underway to determine the possibility of installing solar
panels at sites that have the available space, thus reducing
the reliance on a grid that may use fossil fuels for electricity
generation.
Solutions and innovations that yield positive results will
be shared with all businesses in the Group to encourage
investment that will lead to lower emissions and ongoing
savings in the future. This will be done in conjunction with
guidelines for ISO certification and environmental legislation
that applies in each country where Mincon has a local
Mincon is committed to responsible energy management and
presence.
the Group practices energy-efficient thinking throughout the
enterprise. This includes the use of reliable sources of energy
As with Mincon’s product engineering, our energy consumption
and water to sustain our activities, with the aim to procure and
efforts will be subject to an ethos of continuous improvement,
manage these supplies in the most cost-effective manner.
with the eventual goal of achieving a carbon-neutral status.
Mincon’s energy management policy includes a Carbon
ongoing, long-term savings for the Group, and a reputation
Disclosure Project (CDP) – an EU initiative for businesses to
as a responsible business with a mindset for sustainability.
The value of these investments will be realised through
declare their energy usage and associated carbon dioxide
emissions. As part of this, Mincon has implemented, and
continues to implement, solutions for measuring and
monitoring all forms of energy usage – gas, oil, diesel, petrol,
and electricity – and reporting these performance indicators
at regular intervals. The outcome of this is to reduce carbon
dioxide emissions, comply with environmental legislation, and
improve cost-effectiveness.
Mincon’s factories actively reclaim and recycle waste material
generated during manufacturing. Additionally, our global
network of service centres have procedures for recycling or
safely disposing of waste. Recycled materials include, but
are not limited to scrap metal, swarf, offcuts, lubricating oils,
cutting fluids, and solid oily waste. Recycling and collection is
Mincon’s Board of Directors, CEO, and
Senior Management teams are committed to
ensuring all Mincon businesses respect human
rights throughout their operations.
done in conjunction with certified local recyclers and waste-
Mincon’s human rights policy is modelled on the UN guiding
management experts.
principles for business and human rights. We provide all the
basic needs to our employees as set out in these guidelines.
Wood, cardboard, and office wastepaper are also recycled.
Additionally, Mincon’s commitment to human rights extends
Efforts have been made to reduce single-use packaging. In
to dealings with suppliers, who are critical to the success of
instances where Mincon products are shipped in crates, the
the business. Mincon endeavours to ensure that products and
wood is recycled or provided to local communities to
services provided by suppliers are ethically sourced and do
be repurposed.
not breach human rights laws in the countries in which they
originate. This will be achieved through intense scrutiny of the
Electronic waste, including unused computers, printers,
ethical and moral values of potential new suppliers.
batteries, and consumables, are also recycled in conjunction
with local recyclers or council-provided facilities (in the case of
We are committed to operating our businesses in compliance
jurisdictions where disposal fees are included in taxes or the
with all applicable laws, to respect human rights and to
conduct business in an honest, open, and ethical manner. We
expect employees to comply with all relevant laws relating to
human rights wherever we operate, and to abide by Mincon’s
human rights policy. Trust and respect in all business dealings
are core values that the Group upholds.
Mincon’s regional and country managers have been
entrusted to respect the local communities and to abide by
the company’s values. Each manager will ensure that their
business, and by extension, Mincon, is not in breach of local
or national regulations and laws. Those employees found to be
in breach of these regulations and laws will face disciplinary
action, while corrective measures will be implemented.
purchase price).
SUSTAINABLE PRACTICES
Mincon educates employees about the importance of the
planet’s limited resources, to foster a culture of sustainability
and environmentally friendly practices. Employees are
encouraged to be vigilant about the environment and are given
opportunities to present improvements that can be made for
the benefit of the business or local communities.
The result of this is seen at Mincon offices around the world,
where consideration is given to using low-energy lighting and
appliances; plants that require less water in arid climates;
participation in recycling initiatives; the use of environmentally
friendly alternatives; products that have less single-use
plastics; and consumption of food and/or drinks that result in
compostable organic waste.
Where possible, products are manufactured as close as
possible to customer operations, thus reducing or avoiding
carbon emissions for the transport of those products. The
Group strives to partner with suppliers that share our values
when it comes to sustainable practices, and this includes
working with low-carbon logistics providers.
60
61
CORPORATE
RESPONSIBITIES
CONTINUED
EMPLOYEES
Consideration will be given to a formal remote-working policy
We select those suitable for employment solely based
Corruption is dishonest and illegal behaviour by those in a
that extends beyond the pandemic. Mincon Group strives to
on merit. Any job advertisements, application forms and
position of trust in order to gain an undue advantage. The risks
be a progressive employer that is willing to embrace change
publicity material will encourage applications from all suitable
of corruption are not always obvious, therefore we inform our
and use technology that enables the workforce regardless of
candidates and will not discriminate against any group or
employees how corruption and bribery may occur through our
physical location.
individual on any unjustifiable grounds. The objective is to
corruption and bribery policy.
Mincon is committed to complying with all labour laws in the
job vacancies.
ensure that all candidates have equality of access to all
Mincon realises the value of honest and
trustworthy employees. Creating a safe
and positive work environment for our
employees is a high priority across the
Mincon Group. Employees are treated with
dignity and respect. The resulting employee
morale and work ethic is evident in the
important business metrics that we use
to report on the success of the Group.
We are committed to developing the skills of our employees.
countries that it operates. Policies have been developed to
include:
•
Induction programs for new employees
• Working conditions
• Hours of work & overtime
• Breaks and rest periods
• Health and safety policies
Many of our manufacturing facilities engage in co-operative
• Accident reporting & first aid
learning programs with universities and colleges. Mincon
• Use of personal protective equipment
invests time and finances in developing undergraduates and
• Smoke-free workplace
postgraduates, benefiting both the participants and the Group.
• Alcohol and drug free workplaces
As the Group grows, we strive to communicate efficiently with
We are committed to equality of opportunity for existing
our employees on an international level. A quarterly company
and potential employees and to creating a workplace which
newsletter is published to update employees on all aspects
provides for:
of the business, both operational and commercial. Regular
meetings are also used to update our employees on important
developments within the Group.
During the COVID-19 pandemic, the Group took extraordinary
measures to provide a safe and healthy workplace for
employees. Investments were made in sanitation, procedures,
and technologies to lower the risk of virus transmission in the
workplace. Business continuity processes were developed and
rolled out at certain offices to mitigate health risks and ensure
ongoing operations.
Additionally, Mincon accommodated the requirements of
employees considered to be high-risk, as well as those who
• Equal opportunities for all staff and potential staff and
where their dignity is protected and respected at all times
• All persons regardless of gender, civil status, family status,
race, religious beliefs, sexual orientation, disability, age, or
ethnic minorities will be provided with equality of access to
employment. All persons will be encouraged and assisted
to achieve their full potential. We will continue with a culture
of equality right through our businesses
We aim to ensure that no job applicant or employee receives
less favourable treatment on any grounds which cannot be
shown to be justified. This applies to recruitment and selection,
training, promotion, pay and employee benefits, employee
grievances, discipline procedures and all terms and conditions
were unable to perform their duties due to restrictions imposed
of employment.
by health authorities. Investments have also been made to
accommodate work-from-home arrangements for office
employees during the pandemic, reducing footfall and
lowering risk for essential staff.
Corruption and bribery issues are the responsibility of our
Executive Management team. Once a claim is made, the
We place considerable emphasis on Health and Safety matters.
Executive Management team will respond to the allegation
We undertake our business in a manner that will ensure the
within a reasonable length of time and an investigation will
safety, health, and welfare of all our employees, visitors, and
begin. Such an investigation may include internal reviews or
the public. This commitment is in accordance with applicable
reviews by external lawyers, accountants or an appropriate
Environmental Health and Safety legislation.
external body. If the claim of malpractice or misconduct is
substantiated, appropriate disciplinary action will be taken
We are committed to providing a safe and secure working
against the responsible individuals.
environment that is free from all forms of harassment and
bullying. We have set a standard for all members of staff to be
Our whistleblowing policy exists to enable all staff across our
treated with the utmost levels of dignity and respect. Mincon
Group to feel confident that they can expose wrongdoing
is committed to the implementation of all necessary measures
without any risk to themselves. Mincon will not tolerate
required to protect the dignity of employees and to encourage
malpractice and attaches extreme importance to identifying
respect in the workplace. We achieve this by implementing
and remedying any issues in relation to corruption or bribery.
effective procedures to deal with any complaints of such
conduct as it may arise.
CORRUPTION AND BRIBERY ISSUES
We are committed to continuously operating
our business with integrity and being
accountable for our actions. We maintain a
strict stance against bribery and corruption
across all our businesses. Our internal
control structures are designed to mitigate
reputational risk and to assist in preventing
any potential corruption and bribery. We
consistently review and assess the robustness
of our internal controls to further strengthen
our business.
62
63
GROUP
FINANCIAL
STATEMENTS
FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
SEPARATE FINANCIAL STATEMENTS
OF THE COMPANY
Company Statement of Financial Position
Company Statement of Cash Flows
Company Statement of Changes in Equity
Notes to the Company Financial Statements
66
71
72
73
74
75
76
116
117
118
119
64
64
65
6565
INDEPENDENT AUDITOR’S
REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MINCON GROUP PLC
Our conclusions based on this work:
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Mincon Group plc (‘the Company’) and its consolidated undertakings (‘the Group’)
for the year ended 31 December 2020 set out on pages 71 to 119, which comprise the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the
Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows, and
related notes, including the summary of significant accounting policies set out in note 3. The financial reporting framework that
has been applied in their preparation is Irish Law and International Financial Reporting Standards (IFRS) as adopted by the
European Union.
In our opinion:
• the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as
at 31 December 2020 and of the Group’s profit for the year then ended;
•
the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
• the Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union,
as applied in accordance with the provisions of the Companies Act 2014; and
• the Group and Company financial statements have been properly prepared in accordance with the requirements of the
Companies Act 2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit of the financial
statements section of our report. We have fulfilled our ethical responsibilities under, and we remained independent of the
Group in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including the
Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied to listed entities.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
We evaluated the director’s assessment of the entity’s ability to continue to adopt the going concern basis of accounting. In our
evaluation of the directors’ conclusions, we used our knowledge of the Group and Company, its industry and general economic
environment to identify the inherent risks to the business model and analysed how those risks might affect the Group and
Company’s financial resources or ability to continue operations over the going concern period. The risks that we considered
most likely to adversely affect the Group and Company’s available financial resources over this period were availability of
funding and liquidity in the event of an industry wide decline in trade due to continuing effects of the COVID-19 pandemic on the
business.
We also considered less predictable but realistic second order impacts that could affect demand in the Company’s markets,
such as the impact of COVID-19 on the Group’s results and operations, from risks related to interruptions in raw materials
supply, interruptions in end user markets through work stoppages or shipping difficulties or interruptions in manufacturing
capacity caused by a potential outbreak of infection in one or more plants with consequent material adverse effect on the
Group’s revenue.
We also considered whether the going concern disclosure in note 2 of the financial statements gives a full and accurate
description of the Directors’ assessment of going concern, including the identified risks and dependencies.
• we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is
appropriate;
• we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events
or conditions that, individually or collectively, may cast significant doubt on the Group or Company’s ability to continue as a
going concern for the going concern period; and
• we found the significant assumptions associated with the use of the going concern basis of accounting, outlined in the
disclosure in note 2, to be acceptable.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Revenue recognition: Cut off (2020: €129.9 million; 2019: €123.7 million)
Refer to page 77 (accounting policy) and page 85 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
Revenue of €129.9 million was recognised for the year
ended 31 December 2020 (2019: €123.7 million).
There is a significant risk that revenue may be
recognised in an incorrect period as a result of
management accelerating revenue recognition to
overstate current year operating results.
The Group’s standard policy is to recognise revenue
on shipment of inventory or collection of inventories
by customer. As a consequence, some revenue
arrangements have a cut-off risk at period end.
The procedures that we performed, among
others, to assess the appropriateness
of revenue recognition, included:
• We obtained and documented our understanding of
the revenue recognition process and evaluated the
design and implementation of key control therein.
• We agreed a sample of deliveries occurring
near 31 December 2020 to supporting
documentation to ensure transactions
were recorded in the correct period.
• We agreed a sample of sales transactions to
proof of delivery documentation to ensure
that they were complete and accurate.
• We inquired with management the basis
for determining the point of sale for
material deliveries near year-end.
• We assessed whether the related disclosures
in the financial statements are appropriate.
• We requested that component auditors perform
similar procedures as outlined above.
Based on the results of our testing we considered
that the policies applied to revenue recognition
are reasonable, and we did not identify any
material misstatements. We found the disclosures
in respect of revenue to be appropriate.
66
67
INDEPENDENT AUDITOR’S
REPORT CONTINUED
The key audit matter impacting the parent company
Investment in subsidiary undertakings (2020: €67.2 million; 2019: €51.5 million)
Refer to page 82 (accounting policy) and page 119 (financial disclosures)
Valuation of Intangible assets and Goodwill (2020: €36.9 million; 2019: €31.9 million)
Refer to page 80 (accounting policy) and page 95 to 96 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
Intangible assets and Goodwill of €36.9 million were
recognised as at 31 December 2020 (2019: €31.9 million).
An annual impairment test was performed in respect of
goodwill and intangible assets at 31 December 2020.
Conducting an impairment test to determine whether the
carrying amount of assets is recoverable is complex and
judgemental and involves significant assumptions around
revenue forecasts, EBITDA margin, WACC and terminal
values.
The procedures that we performed, among others, to
assess the appropriateness of the carrying value of
intangibles and goodwill, included:
• We obtained an understanding of the process and
perceived risks over the valuation of intangibles and
goodwill and tested the design and implementation of
the key controls over the valuation of intangibles and
goodwill.
• We obtained and critically assessed the impairment
models and the supporting documentation prepared
by management regarding the recoverability of both
the intangibles related to product development and
the Goodwill held on balance sheet at year end.
• With the support our specialist, we considered the
significant underlying assumptions and checked the
mathematical accuracy of the model. We performed a
number of stress tests to assess the sensitivity of the
model to changes in significant assumptions and the
resulting impact on headroom.
• We evaluated the significant assumptions by
reference to past performance and discussions with
management.
• We reviewed the appropriateness of the accounting
treatment of recognition of intangibles and
adequacy of the disclosures in line with accounting
requirements.
Based on the results of our testing we considered that
the policies applied to valuation of intangibles and
goodwill are reasonable. We found that management’s
significant judgements were appropriate and supported
by reasonable assumptions, and we did not identify any
material misstatements. We found the disclosures to be
adequate in providing an understanding of the basis of
the impairment assessment.
The key audit matter
The investment in subsidiary undertakings is carried by
the Company at cost less impairment. There is a risk
in respect of the carrying value of these investments if
future cash flows and performance of these subsidiaries
is not sufficient to support the Company’s investment.
This area has been identified as a key audit matter due to
the significance of the balance to the Company.
How the matter was addressed in our audit
Our audit procedures in this area included:
• We obtained and documented the process surrounding
impairment considerations and tested the design and
implementation of the relevant key controls therein.
• We considered management’s assessment of
impairment indicators.
• We compared the carrying value of investments to the
net assets of the subsidiary companies.
We found management’s assessment of the carrying
value of the investment in subsidiary undertakings and
related disclosures to be appropriate, and we did not
identify any material misstatements.
Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at €0.8 million (2019: €0.7 million). This has been
calculated using a benchmark of Group profit before taxation, from continuing operations (of which it represents 5% (2019:
5%)), which we have determined, in our professional judgement, to be one of the principal financial benchmarks relevant to
members of the Group in assessing financial performance.
Materiality for the parent company financial statements as a whole was set at €0.8 million (2019: €0.8 million), determined with
reference to a benchmark of total assets, of which it represents 0.8%.
We report to the Audit Committee all corrected and uncorrected misstatements we identified through our audit with a value
in excess of €40,000 (2019: €33,500), in addition to other audit misstatements below that threshold that we believe warrant
reporting on qualitative grounds.
Of the Group’s 43 (2019: 42) reporting components, we subjected 11 (2019: 13) to full scope audits for Group purposes. An
additional 2 components (2019: 3) were subjected to account balance testing in order to provide sufficient coverage over
the Group’s key financial statement lines. In addition, we conducted reviews of financial information (including inquiry) for all
remaining non-significant components. The components for which we performed a review of financial information (including
inquiry) were not individually significant enough to require an audit for Group reporting purposes but a review was performed
to provide further coverage over the Group’s results. The Group audit team instructed component auditors as to the significant
areas to be covered, including the relevant risks detailed above and the information to be reported back. The Group audit
team approved the materiality for components which ranged from €130,000 to €450,000, having regard to the mix of size
and risk profile of the Group across the components. The Group team held telephone and video conference meetings with all
component auditors to assess the audit risk and strategy.
Other information
The directors are responsible for the preparation of the other information presented in the Annual Report together with the
financial statements. The other information comprises the information included in the Corporate Profile, Chairman’s Statement,
Chief Executive Officer’s Review, Strategy of the Group, Chief Financial Officer’s Review, Board of Directors, Key Management,
Directors’ Report, Directors’ Statement on Corporate Governance, Audit Committee Report, Nominations Committee Report,
Remuneration Committee Report, Statement of Directors’ Responsibilities and Corporate Responsibility.
The financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based
solely on that work we have not identified material misstatements in the other information.
Based solely on our work on the other information undertaken during the course of the audit, we report that:
• we have not identified material misstatements in the directors’ report;
•
•
in our opinion, the information given in the directors’ report is consistent with the financial statements; and
in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.
68
69
INDEPENDENT AUDITOR’S
REPORT CONTINUED
Our opinions on other matters prescribed the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and
properly audited and the Company’s financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion:
•
•
the disclosures of directors’ remuneration and transactions required by Sections 305 to 312 of the Act are not made
the Company has not provided the information required by section 5(2) to (7) of the European Union (Disclosure of Non-
Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 for the year ended 31
December 2020 as required by the European Union (Disclosure of Non-Financial and Diversity Information by certain large
undertakings and groups) (amendment) Regulations 2018.
We have nothing to report in this regard.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on page 59, the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing
the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at http://www.iaasa.ie/Publications/Auditing-
standards/International-Standards-on-Auditing-for-use-in-Ire/Description-of-the-auditor-s-responsibilities-for.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or
for the opinions we have formed.
Caroline Flynn
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place, St Stephen’s Green, Dublin, Ireland
CONSOLIDATED
INCOME STATEMENT
For the year ended 31 December 2020
Continuing operations
Revenue
Cost of sales
Gross profit
Operating costs
Operating profit
Finance costs
Finance income
Foreign exchange loss
FV movement on deferred consideration
Profit on disposal of operations
Profit before tax
Income tax expense
Profit for the period
Profit attributable to:
- owners of the Parent
- non-controlling interests
Earnings per Ordinary Share
Basic earnings per share
Diluted earnings per share
2020
2019
Notes
€’000
Excluding
exceptional
items
€’000
Exceptional
items
(Note 8)
€’000
Including
exceptional
items
€’000
4
6
6
23
11
19
21
21
129,903
(84,186)
45,717
(27,468)
18,249
(857)
42
(376)
11
-
120,671
(80,158)
40,513
(28,703)
11,810
(582)
107
(130)
10
-
3,074
(2,489)
585
(5,113)
(4,528)
-
-
-
-
7,489
123,745
(82,647)
41,098
(33,816)
7,282
(582)
107
(130)
10
7,489
17,069
11,215
2,961
14,176
(2,683)
14,386
14,221
165
6.72
6.57
(1,666)
9,549
(127)
2,834
(1,793)
12,383
12,329
54
5.84c
5.80c
The accompanying notes are an integral part of these financial statements.
70
71
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
For the year ended 31 December 2020
As at 31 December 2020
Profit for the year
Other comprehensive loss
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation – foreign operations
Other
Other comprehensive (expense)/income for the year
Total comprehensive income for the year
Total comprehensive income attributable to:
- owners of the Parent
- non-controlling interests
The accompanying notes are an integral part of these financial statements.
2020
€’000
2019
€’000
14,386
12,383
(4,165)
156
(4,009)
10,377
10,212
165
2,153
(1,092)
1,061
13,444
13,390
54
Notes
12
13
11
14
15a
15b
23
20
20
20
22
18
11
23
18
16
16
2020
€’000
36,987
45,820
1,093
83,900
53,017
20,640
4,186
311
17,045
95,199
2019
€’000
31,937
41,172
616
73,725
48,590
20,346
6,098
589
16,368
91,991
179,099
165,716
2,117
67,647
39
(17,393)
2,259
(8,033)
86,300
2,110
67,647
39
(17,393)
1,629
(3,868)
74,865
132,936
125,029
-
1,115
132,936
126,144
14,789
1,832
4,723
503
21,847
6,822
10,457
5,529
1,508
24,316
46,163
10,879
1,794
4,962
153
17,788
4,043
10,853
5,827
1,061
21,784
39,572
179,099
165,716
Non‑Current Assets
Intangible assets and goodwill
Property, plant and equipment
Deferred tax asset
Total Non‑Current Assets
Current Assets
Inventory and capital equipment
Trade and other receivables
Prepayments and other current assets
Current tax asset
Cash and cash equivalents
Total Current Assets
Total Assets
Equity
Ordinary share capital
Share premium
Undenominated capital
Merger reserve
Share-based payment reserve
Foreign currency translation reserve
Retained earnings
Equity attributable to owners of Mincon Group plc
Non-controlling interests
Total Equity
Non‑Current Liabilities
Loans and borrowings
Deferred tax liability
Deferred contingent consideration
Other liabilities
Total Non‑Current Liabilities
Current Liabilities
Loans and borrowings
Trade and other payables
Accrued and other liabilities
Current tax liability
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
The accompanying notes are an integral part of these financial statements.
On behalf of the Board:
Hugh McCullough
Joseph Purcell
Chairman
Chief Executive Officer
19 March 2021
72
73
CONSOLIDATED STATEMENT OF
CASH FLOWS
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 31 December 2020
For the year ended 31 December 2020
Operating activities:
Profit for the period
Notes
2020
€’000
2019
€’000
14,386
12,383
Adjustments to reconcile profit to net cash provided by operating activities:
Depreciation
13
6,482
Fair value movement on deferred contingent consideration
Gain on sale of operations, net of tax
Finance cost
Finance income
Loss on sale of property, plant and equipment
Income tax expense
NCI movement in equity
Other non-cash movements
Changes in trade and other receivables
Changes in prepayments and other assets
Changes in inventory
Changes in trade and other payables
Cash provided by operations
Interest received
Interest paid
Income taxes paid
Net cash provided by operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Investment in intangible assets
Proceeds from the issuance of share capital
Acquisitions of subsidiary, net of cash acquired
Purchase of NCI
Payment of deferred contingent consideration
Proceeds from the sale of subsidiaries
Proceeds from former joint venture investments
Net cash used in investing activities
Financing activities
Dividends paid
Repayment of loans and finance leases
Drawdown of loans
Net cash used in financing activities
Effect of foreign exchange rate changes on cash
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
(11)
-
857
(42)
18
2,683
720
372
25,465
919
1,209
(3,228)
(1,812)
22,553
42
(857)
(2,389)
19,349
(7,222)
331
(1,065)
7
(7,156)
(1,000)
(2,460)
706
-
5,242
(10)
(7,489)
582
(107)
-
1,793
-
209
12,603
1,037
1,873
1,050
(1,865)
14,698
107
(582)
(1,713)
12,510
(7,930)
-
(1,405)
5
(770)
-
(1,600)
8,517
-
18
18
(17,859)
(3,183)
(2,222)
(4,991)
6,622
(591)
(222)
677
16,368
17,045
(4,426)
(2,778)
6,182
(1,022)
21
8,326
8,042
16,368
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The accompanying notes are an integral part of these financial statements
74
75
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.
3. SIGNIFICANT ACCOUNTING PRINCIPLES, ACCOUNTING ESTIMATES
AND JUDGEMENTS
The accounting principles as set out in the following paragraphs have, unless otherwise stated, been consistently applied
to all periods presented in the consolidated financial statements and for all entities included in the consolidated financial
statements. The Group has initially adopted Definition of a Business (Amendments to IFRS 3) and it has not had a significant
The Group is an Irish engineering Group, specialising in the design, manufacturing, sale and servicing of rock drilling tools
impact on the Groups financial statements.
and associated products. Mincon Group Plc is domiciled in Shannon, Ireland.
On 26 November 2013, Mincon Group plc was admitted to trading on the Enterprise Securities Market (ESM) of the Euronext
Dublin and the Alternative Investment Market (AIM) of the London Stock Exchange.
2. BASIS OF PREPARATION
These consolidated financial statements have been prepared in accordance with the International Financial Reporting
Standards as adopted by the European Union (EU IFRS), which comprise standards and interpretations approved by the
International Accounting Standards Board (IASB), and endorsed by the EU.
The Group applied Definitions of a Business (Amendments to IFRS 3) to business combinations whose acquisition dates are
on or after 1 January 2020 in assessing whether it had acquired a business or a group of assets. See Note 9 for the details
of the Groups acquisitions of subsidiary during the year.
Revenue Recognition
The Group is involved in the sale and servicing of rock drilling tools and associated products. Revenue from the sale of
these goods and services to customers is measured at the fair value of the consideration received or receivable (excluding
sales taxes). The Group recognises revenue when it transfers control of goods to a customer.
The following provides information about the nature and timing of the satisfaction of performance obligations in contracts
The individual financial statements of the Company have been prepared in accordance with IFRSs as adopted by the EU
with customers, including significant payment terms, and the related revenue recognition policies.
and as applied in accordance with the Companies Act 2014 which permit a company that publishes its Group and Company
financial statements together to take advantage of the exemption in Section 304 of the Companies Act 2014 from presenting
Customers obtain control of products when one of the following conditions are satisfied:
to its members its Company income statement, statement of comprehensive income and related notes that form part of the
approved Company financial statements.
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
The accounting policies set out in note 3 have been applied consistently in preparing the Group and Company financial
premises.
statements for the years ended 31 December 2020 and 31 December 2019.
Invoices are generated when the above conditions are satisfied. Invoices are payable within the timeframe as set in
agreement with the customer at the point of placing the order of the product. Discounts are provided from time-to-time to
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
customers.
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.
Customers may be permitted to return goods where issues are identified with regard to quality of the product. Returned
goods are exchanged only for new goods or a credit note. No cash refunds are offered.
Where the customer is permitted to return an item, revenue is recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. Therefore, the amount of revenue
recognised is adjusted for expected returns, which are estimated based on the historical data for specific types of product.
In these circumstances, a refund liability and a right to recover returned goods asset are recognised.
Government Grants
Amounts recognised in the profit and loss account are presented under the heading Operating Costs on a systematic basis
in the periods in which the expenses are recognised, unless the conditions for receiving the grant are met after the related
expenses have been recognised. In this case, the grant is recognised when it is receivable.
Earnings per share
Basic earnings per share is calculated based on the profit for the year attributable to owners of the Company and the basic
weighted average number of shares outstanding. Diluted earnings per share is calcu¬lated based on the profit for the year
attributable to owners of the Company and the diluted weighted average number of shares outstanding.
76
77
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
3. SIGNIFICANT ACCOUNTING PRINCIPLES, ACCOUNTING ESTIMATES
AND JUDGEMENTS (CONTINUED)
Taxation
(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.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at
estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is
or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss;
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
•
temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that
incremental borrowing rate.
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.
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.
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.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating
lease.
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.
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
Deferred tax assets and liabilities are offset only if certain criteria are met.
Leases
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-
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease
term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
on a straight-line basis over the lease term.
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.
78
79
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
3. SIGNIFICANT ACCOUNTING PRINCIPLES, ACCOUNTING ESTIMATES
AND JUDGEMENTS (CONTINUED)
Inventories and capital equipment
Inventories and capital equipment are valued at the lower of cost or net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. The
cost of inventories is based on the first-in, first-out principle and includes the costs of acquiring inventories and bringing
them to their existing location and condition. Inventories manufactured by the Group and work in progress include an
appropriate share of production overheads based on normal operating capacity. Inventories are reported net of deductions
for obsolescence.
Intangible Assets and Goodwill
Goodwill
The Group accounts for acquisitions using the purchase accounting method as outlined in IFRS 3 Business Combinations.
Group management has determined that the Group has one operating segment and therefore all goodwill is tested for
impairment at Group level and this is tested for impairment annually.
Intangible assets
Expenditure on research activities is recognised in profit or loss as incurred.
Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is
technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient
resources to complete development and to use or sell the asset. Otherwise, it is recognised in the profit or loss as incurred.
Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any
accumulated impairment losses.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in
profit or loss as incurred.
Foreign Currency
Foreign currency transactions
Transactions in foreign currencies (those which are denominated in a currency other than the functional currency) are
translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated using the foreign exchange rate at the statement of financial position date. Exchange gains
and losses related to trade receivables and payables, other financial assets and payables, and other operating 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 23.
Translation of accounts of foreign entities
The assets and liabilities of foreign entities, including goodwill and fair value adjustments arising on consolidation, are
translated to euro at the exchange rates ruling at the reporting date. Revenues, expenses, gains, and losses are translated
at average exchange rates, when these approximate the exchange rate for the respective transaction. Foreign exchange
differences arising on translation of foreign entities are recognised in other comprehensive income and are accumulated
in a separate component of equity as a translation reserve. On divestment of foreign entities, the accumulated exchange
differences, are recycled through profit or loss, increasing or decreasing the profit or loss on divestments.
Business combinations and consolidation
The consolidated financial statements include the financial statements of the Group and all companies in which Mincon
Group plc, directly or indirectly, has control. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the consolidated financial statements from the date on which control
commences until the date on which control ceases.
The consolidated financial statements have been prepared in accordance with the acquisition method. According to this
method, business combinations are seen as if the Group directly acquires the assets and assumes the liabilities of the entity
acquired. At the acquisition date, i.e. the date on which control is obtained, each identifiable asset acquired and liability
assumed is recognised at its acquisition-date fair value.
Consideration transferred is measured at its fair value. It includes the sum of the acquisition date fair values of the assets
transferred, liabilities incurred to the previous owners of the acquiree, and equity interests issued by the Group. Deferred
contingent consideration is initially measured at its acquisition-date fair value. Any subsequent change in such fair value
is recognised in profit or loss, unless the deferred contingent consideration is classified as equity. In that case, there is no
remeasurement and the subsequent settlement is accounted for within equity. Deferred contingent consideration arises in
the current year where part payment for an acquisition is deferred to the following year or years.
Transaction costs that the Group incurs in connection with a business combination, such as legal fees, due diligence fees,
and other professional and consulting fees are expensed as incurred.
Goodwill is measured as the excess of the fair value of the consideration transferred, the amount of any non-controlling
interest in the acquiree, and the fair value of the Group’s previously held equity interest in the acquiree (if any) over the net of
acquisition-date fair values of the identifiable assets acquired and liabilities assumed. Goodwill is not amortised but tested
for impairment at least annually.
Non-controlling interest is initially measured either at fair value or at the non-controlling interest’s proportionate share
of the fair value of the acquiree’s identifiable net assets. This means that goodwill is either recorded in “full” (on the total
acquired net assets) or in “part” (only on the Group’s share of net assets). The choice of measurement basis is made on an
acquisition-by-acquisition basis.
Earnings from the acquirees are reported in the consolidated income statement from the date of control.
Intra-group balances and transactions such as income, expenses and dividends are eliminated in preparing the
consolidated financial statements. Profits and losses resulting from intra-group transactions that are recognised in assets,
such as inventory, are eliminated in full, but losses are only eliminated to the extent that there is no evidence of impairment.
Property, plant and equipment
Items of property, plant and equipment are carried at cost less accumulated depreciation and impairment losses. Cost of
an item of property, plant and equipment comprises the purchase price, import duties, and any cost directly attributable
to bringing the asset to its location and condition for use. The Group capitalises costs on initial recognition and on
replacement of significant parts of property, plant and equipment, if it is probable that the future economic benefits
embodied will flow to the Group and the cost can be measured reliably. All other costs are recognised as an expense in
profit or loss when incurred.
80
81
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
3. SIGNIFICANT ACCOUNTING PRINCIPLES, ACCOUNTING ESTIMATES
AND JUDGEMENTS (CONTINUED)
Depreciation
Depreciation is calculated based on cost using the straight-line method over the estimated useful life of the asset. The
following useful lives are used for depreciation:
Buildings
Plant and equipment
Years
20–30
3–10
The depreciation methods, useful lives and residual values are reassessed annually. Land is not depreciated.
Right of use assets are depreciated using the straight-line method over the estimated useful life of the asset being the
remaining duration of the lease from inception date of the asset. The depreciation methods, useful lives and residual values
are reassessed annually.
Financial Assets and Liabilities
Recognition and derecognition
Equity
Shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effect.
Contingent liabilities
A contingent liability is a possible obligation or a present obligation that arises from past events that is not reported as a liability
or provision, as it is not probable that an outflow of resources will be required to settle the obligation or that a sufficiently
reliable calculation of the amount cannot be made.
Financial instruments carried at fair value: Non‑derivative financial liabilities
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate
of interest at the reporting date.
Finance income and expenses
Finance income and expense are included in profit or loss using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less.
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
Provisions
Group contractually commits to acquire or dispose of the assets. Trade receivables are recognised on delivery of product.
A provision is recognised in the statement of financial position when the Group has a legal or constructive obligation as a
Liabilities are recognised when the other party has performed and there is a contractual obligation to pay. Derecognition
result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the
(fully or partially) of a financial asset occurs when the rights to receive cash flows from the financial instruments expire or
outflow can be estimated reliably. The amount recognised as a provision is the best estimate of the expenditure required
are transferred and substantially all of the risks and rewards of ownership have been removed from the Group. The Group
to settle the present obligation at the reporting date. If the effect of the time value of money is material, the provision is
derecognises (fully or partially) a financial liability when the obligation specified in the contract is discharged or otherwise
determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of
expires. A financial asset and a financial liability are offset and the net amount presented in the statement of financial
the time value of money and, where appropriate, the risks specific to the liability.
position when there is a legally enforceable right to set off the recognised amounts and there is an intention to either settle
on a net basis or to realise the asset and settle the liability simultaneously.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and
of allocating the interest income or interest expense over the relevant periods. The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument, or when
appropriate a shorter period, to the net carrying amount of the financial asset or financial liability. The calculation includes
all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs, and all other premiums or discounts.
Borrowing costs
All borrowing costs are expensed in accordance with the effective interest rate method.
Investments in subsidiaries ‑ Company
Investments in subsidiary undertakings are stated at cost less provision for impairment in the Company’s statement of
financial position. Loans to subsidiary undertakings are initially recorded at fair value in the Company statement of financial
position and subsequently at amortised cost using an effective interest rate methodology.
Impairment of financial assets
Financial assets are assessed at each reporting date to determine whether there is any objective evidence that they are
impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that asset.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and the
restructuring has either commenced or been announced publicly. Future operating losses are not provided for.
Exceptional Items
The Group has adopted an Income Statement format which seeks to highlight significant items within the Group results
for the year. Exceptional items may include restructuring, profit or loss on disposal or termination of operations, litigation
costs and settlements, profit or loss on disposal of investments, profit or loss on disposal of property, plant and equipment,
acquisition costs, adjustment to contingent consideration and impairment of assets relating to significant transactions.
Judgement is used by the Group in assessing particular items, which by virtue of their scale and nature, should be
presented in the Income Statements and disclosed in the related notes as exceptional items.
Defined contribution plans
A defined contribution retirement benefit plan is a post-employment benefit plan under which the Group pays fixed
contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution retirement benefit plans are recognised as an employee benefit expense in profit or
loss when employees provide services entitling them to the contributions.
82
83
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
3. SIGNIFICANT ACCOUNTING PRINCIPLES, ACCOUNTING ESTIMATES
AND JUDGEMENTS (CONTINUED)
Share-based payment transactions
The Group operates a long term incentive plan which allows the Company to grant Restricted Share Awards (“RSAs”) to
executive directors and senior management. All schemes are equity settled arrangements under IFRS 2 Share-based
Payment.
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-
market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based
on the number of awards that meet the related service and non-market performance conditions at the vesting date.
Critical accounting estimates and judgements
The preparation of financial statements requires management’s judgement and the use of estimates and assumptions
that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates and
associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the prevailing circumstances. Actual results may differ from those estimates. The estimates and assumptions are
reviewed on an ongoing basis. Revisions to the accounting estimates are recognised in the period in which they are revised
and in any future periods affected.
Following are the estimates and judgements which, in the opinion of management, are significant to the underlying amounts
included in the financial reports and for which there is a significant risk that future events or new information could entail a
change in those estimates or judgements.
Deferred contingent consideration
The deferred contingent consideration payable represents management’s best estimate of the fair value of the amounts
that will be payable, discounted as appropriate using a market interest rate. The fair value was estimated by assigning
probabilities, based on management’s current expectations, to the potential pay-out scenarios. The fair value of
deferred contingent consideration is primarily dependent on the future performance of the acquired businesses against
predetermined targets and on management’s current expectations thereof.
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.
Product revenue:
Sale of Mincon product
Sale of third-party product
Total revenue
2020
€’000
2019
€’000
108,556
21,347
129,903
103,797
19,948
123,745
5. OPERATING SEGMENT
An operating segment is a component of the Group that engages in business 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 decisions about allocation of
resources and also to assess performance.
Results are reported in a manner consistent with the internal reporting provided to the chief operating decision maker
(CODM). Our CODM has been identified as the Board of Directors.
The Group has determined that it has one reportable segment. The Group is managed as a single business unit that sells
drilling equipment, primarily manufactured by Mincon manufacturing sites.
The CODM assesses operating segment performance based on a measure of operating profit. Segment revenue for the
year ended 31 December 2020 of €129.9million (2019: €123.7 million) is wholly derived from sales to external customers.
Entity-wide disclosures
The business is managed on a worldwide basis but operates manufacturing facilities and sales offices in Ireland, UK,
Sweden, Finland, South Africa, Western Australia, the United States and Canada and sales offices in nine other locations
including Eastern Australia, South Africa, France, Spain, Namibia, Sweden, Chile and Peru. In presenting information on
geography, revenue is based on the geographical location of customers and non-current assets based on the location of
Goodwill
The initial recognition of goodwill represents management’ best estimate of the fair value of the acquired entities value less
the identified assets acquired.
these assets.
Revenue by region (by location of customers):
During the annual impairment assessment over goodwill, management calculate the recoverable value of the group using
their best estimate of the discounted future cash flows of the group. The fair values were estimated using management’s
current and future projections of the Mincon Group’s performance as well as appropriate data inputs and assumptions.
Trade and other receivables
Trade and other receivables are included in current assets, except for those with maturities more than 12 months after the
reporting date, which are classified as non-current assets. The Group estimates the risk that receivables will not be paid
and provides for doubtful debts in line with IFRS 9.
Region:
Ireland
Americas
Australasia
Europe, Middle East, Africa
2020
€’000
1,487
43,640
24,754
60,022
2019
€’000
772
39,410
27,351
56,212
Total revenue from continuing operations
129,903
123,745
During 2020 Mincon had sales in the USA of €24.7 million (2019: €20.8 million), Australia of €14.6 million (2019: €18.5 million) and
Sweden of €13.5 million (2019: €12.8 million), these separately contributed to more than 10% of the entire Group’s sales for 2020.
84
85
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
5. OPERATING SEGMENT (CONTINUED)
Non‑current assets by region (location of assets):
Region:
Ireland
Americas
Australasia
Europe, Middle East, Africa
Total non‑current assets(1)
(1) Non-current assets exclude deferred tax assets.
2020
€’000
18,315
11,310
11,338
41,844
82,807
2019
€’000
17,064
21,846
11,144
23,055
73,109
During 2020 Mincon held non-current assets (excluding deferred tax assets) in the USA of €9.4 million, these
contributed to more than 10% of the entire Group’s non-current assets (excluding deferred tax assets) for 2020.
Operating costs
Employee costs (including director emoluments)
Depreciation (note 13)
Rent
Travel
Professional costs
Administration
Marketing
Salary and termination payments for redundant employees (note 8)
Impairment of trade receivable
Operating costs of disposed operations (note 8)
Other
Total other operating costs
2020
€’000
17,438
2,266
793
775
1,814
2,007
542
-
-
-
1,833
27,468
2019
€’000
15,899
1,930
865
2,375
1,938
2,247
886
2,754
799
2,359
1,764
33,816
6. COST OF SALES AND OPERATING EXPENSES
The Group invested approximately €3.7 million on research and development projects in 2020 (2019: €3.2 million). €2.6 million
of this has been expensed in the period (2019: €1.8 million), with the balance of €1.1 million capitalised (2019: €1.4 million)
Included within cost of sales and operating costs were the following major components:
(note 12).
Cost of sales
Raw materials
Third-party product purchases
Employee costs
Depreciation (note 13)
Distribution costs
Energy costs
Maintenance of machinery
Impairment of finished goods inventory
Cost of sales of disposed operations (note 8)
Subcontracting
Other
Total cost of sales
2020
€’000
33,913
16,098
17,504
4,216
3,106
1,623
1,392
-
-
4,311
2,023
84,186
2019
€’000
39,190
14,204
14,045
3,312
2,380
1,450
1,363
1,692
2,489
2,102
420
82,647
The Group recognised €1.3 million in Government Grants in 2020 (2019:NIL). These grants differ in structure from country to
country, they primarily relate to personnel costs.
86
87
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
7. EMPLOYEE INFORMATION
8. EXCEPTIONAL ITEMS
Wages and salaries – excluding directors
Wages, salaries, fees and retirement benefit – directors (note 10)
Salary and termination payments for redundant employees
Social security costs
Retirement benefit costs of defined contribution plans
Share based payment expense (note 22)
2020
€’000
2019
€’000
28,753
25,088
795
-
3,029
1,735
630
760
2,754
2,677
1,064
355
Total employee costs
34,942
32,698
The Group capitalised payroll costs of €0.5 million in 2020 (2019: €0.5 million) in relation to research and development.
The average number of employees was as follows:
Sales and distribution
General and administration
Manufacturing, service and development
Average number of persons employed
2020
Number
2019
Number
126
66
360
552
124
56
290
470
Retirement benefit and Other Employee Benefit Plans
The Group operates various defined contribution retirement benefit plans. During the year ended 31 December 2020, the
Group recorded €1.7 million (2019: €1.1 million) of expense in connection with these plans.
Revenue
Revenue from disposed operations
Total Revenue
Cost of sales
Impairment of capital equipment inventory
Cost of sales of disposed operations
Total cost of sales
Operating costs
Salary and termination payments for redundant employees
Acquisition related costs
Operating costs of disposed operations
Total operating costs
Tax on disposals and discontinued operations
Profit on Disposal (note 9)
Total exceptional profit after tax
2020
€’000
-
‑
-
‑
-
-
-
‑
‑
‑
-
2019
€’000
3,074
3,074
-
(2,489)
(2,489)
(2,754)
-
(2,359)
(5,113)
(127)
7,489
2,834
The Group had undertaken a reorganisation of its activities across all regions during 2019, including relocation of activities,
closing of regional offices and redundancies where necessary.
The Group had also disposed of operations in two distribution centres, Mincon Tanzania and Mincon Russia, following a
strategic decision to place greater focus and emphasis on the Groups key competencies while focusing on the profitability
of the core business activities and growth areas where there are synergies and tangible growth opportunities.
The Group has chosen to present exceptional items separately from the reorganisation.
88
89
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
9. ACQUISITIONS & DISPOSALS
In January 2020, Mincon acquired 100% shareholding in Lehti Group, a Finnish based product manufacturing and
distributing company, for a consideration of €7.7 million. The transaction included a cash consideration of €7 million and
deferred consideration of €706,000.
In May 2020, Mincon acquired 100% shareholding in EURL Rocdrill, a French-based construction product distributor and
drilling specialist, for a consideration of €1 million. The transaction included a cash consideration of €450,000 and deferred
consideration of €550,000.
A. Consideration transferred
Goodwill
Goodwill arising from the acquisition has been recognised as follows.
Consideration transferred
Fair value of identifiable net assets
Goodwill
Total
2020
€’000
8,706
(4,173)
4,533
The following table summarises the acquisition date fair value of each major class of consideration transferred.
C. Profit on Disposal
During 2019 the Group disposed of two subsidiaries in Sweden (Hardtekno and Cebeko) and a distribution subsidiary in
South Africa (Premier Drilling Solutions).
Consideration received
Cash and cash equivalents disposed of
Net assets
Profit on Disposal
Profit on disposal of Hardtekno
Profit on disposal of Cebeko
Profit on disposal of Premier Drilling Solutions
Cost on disposal
Profit on Disposal
Total
2020
€’000
-
-
-
‑
Total
2020
€’000
-
-
-
-
‑
Cash
Deferred contingent consideration
Total consideration transferred
EURL
Rocdrill
€’000
450
550
1,000
Lehti
Group
€’000
7,000
706
7,706
B. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets and liabilities assumed at the date of acquisition.
Property, plant and equipment
Right of use assets
Inventories
Trade receivables
Other assets
Trade and other payables
Right of use liabilities
Other accruals and liabilities
Fair value of identifiable net assets acquired
Total
€’000
7,450
1,256
8,706
Total
€’000
2,637
3,385
3,582
4,704
322
(2,022)
(3,385)
(5,050)
4,173
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
Inventories
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.
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.
Total
2019
€’000
1,802
(916)
886
Total
2019
€’000
8,997
(480)
(1,028)
7,489
Total
2019
€’000
7,551
106
98
(266)
7,489
90
91
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
10. STATUTORY AND OTHER REQUIRED DISCLOSURES
Operating profit is stated after charging the following amounts:
11. INCOME TAX
Tax recognised in income statement:
Directors’ remuneration
Fees
Wages and salaries
Other emoluments
Retirement benefit contributions
Total directors’ remuneration
Auditor’s remuneration
Auditor’s remuneration – Fees payable to lead audit firm
Audit of the Group financial statements
Audit of the Company financial statements
Other assurance services
Tax advisory services (a)
Other non-audit services
Auditor’s remuneration – Fees payable to other firms in lead audit firm’s network
Audit services
Other assurance services
Tax advisory services
Total auditor’s remuneration
2020
€’000
2019
€’000
165
192
574
511
-
56
795
-
57
760
2020
€’000
2019
€’000
205
15
20
-
-
240
112
2
9
123
195
15
20
-
2
232
158
2
63
223
Current tax expense
Current year
Adjustment for prior years
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Adjustment for prior years
Total deferred tax (credit)/expense
Total income tax expense
2020
€’000
3,224
(103)
3,121
(438)
-
(438)
2,683
2019
€’000
1,648
(89)
1,559
231
3
234
1,793
A reconciliation of the expected income tax expense for continuing operations is computed by applying the standard Irish tax
rate to the profit before tax and the reconciliation to the actual income tax expense is as follows:
Profit before tax from continuing operations
Irish standard tax rate (12.5%)
Taxes at the Irish standard rate
Foreign income at rates other than the Irish standard rate
Losses creating no income tax benefit
Other
Total income tax expense
(a) Includes tax compliance work on behalf of Group companies.
The Group’s net deferred taxation liability was as follows:
Deferred taxation assets:
Reserves, provisions and tax credits
Accrued income
Tax losses and unrealised FX gains
Total deferred taxation asset
Deferred taxation liabilities:
Property, plant and equipment
Profit not yet taxable
Total deferred taxation liabilities
Net deferred taxation liability
2020
€’000
17,069
12.5%
2,134
849
(843)
543
2,683
2020
€’000
585
31
477
1,093
(1,780)
(52)
(1,832)
(739)
2019
€’000
14,176
12.5%
1,772
957
288
(1,224)
1,793
2019
€’000
610
-
6
616
(1,742)
(52)
(1,794)
(1,178)
92
93
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
11. INCOME TAX (CONTINUED)
The movement in temporary differences during the year were as follows:
12. INTANGIBLE ASSETS AND GOODWILL
Product development
Goodwill
1 January 2019 – 31 December 2019
Deferred taxation assets:
Reserves, provisions and tax credits
Tax losses
Total deferred taxation asset
Deferred taxation liabilities:
Property, plant and equipment
Profit not yet taxable
Total deferred taxation liabilities
Net deferred taxation liability
1 January 2020 – 31 December 2020
Deferred taxation assets:
Reserves, provisions and tax credits
Accrued income
Tax losses
Total deferred taxation asset
Deferred taxation liabilities:
Property, plant and equipment
Profit not yet taxable
Total deferred taxation liabilities
Net deferred taxation liability
Deferred taxation assets have not been recognised in respect of the following items:
Tax losses
Total
Balance
1 January
€’000
Recognised in
Profit or Loss
€’000
Acquired in a
Business
combination
€’000
Balance
31 December
€’000
278
-
278
(1,154)
(68)
(1,222)
(944)
332
6
338
(588)
16
(572)
(234)
-
-
-
-
-
-
-
610
6
616
(1,742)
(52)
(1,794)
(1,178)
Balance
1 January
€’000
Recognised in
Profit or Loss
€’000
Acquired in a
Business
combination
€’000
Balance
31 December
€’000
610
-
6
616
(1,742)
(52)
(1,794)
(1,178)
(25)
31
471
477
(38)
-
(38)
439
-
-
-
-
-
-
-
-
2020
€’000
3,269
3,269
585
31
477
1,093
(1,780)
(52)
(1,832)
(739)
2019
€’000
4,112
4,112
Balance at 1 January 2019
Internally developed
Acquisitions
Disposal (note 9)
Translation differences
Balance at 31 December 2019
Internally developed
Acquisitions (note 9)
Disposal (note 9)
Translation differences
Balance at 31 December 2020
€’000
3,377
1,405
-
-
-
4,782
1,065
-
-
-
5,847
€’000
27,376
-
886
(1,529)
422
27,155
-
4,533
-
(548)
31,140
Total
€’000
30,753
1,405
886
(1,529)
422
31,937
1,065
4,533
-
(548)
36,987
Goodwill relates to the acquisition of the below companies, being the dates that the Group obtained control of these business:
• The remaining 60% of DDS-SA Pty Limited in November 2009.
• The 60% acquisition of Omina Supplies in August 2014.
• The 65% acquisition of Rotacan in August 2014.
• The acquisition of ABC products in August 2014.
• The acquisition of Ozmine in January 2015.
• The acquisition of Mincon Chile in March 2015.
• The acquisition of Rockdrill Engineering in November 2016.
• The acquisition of PPV in April 2017.
• The acquisition of Viqing July 2017.
• The acquisition of Driconeq in March 2018.
• The acquisition of Pacific Bit of Canada in January 2019.
• The acquisition of Lehti Group in January 2020.
• The acquisition of Rocdrill in May 2020.
The Group accounts for acquisitions using the purchase accounting method as outlined in IFRS 3 Business Combinations.
The businesses acquired were integrated with other Group operations soon after acquisition. Impairment testing (including
sensitivity analysis) is performed at each period end. Group management has determined that the Group has one cash generating
unit and one operating segment and therefore all goodwill is tested for impairment at Group level.
The recoverable amount of goodwill has been assessed based on estimates of fair value less costs to sell (FVLCS). The FVLCS
valuation is calculated on the basis of a discounted cash flow (“DCF”) model. The most significant assumptions within the DCF
are weighted average cost of capital (“WACC”), tax rates and terminal value assumptions. Goodwill impairment testing did not
indicate any impairment during any of the periods being reported. Four sensitivities are applied as part of the analysis considering
the effects of changes in 1) the WACC, 2) the EBITDA margin, 3) the long term growth rate and 4) the level of terminal value capital
expenditure. The sensitivities calculate downside scenarios to assess potential indications of impairments due to changes in key
assumptions. The results from the sensitivity analysis did not suggest that goodwill would be impaired when those sensitivities
were applied.
94
95
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
12. INTANGIBLE ASSETS AND GOODWILL (CONTINUED)
13. PROPERTY, PLANT AND EQUIPMENT
The carrying amount of the CGU was determined to be lower than its fair value less cost to sell by €68.4 million, giving management
substantial headroom and comfort in the above stated impairment assessment.
The key assumptions used in the estimation of the fair value less cost calculation were as follows:
WACC
EBIDTA margin
Long term growth rate
Terminal value capital expenditure
2020
10.5%
17.8%
2.25%
€7.1 million
The WACC calculation considers market data and data from comparable public companies. Peer group data was especially
considered for the beta factor and assumed financing structure (gearing level). The analysis resulted in a discount rate range of 9.60%
to 11.35%. This results in a midpoint WACC being used of 10.5%.
The Long term growth rate of 2.25% applied is based on a weighted average of the long term inflation rates of the countries in which
Mincon generates revenues and earnings.
The budgeted EBITDA was based on expectations of future outcomes, taking account for past experience, adjusted for anticipated
revenue growth as detailed in managements approved Budget. No EBITDA margin effect is assumed in the terminal value i.e. the
budgeted EBITDA margin of 17.8% for 2023 is assumed in the Terminal Value calculation used to arrive at the FVLCS.
Terminal value Capital expenditure assumes no balance sheet growth is assumed in the terminal value, CAPEX is assumed to equal
depreciation of €7.1 million.
Investment expenditure of €1.1 million, which has been capitalised, is in relation to ongoing product development within the Group.
Cost:
At 1 January 2019
Acquisitions through business combinations
Right of use asset on inception
Additions
Disposals
Foreign exchange differences
At 31 December 2019
Acquisitions through business combinations
Additions
Disposals and derecognition of ROU assets
Foreign exchange differences
At 31 December 2020
Accumulated depreciation:
At 1 January 2019
Charged in year
Disposals
Foreign exchange differences
At 31 December 2019
Charged in year
Disposals
Foreign exchange differences
Amortisation will begin at the stage of commercialisation and charged to the income statement over a period of three to five years, or
At 31 December 2020
the capitalised amount will be written off if the project is deemed no longer viable by management.
Change in estimates
During 2020, the Group performed a review of their goodwill impairment assessment method and concluded that the fair value less
costs of disposal was greater than the value in use. As a result, the recoverable amount has been calculated using the fair value less
Carrying amount: 31 December 2020
Carrying amount: 31 December 2019
Carrying amount: 1 January 2019
Land and
Buildings
Plant and
Equipment
€’000
€’000
ROU
Assets
€’000
15,650
-
-
1,223
(482)
(163)
16,228
95
387
-
(419)
16,291
40,347
75
-
6,707
(2,913)
1,613
45,829
2,542
6,835
(2,282)
(1,384)
51,540
-
-
4,683
490
(455)
114
4,832
3,385
102
(1,199)
(233)
6,887
Total
€’000
55,997
75
4,683
8,420
(3,850)
1,564
66,889
6,022
7,324
(3,481)
(2,036)
74,718
(2,855)
(18,212)
-
(21,067)
(442)
279
(9)
(3,456)
1,582
(1,260)
(1,344)
-
-
(5,242)
1,861
(1,269)
(3,027)
(21,346)
(1,344)
(25,717)
(461)
-
68
(3,420)
12,871
13,201
12,795
(4,205)
1,969
750
(1,816)
432
82
(6,482)
2,401
900
(22,832)
(2,646)
(28,898)
28,708
24,483
22,135
4,241
3,488
‑
45,820
41,172
34,930
costs of disposal model in the current year. There was no impact on the financial statements of this change in estimate.
The depreciation charge for property, plant and equipment is recognised in the following line items in the income statement:
Cost of sales
General, selling and distribution expenses
General, selling and distribution expenses ROU asset
Total depreciation charge for property, plant and equipment
2020
€’000
4,216
922
1,344
6,482
2019
€’000
3,312
586
1,344
5,242
96
97
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
14. INVENTORY AND CAPITAL EQUIPMENT
16. TRADE CREDITORS, ACCRUALS AND OTHER LIABILITIE
Finished goods and work-in-progress
Capital equipment
Raw materials
Total inventory
2020
€’000
42,326
504
10,187
53,017
2019
€’000
38,212
962
9,416
48,590
The Group recorded an impairment of €80,000 against inventory to take account of net realisable value during the year ended
31 December 2020 (2019: €1.7 million). Write-downs are included in cost of sales.
At 31 December 2020 and 31 December 2019, capital equipment are rigs held in South Africa for resale.
Trade creditors
Total creditors and other payables
VAT
Social security costs
Other accruals and liabilities
Total accruals and other liabilities
15. TRADE AND OTHER RECEIVABLES AND THE CURRENT ASSETS
17. CAPITAL MANAGEMENT
2020
€’000
10,457
10,457
2020
€’000
390
1,088
4,051
5,529
2019
€’000
10,853
10,853
2019
€’000
207
674
4,946
5,827
(a) Trade and other receivables
Gross receivable
Provision for impairment
Net trade and other receivables
Balance at 1 January 2020
Additions
Balance at 31 December 2020
Less than 60 days
61 to 90 days
Greater than 90 days
Net trade and other receivables
2020
€’000
21,830
(1,190)
20,640
2019
€’000
21,424
(1,078)
20,346
Provision for impairment
€’000
(1,078)
(112)
(1,190)
2019
€’000
17,112
1,659
1,575
2020
€’000
17,878
1,350
1,412
20,640
20,346
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).
Total liabilities
Less: cash and cash equivalents
Net debt
Total equity
Net debt to equity ratio
2020
€’000
(46,163)
17,045
2019
€’000
(39,784)
16,368
(29,118)
(23,416)
132,936
126,144
0.22
0.18
At 31 December 2020, €2.8 million of trade receivables balances (13%) were past due but not impaired (2019: €3.2 million (16%).
(b) Prepayments and other current assets
Plant and machinery prepaid
Prepayments and other current assets
Prepayments and other current assets
2020
€’000
1,597
2,589
4,186
2019
€’000
3,332
2,766
6,098
98
99
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
18. LOANS AND BORROWINGS
Bank loans
Finance leases
Right of Use leases
Total loans and borrowings
Current
Non-current
Maturity
2021-2034
2021-2026
2020-2029
2020
€’000
11,090
5,494
5,027
21,611
6,822
14,789
2019
€’000
4,879
5,903
4,140
14,922
4,043
10,879
The Group has a number of bank loans and finance leases with a mixture of variable and fixed interest rates. The Group has not
been in default on any of these debt agreements during any of the periods presented. The Group has been in compliance with
all debt agreements during the periods presented. The loan agreements in Ireland carry restrictive financial covenants. Interest
rates on current borrowings are at an average rate of 4.56%
During 2020 the Group availed of the option to enter into overdraft facilities and to draw down loans of €6.6 million with interest
rate between 1% and 10.5%.
Reconciliation of movements of liabilities to cash flows arising from financing activities:
Loans and borrowings
Finance leases
Right of use leases
Retained earnings
Total
Balance at
1 January
2020
€’000
Arising
from
acquisition
€’000
4,879
5,903
4,140
-
14,922
3,144
-
3,385
-
6,529
Cash
movements
Non‑cash
movements
€’000
3,210
(1,579)
-
(2,222)
(591)
€’000
-
1,276
(2,331)
-
(1,055)
Foreign
exchange
differences
€’000
Balance
at 31
December
€’000
(143)
(106)
(167)
-
(416)
11,090
5,494
5,027
(2,222)
19,389
19. NON-CONTROLLING INTEREST
(a) Non‑controlling interest
The following table summarises the information relating to the Group’s subsidiary, Mincon West Africa SL, that has material
non-controlling interests, before any intra-group eliminations. The non-controlling interest was 20% of this subsidiary until the
date of the transaction described in note 19b.
Non‑controlling Interest 20%
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Net assets attributable to NCI
Revenue
Profit
OCI
Total comprehensive income
Profit allocated to NCI
2020
€’000
-
-
-
-
-
‑
6,919
826
-
826
165
2019
€’000
97
4,253
-
(874)
3,476
695
6,176
272
-
272
54
(b) Acquisition of non‑controlling interest
Mincon Group plc acquired the additional 20% interest in the voting shares of Mincon West Africa on 1 October 2020, increasing
its ownership interest to 100%. The carrying amount of Mincon West Africa’s NCI portion in the Group’s consolidated financial
statements on the date of acquisition was €1.28 million.
Cash consideration paid to NCI
Deferred consideration due to NCI
Carrying amount of NCI acquired
Decrease in equity attributable to owners of the company
€000
1,000
1,000
(1,280)
720
100
101
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
20. SHARE CAPITAL AND RESERVES
21. EARNINGS PER SHARE
At 31 December 2020
Authorised Share Capital
Ordinary Shares of €0.01 each
Allotted, called‑up and fully paid up shares
Ordinary Shares of €0.01 each
Number
500,000,000
Number
211,675,024
€000
5,000
€000
2,117
Share issuances
On 26 November 2013, Mincon Group plc was admitted to trading on the Enterprise Securities Market (ESM) of the Euronext
Dublin and the Alternative Investment Market (AIM) of the London Stock Exchange.
Voting rights
The holders of Ordinary Shares have the right to receive notice of and attend and vote at all general meetings of the Company and
they are entitled, on a poll or a show of hands, to one vote for every Ordinary Share they hold. Votes at general meetings may be
given either personally or by proxy. Subject to the Companies Act and any special rights or restrictions as to voting attached to
any shares, on a show of hands every member who (being an individual) is present in person and every proxy and every member
(being a corporation) who is present by a representative duly authorised, shall have one vote, so, however, that no individual shall
have more than one vote for every share carrying voting rights and on a poll every member present in person or by proxy shall
have one vote for every share of which he is the holder.
Dividends
In September 2020, Mincon Group plc paid a final dividend for 2019 of €0.0105 (1.05 cent) per ordinary share. In September 2019,
Mincon Group plc paid an interim dividend for 2019 of €0.0105 (1.05 cent) per ordinary share. In June 2019, Mincon Group plc paid
a final dividend for 2018 of €0.0105 (1.05 cent) per ordinary share.
The Board of Mincon Group plc is recommending the payment of a full year dividend for the year ended 31 December 2020 in the
amount of €0.021 (2.10 cent) per ordinary share, which will be subject to approval at the Annual General Meeting of the Company
in May 2021. This dividend, is in respect to an interim dividend of 1.05 cent and final dividend of 1.05 cent. Subject to Shareholder
approval at the Company’s annual general meeting on 28 May 2021.
Share premium and other reserves
As part of a Group reorganisation of the Company, Mincon Group plc, became the ultimate parent entity of the Group. On 30
August 2013, the Company acquired 100% of the issued share capital in Smithstown Holdings and acquired (directly or indirectly)
the shareholdings previously held by Smithstown Holdings in each of its subsidiaries, thereby creating a merger reserve.
102
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:
Numerator (amounts in €’000):
Profit attributable to owners of the Parent
Denominator (Number):
Basic shares outstanding
Restricted share awards
Diluted weighted average shares outstanding
Earnings per Ordinary Share
Basic earnings per share, €
Diluted earnings per share, €
2020
€’000
2019
€’000
14,221
12,329
211,675,024
210,973,102
4,825,517
1,546,189
216,500,544
212,519,291
6.72
6.57
5.84
5.80
22. SHARE-BASED PAYMENT
During the year ended 31 December 2020, the Remuneration Committee made a grant of approximately 3,981,250 Restricted
Share Options (RSAs) to members of the senior management team.
The vesting conditions of the scheme state that the minimum growth in EPS shall be CPI plus 5% per annum, compounded
annually, over the relevant three accounting years up to the share award of 100% of the participants basic salary. Where awards
have been granted to a participant in excess of 100% of their basic salary, the performance condition for the element that is in
excess of 100% of basic salary is that the minimum growth in EPS shall be CPI plus 10% per annum, compounded annually,
over the three accounting years.
Reconciliation of outstanding share awards
Number of Awards in thousand
Outstanding on 1 January 2020
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at 31 December 2020
1,546
-
(702)
-
844
Reconciliation of outstanding share options
Number of Options in thousands
Outstanding on 1 January 2020
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at 31 December 2020
-
-
-
3,981
3,981
103
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
23. FINANCIAL RISK MANAGEMENT
At year-end, the Group’s total cash and cash equivalents were held in the following jurisdictions:
The Group is exposed to various financial risks arising in the normal course of business. Its financial risk exposures are
predominantly related to changes in foreign currency exchange rates and interest rates, as well as the creditworthiness of our
counterparties.
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management
framework. The Board of directors has established the risk management committee, which is responsible for developing and
monitoring the Group’s risk management policies. The committee reports regularly to the Board of Directors on its activities.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and
procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and
obligations.
The Group audit committee oversees how management monitors compliance with the Group’s risk management policies and
procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
a) Liquidity and capital
The Group defines liquid resources as the total of its cash, cash equivalents and short term deposits. Capital is defined as the
Group’s shareholders’ equity and borrowings.
The Group’s objectives when managing its liquid resources are:
• To maintain adequate liquid resources to fund its ongoing operations and safeguard its ability to continue as a going
concern, so that it can continue to create value for investors;
• To have available the necessary financial resources to allow it to invest in areas that may create value for shareholders; and
• To maintain sufficient financial resources to mitigate against risks and unforeseen events
Liquid and capital resources are monitored on the basis of the total amount of such resources available and the Group’s
anticipated requirements for the foreseeable future. The Group’s liquid resources and shareholders’ equity at 31 December 2020
and 31 December 2019 were as follows:
Cash and cash equivalents
Loans and borrowings
Shareholders’ equity
2020
€’000
17,045
21,611
132,936
2019
€’000
16,368
14,922
125,029
The Group frequently assess its liquidity requirements, together with this requirement and the rate return of long term euro
deposits, the Group has decided to keep all cash readily available that is accessible within a month or less. Cash at bank earns
interest at floating rates based on daily bank deposits. The fair value of cash and cash equivalents equals the carrying amount.
Cash and cash equivalents are held by major Irish, European, United States and Australian institutions with credit rating of A3
or better. The Company deposits cash with individual institutions to avoid concentration of risk with any one counterparty. The
Group has also engaged the services of a depository to ensure the security of the cash assets.
Risk of counterparty default arising on cash and cash equivalents and derivative financial instruments is controlled by dealing
with high-quality institutions and by policy, limiting the amount of credit exposure to any one bank or institution.
The Group is also exposed to credit risk on its liquid resources (cash), of which the euro equivalent of €2.8 million was held in
US dollar (USD 3.5 million), €2.4 million was held in Swedish krona (SEK 24.7 million) and the euro equivalent of €1.7 million was
held Australian dollar (AUD 2.7 million). The Directors actively monitor the credit risk associated with this exposure.
Ireland
Americas
Australasia
Europe, Middle East, Africa
Total cash, cash equivalents and short term deposits
31 December
2020
31 December
2019
€’000
1,870
2,989
1,723
10,463
17,045
€’000
5,759
2,339
1,625
6,645
16,368
There are currently no restrictions that would have a material adverse impact on the Group in relation to the intercompany
transfer of cash held by its foreign subsidiaries. The Group continually evaluates its liquidity requirements, capital needs and
availability of resources in view of, among other things, alternative uses of capital, the cost of debt and equity capital and
estimated future operating cash flow.
In the normal course of business, the Group may investigate, evaluate, discuss and engage in future company or product
acquisitions, capital expenditures, investments and other business opportunities. In the event of any future acquisitions, capital
expenditures, investments or other business opportunities, the Group may consider using available cash or raising additional
capital, including the issuance of additional debt. The maturity of the contractual undiscounted cash flows (including estimated
future interest payments on debt) of the Group’s financial liabilities at 31 December were as follows:
At 31 December 2019:
Deferred contingent consideration
Loans and borrowings
Finance leases
Right of use leases
Trade and other payables
Accrued and other financial liabilities
Total at 31 December 2019
At 31 December 2020:
Deferred contingent consideration
Loans and borrowings
Finance leases
Right of use leases
Trade and other payables
Accrued and other financial liabilities
Total at 31 December 2020
Total
Fair Value of
Cash Flows
€’000
Less than
1 Year
€’000
1‑3 Years
€’000
3‑5 Years
€’000
More than
5 Years
€’000
4,962
4,879
5,903
4,140
10,853
5,827
36,564
4,723
11,090
5,494
5,027
10,457
5,529
42,320
2,452
1,441
1,244
1,360
10,853
5,827
23,177
2,068
3,666
1,448
1,707
10,457
5,529
24,875
2,510
847
2,895
1,807
-
-
8,059
2,186
3,875
2,924
2,449
-
-
11,434
-
782
1,764
735
-
-
3,281
359
1,881
1,030
850
-
-
4,120
-
1,809
-
238
-
-
2,047
110
1,668
92
21
-
-
1,891
104
105
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
23. FINANCIAL RISK MANAGEMENT (CONTINUED)
b) Foreign currency risk
The Group is a multinational business operating in a number of countries and the euro is the presentation currency. The
Group, however, does have revenues, costs, assets and liabilities denominated in currencies other than euro.
Transactions in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction. The resulting
monetary assets and liabilities are translated into the appropriate functional currency at exchange rates prevailing at the
reporting date and the resulting gains and losses are recognised in the income statement. The Group manages some of
its transaction exposure by matching cash inflows and outflows of the same currencies. The Group does not engage in
hedging transactions and therefore any movements in the primary transactional currencies will impact profitability. The Group
continues to monitor appropriateness of this policy.
The Group’s global operations create a translation exposure on the Group’s net assets since the financial statements of
entities with non-euro functional currencies are translated to euro when preparing the consolidated financial statements. The
Group does not use derivative instruments to hedge these net investments.
The principal foreign currency risks to which the Group is exposed relate to movements in the exchange rate of the euro
against US dollar, South African rand, Australian dollar, Swedish krona and Canadian dollar.
The Group has material subsidiaries with a functional currency other than the euro, such as US dollar, Australian dollar, South
African rand, Canadian dollar, British pound and Swedish krona.
The Group’s worldwide presence creates currency volatility when compared year on year. During 2020, currencies were
extremely volatile due to the COVID-19 Global pandemic, however the euro remained relatively steady against all major
currencies the Group trades in.
The US dollar, the largest currency the Group trades in outside the euro began to weaken at the beginning of H2 2020, and
steadily declined during that period and ended the year 9% weaker compared with 2019 year end. This weakening was
directly linked with economic uncertainty, with the US presidential elections tension that continued in 2021 while in the midst
of the COVID-19 Global pandemic.
In South Africa, where Mincon has a large presence in relative terms to the Group, the South Africa rand weakened at the
beginning of the COVID-19 Global pandemic as South Africa temporarily closed a large portion of its economy and more
specifically most of its mining sector. However, the South African rand did recover towards the latter stages of 2020 and
finished 14% behind the year end 2019.
The Australian dollar weakened in 2019, and the beginning of the COVID-19 Global pandemic compounded this in Q1
2020, as the Australian economy is very much dependent on the mining sector. As mining proved to be resilient during this
pandemic the Australian dollar began to recover through the remainder of the year and finished 2020 flat against the euro.
• The US dollar decreased by 9% against the closing 2019 euro rate (2019 increase of 2% against 2018).
• The Australian dollar remained flat against the closing 2019 euro rated (2019 increase of 2% against 2018).
In 2020, 57% (2019: 60%) of Mincon’s revenue €130 million (2019: €124 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.
Euro exchange rates
US dollar
Australian dollar
South African rand
Swedish krona
c) Credit risk
2020
2019
Closing
Average
Closing
Average
1.22
1.59
17.91
10.06
1.14
1.66
18.76
10.48
1.12
1.59
15.72
10.51
1.11
1.61
15.93
10.53
Credit risk is the risk that the possibility that the Group’s customers may experience financial difficulty and be unable to
meet their obligations. The Group monitors its collection experience on a monthly basis and ensures that a stringent policy is
adopted to provide for all past due amounts. The majority of the Group’s customers are third party distributors and end users of
drilling tools and equipment.
Expected credit loss assessment
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss and
applying experienced credit judgement. Credit risk grades are defined using quantitative factors that are indicative of the risk of
default and are aligned to past experiences. Loss rates are based on accrual credit loss experience over the past five years.
The maximum exposure to credit risk for trade and other receivables at 31 December 2020 and 31 December 2019 by
geographic region was as follows:
Ireland
Americas
Australasia
Europe, Middle East, Africa
Total amounts owed
2020
€’000
121
7,298
2,540
10,681
20,640
2019
€’000
88
6,141
4,495
9,622
20,346
The Group is also exposed to credit risk on its liquid resources (cash), of which the euro equivalent of €2.8 million was held in
US dollar (USD 3.5 million), €2.4 million was held in Swedish krona (SEK 24.7 million) and the euro equivalent of €1.7 million was
held Australian dollar (AUD 2.7 million). The Directors actively monitor the credit risk associated with this exposure, cash and
cash equivalents are held by major Irish, European, United States and Australian institutions with credit rating of A3 or better.
• The South African rand has decreased 14% against the closing 2019 euro rated (2019 increase of 4% against 2018).
• The Swedish Krona has increased 4% against the closing 2019 euro rated (2019 decrease of 3% against 2018).
d) Interest rate risk
Interest Rate Risk on financial liabilities
Movements in interest rates had no significant impact on our financial liabilities or finance cost recognised in either 2019 or 2020.
Interest Rate Risk on cash and cash equivalents
Our exposure to interest rate risk on cash and cash equivalents is actively monitored and managed, the rate risk on cash and cash
equivalents is not considered material to the Group.
106
107
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
23. 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
24. SUBSIDIARY UNDERTAKINGS
At 31 December 2020 the Group had the following subsidiary undertakings:
and willing parties, other than in a forced or liquidation sale. The contractual amounts payable less impairment provision of
Company
Group Share % Registered Office and Country of Incorporation
trade receivables, trade payables and other accrued liabilities approximate to their fair values. Under IFRS 7, the disclosure of
fair values is not required when the carrying amount is the reasonable approximation of fair value.
There are no material differences between the carrying amounts and fair value of our financial liabilities as at 31 December 2019
or 2020.
Financial instruments carried at fair value
The deferred contingent consideration payable represents management’s best estimate of the fair value of the amounts that
will be payable, discounted as appropriate using a market interest rate. The fair value was estimated by assigning probabilities,
based on management’s current expectations, to the potential pay-out scenarios.
Movements in the year in respect of Level 3 financial instruments carried at fair value
The movements in respect of the financial assets and liabilities carried at fair value in the year to 31 December 2020 are
as follows:
Balance at 1 January 2020
Arising on acquisition
Purchase of NCI
Cash payment
Foreign currency translation adjustment
Fair value movement on deferred contingent consideration
Balance at 31 December 2020
Deferred contingent consideration
€’000
4,962
1,257
1,000
(2,460)
(25)
(11)
4,723
Mincon International Limited
Manufacturer of rock drilling equipment
Mincon Rockdrills PTY Ltd
Manufacturer of rock drilling equipment
100%
Smithstown, Shannon, Co. Clare, Ireland
100%
8 Fargo Way, Welshpool, WA 6106, Australia
1676427 Ontario Inc. (Operating as Rotacan)
Manufacturer of rock drilling equipment
100%
400B Kirkpatrick Street, North Bay,
Ontario, P1B 8G5, Canada
Mincon Carbide Ltd
Manufacturer of tungsten carbide
Viqing Drilling Equipment AB
Manufacturer of drill pipe equipment
100%
Windsor St, Sheffield S4 7WB, United Kingdom
100%*
Svarvarevagen 1, SE-686 33 Sunne, Sweden
Mincon Inc.
Sales company
Mincon Sweden AB
Sales company
Mincon Nordic OY
Sales company
100%
603 Centre Avenue, N.W. Roanoke, VA 24016, USA
100%
Industrivagen 2-4, 61202 Finspang, Sweden
100%
Hulikanmutka 6, 37570 Lempäälä, Finland
Mincon Holdings Southern Africa (Pty)
Sales company
100%
1 Northlake, Jetpark 1469, Gauteng, South Africa
ABC Products (Rocky) Pty Ltd
Sales company
100%
2/57 Alexandra Street, North Rockhampton,
Queensland, 4701 Australia
Mincon West Africa SARL
Dormant company
Mincon West Africa SL
Sales company
Mincon Poland
Dormant company
Pacific Bit of Canada
Sales company
Mincon Rockdrills Ghana Limited
Dormant company
Mincon S.A.C.
Sales company
Ozmine International Pty Limited
Sales company
Mincon Chile
Sales company
Mincon Namibia Pty Ltd
Sales company
Mincon Mining Equipment Inc
Sales company
80%
Villa TF 4635 GRD, Almadies, Dakar B.P. 45534, Senegal
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 Canaria
100%
ul.Mickiewicza 32, 32-050 Skawina, Poland
100%
9485 189 Unit204, Surrey, BC V4N 5L8, Canada
100%
P.O. Box CT5105, Accra, Ghana
100%
Calle La Arboleda 151, Dpto 201, La Planicie, La Molina, Peru
100%
Gidgegannup, WA 6083, Australia
100%
Av. La Dehesa #1201, Torre Norte, Lo Barnechea, Santiago, Chile
100%
Ausspannplatz, Windhoek, Namibia
100%*
19789-92a Avenue, Langley, British Columbia V1M3B3, Canada
108
109
100%
Suite 1800-355 Burrard Street, Vancouver, BC V6C 268, Canada
Information about leases for which the Group is a lessee is presented below.
(i) Right‑of‑use assets
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
24. SUBSIDIARY UNDERTAKINGS (CONTINUED)
At 31 December 2020 the Group had the following subsidiary undertakings:
Company
Group Share % Registered Office and Country of Incorporation
Pirkanmaan Poraveikot OY PPV
Engineering company
Mincon Exports USA Inc.
Group finance company
Mincon International Shannon
Dormant company
Smithstown Holdings
Holding company
Mincon Canada Drilling Products Inc.
Holding company
Lotusglade Limited
Holding company
Floralglade Company
Holding company
Castle Heat Treatment Limited
Holding company
Mincon Microcare Limited
Holding company
Cebeko Elast AB
Holding company
Driconeq AB
Holding company
Driconeq Production AB
Manufacturing facility
Driconeq Fastighet AB
Property holding company
Driconeq Do Brazil
Sales company
Driconeq Africa Ltd
Sales company
Driconeq Australia Holdings Pty Ltd
Holding company
Driconeq Australia Pty Ltd
Manufacturing facility
Mincon Drill String AB
Holding company
100%*
Hulikanmutka 6, 37570 Lempäälä, Finland
100%
603 Centre Ave, Roanoke VA 24016, USA
100%*
Smithstown, Shannon, Co. Clare, Ireland
100%
Smithstown, Shannon, Co. Clare, Ireland
100%*
Smithstown, Shannon, Co. Clare, Ireland
100%
Smithstown, Shannon, Co. Clare, Ireland
100%*
Smithstown, Shannon, Co. Clare, Ireland
100%*
Smithstown, Shannon, Co. Clare, Ireland
100%*
Svarvarevagen 1, SE-686 33 Sunne, Sweden
100%
Svarvarevagen 4, 686 33 Sunne, Sweden
100%
Svarvarevagen 4, 686 33 Sunne, Sweden
100%
Svarvarevagen 4, 686 33 Sunne, Sweden
100%
Rua Dr. Ramiro De Araujo Filho, 348, Jundai, SP, Brazil
100%
Cnr of Harriet and James Bright Avenue, Driehoek. Germiston 1400
100%
47 Greenwich Parade, AU-6031 Neerabup, WA, Australia
100%
47 Greenwich Parade, AU-6031 Neerabup, WA, Australia
100%
Svetsarevägen 4, 686 33, Sunne, Sweden
25. LEASES
A. Leases as Lessees (IFRS 16)
The group leases property, plant and equipment across its global operations.
During 2020, one of the leased properties in Finland was sublet. The lease and sublease expire in 2023
During 2019, one of the leased properties in Australia was sublet. The lease and sublease expire in 2024.
The Group leases IT and other equipment with contract terms of less than 12 months and also for low value items. The
Group has elected not to recognise right-of -use assets and lease liabilities for these leases in line with availing of the
exemptions for such leases allowable under IFRS16.
Balance at 1 January
Depreciation charge for the year
Additions to right of use assets
Derecognition of right of use asset*
Foreign exchange difference
Balance at 31 December 2019
Balance at 1 January
Depreciation charge for the year
Additions to right of use assets
Disposal of right of use asset
Derecognition of right of use asset*
Foreign exchange difference
Balance at 31 December 2020
*Derecognition of the right of use asset during 2020 is as a result of entering into a finance sub-lease.
(ii) Amounts recognised in income statement.
31 December 2019
€’000
4,683
(1,344)
490
(455)
114
3,488
31 December 2020
€’000
3,488
(1,816)
3,487
(536)
(231)
(151)
4,241
EURL Roc Drill
100%
Rue Charles Rolland, 29650 Guerlesquin, France
*Indirectly held shareholding
Interest on lease liabilities
Expenses related to short term leases
Expenses related to leases of low value assets
Leases under IFRS 16
2020
€’000
332
314
95
741
2019
€’000
247
363
28
638
110
111
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
25. LEASES (CONTINUED)
(iii) Amounts recognised in statement of cash flows
Total cash outflow for leases
Total cash outflow of leases
(iv) Extension options
2020
€’000
1,579
1,579
2019
€’000
2,121
2,121
(ii) Operating leases
The group leases company owned property out to tenants in the USA under various agreements. The group recognises these
leases as operating leases from a lessor perspective due to the fact they do not transfer substantially all of the risks and
rewards incidental to the ownership of the assets.
Rental income recognised by the Group during 2020 was €213,000 (2019: €125,000).
The following table sets out a maturity analysis of lease receivable, showing the undiscounted lease payments to be received
after the reporting date.
Some property leases contain extension options exercisable by the Group. The Group assesses at lease commencement date
whether it is reasonably certain to exercise the extension options. The Group is reasonably certain it will not incur future lease
liabilities beyond what is currently calculated.
B. Leases as Lessor (IFRS 16)
(i) Financing Lease
The group subleased a properties that had been recognised as a right of use asset in Finland and Australia. The group
recognised income interest in the year in relation to this totalling €143,000.
Less than one year
One to two years
Two to three years
Three to four years
More than five years
Total
The following table sets out a maturity analysis of lease receivable, showing the undiscounted lease payments to be received
after the reporting date.
26. COMMITMENTS
31 December 2020
€’000
107
67
21
-
-
195
Less than one year
One to two years
Two to three years
Three to four years
More than five years
Balance at 31 December 2020
Unearned finance income
Total undiscounted lease receivable
31 December 2020
€’000
31 December 2019
€’000
188
185
138
138
140
-
-
513
(43)
470
135
135
-
546
(62)
484
31 December 2020:
Contracted for
Not-contracted for
Total
27. LITIGATION
31 December 2020
€’000
31 December 2019
€’000
3,044
521
3,565
358
-
358
The following capital commitments for the purchase of property, plant and equipment had been authorised by the directors at
The Group is not involved in legal proceedings that could have a material adverse effect on its results or financial position.
112
113
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
28. RELATED PARTIES
29. EVENTS AFTER THE REPORTING DATE
As at 31 December 2020, the share capital of Mincon Group plc was 56.54% owned by Kingbell Company which is ultimately
The Board of Mincon Group plc is recommending the payment of a full year dividend for the year ended 31 December 2020
controlled by Patrick Purcell and members of the Purcell family. Patrick Purcell is also a director of the Company.
in the amount of €0.021 (2.10 cent) per ordinary share, which will be subject to approval at the Annual General Meeting of the
In September 2020, the Group paid a final dividend for 2019 of €0.0105 to all shareholders. The total dividend paid to Kingbell
Company was €1,256,551 (September 2019: €1,256,551).
Company in May 2021. This dividend, is in respect to an interim dividend of 1.05 cent and final dividend of 1.05 cent. Subject to
Shareholder approval at the Company’s annual general meeting, the final dividend will be paid on 18 June 2021 to Shareholders
on the register at the close of business on 28 May 2021.
The Group has a related party relationship with its subsidiary and its joint venture undertakings (see note 24) for a list of these
Acquisition of the Hammer Drilling Rigs
undertakings), directors and officers. All transactions with subsidiaries eliminate on consolidation and are not disclosed.
Transactions with Directors
The Group is owed €Nil from directors and shareholders at 31 December 2020 and 2019. The Group has amounts owing to
directors of €Nil as at 31 December 2020 and 2019.
Key management compensation
The profit before tax from continuing operations has been arrived at after charging the following key management
compensation:
On 1 January 2021, the Group completed the acquisition of the Hammer Drilling Rigs (HDR), a specialist in supply of hard rock
drilling attachments based in the USA, for a consideration of €2.1 million. There is zero goodwill arising on acquisition as the
Group acquired the IP of the business, the full consideration will be amortised over the next five years.
30. APPROVAL OF FINANCIAL STATEMENTS
The Board of Directors approved the consolidated financial statements on 19 March 2021.
Short-term employee benefits
Share-based payment charged in the year
Bonus and other emoluments
Post-employment contributions
Social security costs
Total
2020
€’000
1,441
-
347
126
86
2,000
2019
€’000
1,369
67
10
68
133
1,647
The key management compensation amounts disclosed above represent compensation to those people having the authority
and responsibility for planning, directing and controlling the activities of the Group, which comprises the Board of Directors and
executive management (ten in total at year end). Amounts included above are time weighted for the period of the individuals
employment.
114
115
COMPANY STATEMENT
OF FINANCIAL POSITION
COMPANY STATEMENT OF CASH
FLOWS
As at 31 December 2020
For the year ended 31 December 2020
Notes
2
3
4
1
3
2020
€’000
67,242
67,242
25,447
90
1,334
26,871
94,113
2,117
67,647
39
2,259
17,260
89,322
3,000
3,000
1,000
633
158
1,791
4,791
2019
€’000
51,498
51,498
22,460
369
5,006
27,835
79,333
2,110
67,647
39
1,629
7,356
78,781
‑
‑
-
394
158
552
552
94,113
79,333
Operating activities:
Profit for the year
Share based payments
Loans to subsidiaries
Movement in loans to subsidiaries
Repayment of loans
Movement in other current assets
Movement in accruals
Movement in intercompany creditors
Net cash provided by operating activities
Investing activities
Redemption of/(investment in) short term deposits
Proceeds from the issuance of share capital
Investment in subsidiary undertakings
Net cash (used in)/provided by investing activities
Financing activities
Dividends
Drawdown of loan
Net cash provided by/(used in) financing activities
Effect of foreign exchange rate changes on cash
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The accompanying notes are an integral part of these financial statements.
2020
€’000
12,126
630
-
(2,987)
(1,000)
279
239
-
9,287
-
7
(15,744)
(6,450)
(2,222)
5,000
2,778
-
(3,672)
5,006
1,334
2019
€’000
6,012
355
-
3,783
1,063
(43)
-
11,170
-
5
(2,621)
8,554
(4,426)
-
(4,426)
-
4,128
878
5,006
Non‑Current Assets
Investments in subsidiary undertakings
Total Non‑Current Assets
Current Assets
Loan amounts owing from subsidiary companies
Other assets
Cash and cash equivalents
Total Current Assets
Total Assets
Equity
Ordinary share capital
Share premium
Undenominated capital
Share-based payment reserve
Retained earnings
Total Equity
Non‑Current Liabilities
Loans and borrowings
Total Non‑Current Liabilities
Current Liabilities
Loans and borrowings
Accrued and other liabilities
Amounts owed to subsidiary companies
Total Current Liabilities
Total Liabilities
Total Equity and Liabilities
The accompanying notes are an integral part of these financial statements.
On behalf of the Board:
Hugh McCollough
Joseph Purcell
Chairman
Chief Executive Officer
19 March 2021
116
117
COMPANY STATEMENT OF
CHANGES IN EQUITY
For the year ended 31 December 2020
Share
capital
€’000
Share
premium
€’000
Other
reserve
€’000
Balance at 01 January 2019
2,105
67,647
Comprehensive income:
Profit for the year
Total comprehensive income
Transactions with Shareholders:
Equity settled share
based payments
Share based payments
Dividends
-
5
-
-
-
-
-
-
Balances at 31 December 2019
2,110
67,647
Comprehensive income:
Profit for the year
Total comprehensive income
Transactions with Shareholders:
Equity settled share
based payments
Share-based payments
Dividends
-
7
-
-
-
-
-
-
Balances at 31 December 2020
2,117
67,647
‑
-
-
-
-
‑
-
-
-
-
‑
Unde‑
nominated
Capital
€’000
Share
based
payment
reserve
€’000
Capital
contri‑
bution
€’000
Retained
earnings
€’000
Total
equity
€’000
39
1,274
‑
5,770
76,835
-
-
-
-
-
-
355
-
6,012
6,012
6,012
6,012
-
5
-
(4,426)
355
(4,426)
39
1,629
‑
7,356
78,781
-
-
-
-
-
-
630
-
12,126
12,126
12,126
12,126
-
7
-
(2,222)
630
(2,222)
NOTES TO THE COMPANY
FINANCIAL STATEMENTS
1. SHARE CAPITAL
See note 20 of the Mincon Group plc consolidated financial statements for details of the authorised and issued share
capital of the company.
2. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
During the year ended 31 December 2020, Mincon Group plc subscribed for equity in the following subsidiaries as follows:
Balance at 1 January 2020
EURL Roc Drill
Investment in Pacific Bit
Investment in Viqing
Investment in Mincon Inc
Investment in Mincon West Africa
Investment in Mincon Exports USA
Investment in Mincon Tanzania
Balance at 31 December 2020
3. TRANSACTIONS WITH SUBSIDIARY COMPANIES
Investments in subsidiary
€’000
51,498
450
559
6,400
7,600
1,000
(32)
(233)
67,242
39
2,259
‑
17,260
89,322
At 31 December 2020, the Company had advanced €3 million (2019: €22.1 million) to subsidiary companies by way of
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
loans.
At 31 December 2020, the Company owed €158,000 (2019: €158,000) to subsidiary companies in relation to costs
incurred on its behalf.
4. SHORT-TERM DEPOSITS
At 31 December 2020, the Company had €1.3 million cash readily available (2019: €5.0 million).
5. EXEMPTION TO DISCLOSE SEPARATE FINANCIAL STATEMENT
Under Section 304 of the Companies Act 2014, the company has availed of an exemption not to disclose the Statement
of Comprehensive Income for the single entity and note that for the year-ended 31 December 2020, made a loss of €3.2
million but received dividends from subsidiary companies totaling €15.3 million leaving the profit after these dividends
were received at €12.1 million.
6. APPROVAL OF FINANCIAL STATEMENTS
The Board of Directors approved the financial statements on 19 March 2021.
118
119
MINCON GROUP PLC
Smithstown Industrial Estate,
Shannon, Co. Clare, Ireland.
T. +353 (61) 361 099
E. investorrelations@mincon.com
W. mincon.com
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