TIDMGDWN
RNS Number : 2296I
Goodwin PLC
11 August 2021
PRELIMINARY ANNOUNCEMENT
Goodwin PLC today announces its preliminary results for the year
ended 30th April 20201.
CHAIRMAN'S STATEMENT
The pre-tax profit for the Group for the twelve month period
ended 30th April 2021, was GBP16.5 million (2020: GBP12.1 million),
an increase of 36% on a revenue of GBP131 million (2020: GBP145
million). The Directors propose an increased dividend of 102.24p
(2020: 81.71p) per share.
In what has been another year of unique challenges, I am
delighted that excellent progress has been made particularly during
the second half of the year in many areas with the Group's workload
as at the time of writing remaining healthy at GBP165 million
(2020: GBP183 million).
Despite the placement of large capital projects having slowed as
expected due to the world having to adapt to new working
arrangements, headway has been made within the Mechanical
Engineering Division on the nuclear propulsion engineering products
and the nuclear waste containment box supply agreement. The
performance achieved in the year is a reflection of the Group's
strength through diversification, supplying a wide range of
customers, countries and markets. Following the Group's decisive
actions last financial year with the global onset of Covid-19, the
Group protected its workforce and ensured our manufacturing
facilities continued to operate. In doing so, we placed ourselves
in a strong position to tackle the headwinds that were faced during
the year ended 30th April, 2021.
Whilst Covid-19 has been the most recent global 'Black Swan'
event, it is coupled with another shockwave sweeping the globe,
namely the pace of the uptake of greener energy with the oil majors
now rapidly investing in green energy products rather than new
oilfields. So when looking at the Mechanical Engineering Division,
our steel foundry, Goodwin Steel Castings Limited, has faced a
difficult year due to the accelerated decline of capital flows into
oil projects. Whilst it has progressed well with transitioning its
business away from the oil industry, it has also been hindered by
Covid-19 delaying documentation approvals that would have enabled
the foundry to achieve higher levels of casting activity in the
year within its new targeted markets.
Looking forward, Goodwin Steel Castings should soon start to
accelerate the production of 30 tonne cast nuclear waste boxes, the
initial castings of which are being successfully delivered to
Goodwin International Limited for machining, painting and assembly.
The foundry is also having good success winning work for naval
vessels both in the UK and the USA, all for long running programmes
that will span decades to come in an area where there are
significant time barriers to entry for other foundries.
Profitability in our submersible pump businesses in India,
Australia, Africa and Brazil has materially improved, a reflection
of the four companies maturing and the global metal prices having
dramatically recovered. They have all performed admirably by
carrying out more servicing for existing customers on the sizeable
global fleet of Goodwin pumps now deployed. The submersible pump
companies in the financial year just completed generated 14% of the
Group pre-tax profitability. With minerals pricing across the board
generally being high, our target customers that use our pumps are
profitable and are expected to continue with their delayed capital
expenditure in the new financial year.
Goodwin International has had another successful year with a
good mix of business, supplying a growing range of capabilities to
their valve, nuclear waste, naval propulsion and ship construction
customers. Within the year a new 1.5 acre facility, with multiple
100 tonne overhead cranes and a new radiography bay, has become
operational and has started to fill up with work already on
order.
Valve sales to the oil industry in the last financial year
represented 43% of activity for Goodwin International and in this
new financial year, whilst Goodwin International's overall sales
output remains extremely robust as they have orders on hand, the
valve activity for the oil industry is expected to drop to less
than 33% of activity as the manufacture relating to nuclear waste
products, propulsion, and naval hull components is rapidly
increasing.
Easat Radar Systems' recovery to profitability has also been
impacted due to the severe decline in global air traffic associated
with Covid-19, starving many airports of cash. Whilst market
expectations forecast that air traffic levels are to return to
their historic 2019 levels by 2022 / 2023, infrastructure
surveillance projects continue to be planned and Easat has a
growing pipeline of opportunities with the bids being submitted
substantially increasing in size and therefore margin
potential.
The Board has high expectations for Easat Radar Systems as it
moves away from selling only the mechanical parts of a radar
system. Since the integration with NRPL, based in Finland, in 2015,
followed by a period of design enhancements to their transceivers
and interrogators, we are now marketing and selling complete air
traffic control and coastal surveillance systems inclusive of the
air traffic control systems and screens, recorded radios and runway
lighting control to guide planes on the tarmac should the customer
so desire. The sales value of a complete system is in excess of ten
times that of the original mechanical components that were
previously manufactured, and, now, with our vertically integrated
product offering, we have a system that not only performs
excellently but is internationally competitive. The major area of
growth for Easat over the coming years will be in the Far East,
where in the year, despite the travel restrictions and national
lockdown, Easat has successfully commissioned two of the three
turnkey radar systems for which it had orders.
Whilst Goodwin Steel Castings and Easat Radar Systems have not
recently been firing on all cylinders, the Board firmly believes
that both businesses will become profitable again moving forward
with the transitions they have both been through.
Within the Refractory Engineering Division, increased levels of
consumer spending in the second half of the year on luxury goods,
horticulture and construction, as a consequence of Covid-19
restrictions redirecting consumer spending away from entertainment,
hospitality and travel towards these sectors, has resulted in
strong performance, making up for the low activity levels in the
first half of the financial year due to the onset of Covid-19.
Business levels remain strong with continued high levels of pent-up
consumer spending. The Division achieved a record pre-tax profit of
GBP9.3 million (2020: GBP7 million), equating to 46% of the Group
profitability.
Customer acceptance trials of the patented Silica Free
Investment Powder, X-Sil, are underway and it is hoped that regular
sales will start within the year ahead, further increasing the
Group's market share within the industry sector.
Sales of the patented AVD Lith-EX lithium battery fire
extinguishers and vermiculite-containing fluids continue to gain
momentum with industry sectors, insurance companies and
accreditation bodies waking up to the need and requirement for
products and standards that specify their use on lithium battery
fires which other extinguishing agents do not effectively
extinguish.
Key industry sectors adopting the products include electric car
manufacturers, car repair workshops, battery manufacturers, battery
recyclers, energy storage systems, e-mobility manufacturers,
e-mobility storage and repair, marine and military.
Sales of patented Soluform concrete bag work doubled within the
year with good prospects for future growth with the use of the
product in large scale projects such as HS2 and Thames Tideway
Tunnel, along with many other projects for the formation of
headwalls, culverts, scour protection, retaining walls and bridge
pier protection.
As at 30th April, 2021, the Group finished the year with a net
debt and gearing of GBP17.4 million and 15.4% respectively, as
calculated in note 26 (d) to the financial statements to be
published shortly. The strength of the Group's cash generation was
a result of staying operational throughout the pandemic, which
meant that the Group has been able to stay within its funding
headroom without the need to approach our financial lenders for
additional facilities. Furthermore, the Group has not needed to
cancel any capital expenditure projects; raise additional funds
from shareholders; nor has it any outstanding deferral of tax
payments with HMRC. The CCFF loan that was drawn down as an
insurance policy during the financial year and referred to in the
previous Chairman's Statement, was fully repaid on 26th April,
2021.
Armed with a strong balance sheet and a renewed set of bank
facilities we are well placed to benefit from the recovery of the
global economy and deliver strong returns on the capital that has
been invested to date. The Board remains confident of the Group's
ability to continue to develop new and existing activities that
will deliver additional sustainable growth in the long-term.
The Board is once again indebted to our Directors, managers and
employees around the world for their unwavering efforts in keeping
the Group operational, controlling cost and delivering what can
only be described as an extraordinary Group result in the year of
Covid-19 just completed.
11(th) August, 2021 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 is to have a sustainable long-term
engineering based business with good potential for profitable
growth while providing a fair return to our shareholders.
The Board's STRATEGY to achieve this is:
-- to supply a range of technically advanced products to growth
markets in the mechanical engineering and refractory engineering
segments in which we have built up a global reputation for
engineering excellence, quality, efficiency, reliability,
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 product range and 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 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 industrial goods, generally
on a project basis, more often than not involving the complementary
skillset of other Group companies to deliver the requirement. The
projects normally involve international procurement, high integrity
castings, forgings or wrought high alloy steels, 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 to serve the oil, petrochemical, gas, liquefied natural gas
(LNG), mining, nuclear power generation, nuclear waste treatment
and water markets.
We generate value by creating leading edge technology designs,
globally sourcing the best quality raw material at good prices,
manufacturing in highly efficient facilities using up to date
technology to provide very reliable products to the required
specification, at competitive prices and with timely
deliveries.
Our mechanical engineering markets also include high alloy
castings, machining and general engineering products which
typically form part of large construction projects such as nuclear
waste treatment plants, high integrity offshore structural
components and bridges, chemical plants, oil refineries and naval
vessels.
The Group through its foundry, Goodwin Steel Castings, has the
capability to pour high performance alloy castings up to 35 tonnes,
radiograph and also finish CNC machine and fabricate them at the
foundry's sister company, Goodwin International. This capability is
targeting the defence industry and nuclear decommissioning, the oil
and gas industry, as well as large, global projects requiring high
integrity machined castings.
Goodwin International 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 also has a division that is
focussed on manufacturing / machining high precision, high
integrity components for naval marine vessels. Noreva GmbH also
designs, manufactures and sells axial nozzle check valves. Both
Goodwin International and Noreva purchase the majority of the value
of their sand mould castings from Goodwin Steel Castings 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 antenna systems for the global market of major defence
contractors, civil aviation authorities and border security
agencies. Easat has a sister company, Easat Radar Systems India
Private Limited, that also manufactures, sells and maintains radar
systems for air traffic control. We create value on these by
innovative design, assembly and testing in our own facilities using
bought in or engineered in-house components.
Refractory Engineering
Within the Refractory Engineering Division, Goodwin Refractory
Services Limited (GRS) primarily generates value from designing,
manufacturing and selling investment casting powders, rubbers and
waxes to the jewellery casting industry. GRS also manufactures and
sells investment casting powders to the tyre mould and aerospace
industries. The Refractory Engineering Division has five other
investment powder manufacturing companies located in China, India
and Thailand which sell the consumable investment casting products
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, 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 such as
wind turbine blade manufacture. Hoben International manufactures
different grades of perlite, and a patented range of biodegradable
bags, known as Soluform, for the placement of concrete in or around
rivers and other construction applications.
The other UK refractory company is Dupré Minerals Limited which
focuses on producing exfoliated vermiculite that is used in
insulation, brake linings and fire protection products, including
technical textiles that can withstand exposure to high temperatures
and for lithium battery fire extinguishers. Dupré also sells
consumable refractories to the shell moulding precision casting
industry. Dupre has designed, patented and is now selling a range
of fire extinguishers and an extinguishing agent for lithium
battery fires that utilises a vermiculite dispersion as the fire
extinguishing agent.
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2021
2021 2020
GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 131,231 144,512
Cost of sales (92,230) (109,743)
GROSS PROFIT 39,001 34,769
Other income 763 690
Distribution expenses (2,988) (2,792)
Administrative expenses (19,682) (19,809)
OPERATING PROFIT 17,094 12,858
Finance costs (net) (640) (809)
Share of profit of associate company 60 66
PROFIT BEFORE TAXATION 16,514 12,115
Tax on profit (3,508) (3,775)
PROFIT AFTER TAXATION 13,006 8,340
ATTRIBUTABLE TO:
Equity holders of the parent 12,494 7,866
Non-controlling interests 512 474
PROFIT FOR THE YEAR 13,006 8,340
BASIC EARNINGS PER ORDINARY SHARE 167.82p 107.93p
DILUTED EARNINGS PER ORDINARY SHARE 164.23p 103.31p
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2021
2021 2020
GBP'000 GBP'000
PROFIT FOR THE YEAR 13,006 8,340
OTHER COMPREHENSIVE INCOME / (EXPENSE)
ITEMS THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY
TO PROFIT OR LOSS:
Goodwill arising from purchase of non-controlling
interest in subsidiaries - (72)
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO
PROFIT OR LOSS:
Foreign exchange translation differences (1,371) (1,007)
Effective portion of changes in fair value of
cash flow hedges 1,296 (355)
Ineffectiveness in cash flow hedges transferred (657) -
to profit or loss
Change in fair value of cash flow hedges transferred
to profit or loss 1,932 522
Effective portion of changes in fair value of
cost of hedging (37) (843)
Ineffectiveness in cost of hedging transferred 631 -
to profit or loss
Change in fair value of cost of hedging transferred
to profit or loss 381 395
Tax (charge) / credit on items that may be reclassified
subsequently to profit or loss (673) 77
OTHER COMPREHENSIVE INCOME / (EXPENSE) FOR THE
YEAR, NET OF INCOME TAX 1,502 (1,283)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 14,508 7,057
PROFIT FOR THE YEAR ATTRIBUTABLE TO:
Equity holders of the parent 14,081 6,587
Non-controlling interests 427 470
14,508 7,057
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2021
Total
attributable
Cash to equity
Share-based flow Cost holders
Share Translation payments hedge of hedging Retained of the Non-controlling Total
capital reserve reserve reserve reserve earnings parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
YEARED
30TH APRIL,
2021
Balance at
1st May, 2020 736 361 5,244 (499) (743) 99,918 105,017 4,585 109,602
Total
comprehensive
income:
Profit for
the year - - - - - 12,494 12,494 512 13,006
Other
comprehensive
income:
Foreign exchange
translation
differences - (1,255) - - - - (1,255) (116) (1,371)
Effective portion
of changes
in fair value - - - 1,252 (42) - 1,210 49 1,259
Ineffectiveness
transferred
to profit or
loss - - - (617) 596 - (21) (5) (26)
Change in fair
value
transferred
to profit or
loss - - - 1,957 362 - 2,319 (6) 2,313
Tax - - - (492) (174) - (666) (7) (673)
TOTAL
COMPREHENSIVE
INCOME /
(EXPENSE)
FOR THE YEAR - (1,255) - 2,100 742 12,494 14,081 427 14,508
Transactions
with owners:
Issue of shares 17 - - - - - 17 - 17
Dividends paid - - - - - (6,016) (6,016) (125) (6,141)
Recycling of
translation
reserve on
disposal of
subsidiary - 42 - - - - 42 - 42
BALANCE AT
30TH APRIL,
2021 753 (852) 5,244 1,601 (1) 106,396 113,141 4,887 118,028
Total
attributable
Cash to equity
Share-based flow Cost holders
Share Translation payments hedge of hedging Retained of the Non-controlling Total
capital reserve reserve reserve reserve earnings parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
YEARED
30TH APRIL,
2020
Balance at
1st May, 2019 720 1,044 4,991 (573) (426) 99,409 105,165 4,126 109,291
Total
comprehensive
income:
Profit for
the year - - - - - 7,866 7,866 474 8,340
Other
comprehensive
income:
Foreign exchange
translation
differences - (964) - - - - (964) (43) (1,007)
Goodwill arising
from purchase
of NCI interest
in subsidiaries - - - - - (72) (72) - (72)
Effective portion
of changes
in fair value - - - (446) (802) - (1,248) 50 (1,198)
Change in fair
value
transferred
to profit or
loss - - - 522 398 - 920 (3) 917
Tax - - - (2) 87 - 85 (8) 77
TOTAL
COMPREHENSIVE
INCOME /
(EXPENSE)
FOR THE YEAR - (964) - 74 (317) 7,794 6,587 470 7,057
Transactions
with owners
Issue of shares 16 - - - - - 16 - 16
Dividends paid - - - - - (6,927) (6,927) - (6,927)
Tax on
equity-settled
share-based
payment
transactions - - 253 - - - 253 - 253
Acquisition
of NCI without
a change in
control - - - - - - - (11) (11)
Recycling of
translation
reserve on
disposal of
subsidiary - (77) - - - - (77) - (77)
Reclassification - 358 - - - (358) - - -
BALANCE AT
30TH APRIL,
2020 736 361 5,244 (499) (743) 99,918 105,017 4,585 109,602
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2021
2021 2020
GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 77,063 69,626
Right-of-use assets 3,691 5,343
Investment in associate 829 816
Intangible assets 24,813 24,695
Derivative financial assets 191 749
Other financial assets at amortised cost - 252
106,587 101,481
CURRENT ASSETS
Inventories 34,547 44,887
Contract assets 15,844 6,558
Trade receivables and other financial assets 20,540 24,486
Other receivables 5,627 4,566
Derivative financial assets 4,106 456
Cash and cash equivalents 15,160 9,840
95,824 90,793
TOTAL ASSETS 202,411 192,274
CURRENT LIABILITIES
Borrowings 1,607 14,624
Contract liabilities 14,332 18,965
Trade payables and other financial liabilities 21,730 23,485
Other payables 4,025 3,298
Derivative financial liabilities 2,016 1,071
Liabilities for current tax 1,174 1,873
Provisions for liabilities and charges 608 160
45,492 63,476
NON-CURRENT LIABILITIES
Borrowings 33,066 15,599
Derivative financial liabilities - 202
Provisions for liabilities and charges 251 324
Deferred tax liabilities 5,574 3,071
38,891 19,196
TOTAL LIABILITIES 84,383 82,672
NET ASSETS 118,028 109,602
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 753 736
Translation reserve (852) 361
Share-based payments reserve 5,244 5,244
Cash flow hedge reserve 1,601 (499)
Cost of hedging reserve (1) (743)
Retained earnings 106,396 99,918
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 113,141 105,017
NON-CONTROLLING INTERESTS 4,887 4,585
TOTAL EQUITY 118,028 109,602
GOODWIN PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2021
2021 2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations
after tax 13,006 8,340
Adjustments for:
Depreciation of property, plant
and equipment 5,696 5,874
Depreciation of right of use assets 972 827
Amortisation and impairment of intangible
assets 1,566 1,328
Finance costs (net) 640 809
Foreign exchange losses 292 203
(Profit) / loss on sale of property,
plant and equipment (745) 52
Profit on disposal of subsidiary (32) (172)
Share of profit of associate company (60) (66)
Tax expense 3,508 3,775
OPERATING PROFIT BEFORE CHANGES
IN WORKING CAPITAL AND PROVISIONS 24,843 20,970
Decrease in inventories 10,344 4,748
Increase in contract assets (9,242) (2,863)
Decrease / (increase) in trade and
other receivables 2,885 (2,549)
(Decrease) / increase in contract
liabilities (4,428) 874
Increase in trade and other payables 1,047 2,310
Increase in unhedged derivative
balances (438) (980)
CASH GENERATED FROM OPERATIONS 25,011 22,510
Interest paid (734) (844)
Corporation tax paid (3,068) (2,493)
NET CASH INFLOW FROM OPERATING ACTIVITIES 21,209 19,173
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property,
plant and equipment 1,958 139
Acquisition of property, plant and
equipment (11,738) (6,062)
Additional investment in existing
subsidiaries - (83)
Acquisition of intangible assets (719) (1,855)
Development expenditure capitalised (1,420) (1,105)
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (11,919) (8,966)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares 17 16
Payment of capital element of lease
liabilities (1,635) (1,463)
Dividends paid (6,016) (6,927)
Dividends paid to non-controlling
interests (125) -
Proceeds from new loans 35,048 7,658
Repayment of loans and committed
facilities (30,772) -
NET CASH OUTFLOW FROM FINANCING
ACTIVITIES (3,483) (716)
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,807 9,491
Cash and cash equivalents at beginning
of year 9,449 493
Effect of exchange rate fluctuations
on cash held (96) (535)
CASH AND CASH EQUIVALENTS AT OF YEAR 15,160 9,449
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 facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity.
Covid-19 risk: The Covid-19 pandemic continues to have a global
impact in varying degrees affecting the population, travel, supply
chains, and the global marketplace. The spread temporarily impacted
market demand for certain of our products in the first half of the
financial year just completed, as well as delaying the placement of
larger capital orders by our customers. We have also been
contending with increased costs and shipping times from our
overseas suppliers which have also been exacerbated by the
grounding of the "Ever Green" container ship in the Suez Canal
which whilst afloat has only just docked. It is being suggested
that the combination of Covid-19 and the Ever Green incident will
result in shipping costs and times being disrupted for at least
another two years. The intercountry supply chain may face
difficulties in the short to medium term in timely and economically
fulfilling our requirements due to the stretched international
shipping network, but fortunately we have so far been able to work
around these issues. During the year the Group continued to
dynamically adapt as circumstances changed to protect the wellbeing
of the workforce and to ensure facilities remained operational and
able to satisfy the orders in hand, which maintained the Group's
financial strength.
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 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.
This spread reduces risk in any one territory. Similarly, the
Group operates in both mechanical engineering and refractory
engineering sectors, mitigating the risk of a downturn in any one
product area as was seen over the past three financial years.
The potential risk of the loss of any key customer is limited
as, typically, no single customer accounts for
more than 10% of annual turnover.
As described in the Business Model, and to emphasize the Group's
spread of market risk, the mechanical engineering division
generates significant sales not only from valves it supplies to
oil, gas, chemical and water markets, but increasingly significant
amounts from other areas such as nuclear new build and
decommissioning, naval propulsion marine applications, and ship
hull components. With the submersible pumps that are supplied to
the mining industries and radar systems that are supplied for civil
and defence applications it is clear that the mechanical
engineering is now well diversified. Within the refractory
engineering division, we manufacture and sell vermiculite and
perlite products to the insulating, horticulture and fire
prevention industries 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 and so again we see a good spread of business within this
division.
Technical risk: The Group develops and launches new products as
part of its strategy to enhance the long-term value of the Group.
Such development projects carry business risks, including
reputational risk, abortive expenditure and potential customer
claims which may have a material impact on the Group. The potential
risk here is seen as manageable given the Group is developing
products in areas in which it is knowledgeable and new products are
tested prior to their release into the market.
Product failure/Contractual risk: The risks that the Group
supplies products that fail or are not manufactured to
specification are risks that all manufacturing companies are
exposed to but we try to minimise these risks through the use of
highly skilled personnel operating within robust quality control
system environments, using third party accreditations where
appropriate. With regard to the risk of failure in relation to new
products coming on line, the additional risks here are minimised at
the research and development stage, where prototype testing and the
deployment of a robust closed loop product performance quality
control system provides feed back to the design department for the
products we manufacture and sell. The risk of not meeting safety
expectations, or causing significant adverse impacts to customers
or the environment, is countered by the combination of the controls
mentioned within this section and the purchase of product liability
insurance. The risk of product obsolescence is countered by
research and development investment.
Supply chain and equipment risk: Failure of a major supplier or
essential item of equipment presents a constant risk of disruption
to the manufacturing in progress. Where reasonably possible,
management mitigates and controls the risk with the use of dual
sourcing, continual maintenance programmes, and by carrying
adequate levels of stocks and spares to reduce any disruption.
Health and safety: The Group's operations involve the typical
health and safety hazards inherent in manufacturing and business
operations. The Group is subject to numerous laws and regulations
relating to health and safety around the world. Hazards are managed
by carrying out risk assessments and introducing appropriate
controls, as well as attending safety training courses.
Acquisitions: The Group's growth plan over recent years has
included a number of acquisitions. There is the risk that these, or
future acquisitions, fail to provide the planned value. This risk
is mitigated through financial and technical due diligence during
the acquisition process and the Group's inherent knowledge of the
markets they operate in.
Financial risk: The principal financial risks faced by the Group
are changes in market prices (interest rates, foreign exchange
rates and commodity prices). Detailed information on the financial
risk management objectives and policies is set out in note 26 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. As reported elsewhere within these financial
statements the Company on 2nd July 2021 has acted to mitigate the
possible impact of higher interest rates by taking out an interest
rate swap derivative fixing GBP30 million of notional debt at less
than 1% versus the variable inter-bank lending rate (SONIA) for a
period of ten years.
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.
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.
Brexit: As envisaged and disclosed in previous annual reports
Brexit has not been seen as a significant issue to the Group, the
previously identified risks have been managed or mitigated and the
Board no longer consider this as a significant uncertainty
FORWARD-LOOKING STATEMENTS
The Group Strategic Report contains forward-looking type
statements and information based on current expectations, and
assumptions and forecasts made by the Group. These expectations and
assumptions are subject to various known and unknown risks,
uncertainties and other factors, which could lead to substantial
differences between the actual future results, financial
performance and the estimates and historical results given in this
report. Many of these factors are outside the Group's control. The
Group accepts no liability to publicly revise or update these
forward-looking statements or adjust them for future events or
developments, whether as a result of new information, future events
or otherwise, except to the extent legally required.
Responsibility statement of the Directors in respect of the
Directors Report and Accounts
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the Group Strategic Report includes a fair review of the
development and performance of the business and the position of the
Issuer and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
We consider the Directors' Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group's
position and performance, business model and strategy.
Board of Directors:
T. J. W. Goodwin, Chairman
M. S. Goodwin, Managing Director, Mechanical Engineering
Division
S. R. Goodwin, Managing Director, Refractory Engineering
Division
J. Connolly, Director
B. R. E. Goodwin, Director
N. Brown, Director
J. E. Kelly, Non-Executive Director
Accounting policies
Goodwin PLC (the "Company") is incorporated in England and
Wales.
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group") and
equity account the Group's interest in associates.
The Group's financial statements have been approved by the
Directors and prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
The Accounting Policies are included in Note 1 of the Accounts
to be published shortly.
New IFRS standards and interpretations adopted during 2021
In 2021 the following amendments had been endorsed by the EU,
became effective and were, therefore, mandated to be adopted by the
Group:
-- Amendments to IFRS 9, IAS39 and IFRS 7 - Interest rate
benchmark reform phase 1 (effective for annual periods beginning on
or after 1st January 2020)
-- Amendments to IFRS 3 - Definition of a business (effective
for annual periods beginning on or after 1st January 2020)
-- Amendments to IAS 1 and IAS 8 - Definition of material
(effective for annual periods beginning on or after 1st January
2020)
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective for annual periods beginning on or after 1st
January 2020)
The implementation of these standards and amendments has not had
a material impact on the Group's financial statements.
The financial information previously set out does not constitute
the Company's statutory accounts for the years ended 30th April,
2021 or 2020 but is derived from those accounts. Statutory accounts
for 2020 have been delivered to the Registrar of Companies, and
those for 2021 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 2021 accounts are expected to be posted to
shareholders within the next 10 days and will also be available on
the Company's website: www.goodwin.co.uk and from the Company's
Registered Office: Ivy House Foundry, Hanley, Stoke-on-Trent ST1
3NR.
Note 1
Segmental Information
Products and services from which reportable segments derive
their revenues
For the purposes of management reporting to the chief operating
decision maker, the Board of Directors, the Group is organised into
two reportable operating divisions: mechanical engineering and
refractory engineering. Segment assets and liabilities include
items directly attributable to segments as well as those that can
be allocated on a reasonable basis. Associates are included in
Refractory Engineering.
In accordance with the requirements of IFRS 8 i nformation
regarding the Group's operating segments is reported below.
Mechanical Engineering Refractory Engineering Sub Total
Year ended 30th April 2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External sales 86,616 100,078 44,615 44,434 131,231 144,512
Inter-segment sales 20,871 25,821 11,526 8,361 32,397 34,182
Total revenue 107,487 125,899 56,141 52,795 163,628 178,694
Reconciliation to consolidated
revenue:
Inter-segment sales (32,397) (34,182)
Consolidated revenue
for the year 131,231 144,512
Mechanical Engineering Refractory Engineering Sub Total
Year ended 30th April 2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profits
Operating profit including
share of associates 10,823 8,065 9,340 7,034 20,163 15,099
% of total operating
profit including share
of associates 54% 53% 46% 47% 100% 100%
Group centre (3,009) (2,175)
Group finance expenses (640) (809)
Consolidated profit
before tax for the
year 16,514 12,115
Tax (3,508) (3,775)
Consolidated profit after tax for the
year 13,006 8,340
Segmental total Segmental total Segmental net
assets liabilities assets
Year ended 30th April 2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segmental net assets
Mechanical Engineering 92,929 95,193 66,909 72,207 26,020 22,986
Refractory Engineering 44,114 41,962 20,591 22,850 23,523 19,112
Sub total reportable
segment 137,043 137,155 87,500 95,057 49,543 42,098
Goodwin PLC net assets 83,998 83,415
Elimination of Goodwin PLC
investments (25,392) (25,801)
Goodwill 9,879 9,890
Consolidated total net assets 118,028 109,602
Segmental capital expenditure
Property, Right-of-use Intangible Total
plant and assets assets
equipment
Year ended 2021 2020 2021 2020 2021 2020 2021 2020
30th April
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Goodwin PLC 5,315 2,824 1,180 - 151 2,333 6,646 5,157
Mechanical
Engineering 4,952 2,511 1,146 156 1,123 613 7,221 3,280
Refractory
Engineering 1,570 633 74 1,033 456 633 2,100 2,299
1 3,573,5799
11,837 5,968 2,400 1,189 1,730 3,579 15,967 10,736
2021 2020
Segmental depreciation, amortisation and impairment
Depreciation Amortisation and Total
impairment
Year ended 30th April 2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Goodwin PLC 2,970 2,934 1,106 708 4,076 3,642
Mechanical Engineering 2,346 2,369 20 97 2,366 2,466
Refractory Engineering 1,352 1,398 440 523 1,792 1,921
6,668 6,701 1,566 1,328 8,234 8,029
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.
Year ended 30th April, Year ended 30th April, 2020
2021
Operational Non-current Capital Operational Non-current Capital
Revenue net assets assets expenditure Revenue net assets assets expenditure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 39,755 81,982 89,944 13,634 39,609 76,467 84,198 8,681
Rest of
Europe 21,473 8,309 3,264 279 20,004 8,346 3,439 207
USA 8,027 - - - 12,749 - - -
Pacific
Basin 28,255 13,708 6,499 719 34,844 13,513 7,132 1,248
Rest of
World 33,721 14,029 6,880 1,335 37,306 11,276 6,712 600
Total 131,231 118,028 106,587 15,967 144,512 109,602 101,481 10,736
Of the GBP21,473,000 (April 2020 : GBP20,004,000 ) sales to the
rest of Europe, GBP8,366,000 (April 2020 : GBP5,975,000 ), relate
to the European sales of our German-domiciled subsidiary, Noreva
GmbH.
The following tables provide an analysis of revenue by
geographical market and by product line.
Geographical market
Year ended 30th April, Year ended 30th April, 2020
2021
Mechanical Refractory Mechanical Refractory
Engineering Engineering Total Engineering Engineering Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK 28,258 11,497 39,755 29,187 10,422 39,609
Rest of Europe 15,123 6,350 21,473 13,088 6,916 20,004
USA 7,596 431 8,027 12,664 85 12,749
Pacific Basin 10,899 17,356 28,255 16,361 18,483 34,844
Rest of World 24,740 8,981 33,721 28,778 8,528 37,306
Total 86,616 44,615 131,231 100,078 44,434 144,512
Product lines
Year ended 30th April, Year ended 30th April, 2020
2021
Mechanical Refractory Mechanical Refractory
Engineering Engineering Total Engineering Engineering Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Standard products
and consumables 10,630 44,615 55,245 9,545 44,434 53,979
Bespoke products
- point in time 11,203 - 11,203 25,427 - 25,427
Point in time revenue 21,833 44,615 66,448 34,972 44,434 79,406
Minimum period
contracts 3,306 - 3,306 4,143 - 4,143
Bespoke products
- over time 61,477 - 61,477 60,963 - 60,963
Over time revenue 64,783 - 64,783 65,106 - 65,106
Total revenue 86,616 44,615 131,231 100,078 44,434 144,512
Note 2
Dividends
The Directors propose the payment of an ordinary dividend of
102.24p per share (2020: ordinary dividend of 81.71p ). If approved
by shareholders, the ordinary dividend will be paid on 8th October,
2021 to shareholders on the register at the close of business on
17(th) September, 2021.
Note 3
Earnings per share
Number of ordinary
shares
2021 2020
Ordinary shares in issue
Balance at 1st May, 2020 (1st May, 2019 ) 7,363,200 7,200,000
Shares issued in the year 163,200 163,200
7,526,400 7,363,200
Outstanding ordinary share options 163,200 326,400
Total ordinary shares (issued and options) 7,689,600 7,689,600
Weighted average number of ordinary shares in issue 7,445,024 7,288,289
Weighted average number of outstanding ordinary share
options 162,651 325,365
Denominator used for diluted earnings per share calculation 7,607,675 7,613,654
2021 2020
GBP'000 GBP'000
Relevant profits attributable to ordinary shareholders 12,494 7,866
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.
During April 2021, the Company repaid in full the GBP30 million
drawn down from the Bank of England's CCFF scheme and having
completed the refinancing of GBP10 million referred to within 30th
April, 2020 accounts, currently has at its disposal GBP50.5 million
of Bank facilities, GBP44.5 million of which are vested in long
term committed facilities.
The Directors have, as part of this going concern assessment,
considered the ongoing impact of Covid-19 on the Group's
operations. We are now more than 18 months on from the onset of
Covid-19 and whilst we experienced a slow down in the Refractory
Engineering segment of the business during March 2020 to August
2020, since then most of the entities in this division are seeing
record levels of activity. As predicted when writing within the
30th April, 2020 going concern assessment, there has been little
Covid-19 impact on the Mechanical Engineering segment of the
business. Whilst we have and are still seeing temporary impacts on
our overseas pump company operations, we are thankfully seeing
minimal impact on Group activities as a result of the virus
pandemic.
Within our severe but plausible downside model, it is
demonstrable that the Group has sufficient funds to cover the
Group's and the Company's financial commitments during the forecast
period whilst remaining compliant with its financial covenants. The
downside model factors in adverse circumstances such as the loss of
a major customer and a new Covid-19 impact on our Refractory
Engineering segment.
Since the end of the financial year, the Company has entered
into a ten year interest rate swap agreement which fixes our
variable interest rate on borrowings at less than 1% for the entire
period. The Directors see no shortage of investment opportunities
in the coming years and so, given the historical low level of
interest rates, we deemed it prudent to remove the impact of higher
interest rates from our risk modelling.
Whilst our carrying values of trade debtors and contract assets
are significant, we see little risk here in terms of recovery. We
credit insure our debtors and 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 very high and the Refractory
Engineering segment is 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 6th
October, 2021 at Crewe Hall, Weston Road, Crewe, Cheshire CW1
6UZ.
Note 6
Alternative performance measures
Measure 2021 2020
Gross profit (GBP'000) 39,001 34,769
Revenue (GBP'000) 131,231 144,512
Gross profit as percentage
of revenue (%) 29.7 24.1
Operating profit (GBP'000) 17,094 12,858
Capital employed (GBP'000) 130,572 123,834
Return on capital employed
(%) 13.1 10.4
Net debt (GBP'000) 17,431 18,817
Net assets attributable
to equity holders of
the parent(GBP'000) 113,141 105,017
Gearing (%) 15.4 17.9
Net profit attributable
to equity holders of
the parent (GBP'000) 12,494 7,866
Net assets attributable
to equity holders of
the parent(GBP'000) 113,141 105,017
Return on investment
(%) 11.0 7.5
Revenue (GBP'000) 131,231 144,512
Average number of employees 1,129 1,190
Sales per employee (GBP'000) 116 121
Annual post tax profit
(GBP'000) 13,006 8,340
Depreciation owned assets
(GBP'000) 5,696 5,874
Depreciation right-of-use
assets (GBP'000) 972 827
Amortisation and impairment
(GBP'000) 1,566 1,328
Exclude operating lease
depreciation (GBP'000) (550) (537)
Annual post tax profit
+ depreciation +
amortisation (GBP'000) 20,690 15,832
END
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