Interim Results
Goodwin PLC
27 January 2006
GOODWIN PLC
UNAUDITED INTERIM RESULTS
CHAIRMAN'S STATEMENT
The pre-tax profit of £2,107,000 is a 22.4% increase over the same period last
year and turnover has increased by 31.8%. Higher energy costs have affected
margins and yet are stimulating greater demand for engineering within the energy
industries. Our heavy engineering order book remains very healthy.
In accordance with European Union regulations, the Group is required to adopt
International Financial Reporting Standards (IFRS) in its consolidated accounts
for the first time and notes explaining these changes are included.
J. W. GOODWIN, Chairman
The Interim Report is to be sent to shareholders today and will be made
available to the public at the company's registered office.
Goodwin PLC
Unaudited Interim Results
Group Income Statement
for the half year ended 31st October 2005
Half Year Ended Half Year Ended Year Ended
31st October 2005 31st October 2004 30th April 2005
£'000 £'000 £'000
Turnover - continuing 26,977 20,462 44,945
Operating Profit before Finance Costs 2,278 1,931 4,088
Finance Costs (171) (210) (553)
Profit Before Tax 2,107 1,721 3,535
Tax Expense (638) (562) (1,016)
Profit for the Period 1,469 1,159 2,519
Attributable to:
Equity Holders of the Parent 1,434 1,141 2,477
Minority Interest 35 18 42
1,469 1,159 2,519
Earnings per Ordinary Share 19.91p 15.85p 34.40p
Basic and diluted
Goodwin PLC
Unaudited Interim Results
Group Balance Sheet
at 31st October 2005
Half year ended Half year ended Year Ended
31st October 2005 31st October 2004 30th April 2005
£'000 £'000 £'000
Assets
Intangible Assets 227 140 130
Property, Plant and Equipment 10,948 10,670 10,920
Total Non Current Assets 11,175 10,810 11,050
Inventories 11,716 9,436 10,004
Trade and Other Receivables 11,367 11,516 9,743
Cash 462 242 275
Total Current Assets 23,545 21,194 20,022
Total Assets 34,720 32,004 31,072
Liabilities
Trade and Other Current Payables 13,038 9,343 14,459
Corporation Tax Liabilities 590 519 635
Obligations under Finance Leases 260 340 315
Bank Overdrafts 4,486 7,662 945
Total Current Liabilities 18,374 17,864 16,354
Net Current Assets 5,171 3,330 3,668
Deferred tax 1,060 975 951
Obligations under Finance Leases 456 464 576
Non Current Liabilities 1,516 1,439 1,527
Total Liabilities 19,890 19,303 17,881
Net Assets 14,830 12,701 13,191
Equity
Share Capital 720 720 720
Retained Earnings 13,696 11,777 12,262
Foreign Exchange Hedge Reserve 158 0 0
Overseas Subsidiaries Translation Reserve (8) 0 (20)
Equity Attributable to Equity Holders of 14,566 12,497 12,962
Parent
Minority Interests 264 204 229
Total Equity 14,830 12,701 13,191
Goodwin PLC
Unaudited Interim Results
Group Cash Flow Statement
For the half year ended 31st October 2005
Half Year Half Year Year
Ended Ended Ended
31st October 2005 31st October 2004 30th April 2005
£'000 £'000 £'000
Cash Flows From Operating Activities
Profit for the period 1,469 1,159 2,519
Adjustments for:
Depreciation 732 720 1,506
Amortisation 20 20 40
Interest Expense 171 210 553
Loss on Sale of Fixed Assets 4 2 43
Corporation Tax Expense 638 562 1,016
Operating Profit Before changes in
Working Capital and Provisions 3,034 2,673 5,677
Increase in Trade and other Receivables (1,379) (1,914) (156)
Increase in Inventories (1,681) (2,097) (2,665)
(Decrease) / Increase in Payments on
Account (180) 464 3,301
(Decrease) / Increase in Trade and Other
Payables (1,322) 403 2,808
Cash Generated From Operations (1,528) (471) 8,965
Interest Paid (171) (210) (553)
Corporation Tax Paid (642) (392) (753)
Net Cash From Operating Activities (2,341) (1,073) 7,659
Cash Flows From Investing Activities
Proceeds from Sale of Plant and
Equipment 5 1 25
Acquisition of Plant and Equipment (739) (1,265) (2,177)
Acquisition of Subsidiary Interest (116) 0 (11)
Net Cash From Investing Activities (850) (1,264) (2,163)
Cash Flows from Financing Activities
Payment of Capital Element of Finance (175) (213) (435)
Lease Obligations
Dividends Paid - - (850)
Net Cash from Financing Activities (175) (213) (1,285)
Net (Decrease) /Increase in Cash and (3,366) (2,550) 4,211
Cash Equivalents
Opening Cash and Cash Equivalents (670) (4,871) (4,871)
Effect of Exchange Rate Fluctuations on
Cash Held 12 0 (10)
Closing Cash and Cash Equivalents (4,024) (7,421) (670)
Goodwin PLC
Unaudited Interim Results
Group Statement of Changes in Equity
for the half year ended 31st October 2005
Half year ended Half year ended Year ended
31st October 2005 31st October 2004 30th April 2005
£,000 £'000 £'000
Balance at start of period 13,191 11,542 11,542
Adjustment for IAS 39 2,856
Revised Balance at Start of Period 16,047
Profit for the Period 1,469 1,159 2,519
Prior Year Dividend Paid (850)
Effective Changes in Fair Value of Cash Flow
Hedges (3,854)
Tax on Items Taken Directly to Equity 1,156
Exchange Movements 12 (20)
Balance at End of Period 14,830 12,701 13,191
Goodwin PLC
Unaudited Interim Results
for the half year ended 31st October 2005
NOTES
1. Key changes in accounting policies
From 2005, the Group will produce its consolidated report and accounts in
accordance with International Financial Reporting Standards as adopted for use
in the European Union (IFRS). Previously the Group reported under UK Generally
Accepted Accounting Practice (UK GAAP). The key changes that have arisen due to
the transition from reporting under UK GAAP to reporting under IFRS are set out
in Appendix 1. The Group's date of transition to IFRS is 1st May 2004, which is
the beginning of the comparative period for the 2005 financial year. Therefore
the opening balance sheet for IFRS purposes is that reported at 30th April 2004
as amended for changes due to IFRS.
This interim financial report is the first to be prepared under IFRS, which
results in the comparative figures being prepared on the same basis and are
therefore restated from those previously reported under UK GAAP. To help
understand the impact of the transition, reconciliations have been produced to
show the changes made to statements previously reported under UK GAAP in
arriving at the equivalent statements under IFRS and are also included in
Appendix 1.
The income statement for the six months to 31st October 2005 and the balance
sheet at that date are reported under IFRS. As they have not previously been
reported under UK GAAP no reconciliation to IFRS is provided.
The interim report has been prepared using accounting policies consistent with
International Financial Reporting Standards (IFRS) anticipated to be in effect
at the first reporting date which is 30th April 2006. They have been prepared
on the assumption that all IFRS statements issued as effective from 2005
reporting will be endorsed by the European Commission.
As permitted by IFRS 1 'First Time Adoption of International Financial Reporting
Standards', the Group has elected not to restate comparative information for the
Financial Instrument standards IAS 32 and IAS 39. In this respect the prior
year information has been prepared under UK GAAP.
A full set of UK GAAP accounting policies was published in the Group's report
and accounts for the year to 30th April 2005. The accounting policies that have
changed under IFRS are detailed below.
Basis of accounting
The financial statements and reconciliations shown in this report have been
prepared on an historic cost basis except for certain financial instruments
which are measured at fair value. The statements are also prepared on the basis
of IFRS expected to be in issue at 30th April 2006. The financial statements
presented are unaudited.
Intangible assets
All business combinations are accounted for by applying the purchase method. For
acquisitions that have occurred since 1st May 2004, goodwill is recorded as the
difference between the fair value of consideration given on acquisition and the
aggregate fair value of its identifiable net assets. In respect of acquisitions
prior to this date, goodwill is recorded at deemed cost under UK GAAP. In
accordance with IFRS3 'Business Combinations', goodwill is no longer amortised
but stated at cost less any provision for impairment in value. In accordance
with IFRS 1 business combinations made prior to 1st May 2004 have not been
restated. Goodwill is reviewed annually for any impairment in its value or at
such time there is an indication that its value has reduced.
Expenditure on development activities is capitalised according to IAS 38 if the
product or process is technically and commercially feasible and the Group has
sufficient resources to complete development. The expenditure capitalised
includes the cost of materials, direct labour and an appropriate proportion of
overheads. Other development expenditure is recognised in the income statement
as an expense as incurred. Capitalised development expenditure is stated at cost
less accumulated amortisation and impairment losses and amortised over its
useful economic life.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement.
For consolidation purposes the assets and liabilities of overseas subsidiary
undertakings are translated at foreign exchange rates ruling at the balance
sheet date. The revenues and expenses of overseas subsidiary undertakings are
translated at an average rate for the period where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions. This is a change
from UK GAAP where the revenues were translated at closing rate.
Exchange differences arising from this translation of foreign operations are
taken directly to the translation reserve. They are released into the income
statement upon disposal.
The Group has taken advantage of relief available in IFRS 1 to deem the
cumulative translation differences for all foreign operations to be zero at the
date of transition to IFRS (1st May 2004).
Deferred taxation
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
amount of deferred tax provided is based on the expected manner of realisation
of the settlement of the carrying value of the assets and liabilities, using the
tax rates enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised to the extent that it is regarded as more likely than
not that they will be recovered. Deferred tax assets and liabilities are not
discounted.
Financial instruments
Derivative financial instruments are used by the Group to hedge foreign currency
exchange rate risks. Under IAS 39 'Financial Instruments', forward foreign
exchange contracts are stated in the balance sheet at fair value. The gain or
loss on remeasurement to fair value is recognised immediately in profit or loss.
However, where forward exchange contracts qualify for hedge accounting, the
effective part of any gain or loss is recognised directly in the hedging
reserve. Any ineffective portion of the hedge is recognised immediately in the
income statement. The associated cumulative gain or loss is removed from equity
and recognised in the income statement in the same period or periods during
which the hedged forecast transaction affects profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the
entity revokes designation of the hedge relationship but the hedged forecast
transaction is still expected to occur, the cumulative gain or loss at that
point remains in equity and is recognised in accordance with the above policy
when the transaction occurs. If the hedged transaction is no longer expected to
take place, the cumulative unrealised gain or loss recognised in equity is
recognised in the income statement immediately.
IAS 39 will be applied from 1st May 2005 as permitted under the transitional
arrangements of IFRS 1. Comparatives are presented under UK GAAP where gains and
losses on forward foreign exchange contracts treated as hedging instruments were
not recognised in the income statement. On realisation of the hedged
transaction the unrecognised gains and losses arising on the instrument were
recognised in the income statement.
2. Dividends
The directors do not propose the payment of an interim dividend.
Half Year Ended Half Year Ended Year Ended
31st October 31st October 30th April
2005 2004 2005
£'000 £'000 £'000
Equity dividends:
Paid dividend (Year to April 2004: 11.806p per 0 0 (850)
share)
Proposed dividend (Year to April 2005: 13.889p 0 0 (1,000)
per share)
3. Earnings per share
The calculation of the earnings per ordinary share is calculated on the number
of ordinary shares in issue during both years of 7,200,000 and on the profit
for the period attributable to ordinary shareholders of £1,434,000 (31st
October 2004 £1,141,000). The company has no share options or diluting earnings
per share.
4. Financial Information
The financial information for the six months ended 31st October 2005 and the
comparative figures for the six months ended 31st October 2004 have not been
audited or reviewed. The summarised financial information in respect of the
year ended 30th April 2005 is not the Group's statutory accounts for that
financial year. Those accounts, which were prepared under UK GAAP, have been
delivered to the Registrar of Companies. The audit report was unqualified and
did not contain a statement under section 237(2) or section 237(3) of the
Companies Act 1985.
APPENDIX 1
Reporting under International Financial Reporting Standards (IFRS)
From 2005, Goodwin PLC will produce its consolidated report and accounts in
accordance with IFRS as adopted by the European Union. Previously the Group
reported under UK Generally Accepted Accounting Practice (UK GAAP). This
commentary highlights the key changes that have arisen due to the transition
from reporting under UK GAAP to reporting under IFRS. The Group's date of
transition to IFRS is 1st May 2004, which is the beginning of the comparative
period for the year ending 30th April 2006. Therefore the opening balance sheet
for IFRS purposes is that reported at 30th April 2004 as amended for changes due
to IFRS.
This interim financial report is the first to be prepared under IFRS, which
results in the comparative figures being prepared on the same basis and are
therefore restated from those previously reported under UK GAAP. To help
understand the impact of the transition, reconciliations have been produced to
show the changes made to statements previously reported under UK GAAP in
arriving at the equivalent statements under IFRS. The following five unaudited
reconciliations are included below.
1. Balance sheet at 1st May 2004
2. Income statement for the 6 months to 31st October 2004
3. Balance sheet at 31st October 2004
4. Income statement for the year to 30th April 2005
5. Balance sheet at 30th April 2005
The income statement for the six months to 31st October 2005 and the balance
sheet at that date are reported under IFRS. As they have not previously been
reported under UK GAAP no reconciliation to IFRS is provided.
Key accounting policy changes are included within the interim report. A full
set of IFRS accounting policies will be published in the Group's report and
accounts for the year to 30th April 2006.
First time adoption
IFRS1 'First Time Adoption of International Financial Reporting Standards' sets
out the approach to be followed when IFRS are applied for the first time. IFRS
accounting policies are, in general, to be applied retrospectively although
IFRS1 provides a number of exceptions to this general principle. The policy
choices made under IFRS1 are mentioned under the relevant headings below:
Goodwill
Under UK GAAP, goodwill was amortised over its useful economic life. Under
IFRS3 'Business Combinations' goodwill is not amortised but is carried at cost
with impairment reviews being undertaken annually or when there is an indication
that the carrying value has been reduced. Under IFRS1 the Group has applied the
change from the date of transition as opposed to full application to all
business combinations prior to that date.
Dividends
Under UK GAAP proposed dividends were accrued at the balance sheet date although
there was no obligation to pay until formal approval by shareholders was granted
at the Annual General Meeting. Under IAS10 'Events after the Balance Sheet
Date', a liability should only be recognised once there is an obligation to pay.
As a result the dividend will only be recognised once shareholders approve it.
Treasury instruments
The Group makes use of forward foreign exchange contracts to reduce the risk
exposure to changes in foreign exchange rates. These contracts are designated
as part of a hedging relationship and hence where the hedge is shown to be
effective changes in fair value are accounted for in equity. The impact on the
30th April 2005 balance sheet is to increase other debtors and net assets by
£2,856,000 by creating a hedge reserve within equity.
Foreign exchange
In accordance with IAS21 'The effects of changes in foreign exchange rates',
translation differences that arise in respect of foreign entities have been
reclassified as a separate component of equity from the date of transition, 1st
May 2004.
The financial statements presented are unaudited and there is a possibility that
adjustments may be required before they are incorporated as part of the first
audited annual report and accounts prepared under IFRS, which are due to be
published in September 2006.
The balance sheet reconciliations at 1st May 2004 (date of transition to IFRS)
and at 30th April 2005 (date of last UK GAAP financial statements) and the
reconciliation of profit for the period, as required by IFRS1 are shown below.
The balance sheet reconciliation at 31st October 2004 and the reconciliation of
profit for the six months to 31st October 2004 have also been included to enable
a comparison of the 2005 interim figures with those published in the
corresponding period of the previous financial year.
Appendix 1
Unaudited Balance Sheet Reconciliation as at 1st May 2004
UK GAAP* IAS 10 IFRS
IFRS format Dividends
£'000 £'000 £'000
Non Current Assets
Intangible Assets 160 160
Property, Plant and Equipment 10,391 10,391
Non Current Assets 10,551 0 10,551
Current Assets
Inventories 7,339 7,339
Trade and Other Receivables 9,602 9,602
Cash 229 229
Current Assets 17,170 0 17,170
Total Assets 27,721 0 27,721
Current Liabilities
Trade and Other Current Payables 9,587 (850) 8,737
Corporation Tax Liabilities 385 385
Obligations under Finance Leases 414 414
Bank Overdrafts 5,100 5,100
Current Liabilities 15,486 (850) 14,636
Net Current Assets 1,684 850 2,534
Non Current Liabilities
Deferred tax 940 940
Obligations under Finance Leases 603 603
Non Current Liabilities 1,543 0 1,543
Total Liabilities 17,029 (850) 16,179
Net Assets 10,692 850 11,542
Equity
Share Capital 720 720
Retained Earnings 9,785 850 10,635
Equity Attributable to Equity Holders of Parent 10,505 850 11,355
Minority Interests 187 187
Total Equity 10,692 850 11,542
* As published under UK GAAP reformatted for IFRS presentation
Unaudited Income Statement Reconciliation - 6 Months to 31st October 2004
UK GAAP* IFRS3 IFRS
IFRS format Goodwill
£'000 £'000 £'000
Turnover - Continuing 20,462 20,462
Operating Profit before Finance Costs 1,930 1 1,931
Finance Costs (210) (210)
Profit Before Tax 1,720 1 1,721
Tax Expense (562) (562)
Profit for the Period 1,158 1 1,159
Attributable to:
Equity Holders of the Parent 1140 1 1,141
Minority Interest 18 18
1158 1 1,159
Unaudited Balance Sheet Reconciliation as at 31st October 2004
UK GAAP* IAS 10 IFRS3 IFRS
IFRS format Dividends Goodwill
£'000 £'000 £'000 £'000
Non Current Assets
Intangible Assets 139 1 140
Property, Plant and Equipment 10,670 10,670
Non Current Assets 10,809 0 1 10,810
Current Assets
Inventories 9,436 9,436
Trade and Other Receivables 11,516 11,516
Cash 242 242
Current Assets 21,194 0 0 21,194
Total Assets 32,003 0 1 32,004
Current Liabilities
Trade and Other Current Payables 10,193 (850) 9,343
Income Tax Liabilities 519 519
Obligations under Finance Leases 340 340
Bank Overdrafts 7,662 7,662
Current Liabilities 18,714 (850) 0 17,864
Net Current Assets 2,480 850 0 3,330
Non Current Liabilities
Deferred tax 975 975
Obligations under Finance Leases 464 464
Non Current Liabilities 1,439 0 0 1,439
Total Liabilities 20,153 (850) 0 19,303
Net Assets 11,850 850 1 12,701
Equity
Share Capital 720 720
Retained Earnings 10,926 850 1 11,777
Equity Attributable to Equity 11,646 850 1 12,497
Holders of Parent
Minority Interests 204 204
Total Equity 11,850 850 1 12,701
Unaudited Income Statement Reconciliation - 12 Months to 30th April 2005
UK GAAP* IFRS3 IFRS
IFRS format Goodwill
£'000 £'000 £'000
Turnover - Continuing 44,945 44,945
Operating Profit before Finance Costs 4,085 3 4,088
Finance Costs (553) (553)
Profit Before Tax 3,532 3 3,535
Tax Expense (1,016) (1,016)
Profit for the Period 2,516 3 2,519
Attributable to:
Equity Holders of the Parent 2,474 3 2,477
Minority Interest 42 42
2,516 3 2,519
Unaudited Balance Sheet Reconciliation as at 30th April 2005
UK GAAP* IAS 10 IFRS3 Reclassification IFRS
IFRS format Dividends Goodwill
£'000 £'000 £'000 £'000 £'000
Non Current Assets
Intangible Assets 127 3 130
Property, Plant and 10,920 10,920
Equipment
Non Current Assets 11,047 0 3 0 11,050
Current Assets
Inventories 10,004 10,004
Trade and Other Receivables 9,743 9,743
Cash 275 275
Current Assets 20,022 0 0 0 20,022
Total Assets 31,069 0 3 0 31,072
Current Liabilities
Trade and Other Current 15,459 (1,000) 14,459
Payables
Corporation Tax Liabilities 635 635
Obligations under Finance 315 315
Leases
Bank Overdrafts 945 945
Current Liabilities 17,354 (1,000) 0 0 16,354
Net Current Assets 2,668 1,000 0 0 3,668
Non Current Liabilities
Provisions for Liabilities 951 951
and Charges
Obligations under Finance 576 576
Leases
Non Current Liabilities 1,527 0 0 0 1,527
Total Liabilities 18,881 (1,000) 0 0 17,881
Net Assets 12,188 1,000 3 0 13,191
Equity
Share Capital 720 720
Retained Earnings 11,239 1,000 3 20 12,262
Overseas Subsidiaries 0 (20) (20)
Translation Reserve
Equity Attributable to 11,959 1,000 3 0 12,962
Equity Holders of Parent
Minority Interests 229 229
Total Equity 12,188 1,000 3 0 13,191
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