REG - Goodwin PLC - Preliminary results for the year ended 30 Apr 2024
07/08/2024 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:20240807:nRSG4540Za&default-theme=true
RNS Number : 4540Z Goodwin PLC 07 August 2024
GOODWIN PLC
PRELIMINARY ANNOUNCEMENT FOR RELEASE ON 7TH AUGUST 2024
Goodwin PLC today announces its preliminary results for the year ended 30th
April, 2024.
CHAIRMAN'S STATEMENT
The "Trading" pre-tax profit for the Group for the twelve month period ended
30th April, 2024, was £24.1 million (2023: £18.9 million) an increase of 27%
on revenue of £191 million (2023: £186 million). As has been the case
since 2022, the "Trading" pre-tax profit excludes the movement of the mark to
market valuation of our interest rate swap. The interest rate swap continues
to benefit the Group as it locked in a very preferential borrowing rate of
less than 1% up to 2031 on the Group's first £30 million of debt.
Currently, as of the date of writing this report, the Group's cumulative
future orders stand at £264 million (August 2023: £271 million)
The Directors propose an increased dividend of 133 pence (2023: 115 pence) per
share.
The Group has delivered a strong performance both financially and
operationally, enabling completion of investments for future long-term growth,
as well as increasing shareholders returns in the year. The continued increase
in the performance of the Group in the financial year just ended is a result
of the hard work and strategy to break into new markets coming to fruition.
The profits have again taken a step forward as a direct result of the
strategic investments that have been made over the last decade, and
particularly the supply of mission-critical, high integrity components to the
nuclear waste storage industry and key components for the naval propulsion and
hull construction markets from the Mechanical Engineering Division. During
the year the Group has, within its traditional markets, which include the
supply of valves and submersible pumps for the Mechanical Engineering
Division, performed better than the previous year and the Refractory
Engineering Division has continued its development of the customer base for
the supply of the investment casting powders and ancillary products to the
jewellery casting market.
Mechanical Engineering Division
I am pleased to report that the Mechanical Engineering Division has had a
progressive year, driven by an increase in activity levels of better quality
contracts that have been won in the last few years. The Division's
profitability for the year ended 30th April, 2024 has increased by 55%
delivering a pre-tax profit of £18.9 million (2023: £12.2 million).
The increase in the volume of improved margin work has been achieved due to
our highly trained and skilled workforce, complimented by the annual addition
of new apprentices, giving rise to increased manufacturing capacity.
Furthermore, working a three-shift system across many of its operations has
enabled the Division to progressively continue to ramp up activity levels so
we can satisfactorily process the order book that for many customers are
multi-year programmes. It is satisfying to note that even with this
improvement in divisional activity, there remains room for further growth
across all companies, especially as the integration and alignment with our key
customers continues to develop and evolve.
The majority of the Division's forward order book relates to advanced
solutions for the nuclear waste storage industry and key components for the
naval propulsion and hull construction sector. From the discussions that the
sales teams of both Goodwin International and Goodwin Steel Castings have had
with their key customers, it is expected that there will be more orders for
the same components in the coming years. Furthermore, a significant
proportion of this workload consists of repeat orders for components where we
have already overcome many of the manufacturing uncertainties, allowing us to
realise future production efficiency gains on these repeat components.
Easat Radar Systems now has a forward order book that should see it return to
profitability this coming year. The pipeline of opportunities continues to
grow, with the level of engagement with customers getting stronger as they
recognise what Easat is capable of delivering. Taking a keen interest in
what is on the horizon for Easat, I have attended multiple Easat meetings to
satisfy myself we have the right contingent planning in place to deliver
multiple simultaneous opportunities that are likely to transpire in due
course. We cannot influence customer timings, but can only reiterate that the
Board continues to have confidence in Easat to deliver respectable results it
is capable of in the near future.
The last major element of capital expenditure for the Group was Duvelco - for
the initial polyimide manufacturing facility, which is currently at the final
stages of commissioning. With full production expected to occur in the near
future, Duvelco is actively having commercial discussions with established
distributors and end users. In addition to selling the polyimide resin
powder, the Group is in the process of making additional investments within
its German based subsidiary, Noreva, to directly manufacture the polyimide
resin into pressed parts that are already commonly purchased in the
high-performance polyimide market.
Refractory Engineering Division
The Refractory Engineering Division has continued to move forwards its
profitability, achieving £13.5 million for the year ended 30th April, 2024,
compared to £12.8 million in 2023, which represents a 21.3% pre-tax profit
margin (2023: 20.7%). The strengthening of Sterling over the last twelve
months, against the overseas subsidiaries' currencies, has reduced the
reportable profits and suppressed the true growth performance of the
Division. There has also been a market normalisation of reduced consumer
spending post-COVID, but the Division continues to display a strong
performance.
Within the year, we have increased production capacity at Ultratec, our
southern Chinese investment powder manufacturing facility, to accommodate the
growing local customer demand. During the year, a restructuring and
reorganisation operation was carried out in relation to our companies in
Thailand, resulting in operational cost savings of approximately half a
million pounds per annum post-completion.
Additionally, we are scheduled to be fully operational this year in the new
Indian investment powder manufacturing facility. This 76,000 square feet
facility, built over the past two years, will provide much-needed increased
capacity to service current market requirements and support significant market
growth in India over the next five to ten years. Much of the growth in sales
of products to the jewellery casting markets in India is underpinned by
domestic consumption, driven by the ever-increasing levels of expendable
income available to the population as the country rapidly develops.
Sales of AVD fire extinguishers and extinguishing agents continue to grow, and
we are excited about the future of this product line. We have commenced
production of specialist lithium fire blankets within our India operations.
These blankets, made from vermiculite dispersion-coated e-glass fabrics, have
significantly better thermal resistance properties than competitors' products
available in the market. The renovation of the newly acquired and equipped
50,000 square feet facility in the UK is now complete. It accommodates our
larger in-house vermiculite dispersion plant, which produces the material that
AVD is made from, as well as the AVD fire extinguisher manufacturing and
filling plant. We are awaiting certification from BSI for the fire
extinguisher production line and estimate we will begin filling and selling
in-house produced extinguishers in the second half of this financial year.
At Hoben International, we have gained planning approval for a 4.3 MW solar
array field adjacent to our manufacturing plant. However, despite being
assured by the District Network Operator prior to submitting the planning
application that the local transformer and switch had adequate capacity, we
have now been told that we cannot have a connection. While frustrated by this
outcome, we are committed to finding a solution as soon as possible and will
continue to fight for our cause.
Cash flow
As of 30th April, 2024, the Group's net debt has reduced to £42.9 million
from the net debt position reported at 31st October, 2023, when it stood at
£54.6 million, which corresponds to a gearing ratio of 35.1%, down from 47.8%
six months earlier.
The Group has demonstrated strong cash generation capabilities, reducing the
net debt position while still incurring £16.42 million of capital
expenditures throughout the year and returning £17.5 million to shareholders,
including a successful £8.9 million tender offer in May 2023. Moving
forward, the cash generation throughout the Group companies remains robust.
One of the factors during the year that has contributed to the strong cash
flows, is management's focus to negotiate and obtain multiple milestone
payments on the longer-term contracts allowing us to increase production
levels without having to utilise our banking facilities to fund the work in
progress.
Furthermore, over the last three years, due to the increased capital
expenditure in the UK, the UK companies have obtained a significant cashflow
benefit from the first year capital allowance and super deduction schemes that
were in place in the UK. The net effect of these favourable tax provisions
has resulted in the UK companies deferring £8.1 million of UK corporation tax
that would have been payable. Further details can be found within note 9 of
the financial statements to be published shortly.
The Board's focus for the future remains on improving cash flows and managing
working capital efficiently as business activities increase.
Other than capital expenditure that is fully funded by customers and is cash
flow neutral, for the next three to four years the Board's focus is on
operational efficiency and obtaining output from the substantial capital
investments that have already been made on new product production lines and
increases in manufacturing capacity rather than embark on additional capital
expenditure.
It is for this reason that moving forward the Group's non-customer funded
annual capital expenditure will likely be only about one third of what it has
averaged over the past three years. This policy along with the substantial
workload should result in continued significant cash generation and the
continuation of the dividend policy. Post year-end, the Group has renewed
one of its Revolving Credit Facilities, that was due to expire, for a
four-year term.
Over the past decade, the Group has achieved an average dividend growth rate
of over 15% per year, returning more than £60 million to shareholders and
with the market capitalisation of the Company in the year having risen to
£512 million at 30th April, 2024 which is an increase of £221 million over
the financial year, the Total Shareholders Return including the dividends paid
over the last 20 years is 4,632% (versus FTSE100: 282%). See the financial
statements to be published shortly for full details. Furthermore, as at the
time of writing, the market capitalisation of the Group has continued to rise,
leading to Goodwin PLC's inclusion in the FTSE250 index.
We would like to take the opportunity of thanking all our employees, managers
and Directors both in the UK and overseas for working so hard to achieve the
latest improved trading results, as well as the long-term performance of the
Group to date.
T.J.W. Goodwin
Chairman
Alternative performance measures mentioned above are defined in Note 6.
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;
· engineering activity and investment into the reduction of C02
emissions where it is commercially viable taking into account the long-term
effects of CBAM (Carbon Border Adjustment Mechanism);
· 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 propulsion
and hull components, nuclear waste storage components, liquefied natural gas
(LNG), gas, oil, petrochemical, mining, and water markets.
We generate value by creating leading edge technology designs and
manufacturing processes, globally sourcing the best quality raw material at
good prices, manufacturing in highly efficient facilities using up to date
technology to provide very reliable high performance 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 net in
weight, radiograph and also finish CNC machine and fabricate them at the
foundry's sister company, Goodwin International Limited. This capability is
targeting the naval 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 and is building a facility to
CNC press polyimide components from Duvelco resin. Both Goodwin
International Limited and Noreva GmbH purchase the majority 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, Canada,
Peru and Africa. Easat Radar Systems Limited and its subsidiary, Easat Finland
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. We create value on these by innovative
design, assembly and testing in our own facilities using bought in or
engineered in-house components.
Duvelco, the newest company within the Mechanical Engineering Division, is a
specialist polyimide manufacturer, that will manufacture and sell polyimide
resins into an established market that can then be moulded into parts and
shapes for the high temperature and critical applications, for which very few
polymers can be used.
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 and sales companies located in China, India and Thailand
which sell the casting powders, waxes and moulding rubbers 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 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 and other materials in or
around rivers.
Dupré Minerals Limited (Dupré), a refractory company, 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 sells
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, 2024
2024 * 2023 *
£'000 £'000
CONTINUING OPERATIONS
Revenue 191,258 185,742
Cost of sales (113,371) (116,973)
GROSS PROFIT * 77,887 68,769
Distribution expenses (9,618) (9,623)
Administrative expenses (41,374) (38,833)
OPERATING PROFIT 26,895 20,313
Finance costs (net) (2,870) (1,438)
Share of profit of associate company 69 65
TRADING PROFIT 24,094 18,940
Additional year-on-year unrealised gain on 10 year interest rate swap 113 3,189
derivative
PROFIT BEFORE TAXATION 24,207 22,129
Tax on profit (6,491) (5,616)
PROFIT AFTER TAXATION 17,716 16,513
ATTRIBUTABLE TO:
Equity holders of the parent 16,902 15,904
Non-controlling interests 814 609
PROFIT FOR THE YEAR 17,716 16,513
BASIC AND DILUTED EARNINGS PER ORDINARY SHARE (in pence) 224.53p 206.81p
* The Board has taken the decision to present the statutory reporting of gross
profit to allocate costs, which align more appropriately with the Group's
operational structure and how it is calculated within the Group's management
accounts, to ensure that the end user of the statutory accounts can review the
financial performance of the Group on the same basis as the Board. For
further details please refer to the "Business Diversity and Performance"
section and note 5 of the financial statements to be published shortly.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2024
2024 2023
£'000 £'000
PROFIT FOR THE YEAR 17,716 16,513
OTHER COMPREHENSIVE (EXPENSE) / INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS:
Foreign exchange translation differences (1,935) (1,412)
Cash flow hedges - effective portion of changes in fair value (936) 3,741
Cash flow hedges - ineffectiveness transferred to profit or loss 433 518
Cash flow hedges - amounts transferred to profit or loss (438) 1,308
Cash flow hedges - deferred tax (charge) / credit 85 (1,290)
Cost of hedging - changes in fair value 558 (1,447)
Cost of hedging - ineffectiveness transferred to profit or loss 28 (76)
Cost of hedging - amounts transferred to profit or loss 144 33
Cost of hedging - deferred tax (charge) / credit (184) 371
OTHER COMPREHENSIVE (EXPENSE) / INCOME FOR THE YEAR, NET OF INCOME TAX (2,245) 1,746
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 15,471 18,259
ATTRIBUTABLE TO:
Equity holders of the parent 15,039 17,726
Non-controlling interests 432 533
15,471 18,259
CONSOLIDATED BALANCE SHEET
at 30th April, 2024
2024 2023
£'000 £'000
NON-CURRENT ASSETS
Property, plant and equipment 105,337 101,243
Right-of-use assets 11,744 6,763
Investment in associate 828 964
Intangible assets 25,900 25,448
Derivative financial assets 5,716 5,932
149,525 140,350
CURRENT ASSETS
Inventories 46,809 47,955
Contract assets 22,027 16,257
Trade and other receivables 31,894 34,589
Corporation tax receivable 1,288 1,337
Derivative financial assets 2,007 2,684
Cash and cash equivalents 30,678 19,661
134,703 122,483
TOTAL ASSETS 284,228 262,833
CURRENT LIABILITIES
Borrowings 14,027 6,729
Contract liabilities * 14,856 32,747
Trade and other payables 30,830 31,765
Derivative financial liabilities 251 2,383
Liabilities for current tax 859 921
Provisions for liabilities and charges 231 266
61,054 74,811
NON-CURRENT LIABILITIES
Borrowings 61,906 47,256
Contract liabilities 19,268 ‒
Derivative financial liabilities 277 ‒
Provisions for liabilities and charges 274 246
Deferred tax liabilities 14,799 11,363
96,524 58,865
TOTAL LIABILITIES 157,578 133,676
NET ASSETS 126,650 129,157
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 751 769
Translation reserve (2,391) (849)
Share-based payments reserve ‒ 5,244
Cash flow hedge reserve 633 1,504
Cost of hedging reserve (426) (976)
Retained earnings 123,714 119,055
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 122,281 124,747
NON-CONTROLLING INTERESTS 4,369 4,410
TOTAL EQUITY 126,650 129,157
* Contract liabilities are predominantly advance payments from customers.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2024
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, 2024
Balance at 1st May, 2023 769 (849) 5,244 1,504 (976) 119,055 124,747 4,410 129,157
Total comprehensive income:
Profit for the year ‒ ‒ ‒ ‒ ‒ 16,902 16,902 814 17,716
Other comprehensive income:
Foreign exchange translation differences ‒ (1,542) ‒ ‒ ‒ ‒ (1,542) (393) (1,935)
Effective portion of changes in fair value ‒ ‒ ‒ (948) 560 ‒ (388) 10 (378)
Ineffectiveness transferred to profit or loss ‒ ‒ ‒ 432 28 ‒ 460 1 461
Amounts reclassified to profit or loss ‒ ‒ ‒ (438) 144 ‒ (294) ‒ (294)
Deferred tax (charge) / credit ‒ ‒ ‒ 83 (182) ‒ (99) ‒ (99)
Other comprehensive income / (expense) for the year ‒ (1,542) ‒ (871) 550 ‒ (1,863) (382) (2,245)
TOTAL COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR ‒ (1,542) ‒ (871) 550 16,902 15,039 432 15,471
Transfers between reserves * ‒ ‒ (5,244) ‒ ‒ 5,244 ‒ ‒ ‒
Transactions with owners:
Buy back of shares (18) ‒ ‒ ‒ ‒ (8,851) (8,869) ‒ (8,869)
Dividends paid ‒ ‒ ‒ ‒ ‒ (8,636) (8,636) (473) (9,109)
BALANCE AT 30TH APRIL, 2024 751 (2,391) ‒ 633 (426) 123,714 122,281 4,369 126,650
* The balance on the share-based payment reserve has been transferred to
retained earnings as all previous share options have vested.
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
Amounts reclassified to profit or loss ‒ ‒ ‒ 1,274 40 ‒ 1,314 27 1,341
Deferred tax (charge) / credit ‒ ‒ ‒ (1,283) 367 ‒ (916) (3) (919)
Other comprehensive income / (expense) for the year ‒ (1,312) ‒ 4,250 (1,116) ‒ 1,822 (76) 1,746
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 CASH FLOWS
for the year ended 30th April, 2024
2024 2023
£'000 £'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations after tax 17,716 16,513
Adjustments for:
Depreciation of property, plant and equipment 6,607 6,272
Depreciation of right of use assets 1,497 1,198
Amortisation and impairment of intangible assets 1,341 1,257
Finance costs (net) 2,870 1,438
Currency (gains) / losses (1,025) 1,213
Loss / (profit) on sale of property, plant and equipment (29) 134
Unrealised gain on 10-year interest rate swap derivative (113) (3,189)
Share of profit of associate company (69) (65)
UK tax incentive credit on research and development (660) (610)
Tax expense 6,491 5,616
OPERATING CASH FLOW BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS 34,626 29,777
Decrease / (Increase) in inventories 437 (8,377)
(Increase) in contract assets (5,849) (3,804)
Decrease / (increase) in trade and other receivables 2,357 (5,304)
Increase in contract liabilities 1,388 17,954
Increase in trade and other payables 370 4,072
CASH GENERATED FROM OPERATIONS 33,329 34,318
Interest received * 1,399 556
Interest paid * (5,022) (2,496)
Corporation tax paid (2,587) (3,251)
NET CASH INFLOW FROM OPERATING ACTIVITIES 27,119 29,127
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment 392 218
Acquisition of property, plant and equipment (15,363) (18,871)
Acquisition of intangible assets (582) (675)
Development expenditure capitalised (1,456) (1,196)
Dividend from associate company 131 ‒
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (16,878) (20,524)
CASH FLOW FROM FINANCING ACTIVITIES
Buy back of shares (8,869) ‒
Payment of capital element of lease liabilities (2,910) (1,874)
Dividends paid (8,636) (8,289)
Dividends paid to non-controlling interests (473) (556)
Proceeds from new loans 23,098 11,500
Repayment of loans (1,152) (1,181)
Change in bank overdrafts (71) 119
NET CASH OUTFLOW FROM FINANCING ACTIVITIES 987 (281)
NET INCREASE IN CASH AND CASH EQUIVALENTS 11,228 8,322
Cash and cash equivalents at beginning of year 19,661 11,651
Effect of exchange rate fluctuations on cash held (211) (312)
CASH AND CASH EQUIVALENTS AT END OF YEAR 30,678 19,661
* The prior year comparatives have been increased by £481,000 due to the
interest received from the interest rate swap in the current year being
£1,269,000, as shown in note 8 of the financial statements to be published
shortly.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's operations expose it to a variety of risks and uncertainties.
The Directors confirm that they continue to carry 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 to the 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
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 coastal surveillance and
air traffic control 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. The risk
of product obsolescence is countered by research and development investment
into new products.
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.
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 during times of high inflation or increased shipping
times and costs. 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 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. Prior to the expiry
date of the Revolving Credit Facilities, the Board reviews the current and
future requirements of the Group and arranges suitable replacement facilities
prior to the current facility expiring. Post year-end, the Group has renewed
one of its Revolving Credit Facilities, that was due to expire, for a four
year term.
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 sanctions, anti-corruption, anti-bribery and human rights. During the
year, the Group has carried out additional sanctions training and continued to
refine and update its 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.
Energy and Climate Change: The Group is actively developing and implementing
its carbon neutral plan, which helps mitigate the risk of the Group being
exposed to the long-term effects of global warming and more specifically the
upcoming Carbon Border Adjustment Mechanism (CBAM) taxes that will likely ramp
up over the next ten years, in addition to significant increases in the cost
of power that are a result of the fragile global energy system. The Group's
methods of mitigation include fixed price energy contracts, incorporating
price escalation clauses into the longer term contracts and ultimately
reducing the need to purchase energy from the national grid by installing
renewal solutions like low cost solar panels. To date the Group has
installed 5.7MW of solar panels worldwide and despite the Distribution Network
Operator in the UK restricting future installations, planning has been
obtained to install a further 5.3 MW of solar panels. Additional information
on the Group's climate related risks and opportunities can be found within the
Environmental section, of the financial statements 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.
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 Mechanical Divisional
Managing Director
S.R. Goodwin Refractory
Divisional Managing Director
T.J.W. Goodwin Chairman
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
Company Law and 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
in the financial statements due 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 due to be published
shortly.
New IFRS standards and interpretations adopted during 2023 / 2024
The IASB and IFRIC issued the following amendment:
· Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2: Disclosure of Accounting Policies - (effective for
periods commencing on or after 1st January 2023).
· Amendments to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors 'Definition of Accounting Estimates' - (effective for
periods commencing on or after 1st January 2023).
· Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets
and Liabilities arising from a Single Transaction - (effective for periods
commencing on or after 1st January 2023).
· Amendments to IAS 12 Income Taxes: International Tax Reform -
Pillar Two Model Rules (effective for periods commencing on or after 1st
January 2023).
The implementation of these amendments has not had a material impact on the
Group's financial statements
Copies of the 2024 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 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.
There are no other reportable segments apart from those identified.
2024 2023
Mechanical Engineering Refractory Engineering Total Mechanical Engineering Refractory Engineering Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue
Total revenue 156,944 75,859 232,803 147,538 80,340 227,878
Intra-segment revenue (28,912) (12,633) (41,545) (23,771) (18,365) (42,136)
External revenue 128,032 63,226 191,258 123,767 61,975 185,742
Profit
Segment operating profit 18,861 13,423 32,284 12,171 12,772 24,943
Share of profit of associate company ‒ 69 69 ‒ 65 65
Segment profit before taxation 18,861 13,492 32,353 12,171 12,837 25,008
Group centre costs (5,389) (4,630)
Finance costs (net) (2,870) (1,438)
Profit before taxation and movement in fair value of interest rate swap 24,094 18,940
Percentage of segment profit before tax 58% 42% 100% 49% 51% 100%
2024 2023
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 17,338 192,608 74,282 284,228 18,644 175,023 69,166 262,833
Total liabilities (511) (118,132) (38,935) (157,578) (2,821) (103,234) (27,621) (133,676)
16,827 74,476 35,347 126,650 15,823 71,789 41,545 129,157
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.
2024 2023
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 736 10,102 5,583 16,421 630 15,623 4,928 21,181
Right-of-use assets 180 934 634 1,748 220 1,233 66 1,519
Intangible assets 372 1,209 456 2,037 11 508 1,305 1,824
Total 1,288 12,245 6,673 20,206 861 17,364 6,299 24,524
Segmental depreciation, amortisation and impairment
Depreciation 1,181 4,978 1,945 8,104 1,070 4,872 1,528 7,470
Amortisation and impairment 85 446 810 1,341 64 446 747 1,257
Total 1,266 5,424 2,755 9,445 1,134 5,318 2,275 8,727
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.
2024 2023
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 61,595 78,978 117,376 14,887 55,867 82,669 114,235 21,533
Rest of Europe 21,552 6,884 5,132 1,532 28,367 10,636 4,224 790
USA 21,480 ‒ ‒ ‒ 19,854 ‒ ‒ ‒
Pacific Basin 42,903 17,374 7,009 692 34,725 15,982 7,029 330
Rest of World 43,728 23,414 14,292 3,095 46,929 19,870 8,930 1,871
Total 191,258 126,650 143,809 20,206 185,742 129,157 134,418 24,524
Note 2
Dividends
The Board proposes to pay a dividend of 133 pence per share, up 16% on the
previous year (2023: 115p). The proposed dividend has been calculated using
the Group's profit after taxation figure, plus depreciation and amortisation
for the year ended 30th April, 2024, after having excluded the non-cash mark
to market unrealised gain relating to the 10-year interest rate swap.
Similar to last year, the Board proposes to continue to smooth the Group's
cash flow by splitting the payment of the proposed ordinary dividends of 133
pence per share into equal instalments of 66.5 pence per share on 4th October,
2024 and on or around 11th April, 2025 to shareholders on the register on 13th
September, 2024 and on or around 21st March, 2025 respectively.
Note 3
Earnings per share
2024 2023
Number Number
Ordinary shares in issue
Opening shares in issue 7,689,600 7,689,600
Shares bought back in the year (180,000) ‒
Total ordinary shares 7,509,600 7,689,600
2024 2023
£'000 £'000
Relevant post-tax profits attributable to ordinary shareholders 16,902 15,904
Weighted average number of ordinary shares in issue 7,527,797 7,509,600
2024 2023
pence pence
Basic and diluted earnings per share 224.53 206.81
Note 4
Going concern
The Directors, after having reviewed the Group forecasts and possible
challenges that may occur over the short to medium term, are confident that
the Group has adequate resources to continue to operate for at least twelve
months from the date that these financial statements are approved and have
continued to adopt the going concern principle in preparing these financial
statements.
As at 30th April 2024, the Group's gearing ratio stood at 35.1% (2023: 26.3%)
against a substantial shareholders' net worth of £122 million (2023: £125
million). The retained reserves of the Group put it in a strong position to
deal with any material unforeseen adverse issues that may occur and have an
impact on the Group's operations.
As part of the going concern process, the Group forecasts are stress tested by
being subject to a number of severe but conceivable financial challenges to
ensure that the Group finances remain robust throughout the period being
tested. The stress test model begins with the Group forecasts, that have
been consolidated from the individual forecasts generated by the Directors of
each of the subsidiaries and reflects their specific knowledge of their
business and the markets, within which they operate, to ensure that the
forecasts that they produce reflect the market conditions, the business
strategy and expected outlook. Each of these subsidiary level forecasts is
then reviewed, challenged and approved by the relevant Divisional Managing
Director, who is immersed in each of these businesses and knows and
understands each of their markets. As the Group is so diverse, with two
divisions in different sectors and multiple products within each division,
several stress test events are used to reduce the pre-tax profit forecasts by
reducing revenues and consequently the pre-tax profit. Due to the diversity,
it is feasible that one or two events could take place, but it is highly
improbable that all the stress test events would occur at the same time. The
stress tests implemented reduced revenues and consequently pre-tax profits,
which for these stress tests implemented reduced pre-tax profit by a combined
amount of 44%, without reducing the discretionary capital expenditure
programme, maintaining overheads at their current expected levels, maintaining
the dividend policy and utilising the finance facilities at the same amounts
that will be in place twelve months from the signing of these accounts. The
results of the stress test modelling did not highlight any going concern
issues, breaches of covenants or requirements for any further financing
facilities in addition to those currently in place at year-end.
Post-year-end, the Group has renewed one of its Revolving Credit Facilities,
that was due to expire, for a four-year term.
Whilst our carrying values of trade debtors and contract assets are
significant, we see little risk here in terms of recovery due to the quality
of the customers that the Group contracts with. Where possible, we credit
insure the majority of our trade debtors and our pre-credit risk (work in
progress), and for significant contracts where credit insurance is not
available we ensure, where possible, that those 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 10.30am on Wednesday, 2nd October,
2024 at Crewe Hall, Weston Road, Crewe, Cheshire, CW1 6UZ.
Note 6
ALTERNATIVE PERFORMANCE MEASURES
Measure Method of calculation / reference 2024 2023
Gross profit (£'000) Consolidated statement of profit or loss 77,887 68,769
Revenue (£'000) Consolidated statement of profit or loss 191,258 185,742
Gross profit as percentage of revenue (%) * Gross profit / Revenue 40.7% 37.0%
Profit before tax (£'000) Consolidated statement of profit or loss 24,207 22,129
Unrealised gain on 10 year interest rate swap derivative Consolidated statement of profit or loss (113) (3,189)
Trading profit (£'000) 24,094 18,940
Operating profit (£'000) Consolidated statement of profit or loss 26,895 20,313
Capital employed (£'000) 165,212 157,569
Return on capital employed (%) Operating profit / capital employed 16.3% 12.9%
Net debt (£'000) 42,931 32,822
Net assets attributable to equity holders of the parent (£'000) Consolidated balance sheet 122,281 124,747
Gearing (%) Net debt / equity, as above 35.1% 26.3%
Net profit attributable to equity holders of the parent (£'000) Consolidated statement of profit or loss 16,902 15,904
Net assets attributable to equity holders of the parent (£'000) Consolidated balance sheet 122,281 124,747
Return on investment (%) Net profit / net assets 13.8% 12.7%
Revenue (£'000) Consolidated statement of profit or loss 191,258 185,742
Average number of employees 1,225 1,144
Revenue per employee (£'000) Group revenue / average employees 156,129 162,362
Annual post tax profit (£'000) Consolidated statement of profit or loss 17,716 16,513
Interest rate SWAP mark to market net of tax @ 25% (2023: 19.49%) (£'000) Consolidated statement of profit or loss (85) (2,576)
Deferred tax rate difference (£'000) ‒ 596
Depreciation owned assets (£'000) 6,607 6,272
Depreciation right-of-use assets (£'000) 1,497 1,198
Amortisation and impairment (£'000) 1,341 1,257
Exclude operating lease depreciation (£'000) (723) (538)
Annual post tax profit + depreciation + amortisation (£'000) 26,353 22,722
* The gross profit for the previous year has been updated as outlined in note
5 of the financial statements to be published shortly.
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 UNAURSNUWRURRecent news on Goodwin
See all newsREG - Goodwin PLC - Appointment of Joint Corporate Broker
AnnouncementREG - Goodwin PLC - Result of AGM
AnnouncementREG - Goodwin PLC - September 2024 Trading Update
AnnouncementREG - Goodwin PLC - Posting of Annual Report and Accounts
AnnouncementREG - Goodwin PLC - Preliminary results for the year ended 30 Apr 2024
Announcement