TIDMGDWN
RNS Number : 8476J
Goodwin PLC
22 August 2019
PRELIMINARY ANNOUNCEMENT
Goodwin PLC today announces its preliminary results for the year
ended 30th April 2019.
CHAIRMAN'S STATEMENT
I am pleased to report a like-for-like 11% increase in pre tax
profits to GBP14.7 million (2018: GBP13.3 million), as detailed in
note 3 of the Accounts to be published shortly. Revenue of GBP127
million (2018: GBP125 million) is up 1.8% on the figures reported
for the same period in the last financial year. The Directors
propose an increased dividend of 96.21p (2018: 83.473p), a 15.3%
increase.
Furthermore, I am also delighted to confirm that we have seen a
significant rise in the level of sales order input within our
Mechanical Engineering Division. Whilst some individual elements
would not be notifiable the aggregation is significant for the
Group. With this exceptional input, I am able to confirm that, at
the time of writing, the Group order input since the start of the
new financial year stands at GBP93 million and the total forward
order book stands at a record GBP165 million (July 2018: GBP85
million), a 94% increase from this time last year, with yet more
large long-term contracts, that we have been targeting over the
past few years, still to be placed.
Due to contractual requirements the Company cannot divulge all
successes in relation to the significant increase in order intake.
However we can confirm that several orders have multi-year delivery
requirements and the Board foresees little risk in executing them,
as they utilise the respective companies' core strengths within
Goodwin Steel Castings and Goodwin International.
Of particular note in the Mechanical Engineering Division,
Goodwin Steel Castings has undergone major change, not only in
returning to profitability in the year but also completing its
extensive upgrade programme that gives it increased weight
capability (casting up to 35 tonnes net weight castings in
impact-resistant carbon, stainless and duplex stainless steels) and
puts it in a unique global position. With the work that they have
gone out and won internationally to date, which is now starting to
be delivered, they will never again be as reliant on the
petrochemical industry. One such multi-million dollar order Goodwin
Steel Castings has received is for cast and machined radiation
shielding containment vessels for the USA nuclear decommissioning
market.
Easat Radar Systems reported a loss due to lack of throughput
and excessive work in progress (WIP) over the year, combined with
contract delays whilst working to finalise an off-the-shelf radar
system for a major customer. The final documentation approvals for
this are all but complete now, which should allow for a reduction
in approximately GBP5 million of WIP this current year as radar
systems are shipped.
Over the past decade, Goodwin International has worked closely
with world leading valve stockist, RP Valves, who have stocked and
re-sold Goodwin dual plate valves. We are pleased to announce that
RP Valves has placed a multi-million pound order for axial valves
with Goodwin International. By RP Valves ordering premium
specification product in bulk at their risk, only selling single
items to customers when they have a requirement, it will increase
Goodwin's overall axial valve sales in the future as this will lead
to Goodwin product being utilised for MRO (Maintenance, Repair and
Operational) work, which seldom happens for axial valves, normally
due to the project based nature of the business.
Utilising a beneficial twenty year fixed borrowing rate of
1.89%, that was available as a result of the European economic
conditions during the year, Noreva took the opportunity to stop
renting and purchased the 1.85 acre site that the company is
situated on in Mönchengladbach, Germany.
Our Refractory Engineering Division has maintained the
significant increase in market share in the investment casting
powder sector that it gained last financial year when its major
competitor Kerr ceased manufacture. Whilst operating profits in
April 2019 have risen only 7.2% compared to April 2018, we will
start to see sales within the new financial year of the "Silica
Free" investment powder technology, for which a patent application
was filed in April 2019, with early adopters likely to be the more
western countries. This new technology will enable the division to
further grow its global market share and help further increase its
gross margins in years to come.
The global awareness of the risks of lithium battery fires and
requirement for a solution continues to grow. Within the year,
Dupré Minerals has put in place a manufacturing agreement with a
French company that will manufacture AVD fire extinguishers for
Europe.
During the financial year, Goodwin PLC signed an agreement to
purchase a 26% minority interest in Jewelry Plaster (Thailand),
converting it into a 75% owned subsidiary. We also acquired a
further 24% equity in Ultratec (China) and in SRS QD (China) making
these 75% owned subsidiaries. We would like to thank our departing
Thai equity partner for his efforts in growing these overseas
subsidiaries.
Our current working capital as a percentage of revenue is the
same as the Group average has been for the last 10 years, resulting
in modest gearing of 20% (2018: 11%), despite the high work in
progress values within Easat.
We continue to retain, train and develop our employees, with a
new cohort of 25 apprentices starting in the Goodwin Engineering
Training Centre later this year. The Training Centre is now on the
UK register of Learning Providers as well as being approved by the
necessary exam boards. With these accreditations in place, the
apprenticeship levy on the Group's UK wage bill can now start to be
offset against its running costs. We recognise the importance of
nurturing talent and bringing highly capable people either through
or into the business, as with record low unemployment levels in the
UK, we are continuing with our strategy to ensure that we have the
right people with the right skill sets to competently execute the
work as we grow.
The Board would like to thank John Goodwin and Richard Goodwin,
following their retirement from the Board, for their achievement in
leading the Company over the past twenty-seven years as Chairman
and Managing Director respectively. Over this period the Group's
annual pre tax profits increased thirty-three fold and benefitted
from the addition of seventeen new subsidiaries, fifteen of which
are overseas and the majority of which are located in high growth
developing countries. Over the three year period ending 30th April,
2019, the overseas companies have contributed in excess of 50% of
pre tax profits, thus emphasising their importance to the Group,
from what were small beginnings. The Board is pleased that John and
Richard's extensive knowledge will not be lost to the Group as they
remain members of the Audit Committee.
Due to the diversity of the business and the global reach, the
Board has decided to split the role of Managing Director between
Mechanical Engineering and Refractory Engineering, such that
appropriate focus and energy can be applied to continue growing
these two important but quite different divisions.
Matthew, Simon and I are pleased to have the opportunity to
serve as the new Mechanical Engineering Division Managing Director,
Refractory Engineering Division Managing Director and Chairman,
working with the rest of the Board and Senior Management to carry
on driving the Company forwards, for the benefit of all
stakeholders.
The Board is once again indebted to our employees and former
members of the Board for their devotion to the Group's long-term
performance. It is as a result of their outstanding work ethic that
the Group has never before been in such a favourable position.
22 August, 2019 T.J.W. Goodwin
Chairman
Alternative performance measures mentioned above are defined in
note 7.
OBJECTIVES, STRATEGY AND BUSINESS MODEL
The Group's main OBJECTIVE is to have a sustainable long-term
engineering based business with good potential for profitable
growth while providing a fair return to our shareholders.
The Board's STRATEGY to achieve this is:
-- to supply a range of technically advanced products to growth
markets in the mechanical engineering and refractory engineering
segments in which we have built up a global reputation for
engineering excellence, quality, efficiency, reliability, price and
delivery;
-- to manufacture advanced technical products profitably, efficiently and economically;
-- to maintain an ongoing programme of investment in plant,
facilities, sales and marketing, research and development with a
view to increasing efficiency, reducing costs, increasing
performance, delivering better products for our customers,
expanding our global customer base and keeping us at the forefront
of technology within our markets, whilst at all times taking
appropriate steps to ensure the health and safety of our employees
and customers;
-- to control our working capital and investment programme to ensure a safe level of gearing;
-- to maintain a strong capital base to retain investor,
customer, creditor and market confidence and so help sustain future
development of the business;
-- to support a local presence and a local workforce in order to stay close to our customers;
-- to invest in training and development of skills for the Group's future.
BUSINESS MODEL
The Group's focus is on manufacturing within two sectors,
mechanical engineering and refractory engineering, and through this
division of our manufacturing activities, the Group benefits from
market diversity. Further details of our business and products are
shown on our website www.goodwin.co.uk/2019
Mechanical Engineering
The Group designs, manufactures and sells a wide range of dual
plate check valves, axial nozzle check valves and axial piston
control and isolation valves to serve the oil, petrochemical, gas,
liquefied natural gas (LNG) and water markets. We generate value by
creating leading edge technology designs, globally sourcing the
best quality raw material at good prices, manufacturing in highly
efficient facilities using up to date technology to provide very
reliable products to the required specification, at competitive
prices and with timely deliveries.
Our mechanical engineering markets also include high alloy
castings, machining and general engineering products which
typically form part of large construction projects such as power
generation plants, oil refineries, high integrity offshore
structural components and bridges. The Group through its foundry,
Goodwin Steel Castings, has the capability to pour high performance
alloy castings up to 35 tonnes, radiograph and also finish CNC
machine and fabricate them at the foundry's sister company, Goodwin
International. This capability is targeting the defence industry
and nuclear decommissioning, the oil and gas industry, as well as
large, global projects requiring high integrity machined
castings.
Goodwin International, the largest company in the mechanical
engineering division, not only designs and manufactures dual plate
check valves, axial nozzle check valves and axial piston control
and isolation valves but also undertakes specialised CNC machining
and fabrication work for nuclear decommissioning projects. Goodwin
International also has a division that is focussed on manufacturing
/ machining high precision, high integrity components for naval
marine vessels. Noreva GmbH also designs, manufactures and sells
axial nozzle check valves. Both Goodwin International and Noreva
purchase the majority of the value of their sand mould castings
from Goodwin Steel Castings and this vertical integration gives
rise to competitive benefits, increased efficiencies and timely
deliveries.
At Goodwin Pumps India we manufacture a superior range of
submersible slurry pumps for end users in India, China, Brazil,
Australia and Africa. Easat Radar Systems (Easat) and its
subsidiary, NRPL, design and build bespoke high-performance radar
antenna systems for the global market of major defence contractors,
civil aviation authorities and border security agencies. Easat has
a sister company, Easat Radar Systems India, that also
manufactures, sells and maintains radar systems for air traffic
control. We create value on these by innovative design, assembly
and testing in our own facilities using bought in or engineered
in-house components.
Refractory Engineering
Within the refractory engineering division, Goodwin Refractory
Services (GRS) primarily generates value from designing,
manufacturing and selling investment casting powders waxes and
silicon rubber to the jewellery casting industry. GRS also
manufactures and sells investment casting powders to the tyre mould
and aerospace industries. The refractory engineering division has
six other investment powder manufacturing companies located in
China, India, Thailand and Brazil which sell the casting powders
directly and through distributors to the jewellery casting
industry.
These companies are vertically integrated with another of our UK
companies, Hoben International, which manufactures cristobalite,
which it sells to the seven casting powder manufacturing companies
as well as producing ground silica that also goes into casting
powders. Hoben International now also manufactures different grades
of perlite.
The other UK refractory company is Dupré Minerals which focuses
on producing exfoliated vermiculite that is used in insulation,
brake linings and fire protection products, including technical
textiles that can withstand exposure to high temperatures and for
lithium battery fire extinguishers. Dupré also sells consumable
refractories to the shell moulding casting industry.
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2019
2019 2018
GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 127,046 124,811
Cost of sales (86,414) (89,143)
GROSS PROFIT 40,632 35,668
Other income - 1,602
Distribution expenses (3,016) (3,359)
Administrative expenses (21,205) (20,331)
OPERATING PROFIT 16,411 13,580
Financial expenses (234) (590)
Share of profit of associate companies 233 310
PROFIT BEFORE TAXATION 16,410 13,300
Tax on profit (3,963) (3,865)
PROFIT AFTER TAXATION 12,447 9,435
ATTRIBUTABLE TO:
Equity holders of the parent 11,505 8,504
Non-controlling interests 942 931
PROFIT FOR THE YEAR 12,447 9,435
BASIC EARNINGS PER ORDINARY SHARE 159.79p 118.11p
DILUTED EARNINGS PER ORDINARY SHARE 149.65p 118.11p
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2019
2019 2018
GBP'000 GBP'000
PROFIT FOR THE YEAR 12,447 9,435
OTHER COMPREHENSIVE (EXPENSE) / INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO
PROFIT OR LOSS:
Foreign exchange translation differences (383) (152)
Goodwill arising from purchase of non-controlling (772) -
interest in subsidiaries
Effective portion of changes in fair value of
cash flow hedges (644) (294)
Change in fair value of cash flow hedges transferred
to profit or loss 180 5,108
Effective portion of changes in fair value of (489) -
cost of hedging
Change in fair value of cost of hedging transferred 49 -
to profit or loss
Tax credit / (charge) on items that may be reclassified
subsequently to profit or loss 154 (818)
OTHER COMPREHENSIVE (EXPENSE) / INCOME FOR THE
YEAR, NET OF INCOME TAX (1,905) 3,844
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 10,542 13,279
ATTRIBUTABLE TO:
Equity holders of the parent 9,528 12,245
Non-controlling interests 1,014 1,034
10,542 13,279
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2019
Total
attributable
Cash to equity
Share-based flow Cost holders
Share Translation payments hedge of hedging Retained of the Non-controlling Total
capital reserve reserve reserve reserve earnings parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
YEARED
30TH APRIL,
2019
Balance at
1st May, 2018 720 1,879 1,625 (224) - 95,568 99,568 5,259 104,827
Adjustment
on initial
application
of IFRS 9 (net
of tax) - - - 52 (52) - - - -
Adjustment
on initial
application
of IFRS 15
(net of tax) (684) (684) (350) (1,034)
ADJUSTED
BALANCE
AT 1ST MAY,
2018 720 1,879 1,625 (172) (52) 94,884 98,884 4,909 103,793
Total
comprehensive
income:
Profit - - - - - 11,505 11,505 942 12,447
Other
comprehensive
income:
Foreign
exchange
translation
differences - (430) - - - - (430) 47 (383)
Goodwill
arising
from purchase
of NCI
interest
in
subsidiaries - (180) - - - (592) (772) - (772)
Net movements
on cash flow
hedges - - - (401) (374) - (775) 25 (750)
TOTAL
COMPREHENSIVE
INCOME FOR
THE YEAR - (610) - (401) (374) 10,913 9,528 1,014 10,542
Equity-settled
share-based
payment
transactions - - 1,220 - - - 1,220 - 1,220
Tax on
equity-settled
share-based
payment
transactions - - 2,146 - - - 2,146 - 2,146
Dividends paid - - - - - (6,126) (6,126) (451) (6,577)
Acquisition
of NCI without
a change in
control - - - - - - - (1,750) (1,750)
Disposal of
equity
investments - (225) - - - - (225) - (225)
Acquisition
of subsidiary
with NCI - - - - - - 142 142
Capital
contribution - - - - - (262) (262) 262 -
BALANCE AT
30TH APRIL,
2019 720 1,044 4,991 (573) (426) 99,409 105,165 4,126 109,291
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
for the year ended 30th April, 2019
Total
attributable
Cash to equity
Share-based flow Cost holders
Share Translation payments hedge of hedging Retained of the Non-controlling Total
capital reserve reserve reserve reserve earnings parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
YEARED
30TH APRIL,
2018
Balance at
1st May, 2017 720 2,154 601 (4,240) - 90,201 89,436 4,225 93,661
Total
comprehensive
income:
Profit - - - - - 8,504 8,504 931 9,435
Other
comprehensive
income:
Foreign
exchange
translation
differences - (275) - - - - (275) 123 (152)
Net movements
on cash flow
hedges - - - 4,016 - - 4,016 (20) 3,996
TOTAL
COMPREHENSIVE
INCOME FOR
THE YEAR - (275) - 4,016 - 8,504 12,245 1,034 13,279
Equity-settled
share-based
payment
transactions - - 1,024 - - - 1,024 - 1,024
Dividends paid - - - - - (3,137) (3,137) - (3,137)
BALANCE AT
30TH APRIL,
2018 720 1,879 1,625 (224) - 95,568 99,568 5,259 104,827
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2019
2019 2018
GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 74,106 69,154
Investment in associates 739 1,963
Intangible assets 22,354 21,138
Other financial assets at amortised
cost 505 728
97,704 92,983
CURRENT ASSETS
Inventories 50,524 28,850
Contract assets 3,698 6,046
Trade receivables and other financial
assets 24,964 20,053
Other receivables 2,715 1,861
Derivative financial assets 195 364
Cash and cash equivalents 9,640 7,485
91,736 64,659
TOTAL ASSETS 189,440 157,642
CURRENT LIABILITIES
Interest-bearing loans and borrowings 10,198 12,468
Contract liabilities 18,002 212
Trade payables and other financial
liabilities 20,570 17,858
Other payables 4,771 8,821
Deferred consideration 204 500
Derivative financial liabilities 1,693 1,535
Liabilities for current tax 2,356 1,174
Warranty provision 261 184
58,055 42,752
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings 20,486 5,775
Warranty provision 232 329
Deferred tax liabilities 1,376 3,959
22,094 10,063
TOTAL LIABILITIES 80,149 52,815
NET ASSETS 109,291 104,827
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF
THE PARENT
Share capital 720 720
Translation reserve 1,044 1,879
Share-based payments reserve 4,991 1,625
Cash flow hedge reserve (573) (224)
Cost of hedging reserve (426) -
Retained earnings 99,409 95,568
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT 105,165 99,568
NON-CONTROLLING INTERESTS 4,126 5,259
TOTAL EQUITY 109,291 104,827
GOODWIN PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2019
2019 2019 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
CASH FLOW FROM OPERATING ACTIVTIES
Profit from continuing operations
after tax 12,447 9,435
Adjustments for:
Depreciation 5,819 5,243
Amortisation of intangible assets 1,312 1,138
Financial expenses 234 590
Foreign exchange losses 66 277
Loss / (profit) on sale of property,
plant and equipment 13 (1,568)
Share of profit of associate companies (233) (310)
Equity-settled share-based provision 1,220 1,024
Tax expense 3,963 3,865
OPERATING PROFIT BEFORE CHANGES
IN WORKING CAPITAL AND PROVISIONS 24,841 19,694
(Increase) / decrease in inventories (11,816) 8,801
Decrease / (increase) in contract
assets 1,361 (6,046)
(Increase) / decrease in trade and
other receivables (4,288) 3,421
Increase in contract liabilities 3,452 212
Increase in trade and other payables
(excluding advance payments from
customers) 1,965 2,001
(Increase) / decrease in unhedged
derivative balances (579) 5,249
(Decrease) / Increase in advance
payments from customers (51) 2,224
CASH GENERATED FROM OPERATIONS 14,885 35,556
Interest paid (524) (665)
Corporation tax paid (3,093) (3,703)
Interest element of finance lease
obligations (64) (89)
NET CASH FROM OPERATING ACTIVITIES 11,204 31,099
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property,
plant and equipment 142 1,888
Acquisition of property, plant and
equipment (11,451) (9,010)
Additional investment in existing
subsidiaries (2,668) -
Acquisition of controlling interest
in associates net of cash acquired (425) -
Acquisition of intangible assets (315) (378)
Development expenditure capitalised (1,500) (3,334)
Dividends received from associate
companies 1,254 441
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (14,963) (10,393)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital element of finance
lease obligations (911) (865)
Proceeds from new finance leases 424 -
Dividends paid (6,126) (3,137)
Dividends paid to non-controlling
interests (451) -
Net proceeds from / (repayment of)
loans and committed facilities 8,337 (12,044)
NET CASH INFLOW / (OUTFLOW) FROM
FINANCING ACTIVITIES 1,273 (16,046)
NET (DECREASE) / INCREASE IN CASH
AND CASH EQUIVALENTS (2,486) 4,660
Cash and cash equivalents at beginning
of year 2,900 (1,483)
Effect of exchange rate fluctuations
on cash held 79 (277)
CASH AND CASH EQUIVALENTS AT OF YEAR 493 2,900
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's operations expose it to a variety of risks and
uncertainties. These risks are no different to previous years and
they are not expected to change substantially in the foreseeable
future. The Directors confirm that they have carried out a robust
assessment of the principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity. The key risks are discussed below.
Market risk: The Group provides a range of products and
services, and there is a risk that the demand for these products
and services will vary from time to time because of competitor
action or economic cycles or international trade friction or even
wars. As shown in note 1, the Group operates across a range of
geographical regions, and its turnover is split across the UK,
Europe, USA, the Pacific Basin and the rest of the world.
This spread reduces risk in any one territory. Similarly, the
Group operates in both mechanical engineering and refractory
engineering sectors, mitigating the risk of a downturn in any one
product area as was seen over the past three financial years.
The potential risk of the loss of any key customer is limited
as, typically, no single customer accounts for more than 10% of
turnover.
As described in the Business Model, the Group generates
significant sales not only from the worldwide energy markets but
also from naval marine applications, military ship building,
vermiculite and perlite to the insulating and fire prevention
industry and the jewellery consumer market that our investment
casting powder companies indirectly supply through the supply of
investment casting moulding powders, waxes and silicone rubber.
Technical risk: The Group develops and launches new products as
part of its strategy to enhance the long-term value of the Group.
Such development projects carry business risks, including
reputational risk, abortive expenditure and potential customer
claims which may have a material impact on the Group. The potential
risk here is seen as manageable given the Group is developing
products in areas in which it is knowledgeable and new products are
tested prior to their release into the market.
Product failure/Contractual risk: The risks that the Group
supplies products that fail or are not manufactured to
specification are risks that all manufacturing companies are
exposed to but we try to minimise these risks through the use of
highly skilled personnel operating within robust quality control
system environments, using third party accreditations where
appropriate. With regard to the risk of failure in relation to new
products coming on line, the additional risks here are minimised at
the research and development stage, where prototype testing and the
deployment of a robust closed loop product performance quality
control system provides feed back to the design department for the
products we manufacture and sell. The risk of not meeting safety
expectations, or causing significant adverse impacts to customers
or the environment, is countered by the combination of the controls
mentioned within this section and the purchase of product liability
insurance. The risk of product obsolescence is countered by
research and development investment.
Supply chain and equipment risk: Failure of a major supplier or
essential item of equipment presents a constant risk of disruption
to the manufacturing in progress. Where reasonably possible,
management mitigates and controls the risk with the use of dual
sourcing, continual maintenance programmes, and by carrying
adequate levels of stocks and spares to reduce any disruption.
Health and safety: The Group's operations involve the typical
health and safety hazards inherent in manufacturing and business
operations. The Group is subject to numerous laws and regulations
relating to health and safety around the world. Hazards are managed
by carrying out risk assessments and introducing appropriate
controls, as well as attending safety training courses.
Acquisitions: The Group's growth plan over recent years has
included a number of acquisitions. There is the risk that these, or
future acquisitions, fail to provide the planned value. This risk
is mitigated through financial and technical due diligence during
the acquisition process and the Group's inherent knowledge of the
markets they operate in.
Financial risk: The principal financial risks faced by the Group
are changes in market prices (interest rates, foreign exchange
rates and commodity prices). Detailed information on the financial
risk management objectives and policies is set out in note 27 to
the financial statements to be published shortly. The Group has in
place risk management policies that seek to limit the adverse
effects on the financial performance of the Group by using various
instruments and techniques, including credit insurance, stage
payments, forward foreign exchange contracts, secured and unsecured
credit lines, and interest rate swaps.
Regulatory compliance: The Group's operations are subject to a
wide range of laws and regulations. Both within Goodwin PLC and its
subsidiaries, the Directors and Senior Managers within the
companies make best endeavours to ensure we comply with the
relevant laws and regulations.
Assessment of principal risks: Changes and likely impact:
As part of the Board's risk management and control of principal
risks, areas of monitoring and expert advice undertaken are
reported upon by the Audit Committee in the Accounts to be
published shortly.
FORWARD-LOOKING STATEMENTS
The Group Strategic Report contains forward-looking type
statements and information based on current expectations, and
assumptions and forecasts made by the Group. These expectations and
assumptions are subject to various known and unknown risks,
uncertainties and other factors, which could lead to substantial
differences between the actual future results, financial
performance and the estimates and historical results given in this
report. Many of these factors are outside the Group's control. The
Group accepts no liability to publicly revise or update these
forward-looking statements or adjust them for future events or
developments, whether as a result of new information, future events
or otherwise, except to the extent legally required.
Responsibility statement of the Directors in respect of the
Directors Report and Accounts
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the Group Strategic Report includes a fair review of the
development and performance of the business and the position of the
Issuer and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
We consider the Directors' Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group's
position and performance, business model and strategy.
Board of Directors:
T. J. W. Goodwin, Chairman
M. S. Goodwin, Managing Director, Mechanical Engineering
Division
S. R. Goodwin, Managing Director, Refractory Engineering
Division
J. Connolly, Director
S. C. Birks, Director
B. R. E. Goodwin, Director
J. E. Kelly, Non-Executive Director
Accounting policies
Goodwin PLC (the "Company") is incorporated in England and
Wales.
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group") and
equity account the Group's interest in associates.
The Group's financial statements have been approved by the
Directors and prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (EU).
The Accounting Policies are included in Note 1 of the Accounts
to be published shortly.
New IFRS standards and interpretations adopted during 2019
In 2019 the following amendments had been endorsed by the EU,
became effective and were, therefore, mandated to be adopted by the
Group:
-- IFRS 9 - Financial Instruments (effective for annual periods
beginning on or after 1st January, 2018)
-- IFRS 15 - Revenue from Contracts with Customers (effective
for annual periods beginning on or after 1st January, 2018)
-- IFRS 15 - Clarifications (effective for annual periods
beginning on or after 1st January, 2018)
-- Annual Improvements to IFRSs - 2014-2016 Cycle - minor
amendments to IFRS 1 and IAS 28 (effective for annual periods
beginning on or after 1st January, 2018)
-- Amendments to IFRS 2 - Classification and Measurement of
Share-based Payment Transactions (effective for annual periods
beginning on or after 1st January, 2018)
-- IFRIC Interpretation 22 - Foreign Currency Transactions and
Advance Consideration (effective for annual periods beginning on or
after 1st January, 2018)
The adoption of IFRS 9 and IFRS 15 is discussed in note 3 of the
Accounts to be published shortly. The implementation of all the
other standards and amendments has not had a material impact on the
Group's financial statements.
The financial information previously set out does not constitute
the Company's statutory accounts for the years ended 30th April,
2019 or 2018 but is derived from those accounts. Statutory accounts
for 2018 have been delivered to the Registrar of Companies, and
those for 2019 will be delivered in due course. The auditors have
reported on those accounts; their report was:
i. unqualified;
ii. did not include references to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report; and
iii. did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
Copies of the 2019 accounts are expected to be posted to
shareholders within the next 10 days and will also be available on
the Company's website: www.goodwin.co.uk and from the Company's
Registered Office: Ivy House Foundry, Hanley, Stoke-on-Trent ST1
3NR.
Note 1
Segmental Information
Products and services from which reportable segments derive
their revenues
The Group has applied IFRS 15 initially at 1st May 2018; the
financial statements for the year to 30 April, 2018 have not been
restated but are presented, as previously reported, under IAS 18,
IAS 11 and related interpretations. IFRS 9 has also been applied
initially at 1st May, 2018. Prior periods have not been restated in
accordance with the classification and measurement requirements of
IFRS 9, because the Group has applied the exemption outlined in
paragraph 7.2.15 of IFRS 9.
For the purposes of management reporting to the chief operating
decision maker, the Board of Directors, the Group is organised into
two reportable operating divisions: mechanical engineering and
refractory engineering. Segment assets and liabilities include
items directly attributable to segments as well as those that can
be allocated on a reasonable basis. In accordance with the
requirements of IFRS 8 the Group's reportable segments, based on
information reported to the Group's Board of Directors for the
purposes of resource allocation and assessment of segment
performance are as follows:
-- Mechanical Engineering - casting, valve, antenna and pump
manufacture and general engineering
-- Refractory Engineering - powder manufacture and mineral processing
Information regarding the Group's operating segments is reported
below. Associates are included in Refractory Engineering.
Revenue
Mechanical Refractory
Engineering Engineering Sub Total
Year ended 30th April 2019 2018 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 82,375 80,661 44,671 44,150 127,046 124,811
Inter-segment sales 21,714 18,839 8,726 8,354 30,440 27,193
Total revenue 104,089 99,500 53,397 52,504 157,486 152,004
Reconciliation to consolidated
revenue:
Inter-segment sales (30,440) (27,193)
Consolidated revenue
for the year 127,046 124,811
Mechanical Refractory
Engineering Engineering Sub Total
Year ended 30th April 2019 2018 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profits
Operating profit including
share of associates 11,932 8,282 8,070 7,528 20,002 15,810
Other income - - - 1,602 - 1,602
Total 11,932 8,282 8,070 9,130 20,002 17,412
% of total operating
profit including share
of associates 60% 48% 40% 52% 100% 100%
Group centre (2,138) (2,498)
LTIP - non cash provision (1,220) (1,024)
Group finance expenses (234) (590)
Consolidated profit
before tax for the
year 16,410 13,300
Tax (3,963) (3,865)
Consolidated profit after tax for the
year 12,447 9,435
Segmental total Segmental total Segmental net
assets liabilities assets
Year ended 30th April 2019 2018 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segmental net assets
Mechanical Engineering 97,862 79,835 72,520 50,113 25,342 29,722
Refractory Engineering 43,950 39,534 25,541 19,905 18,409 19,629
Subtotal reportable
segment 141,812 119,369 98,061 70,018 43,751 49,351
Goodwin PLC net assets 81,249 66,715
Elimination of Goodwin PLC
investments (25,374) (20,950)
Goodwill 9,665 9,711
Consolidated total net assets 109,291 104,827
Segmental property, plant and equipment (PPE) capital
expenditure
2019 2018
GBP'000 GBP'000
Goodwin PLC 3,602 6,880
Mechanical Engineering 6,461 2,176
Refractory Engineering 616 360
10,679 9,416
Segmental depreciation, amortisation and impairment
2019 2018
GBP'000 GBP'000
Goodwin PLC 2,367 2,144
Mechanical Engineering 3,175 2,629
Refractory Engineering 1,589 1,608
7,131 6,381
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's Board of
Directors monitors the tangible and financial assets attributable
to each segment. All assets and liabilities are allocated to
reportable segments with the exception of those held by the parent
Company, Goodwin PLC, and those held as consolidation
adjustments.
The Group's revenue is derived from contracts with customers.
The nature and effect, on the Group's financial statements, of
applying IFRS15 for the first time are outlined in note 3 of the
Accounts to be published shortly.
The following tables provide an analysis of revenue by
geographical market and by product line.
Geographical market
Year ended 30th April, 2019 Year ended 30th April, 2018
Mechanical Refractory Mechanical Refractory
Engineering Engineering Total Engineering Engineering Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 16,877 11,057 27,934 16,346 11,483 27,829
Rest of Europe 16,282 7,923 24,205 23,147 8,099 31,246
USA 8,017 83 8,100 3,623 119 3,742
Pacific Basin 12,848 16,108 28,956 8,207 14,845 23,052
Rest of World 28,351 9,500 37,851 29,338 9,604 38,942
Total 82,375 44,671 127,046 80,661 44,150 124,811
Product lines
Year ended 30th April, 2019 Year ended 30th April, 2018
Mechanical Refractory Mechanical Refractory
Engineering Engineering Total Engineering Engineering Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Standard products
and consumables 7,785 44,671 52,456 5,962 44,150 50,112
Minimum period
contracts 4,996 - 4,996 6,133 - 6,133
Bespoke products
- over time 34,538 - 34,538 21,278 - 21,278
Bespoke products
- point in time 35,056 - 35,056 47,288 - 47,288
Total 82,375 44,671 127,046 80,661 44,150 124,811
Note 2
Intangible Assets
During the year, the Group added to its portfolio of intangible
assets. The main additions are GBP432,000 on the development of a
new valve range by Goodwin International, GBP148,000 on refractory
development projects in Goodwin Refractory Services, and GBP920,000
on the development of radar equipment within Easat Radar Systems
and NRPL Aero.
Note 3
Changes in significant accounting policies
IFRS 15 Revenue from contracts with customers
With effect from the 1st May, 2018, the Group, as is required by
law, has adopted the revised revenue accounting standard, IFRS 15
Revenue from Contracts with Customers that has replaced IAS 18
Revenue, IAS 11 Construction Contracts and related interpretations.
IFRS 15 in certain instances, and as outlined within the revenue
section of note 1 of the Accounts to be published shortly,
materially departs from the way revenue and profits have previously
been recognised by the Group.
In terms of the current year, the impact of the new Standard has
been to increase the reported revenue by GBP10.3 million and profit
before taxation by GBP1.7 million, and therefore, if the Group were
still reporting under IAS 18 and IAS 11, the reported revenue would
have been GBP117 million. The pre tax profits GBP14.7 million
discussed in the Chairman's Statement are on a like-for-like
basis.
The following table summarises the impacts of adopting IFRS 15
on the Group's statement of profit or loss for the year ended 30th
April, 2019 for each of the line items affected. There was no
impact on NCI.
Impact on the consolidated statement of profit or loss
Without
the adoption
of IFRS
As reported Adjustments 15
Continuing operations GBP'000 GBP'000 GBP'000
Revenue 127,046 (10,254) 116,792
Cost of sales (86,414) 8,572 (77,842)
Gross profit 40,632 (1,682) 38,950
Distribution expenses (3,016) - (3,016)
Administrative expenses (21,205) - (21,205)
Operating profit 16,411 (1,682) 14,729
Financial expenses (234) - (234)
Share of profit of associate companies 233 - 233
Profit before taxation 16,410 (1,682) 14,728
Tax on profit (3,963) 333 (3,630)
Profit after taxation 12,447 (1,349) 11,098
Attributable to:
Equity holders of the parent 11,505 (1,067) 10,438
Non-controlling interests 942 (282) 660
Profit for the period 12,447 (1,349) 11,098
Note 4
Dividends
The Directors propose the payment of an ordinary dividend of
96.21p per share (2018: ordinary dividend of 83.473p). If approved
by shareholders, the ordinary dividend will be paid on 4th October,
2019 to shareholders on the register at the close of business on
6th September, 2019.
Note 5
Earnings per share
The earnings per ordinary share has been calculated on profit
for the year attributable to ordinary shareholders of GBP11,505,000
(2018: GBP8,504,000) and by reference to the 7,200,000 ordinary
shares in issue throughout both years.
There is a share option scheme in place for the Directors of the
Company under the Company's Equity Long Term Investment Plan
(LTIP), based on the Company exceeding a target growth in the total
shareholder return of the Company over the period from 1st May,
2016 to 30th April, 2019. In total, 489,600 share options vested on
1st May, 2019. The effect of the potentially dilutive ordinary
shares is 488,056 (2018: Nil) and the weighted average number of
ordinary shares used to calculate the diluted earnings per share is
7,688,056 (2018: 7,200,000).
Note 6
Annual General Meeting
The Annual General Meeting will be held at 10.30 a.m. on 2(nd)
October, 2019 at Crewe Hall, Weston Road, Crewe, Cheshire CW1
6UZ.
Note 7
Alternative performance measures
Measure 2019 2018
Gross profit (GBP'000) 40,632 35,668
Revenue (GBP'000) 127,046 124,811
Gross profit as percentage
of revenue (%) 32.0 28.6
Operating profit (GBP'000) 16,411 13,580
Capital employed (GBP'000) 126,413 110,826
Return on capital employed
(%) 13.0 12.3
Net debt (GBP'000) 21,248 11,258
Deferred consideration 204 500
Net debt excluding deferred
consideration (GBP'000) 21,044 10,758
Net assets attributable
to equity holders of the
parent(GBP'000 105,165 99,568
Gearing (%) 20.0 10.8
Net profit attributable
to equity holders of the
parent (GBP'000) 11,505 8,504
Net assets attributable
to equity holders of the
parent(GBP'000) 105,165 99,568
Return on investment (%) 10.9 8.5
Revenue (GBP'000) 127,046 124,811
Average number of employees 1,082 1,042
Sales per employee (GBP'000) 117 120
Annual post tax profit (GBP'000) 12,447 9,435
Depreciation (GBP'000) 5,819 5,243
Amortisation (GBP'000) 1,312 1,138
Annual post tax profit before
depreciation
and amortisation (GBP'000) 19,578 15,816
Annual post tax profit (GBP'000)
- without the adoption of
IFRS 15 11,098 9,435
Depreciation (GBP'000) 5,819 5,243
Amortisation (GBP'000) 1,312 1,138
Annual post tax profit +
depreciation +
Amortisation - like for
like (GBP'000) 18,229 15,816
END
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END
FR LFFFITTILFIA
(END) Dow Jones Newswires
August 22, 2019 02:01 ET (06:01 GMT)
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