Mincon Grp Regulatory News (MCON)

Mincon Group plc

("Mincon" or the "Group")

2015 Full Year Financial Results

Mincon Group plc (ESM:MIO AIM:MCON), the Irish engineering group specialising in the design, manufacture, sale and servicing of rock drilling tools and associated products, announces its results for the year ended 31 December 2015.

Joe Purcell, Chief Executive Officer, commenting on the results, said:

"The Mincon Group has delivered another strong performance in 2015 despite the current cyclical downturn in the mining industry and the challenges faced by certain markets that we serve. In this difficult environment we grew our revenue by 29% and achieved an operating profit margin of 14%. Overall we have improved our market position with demand for Mincon product increasing approximately 8% on a like for like basis. The impact of acquisitions and foreign currency movements has also contributed to the increase in revenue in the year.

We are pleased with the robustness of our business model and the strong operating margin delivered by the Group. The exploration industry is cyclical in nature, driven by movements in the commodity prices of base and precious metals. Therefore our focus has always been on the production mining and other market sectors such as waterwell, geothermal and construction drilling, which are less cyclical and provide a more stable platform for the long term success and growth of the business. We are ambitious for further growth.

Mincon is continuing to make progress against targets outlined at the time of the initial public offering in November 2013 with the addition of a carbide manufacturer (Marshalls) in March 2015 in addition to a Rotary manufacturer (Rotacan) in August 2014. Together with the successful integration of acquired businesses, Rotacan and Marshalls, we also continued the significant expansion of our sales footprint over the past 12 months in South America, Australia and Africa. While continuing with this controlled growth, Mincon retains its focus on manufacturing products of the highest quality for its customers. We continue to believe this focus will position us as the supplier of choice for market participants when the industry emerges from the current cyclical downturn.

In conjunction with a focus on integration of the businesses acquired, including cost discipline, we continue to assess opportunities to grow our product range through acquisition or organic expansion."

Financial Performance

Revenue - Mincon Manufactured Products

Sales of Mincon manufactured product have increased by €11.0 million (26%) in 2015. This growth was primarily driven by three factors

- A growth of €3.3 million (8%) in legacy Mincon product sales (excluding currency movements), largely due to the Group's expanded global sales network.

- Additions to the Mincon product range through the acquisition of a Rotary product manufacturer, Rotacan, in 2014 and a tungsten carbide insert manufacturer, Marshalls, in 2015. Combined, these entities contributed approximately €5.5 million of the increase in revenue.

- Favourable foreign currency movements, mainly in the US dollar, contributing €2.2 million.

Revenue from our conventional down-the-hole (DTH) hammer represented 52% (2014: 59%) of Group turnover with sales of Reverse Circulation (RC), Horizontal Directional Drilling (HDD) and Rotary product representing 20% (2014: 18%) of Group turnover. Demand for our DTH product grew 8% (excluding currency) driven by an increase in market share in West Africa, Southern Africa and Australia. HDD product was flat year-on-year with a slight increase in the demand for RC product, primarily in Africa. RC product sales are more cyclical depending largely on the global prices for precious metals and the corresponding demand for exploration product and this market is currently at an extremely low ebb.

Revenue - Sale of third party products

Sales of non Mincon manufactured product increased overall by 37% (€4.8 million) year-on-year. This increase was driven by the opening of three additional sales offices in Chile, Western Australia and Tanzania during 2015 and the full year impact of opening sales offices in Namibia and Eastern Australia in August 2014. Offsetting these increases was a lack of drill rig sales in 2015 (€2.2 million in 2014).

Markets

EMEA continues to be the most significant market for Mincon, representing 49% (2014: 54%) of our revenue. Revenue in this region increased €5.0 million mainly due to acquisitions (Marshalls Carbide, Mincon Namibia and Mincon Tanzania). The Americas represents Mincon's second most significant market, representing 29% (2014: 29%) of our revenue. Revenue in this region increased by €5.0 million (32%) primarily due to the acquisition of Rotacan and the strength of the US Dollar. Excluding the impact of acquisitions and currency, revenue in the Americas declined due to market weakness in Canada. Revenues in the Australasia region represented 22% (2014: 17%) of our revenue. Revenue in this region increased by €5.7m (60%) due to the acquisition of two new sales offices in the region.

Gross Profit Margins

The gross margin reduced by 3% to 40% in 2015 primarily due to the 37% increase in third party product sales, which earn a lower margin for the Group. Additionally, sales of tungsten carbide product earn a significantly lower gross margin than other Mincon manufactured products. Other factors impacting the gross margin for the year were pricing pressure on Mincon product sales and the impact of a reduction in RC product sales. Management's primary focus is on the growth in sales of Mincon manufactured product, which generates a significantly higher margin than the distributorship margin received on the sale of third party product.

Currency

The Group's worldwide presence creates currency volatility when compared year on year. In 2015, there were two major movements in Mincon's operational currencies:

- A strengthening in the US Dollar of 16% on average compared to 2014, which resulted in an increase in the reported revenue for the year. However, Mincon has a significant US Dollar cost base through our operations in Illinois and Virginia in the USA and North Bay in Canada. As a result, the strengthening US Dollar did not significantly impact reported profit for 2015.

- A significant devaluation in the South African rand in the second half of the year with the closing rate being 20% lower than at 31 December 2014. This was the primary factor in a foreign currency loss of €1.2 million being recorded as a financing expense.

While Group management makes every effort to reduce the impact of this currency volatility, it is impossible to eliminate or significantly reduce this volatility given the location and currency denomination of our primary manufacturing facilities (mainly euro, GBP or USD denominated) and the markets which we serve (45% of revenue is to non-euro, GBP or USD markets). Additionally, the ability to increase prices for our products in these jurisdictions is limited by current market factors.

Operating Costs

Operating costs have increased by €5.1 million (39%) to €18.3 million primarily due to the seven acquisitions completed between August 2014 and March 2015, which added €4.1 million in operating expenses including restructuring and acquisition related costs. Other operating costs increased €1.0 million predominantly due to foreign currency movements (€0.4 million) and the growth in our operations. The Group implemented a number of cost reduction efforts during the year, but also invested in sales and research and development personnel to support the future growth of Mincon.

Operating Profit and Profit attributable to shareholders

Operating profit declined €0.4 million (3%) in 2015 as the increase in gross profit was more than offset by the increase in operating expenses as outlined above. Profit attributable to shareholders reduced by €1.2 million largely due to the following factors:

- A reduction in operating profit of €0.4 million;

- A reduction in net interest income of €0.4 million due to the reduction in deposit interest rates;

- A foreign exchange loss of €1.2 million compared to a gain in 2014 of €0.6 million;

- A gain of €0.7 million (2014: loss of €0.2 million) on the deferred contingent liability comprising a positive foreign exchange movement of €0.4 million and a gain of €0.3 million following the early completion of the ABC Products buyout in Eastern Australia.

Balance Sheet and Cash Flows

Mincon's balance sheet remains very strong with net assets of €97.9 million and net cash of approximately €38.6 million (2014: €41.7 million) available for investment. The increase in net working capital of €2.7 million during 2015 was primarily attributable to the acquisitions in the year, which added €1.4 million on acquisition and a further investment in the working capital of these entities of €3.4 million with a view to increasing Mincon's market share. Offsetting this increase, has been the impact of foreign currency which has reduced reported inventory by approximately €1.0 million at 31 December 2015 compared to 31 December 2014.

During 2015, the Group generated €9.4 million (2014: €6.7 million) in cash from operations (excluding financing and tax), compared to an operating profit of €10.0 million (2014: €10.4 million). The majority of this cash from operations was generated in the second half of 2015 as the Group introduced a number of initiatives to reduce working capital levels in the Group. Management continue to focus on working capital management and have an objective of generating consistent free cash flow from operations equal to operating profit in future.

Dividend

The Board of Mincon Group plc is recommending the payment of a final dividend for the year ended 31 December 2015 in the amount of €0.01 (1 cent) per ordinary share, which will be subject to approval at the Annual General Meeting of the Company in May 2016. This final dividend, when added to the interim dividend of 1 cent paid on 25 September 2015, makes a total distribution for the year of 2 cent per share.

Business Outlook

The business environment in our market segment remains challenging and we have yet to see evidence that demand in our market segment will change significantly during 2016. Management are taking steps to adjust the Group's cost base and working capital to reflect current trading levels. The risk posed by the volatility in currency markets remains a concern.

We continue to increase our international sales network and maintain a strong emphasis on new product development aimed at improving and expanding the existing product range. Additionally, we are continuing discussions with a number of potential acquisition targets with a view to extending the Group's product range and adding new customers and new geographic markets.

ENDS

9 MARCH 2016

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CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the Year Ended 31 December 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Year Ended 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2015

NOTES TO THE CONSOLIDATED PRELIMINARY FINANCIAL INFORMATION

1.  Description of business

The consolidated financial statements of Mincon Group Plc (also referred to as "Mincon" or "the Company") comprises the Company and its sub-sidiaries (together referred to as "the Group") and the Group's interest in joint ventures.

The Group is an Irish engineering group, specialising in the design, manufacturing, sale and servicing of rock drilling tools and associated products. Mincon Group Plc is domiciled in Shannon, Ireland.

Mincon Group plc was incorporated on 16 August 2013 as Manrock plc under the laws of the Republic of Ireland. Manrock plc changed its name to Mincon Group plc (the "Company") on 23 September 2013.

In the period to 30 August 2013, the business of Mincon was conducted through Smithstown Holdings and its subsidiaries. On 30 August 2013, pursuant to a reorganisation Mincon Group plc 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. Following that reorganisation, Mincon Group plc is now the holding company of the Mincon Group.

The Mincon Group comprises Mincon Group plc and its subsidiaries (including Smithstown Holdings) as outlined in Note 20. The consolidated financial statements of Mincon Group plc are prepared on the basis that the Company is a continuation of the Smithstown Holdings Group, reflecting the substance of the arrangement.

On 26 November 2013, Mincon Group plc was admitted to trading on the Enterprise Securities Market (ESM) of the Irish Stock Exchange and the Alternative Investment Market (AIM) of the London Stock Exchange.

2.  Basis of Preparation

The accounting policies set out in note 3 have been applied consistently in preparing the preliminary financial information for the years ended 31 December 2015 and 31 December 2014.

The Group preliminary financial information 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 indi-cated, the amounts are presented in thousands of euro. This preliminary financial information are prepared on the historical cost basis.

The preparation of the consolidated preliminary financial information 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 preliminary financial information 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 preliminary financial information on a going concern basis.

2.  Basis of Preparation (continued)

New standards and interpretations

The accounting policies applied in the preparation of this consolidated preliminary financial information have been applied consistently during the year and prior year, except as highlighted below in 'Recent accounting pronouncements'.

Recent accounting pronouncements

A number of new Standards, Amendments to Standards and Interpretations are effective for annual periods beginning after 1 January 2016, and have not been applied in preparing this consolidated preliminary financial information. These are set out as follows:

· Annual improvements to IFRSs 2010-2012 Cycle

· Annual Improvements to IFRSs 2012-2014 Cycle

· Amendments to IAS 1: Disclosure Initiative

· Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation

· Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Bearer Plants

· Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an investor and its associate or joint venture*

· IFRS 9 Financial Instruments (2009, and subsequent amendments in 2010 and 2013)*

· IFRS 15: Revenue from contracts with customers*

* These Standards, Interpretations and Amendments to Published Standards have yet to be endorsed by the EU and will only be implemented once they have been endorsed by the EU.

The Group has not yet completed its assessment of the full impact on the Group financial statements of these new Standards, Interpretations and Amendments to Published Standards.

Amendments to existing standards

During the period, a number of amendments to existing accounting standards became effective. These have been considered by the directors and have not had a significant impact on the Group's consolidated preliminary financial information.

New IFRSs not yet adopted

The following provides a brief outline of the likely impact on future financial statements of relevant IFRSs which are not yet effective and have not been adopted early in this consolidated preliminary financial information.

· IFRS 15 'Revenue from Contracts with Customers' (effective for the Group's 2017 consolidated financial statements)

· IFRS 9 'Financial Instruments' (effective for the Group's 2018 consolidated financial statements)

· IFRS 16 'Leases' (effective for the Group's 2019 consolidated financial statements)

The directors do not believe that either of the above standards will have a significant impact on Group reporting. There are other amendments which have been considered but are not likely to have a significant impact on the Group's accounting policies.

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 preliminary financial information and for all entities included in the consolidated preliminary financial information.

Revenue recognition

Segment reporting

3. Significant accounting principles, accounting estimates and judgements (continued)

Earnings per share

Income taxes

Inventories

Foreign currency

Foreign currency transactions

3. Significant accounting principles, accounting estimates and judgements (continued)

Business combinations and consolidation

Property, plant and equipment

Depreciation

The following useful lives are used for depreciation:

Years

The depreciation methods, useful lives and residual values are reassessed annually. Land is not depreciated.

3. Significant accounting principles, accounting estimates and judgements (continued)

Leased assets

Financial assets and liabilities

Recognition and derecognition

Financial assets and liabilities are recognised at fair value when the Group becomes a party to the contractual provisions of the instrument. Purchases and sales of financial assets are accounted for at trade date, which is the day when the Group contractually commits to acquire or dispose of the assets. Trade receivables are recognised on delivery of product. Liabilities are recognised when the other party has performed and there is a contractual obligation to pay. Derecognition (fully or partially) of a financial asset occurs when the rights to receive cash flows from the financial instruments expire or are transferred and substantially all of the risks and rewards of own-ership have been removed from the Group. The Group derecognises (fully or partially) a financial liability when the obligation specified in the contract is discharged or otherwise expires. A financial asset and a financial liability are offset and the net amount presented in the statement of financial position when there is a legally enforce-able 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 liabil-ity 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, transac-tion costs, and all other premiums or discounts.

Borrowing costs

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

Equity

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.

Financial income and expenses

3. Significant accounting principles, accounting estimates and judgements (continued)

Provisions

Exceptional items

The Group has used the term "exceptional" to describe certain items which, in management's view, warrant separate disclosure by virtue of their size or incidence, or due to the fact that certain gains or losses are determined to be non-recurring in nature. Exceptional items may include restructuring, significant impairments, profit or loss on asset disposals, material changes in estimates or once off costs where separate identification is important to gain an understanding of the preliminary financial information.

Defined contribution plans

Critical accounting estimates and judgements

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.

Trade and other receivables

4. Revenue

5. Operating Segments

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 2015 of €70.3 million (FY2014: €54.5 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, Western Australia, the United States and Canada and sales offices in eight other locations including Eastern & Western Australia, South Africa, Senegal, Ghana, Namibia, Tanzania, Sweden, Poland, Chile and Peru. In presenting information on geography, revenue is based on the geographical location of customers and non-current assets based on the location of these assets.

Revenue by region (by location of customers):

6. Cost of Sales and operating expenses

Included within cost of sales, selling and distribution expenses and general and administrative expenses were the following major components: 

General, selling and distribution expenses

Pension and Other Employee Benefit Plans

The Group operates various defined contribution pension plans. During the year ended 31 December 2015, the Group recorded €0.7 million (2014: €0.4 million) of expense in connection with these plans.

8. Acquisitions

A key strategy of the Group is to increase and diversify its product portfolio and to extend its distribution network through acquisitions. In line with this strategy, the principal acquisitions completed by the Group during the year ended 31 December 2015, together with percentages acquired were as follows:

· the acquisition of 100% of Ozmine International Pty Limited, a sales and distribution company in Western Australia. Ozmine will extend Mincon's distribution network in Western Australia, Indonesia and Papua New Guinea in line with the Mincon stated strategy to supply product directly to the end user where possible. The deal was completed in January 2015.

· the acquisition of 100% of Marshalls Carbide, one of Europe's leading tungsten carbide manufacturers located in Sheffield, England. Marshalls Carbide Limited, a 100% subsidiary of Mincon Group plc acquired the entire business and assets of Marshalls Carbide Hard Metals Limited.

Tungsten carbide insets are a key raw material in Mincon manufactured product and this strategic investment further strengthens Mincon's control over the production process and quality control procedures employed in the manufacturing process. The deal was completed in March 2015.

· the acquisition of 70% of Two Tusks Tanzania Limited, a sales and distribution company based in Tanzania, completed in March 2015.

· the acquisition of 100% of Rotacan Sudamericana, SA a sales and distribution company based in Chile, completed in March 2015.

* Full legal names disclosed in Note 20.

In the twelve months to December 2015, these acquisitions contributed net additional revenue of €5.7 million and €0.1 million net loss to the Group's results. If all the acquisitions had occurred on 1 January 2015, management estimates that net additional revenues from these acquisitions would have been €7.1 million. Consolidated profit for the year would not have changed materially. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2015.

A. Consideration transferred

The following table summarises the acquisition date fair value of each major class of consideration transferred.

Deferred contingent consideration

Ozmine

The previous owners of Ozmine will receive additional payment up to the maximum of €680,000 over three years based on the achievement of certain profits by the business during the years ending 31 December 2015, 2016 and 2017. This deferred contingent consideration is included in the fair value of the consideration transferred in the table above.

Two Tusks

Mincon has an option to purchase the remaining 30% of Two Tusks in three years (for consideration based on a profit after tax multiple). The 30% shareholder will also have a put option beginning in three years' time.

In accordance with IFRS 3 Business Combinations, the Group has accounted for the put and call option arrangement under the anticipated acquisition method and accordingly the financial liability arising from the arrangement is included in the fair value of the consideration transferred as deferred contingent consideration in the table above. No non-controlling interests are presented on the basis that the Group has treated the put option as a financial liability that is outside management control.

8. Acquisitions (continued) 

B. Identifiable assets acquired and liabilities assumed

The following table summarises the recognised amounts of assets and liabilities assumed at the date of acquisition.

Measurement of fair values

The valuation techniques used for measuring the fair value of material assets acquired were as follows.

If the information obtained within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition identifies adjustments to the above amounts, or any additional provisions that existed at the date of acquisitions, then the accounting for the acquisition will be revised.

C. Goodwill

Goodwill arising from the acquisition has been recognised as follows.

The goodwill created in the acquisition in the period is primarily related to the synergies expected to be achieved from integrating these companies into the Group's existing structure. Manufactured carbide product will be sold to the Groups existing manufacturing facilities and the new sales office are expected to increase Mincon's market share and sale of own manufactured product.

D. Acquisition - related costs

Acquisition related costs amounted to approximately €175,000 and were included in "operating expenses" in the income statement.

9. Statutory and other required disclosures

(a) Includes tax compliance work on behalf of Group companies.

10.  Income tax

Tax recognised in profit or loss:

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:

10.  Income tax (continued)

The Group's net deferred taxation liability was as follows:

The movement in temporary differences during the year were as follows:

10.  Income tax (continued)

Deferred taxation assets have not been recognised in respect of the following items:

11. Goodwill

Goodwill relates to the acquisition of the remaining 60% of DDS-SA Pty Limited in November 2009, the 60% acquisition of Omina Supplies in August 2014 and the 65% acquisition of Rotacan and ABC products in August 2014, the acquisition of Ozmine in January 2015 and the acquisition of Mincon Chile and Mincon Tanzania in March 2015. being the dates that the Group obtained control of these businesses. 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 analyses) is performed at each period end. Group management has determined that the Group has a single cash generating unit and therefore all goodwill is tested for impairment at Group level.

The recoverable amount of goodwill has been assessed based on estimates of value in use. Calculations of value in use are based on the estimated future cash flows using forecasts covering a five-year period and terminal value (based on three year plans prepared annually). The most significant assumptions are revenues, operating profits, working capital and capital expenditure. A growth rate of 3% was applied for all periods after the three years budgeted. The pre-tax discount rate in 2015 was assumed to amount to 11% (2014: 11%) after tax (approximately 14% before tax) and has been used in discounting the cash flows to determine the recoverable amounts. Goodwill impairment testing did not indicate any impairment during any of the periods being reported. Sensitivity in all calculations implies that the goodwill would not be impaired even if the discount rate increased substantially or the long-term growth was lowered to zero.

12. Other non-current assets

(1) Mincon Equipment Inc. was incorporated on 13 June 2013. This company is owned 50:50 by Mincon and the Gaudet family. Mincon Group plc had advanced €171,000 to this entity as at 31 December 2014, this amount was fully repaid to Mincon Group plc by 31 December 2015.

(2) In September 2008, the Group invested in TJM, a drilling equipment and supplies company based in Pennsylvania. The Group disposed of its investment in March 2012. The consideration for sale of the Group's shareholding was a US$700,000 interest bearing loan note repayable over 6 years. As at 31 December 2015, an amount of $373,000 was outstanding on this loan.

13. Property, Plant and Equipment

(1) Land and buildings include leasehold improvement assets.

The depreciation charge for property, plant and equipment is recognised in the following line items in the income statement:

Finance leases

The Group leases plant and equipment under a number of finance lease arrangements. The leased equipment secures lease obligations. At 31 December 2015, the net carrying amount of leased plant and equipment was € million (2014: €1.1 million).

14. Inventory

The company recorded write-downs of €0.45 million against inventory to net realisable value during the year ended 31 December 2015 (2014: €Nil). Write-downs are included in cost of sales. Included in capital equipment inventory are third party rigs held for resale in Southern Africa. At 31 December 2013, the Group had paid deposits on this capital equipment totalling €1.0m, which was included in other current assets.

15. Trade and other receivables

At 31 December 2015, €1.5 million (11%) of trade receivables of our total trade and other receivables balance was past due but not impaired (2014: €1.4 million (12%)).

No customer accounted for more than 10% of trade and other receivables balance at any period end.

16. Loans and borrowings

The Group has a number of bank loans and finance leases in the United States and Australia 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. None of the debt agreements carry restrictive financial covenants.

In January 2014, Mincon Rockdrills Pty Limited drew down AUS$2.4 million (circa €1.6 million) on a 15 year variable interest loan which is secured on land & buildings of that company with a net book value of approximately AUS$3,500,000 (circa €2.3 million). AUS$1.2 million (€0.8 million) has been repaid by 31 December 2015. In December 2014, Mincon Inc. drew down US$338,000 (circa €0.3 million) on a 10 year variable interest loan which is secured on land and buildings of that company with a net book value of approximately USD$528,000 (circa €0.4 million).

In April 2015, Mincon Rockdrills USA Inc. drew down US$1,200,000 (circa €1.2 million) on a 5 year fixed finance lease which is secured on plant and equipment of that company with a net book value of approximately USD$1,059,000 (circa €1.0 million).

17. Share capital and reserves

Share Issuances

Voting rights

Dividends

On 26 September 2014, Mincon Group plc paid an interim dividend for 2014 in the amount of €0.01 (1 cent) per ordinary share. On 30 June 2015, Mincon Group plc paid a final dividend for 2014 of €0.01 (1 cent) per ordinary share. On 25 September 2015, Mincon Group plc paid an interim dividend for 2015 of €0.01 (1 cent) per ordinary share. The directors are recommending a final dividend of €0.01 (1 cent) per ordinary share for 2015 which will be subject to approval at the company's AGM on 29 May 2016.

Share premium and other reserve

As part of the Group reorganisation which is described in note 1 of the 2013 Annual Report, 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.

As a consequence of the Company electing to record the investment in Smithstown Holdings at cost a difference of €79.3 million arose between this investment and the amount that company law requires to be included in share capital and share premium. This amount was recorded as an "other reserve" in the Company's Statement of Financial Position.

The members of the Company passed a resolution on 1 November 2013 that, subject to the confirmation of the High Court of Ireland, the Company's share capital be reduced by an amount of €79.3 million and that the reserve so created would be used to cancel the other reserve (or such part thereof as the High Court of Ireland may determine). The application to the High Court was heard on 1 May 2014 and, by order of the High Court, the Company reduced its share premium account by €79.3 million and used the reserve so created to eliminate its "other reserve". As a result, the Company is capable, subject to it having distributable reserves, of declaring dividends.

18. Earnings per share

Basic earnings per share (EPS) is computed by dividing the profit for the period available to ordinary shareholders by the weighted average number of Ordinary Shares outstanding during the period. Diluted earnings per share is computed by dividing the profit for the period by the weighted average number of Ordinary Shares outstanding and, when dilutive, adjusted for the effect of all potentially dilutive shares. The following table sets forth the computation for basic and diluted net profit per share for the years ended 31 December:

There were a number of outstanding restricted share awards (RSAs) in issue at 31 December 2014 and 2015 (Note 19). None of the RSAs were dilutive at 31 December 2014 or 2015 for the purposes of the EPS calculations.

19. Share based payment

During the year ended 31 December 2014, the Remuneration Committee of the Board of Directors made its first grant of approximately 193,000 Restricted Share Awards (RSAs) to members of the senior management team, excluding executive directors. There have been no subsequent grants. The terms and conditions of the Group's Long Term Incentive Plan are disclosed in section 10 of Part IV of the Group's Admission Document dated 20 November 2014. The fair value of services received in return for RSAs granted are measured by reference to the fair value of RSAs granted.

20. Subsidiary and Associate Undertakings

At 31 December 2015, the Group had the following subsidiary undertakings:

* Indirectly held shareholding

(1) Non-controlling shareholder has a put option and consequently recorded as a liability rather than non-controlling interest.

21. Litigation

The Group is not involved in legal proceedings that could have a material adverse effect on its results or financial position.

22. Related Parties

As at 31 December 2015, the share capital of Mincon Group plc was 56.84% (2014: 56.84%) owned by Kingbell Company which is ultimately controlled by Patrick Purcell and members of the Purcell family. Patrick Purcell is also a director of the Company. Ballybell Limited, a company controlled by Kevin Barry, holds 14.21% (2014: 14.21%) of the equity of the Company.

In September 2015, the Group paid an interim dividend for 2015 of €0.01 to all shareholders. The total dividend paid to Kingbell Company and Ballybell Limited was €1,196,712 and €299,178, respectively.

In June 2015, the Group paid a final dividend for 2014 of €0.01 to all shareholders. The total dividend paid to Kingbell Company and Ballybell Limited was €1,196,712 and €299,178, respectively.

In September 2014, the Group paid an interim dividend for 2014 of €0.01 to all shareholders. The total dividend paid to Kingbell Company and Ballybell Limited was €1,196,712 and €299,178, respectively.

The Group has a related party relationship with its subsidiary and its joint venture undertakings (see Note 20 for a list of these undertakings), directors and officers. All transactions with subsidiaries eliminate on consolidation and are not disclosed.

Transactions with Directors

The Group is owed €Nil from directors and shareholders at 31 December 2015 and 2014. The Group has amounts owing to directors of €Nil as at 31 December 2015 and 2014.

Key management compensation

The profit before tax from continuing operations has been arrived at after charging the following key management compensation:

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 (nine total).

23. Events after the reporting date

The Board of Mincon Group plc is recommending the payment of a final dividend for the year ended 31 December 2015 in the amount of €0.01 (1 cent) per ordinary share, which will be subject to approval at the Annual General Meeting of the Company in May 2016. This final dividend, when added to the interim dividend of 1 cent paid on 25 September 2015, makes a total distribution for the year of 2 cent per share.