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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