REG - Goodwin PLC - Preliminary results for the year ended 30 Apr 2023
08/08/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230808:nRSH5818Ia&default-theme=true
RNS Number : 5818I Goodwin PLC 08 August 2023
GOODWIN PLC
PRELIMINARY ANNOUNCEMENT FOR RELEASE ON 8TH AUGUST 2023
Goodwin PLC today announces its preliminary results for the year ended 30th
April, 2023.
CHAIRMAN'S STATEMENT
The "Trading" pre-tax profit for the Group for the twelve month period ended
30th April, 2023, was £18.9 million (2022: £17.2 million) an increase of 10%
on revenue of £186 million (2022: £144 million). Trading profit for this
purpose is defined as the Group pre-tax reported profit of £22.1 million less
the positive impact of our interest rate swap, having increased in value by a
further £3.2 million. The £3.2 million movement relates to the 30th April,
2023 valuation of our £30 million interest rate swap derivative that expires
in August 2031, whereby we have fixed our interest rate on £30 million of
debt for ten years at less than 1% for a ten year term. We described in the
Chairman's statement within last year's Annual Report why the movements in
valuation of the interest rate swap shall be excluded, as well as being
excluded for dividend purposes.
The Directors propose an increased dividend of 115p (2022: 107.80p) per share.
For the financial year ending on 30th April 2023, the Group has demonstrated
substantial progression in its transformation, particularly noted in the
handling of increased workload. There was a significant 68% increase in
order intake compared to the last year, predominantly at Goodwin Steel
Castings Limited and Goodwin International Limited, contributing to the start
of the rebound of our Mechanical Engineering Division, which had experienced
challenges in recent years. As of the date of the current report, the
Group's cumulative future orders stand at £271 million.
Mechanical Engineering Division
Whilst there has been some resurgence for petrochemical valves for new LNG
projects around the world, due to energy uncertainty from current world
events, assisting our valve manufacturing companies, it is the combined
package that our foundry, Goodwin Steel Castings and the precision project
engineering facility Goodwin International offers, which has led to the
largest part of new orders shown in the Group workload, with them being
primarily for the nuclear decommissioning and naval markets.
Due to the work that these two businesses have excelled at, whilst
diversifying away from their mainstay of petrochemical-based work a decade
ago, be it discrete orders or orders that combine the skillset of the
organisations, the future looks bright. The programmes of work, that are
actively ramping up now, are being exploited to win more and more of the same,
supporting projects that will still be ongoing in a decade's time.
A lot of this work has only been possible as a result of the significant
investment into Goodwin Steel Castings over recent years. We focused on what
needed to be done to become one of the West's large casting suppliers of
choice for large technically advanced castings that we are manufacturing now.
These investments look set to repay the faith the Board had in the company
and, after a long drought, they should now meaningfully contribute to the
Group's performance going forward.
The supply of heavy duty submersible pumps, primarily to the mining industry,
is 19% up on last year. The pump companies in India, Brazil, Australia and
South Africa continue to convert customers from competitors' pumps that are
not as reliable and robust as the Goodwin pump, which is specifically designed
for the most demanding applications. In the year, a new hydraulically
powered variant of our submersible slurry pump that can be mounted directly on
10 - 30 tonne excavators, driven by the excavator's hydraulics, was launched.
The addition of this hydraulic pump opens up a new market area (Heavy
Construction) in terms of customers and applications that will complement the
natural growth that is expected for the electrically driven pumps. It will
be a distributor-based market with the pump being marketed as an excavator
accessory, thus allowing all the existing pump companies, that are profitable,
to bolt on a complementary product with minimal increases in overheads, all
for applications that do not compete with our existing pump business.
Duvelco, the Group's latest and largest investment into a new business area,
which will facilitate the production of high operational temperature polyimide
polymer resins, is on course to be completed in line with our previously
disclosed timeline. Commercial operation of our initial plant is expected to
occur prior to June 2024. As soon as production material is available, the
team will look to commence gaining sales traction and break into this new
market sector for the Group.
It has been a good year with real progress being made. The Division has
adeptly navigated contract and customer management challenges across all
sectors, with the overall divisional profitability up 33% on an increased
turnover of 41%.
Refractory Engineering Division
In the year there have been two major notable successes. The first major
achievement has occurred at Brassington in Derbyshire, where the team at Hoben
International Limited (Hoben) has successfully installed and commissioned a
second calciner. The calciner supplies one of the key raw materials for the
investment casting powder, and as such, the installation not only enables the
Division to continue to grow, but has provided the Division with a level of
business continuity that we never had the benefit of before. In order to
increase capacity to accommodate continued growth in ground silica sales, a
third ball mill is in the process of being installed and is planned to be
commissioned before the end of the calendar year.
The second success relates to Dupré Minerals Limited (Dupré), which supplies
a range of refractory products that typically contain vermiculite. During
the year the Company has achieved record trading profits by increasing its
profitability by over 50%. The Company has maximised its position through
the supply of its traditional products as well as growing its newer
products. The energy crisis brought on by the Ukraine conflict has led to a
surge in the number of wood stoves being installed, for which Dupré supplies
the internal vermiculite insulation boards.
In addition to the supply of boards, Dupré's internally developed product,
known as AVD that address the burning issues surrounding lithium-ion battery
fires has taken a step forward. The momentum in sales is starting to provide
a respectable contribution to the Group's profits. AVD extinguishing agent
and fire extinguishers are now being sold in over forty-five countries with
additional distributors being appointed in new territories on a regular basis.
In recent weeks, Underwriters Laboratory (UL) certification for component
recognition of AVD as an extinguishing agent and certification of a six litre
fire extinguisher containing AVD to UL8 has now been obtained. This is a
significant milestone for opening up sales into the USA and other global
markets that require UL Certification and it has been pleasing to see that the
order input via multiple sources for AVD in the first two months of this
financial year was equal to more than the last half of 2023. Expansion of
the AVD manufacturing capacity is planned in the coming year.
Sales of jewellery investment powder, moulding rubber and injection waxes have
remained strong within the year. Final customer approvals for X-Sil
respirable silica free investment powder are in their final stages at key
reference customers in the USA and Europe. This has been a long process
which should start to generate sales in the coming year. India remains the
key growth country for jewellery production around the world and in order to
increase production capacity for both investment powder and injection wax
production in India a newly constructed larger production facility will be
completed and commissioned within the current financial year.
Carbon Reduction Activities
Over the course of the year, the Group has continued working on its carbon
neutral program and has spent a further £2 million on renewables,
specifically solar panels where the power generated will be utilised on
site. In total, the Group has now completed sixteen of the twenty-two
individual electricity projects that were initially targeted, which includes
the installation of 5.7 MWp of solar panels. The results of this will reduce
the Group's electricity purchased from the national grid by over 24.7% per
year, amounting to savings of over £1 million per year, providing a reduction
of 1,365 tonnes equivalent of carbon dioxide (CO(2)) per year. As noted in
last year's Annual Report, the remaining projects are being held up by the
District Network Operator. Once this permission, along with planning
permission where required, has been obtained there is potential to install a
further 10MW of solar panels across our sites. Over half of this will be
based at Hoben in Derbyshire where we intend to also apply for planning for
two 2.5MW wind turbines. The power generated from these installations will
be fully utilised by the Group and will not be exported back to the grid.
Two other major components of the carbon neutral program are the conversion of
our 4MW / hr natural gas burners on both calciners at Hoben to hydrogen and
offsetting our CO(2) footprint, that cannot be eliminated in its entirety
without ceasing operation. Despite two unsuccessful grant applications to
BEIS to mitigate the very high cost of the electrolysis machine required to
make onsite green hydrogen, we are continuing to pursue government support, as
the Group's carbon neutral target heavily depends on finding an alternative to
burning natural gas. However, for all other gas processes that cannot be
converted, the company has purchased a new 1,180 acre plot of land that is
ideally suited for planting 560,000 broad leaf trees. The planting scheme
will be one of the largest in the UK and over the next fifty-five years will
offset an average of 2,168 tonnes of CO(2) per year, which, for example,
covers 100% of the CO(2) emissions that are generated at the foundry from
burning natural gas, as well as being able to offset other subsidiary gas
burning processes.
Cashflow
The significant increase in order input and the downpayments associated with
these orders, coupled with the not insignificant levels of non-cash
depreciation charges (£8 million) that occur annually, provided the Group
with a very strong cash generation in the year ended 30th April, 2023.
Notwithstanding the £23 million of capital expenditure that has occurred in
the year, the Group's net debt reduced to finish at £33 million which equates
to a modest gearing of 26.3%. The major areas of expenditure relate to the
second calciner, Duvelco polymer production plant and extending the melt shop
at the foundry to enable a greater level of production capacity.
Furthermore, the initial costs in relation to a new 7,690 sq m building in
India, for which the Board had approved the investment, due to both the
refractory and pump businesses reaching capacity within the existing facility,
were also incurred in the year ending 30th April 2023.
With the growth that is expected in the years to come, the Group has recently
renewed a £10 million revolving credit facility. This is as well as
securing an additional £25 million of committed banking facilities on
effectively a four year term, as a prudent policy to ensure that guaranteed
facilities and the appropriate level of headroom is available to the Group,
should it ever be required. The total value of our facilities now available
to fund the Group is £75.5 million, of which at the year end we were only
utilising 48%.
In line with the activity, the Group's employee numbers are starting to
increase. Our apprenticeship programme continues to insulate the Group from
the skills shortages that exist in the local area. To date, a total of three
hundred apprentices have completed the course at the Training Centre, with the
vast majority of them now working within the subsidiaries and the Group's
twelfth cohort of thirty apprentices will be starting in September 2023.
In March 2023, John Connolly, who had been the Group Chief Accountant and a
Director of Goodwin PLC for sixteen years, retired. He had worked for the
Goodwin Group for over twenty-seven years and the Board takes the opportunity
of thanking him for his hard work and loyalty over the years, which helped
move the Group forward. We wish him much happiness in his retirement. We
are also pleased to report that Adam Deeth has been brought on board as a
highly capable replacement for the Group Chief Accountant role.
We are once again extremely grateful to our UK and overseas directors,
managers and employees for their hard work in driving forward the performance
of the Group.
T.J.W. Goodwin
Chairman
Alternative performance measures mentioned above are defined in Note 2 of the
financial statements to be published shortly.
OBJECTIVES, STRATEGY AND BUSINESS MODEL
The Group's main OBJECTIVE and PURPOSE 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 VALUES of engineering excellence, quality, efficiency,
reliability, competitive price and delivery contribute to the delivery of its
strategy.
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, competitive 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;
· to manage the environmental and social impacts of our business to
support its long-term sustainability.
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, our overseas business facilities and our global
sales and marketing activities, the Group benefits from market diversity.
Further details of our business and products are shown on our website
www.goodwin.co.uk
Mechanical Engineering
The Group specialises in supplying precision engineered solutions and
industrial goods into critical applications, generally on a project basis,
more often than not involving the complementary skill set of other group
companies to deliver the requirement. The projects normally involve
international procurement, high integrity castings, forgings or wrought high
alloy steels, carbon fibre composite structures, precision CNC machining,
complex welding and fabrication, and other operations as are required. In
addition to specialist projects, the Group manufactures and sells a wide range
of dual plate check valves, axial nozzle check valves and axial piston control
and isolation valves. These solutions and products typically form part of
large construction projects, including the construction of naval vessels,
nuclear waste treatment, nuclear power generation, liquefied natural gas
(LNG), gas, oil, petrochemical, mining, 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.
The Group through its foundry, Goodwin Steel Castings Limited, 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 Limited. 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 Limited, 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 Limited also has a
division that is focused 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 Limited and Noreva GmbH purchase the majority of the value of
their sand mould castings from Goodwin Steel Castings Limited for their ranges
of check valves and this vertical integration gives rise to competitive
benefits, increased efficiencies and timely deliveries.
At Goodwin Pumps India Private Limited we manufacture a superior range of
submersible slurry pumps for end users in India, Brazil, Australia and Africa.
Easat Radar Systems Limited and its subsidiary, NRPL Aero Oy, design and build
bespoke high-performance radar surveillance systems for the global market of
major defence contractors, civil aviation authorities and coastal border
security agencies. Easat has a sister company, Easat Radar Systems India
Private Limited, that also manufactures, sells and maintains radar systems.
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
Limited (GRS) generates value primarily from designing, manufacturing and
selling investment casting powders, injection moulding rubbers and waxes to
the jewellery casting industry. GRS also manufactures and sells these
products to the tyre mould and aerospace industries. The Refractory
Engineering Division has five other investment powder manufacturing companies
located in China, India and Thailand which sell the casting powders directly
and through distributors to the jewellery casting industry and also directly
to tyre mould and aerospace industries.
These companies are vertically integrated with another of our UK companies,
Hoben International Limited (Hoben), which manufactures cristobalite, which it
sells to the six casting powder manufacturing companies as well as producing
ground silica that also goes into casting powders and other UK uses of
silica. Hoben now also manufactures different grades of perlite, and a
patented range of biodegradable bags, known as Soluform, for use inside
traditional hessian / jute bags for the placement of concrete in or around
rivers.
The other UK refractory company is Dupré Minerals Limited (Dupré) 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. Dupré also sells consumable
refractories to the shell moulding precision casting industry. Dupré has
designed, patented and is now selling a range of fire extinguishers and an
extinguishing agent for lithium-ion battery fires that utilises a vermiculite
dispersion as the fire extinguishing agent.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2023
2023 2022
£'000 £'000
CONTINUING OPERATIONS
Revenue 185,742 144,108
Cost of sales (139,521) (101,404)
GROSS PROFIT 46,221 42,704
Distribution expenses (3,741) (3,743)
Administrative expenses (22,167) (20,654)
OPERATING PROFIT 20,313 18,307
Finance costs (net) (1,438) (1,169)
Share of profit of associate company 65 63
PROFIT BEFORE TAXATION AND MOVEMENT IN FAIR VALUE OF INTEREST RATE SWAP 18,940 17,201
Additional year-on-year unrealised gain on 10 year interest rate swap 3,189 2,740
derivative
PROFIT BEFORE TAXATION 22,129 19,941
Tax on profit (5,616) (6,321)
PROFIT AFTER TAXATION 16,513 13,620
ATTRIBUTABLE TO:
Equity holders of the parent 15,904 12,980
Non-controlling interests 609 640
PROFIT FOR THE YEAR 16,513 13,620
BASIC EARNINGS PER ORDINARY SHARE (in pence) 206.81p 169.14p
DILUTED EARNINGS PER ORDINARY SHARE (in pence) 206.81p 169.14p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2023
2023 2022
£'000 £'000
PROFIT FOR THE YEAR 16,513 13,620
OTHER COMPREHENSIVE INCOME / (EXPENSE)
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS:
Foreign exchange translation differences (1,412) 1,493
Effective portion of changes in fair value of cash flow hedges 3,741 (3,834)
Ineffectiveness in cash flow hedges transferred to profit or loss 518 (339)
Change in fair value of cash flow hedges realised in the profit or loss 1,308 (1,432)
Effective portion of changes in fair value of cost of hedging (1,447) 275
Ineffectiveness in cost of hedging transferred to profit or loss (76) (23)
Change in fair value of cost of hedging realised in the to profit or loss 33 (75)
Tax (charge) / credit on items that may be reclassified subsequently to profit (919) 1,114
or loss
OTHER COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR, NET OF INCOME TAX 1,746 (2,821)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 18,259 10,799
ATTRIBUTABLE TO:
Equity holders of the parent 17,726 10,089
Non-controlling interests 533 710
18,259 10,799
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2023
Share capital Translation reserve Share-based payments reserve Cash flow hedge reserve Cost of hedging reserve Retained earnings Total attributable to equity holders of the parent Non-controlling interests Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
YEAR ENDED 30TH APRIL, 2023
Balance at 1st May, 2022 769 463 5,244 (2,746) 140 111,440 115,310 4,433 119,743
Total comprehensive income:
Profit for the year ‒ ‒ ‒ ‒ ‒ 15,904 15,904 609 16,513
Other comprehensive income:
Foreign exchange translation differences ‒ (1,312) ‒ ‒ ‒ ‒ (1,312) (100) (1,412)
Effective portion of changes in fair value ‒ ‒ ‒ 3,741 (1,447) ‒ 2,294 ‒ 2,294
Ineffectiveness transferred to profit or loss ‒ ‒ ‒ 518 (76) ‒ 442 ‒ 442
Change in fair value transferred to profit or loss ‒ ‒ ‒ 1,274 40 ‒ 1,314 27 1,341
Tax ‒ ‒ ‒ (1,283) 367 ‒ (916) (3) (919)
TOTAL COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR ‒ (1,312) ‒ 4,250 (1,116) 15,904 17,726 533 18,259
Transactions with owners:
Dividends paid ‒ ‒ ‒ ‒ ‒ (8,289) (8,289) (556) (8,845)
BALANCE AT 30TH APRIL, 2023 769 (849) 5,244 1,504 (976) 119,055 124,747 4,410 129,157
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2022
Share capital Translation reserve Share-based payments reserve Cash flow hedge reserve Cost of hedging reserve Retained earnings Total attributable to equity holders of the parent Non-controlling interests Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
YEAR ENDED 30TH APRIL, 2022
Balance at 1st May, 2020 753 (852) 5,244 1,601 (1) 106,396 113,141 4,887 118,028
Total comprehensive income:
Profit for the year ‒ ‒ ‒ ‒ ‒ 12,980 12,980 640 13,620
Other comprehensive income:
Foreign exchange translation differences ‒ 1,315 ‒ ‒ ‒ ‒ 1,315 178 1,493
Effective portion of changes in fair value ‒ ‒ ‒ (3,790) 275 ‒ (3,515) (44) (3,559)
Ineffectiveness transferred to profit or loss ‒ ‒ ‒ (333) (23) ‒ (356) (6) (362)
Change in fair value transferred to profit or loss ‒ ‒ ‒ (1,359) (64) ‒ (1,423) (84) (1,507)
Tax ‒ ‒ ‒ 1,135 (47) ‒ 1,088 26 1,114
TOTAL COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR ‒ 1,315 ‒ (4,347) 141 12,980 10,089 710 10,799
Transactions with owners:
Issue of shares 16 ‒ ‒ ‒ ‒ ‒ 16 ‒ 16
Acquisition of NCI without a change in control ‒ ‒ ‒ ‒ ‒ (74) (74) (356) (430)
Dividends paid ‒ ‒ ‒ ‒ ‒ (7,862) (7,862) (808) (8,670)
BALANCE AT 30TH APRIL, 2022 769 463 5,244 (2,746) 140 111,440 115,310 4,433 119,743
CONSOLIDATED BALANCE SHEET
at 30th April, 2023
2023 2022
£'000 £'000
NON-CURRENT ASSETS
Property, plant and equipment 101,243 87,594
Right-of-use assets 6,763 6,191
Investment in associate 964 896
Intangible assets 25,448 24,817
Long-term trade receivables ‒ 1,191
Derivative financial assets 5,932 2,741
140,350 123,430
CURRENT ASSETS
Inventories 47,955 40,364
Contract assets 16,257 12,331
Trade and other receivables 34,589 28,647
Corporation tax receivable 1,337 1,347
Derivative financial assets 2,684 1,211
Cash and cash equivalents 19,661 11,651
122,483 95,551
TOTAL ASSETS 262,833 218,981
CURRENT LIABILITIES
Borrowings 6,729 2,764
Contract liabilities 32,747 14,749
Trade and other payables 31,765 27,260
Derivative financial liabilities 2,383 2,393
Liabilities for current tax 921 1,886
Provisions for liabilities and charges 266 205
74,811 49,257
NON-CURRENT LIABILITIES
Borrowings 47,256 40,376
Derivative financial liabilities ‒ 1,643
Provisions for liabilities and charges 246 251
Deferred tax liabilities 11,363 7,711
58,865 49,981
TOTAL LIABILITIES 133,676 99,238
NET ASSETS 129,157 119,743
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 769 769
Translation reserve (849) 463
Share-based payments reserve 5,244 5,244
Cash flow hedge reserve 1,504 (2,746)
Cost of hedging reserve (976) 140
Retained earnings 119,055 111,440
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 124,747 115,310
NON-CONTROLLING INTERESTS 4,410 4,433
TOTAL EQUITY 129,157 119,743
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2023
2023 2022
£'000 £'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations after tax 16,513 13,620
Adjustments for:
Depreciation of property, plant and equipment 6,272 6,202
Depreciation of right of use assets 1,198 1,192
Amortisation and impairment of intangible assets 1,257 1,572
Finance costs (net) 1,438 1,169
Currency (gains) / losses net of unhedged derivative movements 1,213 (1,535)
Loss / (profit) on sale of property, plant and equipment 134 (18)
Unrealised gain on 10 year interest rate swap derivative (3,189) (2,740)
Share of profit of associate company (65) (63)
UK tax incentive credit on research and development (610) (675)
Tax expense 5,616 6,321
OPERATING CASH FLOW BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS 29,777 25,045
(Increase) in inventories (8,377) (5,175)
(Increase) / decrease in contract assets (3,804) 3,498
(Increase) in trade and other receivables (5,304) (3,341)
Increase in contract liabilities 17,954 472
Increase in trade and other payables 4,072 804
CASH GENERATED FROM OPERATIONS 34,318 21,303
Interest received 75 157
Interest paid (2,015) (1,415)
Corporation tax paid (3,251) (2,051)
NET CASH INFLOW FROM OPERATING ACTIVITIES 29,127 17,994
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment 218 341
Acquisition of property, plant and equipment (18,871) (16,215)
Additional investment in existing subsidiaries ‒ (430)
Acquisition of intangible assets (675) (282)
Development expenditure capitalised (1,196) (1,505)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (20,524) (18,091)
CASH FLOW FROM FINANCING ACTIVITIES
Issue of shares ‒ 16
Payment of capital element of lease liabilities (1,874) (1,153)
Dividends paid (8,289) (7,862)
Dividends paid to non-controlling interests (556) (808)
Proceeds from new loans 11,500 6,702
Repayment of loans and committed facilities (1,181) (683)
Change in bank overdrafts 119 ‒
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (281) (3,788)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 8,322 (3,885)
Cash and cash equivalents at beginning of year 11,651 15,160
Effect of exchange rate fluctuations on cash held (312) 376
CASH AND CASH EQUIVALENTS AT END OF YEAR 19,661 11,651
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's operations expose it to a variety of risks and uncertainties.
The Directors confirm that they have carried out a robust assessment of the
principal risks the Company faced, including those that would threaten its
business model, future performance, solvency or liquidity.
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 3 of the financial statements to be
published shortly, 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.
Operating in many territories helps spread market risk. Similarly, the Group
operates in both Mechanical Engineering and Refractory Engineering sectors,
mitigating the impact of a downturn in any one product area as has been seen
in recent financial years.
The potential risk of the loss of any key customer is limited as no single
customer accounts for more than 10% of annual turnover.
As described in the Business Model, the Group generates significant sales from
nuclear new build and decommissioning, naval propulsion marine applications
and ship hull components, as well as from valves it supplies to LNG, oil,
chemical and water markets. The Mechanical Engineering Division also sells
submersible pumps that are supplied to the mining industries and radar systems
that are used for civil and defence applications. The Refractory Engineering
Division sells vermiculite and perlite to the insulating and fire prevention
industry and our investment casting powder companies indirectly sell to the
jewellery consumer market through the supply of investment casting moulding
powders, waxes, silicone and natural 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 as far as possible 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 feedback 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 an essential
item of equipment presents a constant risk of disruption to the manufacturing
in progress, especially in these times of high inflation associated with the
conflict in Ukraine. 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). As reported elsewhere within these financial statements, the
Company, on 2nd July ,2021, signed a contract to mitigate the impact of
interest rate risk by taking out an interest rate swap derivative fixing £30
million of notional debt at less than 1% versus the variable SONIA rate for a
period of ten years, commencing 1st September, 2021. Detailed information on
the financial risk management objectives and policies is set out in note 28 of
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.
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. The Group ensures
that high ethical standards and values are adopted, specifically with regards
to anti-corruption, anti-bribery and human rights. During the year, the
Group has carried out enhanced sanctions training and updated internal
policies to reflect the associated risks.
IT security: The Group performs regular and remote off site backups of its IT
systems, from time to time engaging external companies to test and report any
weaknesses and deficiencies found to enable solutions to be put in place to
mitigate and minimise the risk of an IT security breach. The Group is in the
process of re-evaluating the need to invest further in this area over the next
twelve months.
Energy and Climate Change: The recent geopolitical tensions, with the
current conflict in Ukraine, combined with the UK Government's energy policy
over the last few years to reduce carbon emissions has left the country
exposed to the fragile global energy system which has driven significant
increases in the cost of power. Following the impact this has had on the Group
earlier on in the year, the Group has amended its strategy to manage the risk
through hedging strategies, incorporating price escalation clauses into the
longer term contracts, aided by the coming on stream of increasing levels of
low cost solar power around the Group. Furthermore, the Group has
successfully completed sixteen of the twenty-two individual electricity
projects that were initially targeted, which include the installation of 5.7
MW of solar panels. The results of this will reduce the Group's electricity
purchased from the national grid by over 24.7% per year, amounting to savings
of over £1 million per year as compared to buying electricity from the grid.
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.
Directors' statement pursuant to the Disclosure and Transparency Rules
Each of the Directors, whose names are listed below, confirm that to the best
of each person's knowledge:
a. 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 of the Company and the
undertakings included in the consolidation taken as a whole; and
b. the Strategic Report contained in the Annual Report
includes a fair review of the development and performance of the business and
the position of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties that they face.
Directors
The Directors of the Company who have served during the year are set out
below.
M.S. Goodwin
S.R. Goodwin
T.J.W. Goodwin
J. Connolly (retired 31st March,2023)
B.R.E. Goodwin
N. Brown
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 parent Company financial statements
present information about the Company as a separate entity and not about its
Group.
The Group's financial statements have been prepared in accordance with UK
adopted International Accounting Standards (IAS) and interpretations issued by
the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting
under UK adopted IFRS.
The Company has elected to prepare its financial statements in accordance with
Financial Reporting Standard (FRS) 101 issued in the UK. These are presented
on pages 104 to 114 of the financial statements to be published shortly.
The accounting policies set out below have been applied consistently to all
periods presented in these Group financial statements.
Judgements made by the Directors, in the application of these accounting
policies that have significant effect on the financial statements and
estimates with a possible significant risk of material adjustment in the next
year are discussed in note 2 of the financial statements to be published
shortly.
New IFRS standards and interpretations adopted during 2022 / 2023
The IASB and IFRIC issued the following amendment:
· Amendments to IFRS 3 Business Combinations; IAS 16 Property,
Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent
Assets; and Annual Improvements 2018-2020 - (effective for periods commencing
on or after 1st January, 2022).
The implementation of these 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, 2023 or 2022 but is derived
from those accounts. Statutory accounts for 2022 have been delivered to the
Registrar of Companies, and those for 2023 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 2023 accounts are expected to be posted to shareholders within
the next two weeks 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
For reporting to the chief operating decision maker, the Board of Directors,
and as outlined in the Business Model section of the Strategic Report on page
3 of the financial statements to be published shortly, the Group is organised
into two reportable operating segments according to the different products and
services provided by the Mechanical Engineering and Refractory Engineering
Divisions. Segment assets and liabilities include items directly attributable
to segments as well as group centre balances which can be allocated on a
reasonable basis. Associates are included in Refractory Engineering. In
accordance with the requirements of IFRS 8, information regarding the Group's
operating segments is reported below.
In previous years the segmental analysis of net assets, capital expenditure
and depreciation was based on the legal structure of the Group. This year,
the analysis represents the operational structure of the Group and the prior
year comparatives have been updated accordingly. There are no other
reportable segments apart from those identified.
2023 2022
Mechanical Engineering Refractory Engineering Total Mechanical Engineering Refractory Engineering Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue
External sales 123,767 61,975 185,742 87,605 56,503 144,108
Inter-segment sales 23,771 18,365 42,136 17,784 15,523 33,307
Total revenue 147,538 80,340 227,878 105,389 72,026 177,415
Reconciliation to consolidated revenue:
Inter-segment sales (42,136) (33,307)
Consolidated revenue for the year 185,742 144,108
2023 2022
% £'000 % £'000
Profits
Mechanical Engineering 49 12,171 42 9,139
Refractory Engineering 51 12,772 58 12,657
Segment operating profit 100 24,943 100 21,796
Group centre (4,630) (3,489)
Group operating profit 20,313 18,307
Finance costs (net) (1,438) (1,169)
Share of profit of Refractory associate company 65 63
Profit before taxation and movement in fair value of interest rate swap 18,940 17,201
Unrealised gain on 10 year interest rate swap derivative 3,189 2,740
Profit before tax 22,129 19,941
Tax on profit (5,616) (6,321)
Profit after tax 16,513 13,620
2023 2023 2023 2023 2022 2022 2022 2022
Group centre Mechanical Engineering Refractory Engineering Total Group centre Mechanical Engineering Refractory Engineering Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Net assets
Total assets 18,644 175,023 69,166 262,833 18,493 141,995 58,493 218,981
Total liabilities (2,821) (103,234) (27,621) (133,676) (2,595) (77,211) (19,432) (99,238)
15,823 71,789 41,545 129,157 15,898 64,784 39,061 119,743
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 some of those held
by the parent Company, Goodwin PLC.
2023 2022
Group centre Mechanical Engineering Refractory Engineering Total Group centre Mechanical Engineering Refractory Engineering Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Segmental capital expenditure
Property, plant and equipment 630 15,623 4,928 21,181 1,868 9,596 4,889 16,353
Right-of-use assets 220 1,233 66 1,519 419 2,423 881 3,723
Intangible assets 11 508 1,305 1,824 64 1,121 602 1,787
Total 861 17,364 6,299 24,524 2,351 13,140 6,372 21,863
Segmental depreciation, amortisation and impairment
Depreciation 1,070 4,872 1,528 7,470 1,046 4,643 1,705 7,394
Amortisation and impairment 64 446 747 1,257 123 668 781 1,572
Total 1,134 5,318 2,275 8,727 1,169 5,311 2,486 8,966
Geographical segments
The Group operates in the following principal locations. In presenting the
information on geographical segments, revenue is based on the location of its
customers and assets on the location of the assets.
2023 2022
Revenue Net assets Non-current assets Capital expenditure Revenue Net assets Non-current assets Capital expenditure
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
UK * 55,867 82,669 114,235 21,533 38,599 77,447 102,254 19,670
Rest of Europe 28,367 10,636 4,224 790 21,388 8,648 3,728 1,009
USA 19,854 ‒ ‒ ‒ 14,046 ‒ ‒ ‒
Pacific Basin 34,725 15,982 7,029 330 31,085 15,867 6,703 278
Rest of World 46,929 19,870 8,930 1,871 38,990 17,781 8,004 906
Total 185,742 129,157 134,418 24,524 144,108 119,743 120,689 21,863
* The prior year comparative for non-current assets has been adjusted to
remove £2,741,000 of derivative assets.
Note 2
Dividends
The Board proposes to pay a dividend of 115 pence per share, up 7% on the
previous year (2022: 107.80p). The proposed dividend has been calculated
using the Group's profit after taxation figure, plus depreciation and
amortisation for the year ending 30th April, 2023, after having excluded the
non-cash £3.2 million mark to market unrealised gain relating to the 10 year
interest rate swap.
The Board proposes to continue to smooth the Group's cash flow by splitting
the payment of the proposed ordinary dividends of 115 pence per share into
equal instalments of 57.5 pence per share on 6th October, 2023 and on or
around 12th April, 2024 to shareholders on the register on 15th September,
2023 and on or around 22nd March, 2024 respectively.
Note 3
Earnings per share
2023 2022
Number Number
Ordinary shares in issue
Opening shares in issue 7,689,600 7,526,400
Shares issued in the year ‒ 163,200
Total ordinary shares (issued and options) 7,689,600 7,689,600
Weighted average number of ordinary shares in issue 7,689,600 7,673,951
2023 2022
£'000 £'000
Relevant profits attributable to ordinary shareholders 15,904 12,980
2023 2022
pence pence
Basic earnings per share 206.81 169.14
Diluted earnings per share 206.81 169.14
Note 4
Going concern
The Directors, after having reviewed the projections and possible challenges
that may lie ahead, believe that there is a reasonable expectation that the
Group has adequate resources to continue in operational existence for at least
twelve months from the date of approval of these financial statements, and
have continued to adopt the going concern basis in preparing the financial
statements.
As at 30th April 2023, the Group's gearing ratio stood at 26.3% (2022: 25.8%)
against a substantial shareholders' net worth of £125 million (2022: £115
million). The retained reserves of the Group put it in a strong position to
deal with unforeseen material adverse issues.
The Group has continued to incur high energy costs throughout the financial
year, but it has been able to manage the increases in costs. With the
measures already put in place, together with the continued monitoring of the
energy costs incurred , we do not see the impact of energy costs giving rise
to a going concern issue. Furthermore, the fact that it is Group policy to
manufacture and sell products with high technology and high gross margins
assists in insulating the Group from high energy costs.
Within our severe but plausible stress test model, it is demonstrable that the
Group has sufficient funds, after the share buy-back transaction, to cover the
Group's and the Company's financial commitments during the forecast period
whilst remaining compliant with its financial covenants. The stress test
model starts with the forecasts generated by the subsidiary directors and
reflects their specific knowledge of the market conditions, strategy and
outlook. Each of these subsidiary level forecasts is then reviewed,
challenged and approved by the relevant Group Managing Director who themselves
are immersed in each of the businesses. The stress test model then predicts
the impact of a severe but plausible reduction in the pre-tax profit forecast
by reducing revenues by 18% without adjusting downwards the capital
expenditure programme, maintaining the overheads at their current expected
levels and keeping the financing facilities at the same amounts that were in
place at year end. The results of the stress test modelling did not
highlight any going concern issues, breaches of covenants or requirements for
any further financing facilities.
Whilst our carrying values of trade debtors and contract assets are
significant, we see little risk here in terms of recovery. Where possible,
we credit insure the majority of our debtors and our pre credit risk (work in
progress), and for significant contracts where credit insurance is not
available, we ensure, where possible, that these contracts are backed by
letters of credit or cash positive milestone payments.
As discussed elsewhere within these accounts, the Mechanical Engineering order
book remains high and the Refractory Engineering segment continues to be
buoyant.
The Directors are confident that the Group and Company will have sufficient
funds to continue to meet their liabilities as they fall due for at least
twelve months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern basis.
Note 5
Annual General Meeting
The Annual General Meeting will be held at 10.30 a.m. on 29th September, 2023
at Crewe Hall, Weston Road, Crewe, Cheshire, CW1 6UZ.
Note 6
ALTERNATIVE PERFORMANCE MEASURES
Measure 2023 2022
Gross profit (£'000) 46,221 42,704
Revenue (£'000) 185,742 144,108
Gross profit as percentage of revenue (%) 24.9% 29.6%
Profit before tax (£'000) 22,129 19,941
Unrealised gain on 10 year interest rate swap derivative (3,189) (2,740)
Trading profit (£) 18,940,000 17,201,000
Operating profit (£'000) 20,313 18,307
Capital employed (£'000) 157,569 145,095
Return on capital employed (%) 12.9% 12.6%
Net debt (£'000) 32,822 29,785
Net assets attributable to equity holders of the parent(£'000) 124,747 115,310
Gearing (%) 26.3% 25.8%
Net profit attributable to equity holders of the parent (£'000) 15,904 12,980
Net assets attributable to equity holders of the parent(£'000) 124,747 115,310
Return on investment (%) 12.7% 11.3%
Revenue (£'000) 185,742 144,108
Average number of employees 1,144 1,112
Sales per employee (£) 162,362 129,594
Annual post tax profit (£'000) 16,513 13,620
Interest rate SWAP mark to market net of tax @ 19.49% (2022: 19%) (£'000) (2,567) (2,219)
Deferred tax rate change (£'000) ‒ 2,012
Deferred tax rate difference (£'000) 596 ‒
Depreciation owned assets (£'000) 6,272 6,202
Depreciation right-of-use assets (£'000) 1,198 1,192
Amortisation and impairment (£'000) 1,257 1,572
Exclude operating lease depreciation (£'000) (538) (508)
Annual post tax profit + depreciation+amortisation (£) 22,731,000 21,871,000
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UWARROAUWRRRRecent news on Goodwin
See all newsREG - Goodwin PLC - Director/PDMR Shareholding
AnnouncementREG - Goodwin PLC - Director/PDMR Shareholding
AnnouncementREG - Goodwin PLC - March 2024 Trading Update
AnnouncementREG - Goodwin PLC - Half-year Report
AnnouncementREG - Goodwin PLC - Director/PDMR Shareholding
Announcement