Interim Report

RNS Number : 3200Y
Goodwin PLC
21 December 2010
 



GOODWIN PLC

IVY HOUSE FOUNDRY, HANLEY, STOKE-ON-TRENT

Interim Report

31st October 2010

 

CHAIRMAN'S STATEMENT

 

I am pleased to report that the pre-tax profits for the Group for the six month period ending 31st October 2010 were £5.8 million  (2009 £6.8 million) from a revenue of £45.9 million (2009 £45.8 million).

 

Gross margin earned for the period remained in line with the same period last year, but overhead and administration costs increased as a feature of steps being taken such that the Group is appropriately equipped  to target significant growth both in the UK and in our overseas subsidiaries  over the next five years.

 

The order input of all Group companies for the first six months of this half year improved by 29 % compared with the same period last year which in itself should provide the Group with the opportunity to increase activity in the second half of the year.

 

Dupré Minerals within our Refractory Division has enhanced its position as the exclusive distributor of vermiculite from the Ugandan Namekara mine by extending the agreement term from 10 to 25 years. This new distribution opportunity, which was originally signed for in May 2010, will allow Dupré to further consolidate its position in the world vermiculite market.

 

The cash flow position has deteriorated by some £8 million over the past 6 months. This is a feature of the further release and payment for certain capital expenditure projects within the Group and also an increase in the work in progress and debtors as our activity levels are increasing. It is also now more difficult to obtain satisfactory contract stage payments on large contracts as customers have used the recession as a reason not to appropriately fund contracts and as such we have been faced with adding this cost into our selling prices. The Group now has more than adequate lines of credit that are committed to us over a five year period, and this permitted change in cash flow position is an indication of the confidence the Board has in allowing our companies to expand their product lines and activities.

 

John Goodwin

Chairman

21st December 2010

 

Management report

 

Over 75% of the products made by the Group are for use in overseas markets. The management infrastructure will need continuous investment to further grow the Group in these markets and provide quality of service, whilst minimising the risks.

 

The sales order backlog stands at seven months at the end of October 2010.

 

Financial Highlights

Unaudited Half Year to

31st October 2010

Unaudited Half Year to 31st October 2009

Audited

Year ended

30th April

2010


£m

£m

£m

Consolidated Results




Sales revenue

45.93

45.83

93.93

Operating profit

6.06

7.20

14.04

Profit before tax

5.80

6.80

13.31

Profit after tax

4.15

4.91

9.33









Capital Expenditure

2.71

1.36

5.10









Earnings per share (Basic and Diluted)

49.90p

65.40p

118.15p





 

Turnover

 

Sales revenue virtually unchanged at £45.93 million for the half year represents a 0.2% increase over the £45.83 million achieved during the same period last year.

 

With the increased order input in the first six months of the year, there is the opportunity of increasing activity levels in the second half of the year.

 

Profit Before Tax

 

Profit before tax for the 6 months of £5.80 million is down 14.7% from the £6.80 million achieved for the same period last year. This is largely as a result of an increased level of overhead brought in to service the growth opportunities of the Group over the next 5 years.

 

Risks and Uncertainties

 

The Group has in place internal control procedures which, in conjunction with its centralised management structure, identify and manage the key risks and uncertainties affecting the Group.

 

We would refer you to note 19 (page 31) of the Group annual accounts to 30th April 2010 which describes in detail the key risks and uncertainties affecting the business such as credit risk and foreign exchange risk. This position remains unchanged at the end of October 2010

 

We see markets connected with energy such as oil, gas, LNG, electricity and water remaining in demand and additional investment in our engineering division is occurring such that we are suitably positioned to tender for business in the nuclear power station construction activity when it starts ramping up world wide.

 

Probably the biggest unknown for the next 24 months is the relationship of the major currency pairs and this will have an affect on our global competitiveness, although our overseas manufacturing operations have to some extent reduced this risk

 

Report on Expected Developments

 

This report describes the expected developments of the Group during the year ended 30th April 2011. The report may contain forward-looking 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 to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.

 

2011 Outlook

 

The order input of all Group companies for the first six months has improved 29% compared to the same period last year, which should in itself provide the Group with the opportunity to increase activity in the second half of the year. 

 

Responsibility statement of the directors in respect of the half-yearly financial report

The directors confirm to the best of their knowledge that this condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the Interim Management Report and condensed financial statements include a fair review of the information required by Disclosure and Transparency Rules 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year) and 4.2.8R (being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so) of the United Kingdom's Financial Service Authority.

 

J. W. Goodwin

Chairman

 

21st December 2010



CONDENSED CONSOLIDATED INCOME STATEMENT

for the half year to 31st October 2010

 


Unaudited

Half year to

31st October

2010

Unaudited

Half year to

31st October

2009

 

Year ended

30th April

2010

 

£'000

£'000

£'000

Continuing operations

 

 

 

Revenue

45,933

45,827

93,928

Cost of sales

(32,078)

(31,899)

(64,057)

 

              

              

              

Gross profit

13,855

13,928

29,871

Distribution costs

(1,475)

(1,390)

(4,595)

Administrative expenses

(6,319)

(5,338)

(11,232)

 

              

              

              

Operating profit

6,061

7,200

14,044


 

 

 

Financial expenses

(436)

(522)

(959)

Share of profit of associates

181

120

226

 

              

              

              

Profit before taxation

5,806

6,798

13,311

 

 

 

 

Tax on profit

(1,659)

(1,884)

(3,980)

 

              

              

              

Profit after taxation

4,147

4,914

9,331

 

              

              

              

Attributable to:

 

 

 

Equity holders of the parent

3,593

4,709

8,507

Minority interest

554

205

824


              

              

              

Profit for the period

4,147

4,914

9,331

 

              

              

              

Basic and diluted earnings per ordinary share

49.90p

65.40p 

118.15p

 

              

              

              



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the half year to 31st October 2010

 


Unaudited Half year to 31st October 2010

Unaudited 

Half year to

31st October

2009

 

Year end

30th April

2010

 


£'000

£'000

£'000



 

 

Profit for the period

4,147

4,914

9,331



 

 

Other comprehensive income



 

Foreign exchange translation differences

(159)

(238)

382

Effective portion of changes in fair value of cash flow hedges

 

2,067

 

2,542

 

328

Change in fair value of cash flow hedges transferred to profit and loss

 

(363)

 

3,043

 

6,858

Tax recognised on income and expenses recognised directly in equity

 

(477)

 

(1,564)

 

(2,012)


 

 

 

 




 

Other comprehensive income for the period, net of income tax

1,068

3,783

5,556


 


 

Total comprehensive income for the period

5,215

8,697

14,887





Attributable to:


 

 

Equity holders of the parent

4,699

8,297

13,922

Minority interest

516

400

965


 


 


5,215

8,697

14,887







CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the half year to 31st October 2010

 

 

Share capital

Translation reserve

Cash flow hedging reserve

Retained earnings

Total

Minority interest

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Half year to 31st October 2010

 

 

 

 

 

Balance at 1st May 2010

720

1,199

(74)

35,082

36,927

3,242

40,169

Total comprehensive income for the period

-

(120)

1,227

3,592

4,699

516

5,215

Dividends paid

-

-

-

(2,000)

(2,000)

(256)

(2,256)

Balance at 31st October 2010 (Unaudited)

720

1,079

1,153

36,674

39,626

3,502

43,128

Half year to 31st October 2009

 

 

 

 

 

Balance at 1st May 2009

720

957

(5,247)

30,575

27,005

2,482

29,487

Total comprehensive income for the period

-

(238)

4,021

4,514

8,297

400

8,697

Dividends paid

-

-

-

(4,000)

(4,000)

(380)

(4,380)

Balance at 31st October 2009 (Unaudited)

720

719

(1,226)

31,089

31,302

2,502

33,804

Year ended 30 April 2010

 

 

 

 

 

Balance at 1st May 2009

720

957

(5,247)

30,575

27,005

2,482

29,487

Total comprehensive income for the period

-

242

5,173

8,507

13,922

965

14,887

Dividends paid

-

-

-

(4,000)

(4,000)

(205)

(4,205)

Balance at 30th April 2010

720

1,199

(74)

35,082

36,927

3,242

40,169



CONDENSED CONSOLIDATED BALANCE SHEET

as at 31st October 2010

 

 

Unaudited

As at

31st October

2010

Unaudited

As at

31st October

2009

As at

30th April

2010

 

£'000

£'000

£'000

Non-current assets

 

 

 

Property, plant and equipment

24,596

20,970

23,260

Intangible assets

11,094

10,780

10,671

Investments  in associates

1,055

760

919


             

             

              


36,745

32,510

34,850


             

             

              

Current assets

 

 

 

Inventories

20,227

17,004

18,085

Trade and other receivables

26,247

23,612

21,815

Derivative financial assets

2,934

1,172

635

Cash and cash equivalents

3,485

5,288

10,710


             

             

              

 

52,893

47,076

51,245


             

             

              

Total assets

89,638

79,586

86,095


             

             

              

Current liabilities

 

 

 

Bank overdrafts

1,882

28

887

Other interest-bearing loans and borrowings

680

390

139

Trade and other payables

21,690

23,340

23,629

Deferred consideration

2,617

-

-

Derivative financial liabilities

1,051

3,768

1,306

Liabilities for current tax

2,379

2,480

2,150


             

             

              


30,299

30,006

28,111


             

             

              

Non-current liabilities

 

 

 

Other interest-bearing loans and borrowings

10,768

9,096

10,358

Deferred consideration

3,479

5,722

5,911

Deferred tax liabilities

1,964

958

1,546


             

             

              


16,211

15,776

17,815


             

             

              

Total liabilities

46,510

45,782

45,926


             

             

              

Net assets

43,128

33,804

40,169


             

             

              


 

 

 

Equity attributable to equity holders of the parent

 

 

 

Share capital

720

720

720

Translation reserve

1,079

719

1,199

Cash flow hedge reserve

1,153

(1,226)

(74)

Retained earnings

36,674

31,089

35,082


             

             

              


39,626

31,302

36,927


 

 

 

Minority interest

3,502

2,502

3,242


             

             

              

Total equity

43,128

33,804

40,169


             

             

              

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the half year ended 31st October 2010

 


Unaudited

Half year to

31st October

2010

Unaudited

Half year to

31st October

2009

Year ended

30th April

2010

 

£'000

£'000

£'000

 

Cash flow from operating activities

 

 

 

 

Profit for the period

4,147

4,914

9,331

 

 Adjustments for:

 

 

 

 

  Depreciation

1,231

1,149

2,832

 

  Amortisation of intangible assets

232

214

456

 

  Financial expense

436

522

959

 

  Loss on sale of property, plant and equipment

4

6

86

 

  Share of profit of associate companies

(181)

(120)

(226)

 

  Tax expense

1,659

1,884

3,980

 


                 

                

                

 

Operating profit before changes in working capital and provisions

7,528

8,569

17,418

 

 (Increase)/decrease in trade and other receivables

(5,590)

(2,443)

203

 

  Increase in inventories 

(2,181)

(584)

(1,595)

 

  Increase / (decrease) in trade and other payables (excluding payments 

 on account)

14

(1,341)

(1,581)

 

  Decrease in payments on account

(617)

(639)

(1,825)

 


                 

                

              

 

Cash generated from operations

(846)

3,562

12,620

 


 

 

 

 

  Interest paid

(237)

(324)

(564)

 

  Corporation tax paid

(1,489)

(1,989)

(4,240)

 

  Interest element of finance lease obligations

(14)

(7)

(15)

 


                 

             

              

 

Net cash (outflow) / inflow from operating activities

(2,586)

1,242

7,801

 


                 

                   

             

 

Cash flow from investing activities

 

 

 

 

  Proceeds from sale of property, plant and equipment

12

9

17

 

  Acquisition of property, plant and equipment

(3,504)

(1,635)

(4,235)

 

  Acquisition of intangible assets

(655)

-

-

 

  Acquisition of subsidiary net of cash acquired

-

(40)

(290)

 

  Acquisition of associated undertaking

-

-

(40)

 

  Payment of deferred purchase creditor

-

 

(500)

 

  Increase holding in subsidiary company

-

(117)

-

 

  Dividends received from associate company

-

-

119

 


                 

                

              

 

Net cash from investing activities

(4,147)

(1,783)

(4,929)

 


                 

                

             

 

Cash flows from financing activities

 

 

 

 

  Payment of capital element of finance lease obligations

(177)

(188)

(275)

 

  Dividends paid

(2,000)

(4,000)

(4,000)

 

  Net proceeds from new loans / lease agreements

696

909

2,007

 


             

             

              

 

Net cash from financing activities

(1,481)

(3,279)

(2,268)

 


                           

                           

              

 

Net (Decrease) / Increase in cash and cash equivalents

(8,214)

(3,820)

604

 





 

  Opening cash and cash equivalents

9,823

9,180

9,180

 

  Effect of exchange rate fluctuations on cash held

(6)

(100)

39

 


             

             

              

 

Closing cash and cash equivalents

1,603

5,260

9,823

 


             

             

              

 



 

Notes to the condensed consolidated financial statements

1          Reporting entity

Goodwin PLC (the "Company") is a company incorporated in England. The condensed consolidated interim financial statements of the Company as at and for the six months ended 31st October 2010 comprises the Company, its subsidiaries, and the Group's interests in associates (together referred to as the "Group").

The consolidated financial statements of the Group as at and for the year ended 30th April 2010 are available upon request from the Company's registered office at Ivy House Foundry, Hanley, Stoke on Trent ST1 3NR or via the Company's web site:  www.goodwin.co.uk

2          Statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted in the EU.  They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30th April 2010.

The comparative figures for the financial year ended 30th April 2010 are extracts and not the full Group's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference 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.

These condensed consolidated interim financial statements were approved by the Board of Directors on 21st December 2010.

3          Significant accounting policies

The accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30th April 2010.

4          Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

In preparing these consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 April 2010.

5          Business Segments

Products and services from which reportable segments derive their revenues

In accordance with the requirements of IFRS8 "Operating Segments" the Group's reportable segments based on information reported to the Group's Board of Directors for the purposes of resource allocation and assessment of segment performance are as follows:

·      Engineering             - casting, machining and general engineering

·      Refractories             - powder manufacture and mineral processing

Information regarding the Group's operating segments is reported below. 

 

Segment revenues and profits

 


Engineering

Refractories

Sub Total


Half year ended 31st October 2010

Half year ended 31st October 2009

Year ended 30th April 2010

Half year ended 31st October 2010

Half year ended 31st October 2009

 

Year ended 30th April 2010

 

Half year ended 31st October 2010

 

Half year ended 31st October 2009

 

Year ended 30th April 2010

 


£000

£000

£000

£000

£000

£000

£000

£000

£000

Revenue










External sales

33,008

34,261

70,982

12,988

10,319

22,981

45,996

44,850

93,963

Intra-Group sales

7,004

7,567

15,028

2,337

1,689

3,104

9,341

9,256

18,132


              

              

              

              

              

                  

            

              

              

Total revenue

40,012

41,828

86,010

15,325

12,008

26,085

55,337

53,836

112,095


              

              

              

              

              

                  




Reconciliation to consolidated revenues:








Intra-Group sales







    (9,341)

(9,256)

(18,132)

Net consolidation adjustments







(63)

1,247

(35)






              

              

              

Consolidated revenue for the period





45,933

45,827

93,928






              

              

              

 

 


Engineering

Refractories

Sub Total


Half year ended 31st October 2010    

Half year ended 31st October 2009

 

Year ended 30th April 2010

 

Half year ended 31st October 2010

 

Half year ended 31st October 2009

 

Year ended 30th April 2010

 

Half year ended 31st October 2010

 

Half year ended 31st October 2009

 

Year ended 30th April 2010

 


£000

£000

£000

£000

£000

£000

£000

£000

£000

Profits










Segment result including associates

4,429

5,512

11,533

1,634

1,299

3,299

6,063

6,811

14,832


              

              

              

              

              

                  




Group administration  costs





(445)

(115)

(368)

Group finance and treasury costs





(251)

(322)

(1,284)

Other (net)





439

424

131






              

              

              

Consolidated profit before  tax for the  period





5,806

6,798

13,311

Tax





 (1,659)

(1,884)

(3,980)






              

              

              

Consolidated profit after  tax for the  period





4,147

4,914

9,331






              

              

              

 

Segmental assets and liabilities

 


Segmental total assets

Segmental total liabilities

Segmental net assets


Half year ended 31st October 2010

 

Half year ended 31st October 2009

 

Year ended 30th April 2010

 

Half year ended 31st October 2010

 

Half year ended 31st October 2009

 

Year ended 30th April 2010

 

Half year ended 31st October 2010

 

Half year ended 31st October 2009

 

Year ended 30th April 2010

 


£000

£000

£000

£000

£000

£000

£000

£000

£000

Engineering

50,293

45,645

44,010

33,926

31,032

32,003

16,367

14,613

12,007

Refractories

26,589

20,932

22,668

15,588

11,553

12,338

11,001

9,379

10,330


                 

                 

                 

                 

                 

                 

                 

                 

                 

Sub total reportable segment

76,882

66,577

66,678

49,514

42,585

44,341

27,368

23,992

22,337


                 

                 

                 

                 

                 

                 




 

Goodwin PLC (the Company) net assets





22,672

19,651

25,072

Investments elimination / Goodwill adjustments





(6,062)

(6,634)

(6,611)

Other consolidation adjustments





(3,324)

(3,360)

(1,426)

Foreign exchange / IAS 39





2,474

155

797








                 

                 

                 

Consolidated total net assets





43,128

33,804

40,169








                 

                 

                 

 

Geographical segments

 

 

 Half year ended

31st October 2010

Half year ended

31st October 2009

 

Revenue

Operational assets

Non current assets

PPE Capital expenditure

Revenue

Operational assets

Non current assets

PPE Capital expendi-ture

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

UK

9,979

32,531

31,587

1,360

7,325

         23,367

27,588

910

Rest of Europe

9,594

3,427

701

148

10,746

3,705

840

321

USA

5,106

-

-

-

6,323

-

-

-

Pacific Basin

10,878

3,955

237

19

13,193

4,152

1,436

17

Rest of world

10,376

3,215

4,220

1,184

8,240

2,580

2,646

116

 

              

                 

                 

                 

                 

                 

                 

                 

Total

45,933

43,128

36,745

2,711

45,827

33,804

32,510

1,364

 

              

              

              

                 

                 

                 

                 

                 

 

 

 

 

 

Year ended 30 April 2010

 

 

 

 

 

Revenue

Operational assets

Non current assets

PPE Capital expendi-ture

 

 

 

 

 

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

UK

 

 

 

 

18,332

29,459

30,764

3,741

Rest of Europe

 

 

 

 

22,251

3,872

723

798

USA

 

 

 

 

         9,277

-

-

-

Pacific Basin

 

 

 

 

24,035

3,697

128

50

Rest of world

 

 

 

 

20,033

3,141

3,235

518

 

 

 

 

 

                 

                 

                 

                 

Total

 

 

 

 

93,928

40,169

34,850

5,107

 

 

 

 

 

                 

                 

                 

                 

 

The Group operates in the above principal locations. In presenting the information on geographical segments, revenue is based on the location of its customers and assets and the location of the assets.

 

 6       Dividends

The directors do not propose the payment of an interim dividend.

 

 

Half year ended

31st October

2010

Half year ended

31st October

2009

Year ended

30th April

2010

 

£000

£000

£000

Equity Dividends Paid:

 

 

 

Paid ordinary dividend 30th April 2010:(27.777p per share)

2,000

 

 

Paid ordinary dividend 30th April 2009:(27.777p per share)

-

2,000

2,000

Paid extraordinary dividend 30th April 2009:(27.777p per share)

-

2,000

2,000

 

 

 

 

 

7          Earnings per share

The calculation of the earnings per ordinary share is based on the number of ordinary shares in issue during all periods of 7,200,000 and on the profit for the six months attributable to ordinary shareholders of £ 3,593,000 (half year ended 31st October 2009: £4,709,000). The company has no share options or other diluting interest and accordingly, there is no difference in the calculation of diluted earnings per share.

8.         Issuance and repayment of debt

During the 6 months to 31st October 2010, the Group has repaid £350,000 of 5 year drawn down committed lines which remain available to be redrawn when appropriate.

The Group has also entered into a finance lease agreement for a total of £1,046,000 relating to the purchase of new CNC machinery and has repaid capital elements of its finance leases of £177,000.

9.         Property, Plant and Equipment

During the six month period, the Group incurred fixed asset expenditure of £ 2.711 million (6 months to 31 October 2009: £1.364 million) on various capital projects throughout the Group.

10.       Intangible assets

 

 

 

£000

Cost

 

At 1st May 2010

12,335

Additions

655

 

 

At 31st October 2010

12,990

Amortisation

 

At 1st May 2010

1,664

Charge for the  half year

232

 

 

At 31st October 2010

1,896

 

 

Net book value at 31st October 2009

10,780

Net book value at 1st May 2010

10,671

Net book value at 31st October 2010

11,094

 

 

Additions to intangible assets in the period relate to the acquisition of vermiculite rights in relation to the Ugandan Namekara mine.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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