Preliminary Results

RNS Number : 4077R
Goodwin PLC
23 August 2010
 



PRELIMINARY ANNOUNCEMENT

 

Goodwin PLC today announces its preliminary results for the year to 30th April 2010.

 

 

CHAIRMAN'S STATEMENT

 

I am pleased to report annual pre-tax profits for the Group for the year to 30th April, 2010 of £13.3 million (2009: £13.1 million) on a revenue of £93.9 million(2009: £100.7 million).

 

The Directors propose to maintain the dividend and pay an ordinary dividend of 27.777p per share (2009:27.777p and an extraordinary dividend of 27.777p). 

 

The Group managed to maintain profitability during the current year despite an overall drop in sales revenue.  The companies in the Refractory Division significantly improved their profitability in the face of difficult world trading conditions which was in part achieved  through the realisation of synergy savings from our prior year acquisition of SRS Holdings Limited and the improved order book for our Dupré vermiculite business. Easat Antennas also achieved a record level of profitability and sales.

 

Our Refractory Division companies in the UK, India, Thailand, Brazil and China, which supply moulding consumables and machinery to the jewellery investment casters, have progressed  in bringing their supply up to speed with the  growing markets they serve. The percentage of Group sales of the Refractory Division has increased  to 24% (2009:18%).

 

Dupré Minerals has further enhanced its position as a leading world supplier of vermiculite, both exfoliated and of the raw ore, by signing an exclusive supply agreement that enables the company to distribute and sell the larger grades of vermiculite that are currently in short supply in the world.   

                                                                                                                                                                                                                                                            

Within the Engineering Division Goodwin International, whilst still remaining very profitable, reported profits for the year reduced by 35% as it  adopted a policy of conserving the work load to protect its skill base. It is, however, pleasing to report that, although the order input for Goodwin International was some 40 % down during the first six months of the financial year,  by the end of the financial year ending 30th April 2010 its  order input for the whole year was down just 8 % and orders for the nozzle check valves manufactured by Goodwin International had grown by 49 % as compared to the previous year.

 

Noreva GmbH in Germany, which also makes nozzle check valves continued to perform well in challenging market conditions.

 

By the end of the first half of the financial year  the Board, with a greater level of confidence that the Group's financial performance was not going to be damaged by the global recession, embarked on a  further £4 million of capital expenditure which we internally financed. In the UK our largest CNC machine tool to date was ordered to serve the growing demand for larger engineering components.

 

Two large machined casting contracts (approximating £12 million sales) for the Oakland Bridge in California and the Hardanger Bridge in Norway form work in progress and are on schedule. We have adopted a new focus on obtaining orders for engineering products with a unit weight in the higher weight range of up to 25 tonnes.

 

The workload for current orders remains  the same as it was twelve months ago (approximately 6 months of workload) and  new order potential  seems  more positive  due to a rise in enquiries  and  signs  that  more capital projects are being released in the energy sector.

 

There is evidence of an international tightening of financial controls in terms of cash management where customers look to suppliers to finance their projects due to there being less liquid funds available in the market. We have strengthened our accounting team to ensure we manage the increased risk of this requirement accordingly. The Board has hedged interest rates and has secured longer five year term loan facilities (not necessarily drawn down).  This will be at some cost but, due to the continued uncertainty of the ability of banks to lend money in the future, the Board considers this additional expenditure prudent. Gearing at year end was 1.8% (gearing is defined as net debt divided by equity attributable to the shareholders).

 

As part of the Company's resilience, autonomy in overseas subsidiaries where possible is encouraged. This is backed up by the creation of common standards enabling inter-changeability should unforeseen events occur.  For example, restrictions in travel  due to volcanic ash clouds mean communications, risk  and business continuity assessments (ISO17799) remain high on our corporate agenda.

 

The Group operates its foundry in line with a climate levy agreement and steps are being taken to meet the UK CRC deadline reporting requirements for the remainder of the Group. During the year Goodwin Steel Castings Ltd achieved certified accreditation to ISO 18001 Occupational Health and Safety in addition to its ISO 14000 Environment Management accreditation and its ISO 9001 accreditation.

 

The Group has engaged recently a further 38 managerial employees to help cope with our continued growth aspirations over the next five years.

 

Our thanks go to a growing team of multi-talented individuals from a variety of cultural backgrounds who understand the need to be hard working, quality orientated, competent and competitive.  Their hard work has resulted in the Group reporting a  satisfactory result this year bearing in mind that the world has been in the worst recession for 65 years.

 

 

JW Goodwin

Chairman


 

Consolidated income statement

for the year ended 30th April 2010

 


 

2010

2009

 

 

£'000

£'000

Continuing operations

 

 

 

Revenue

 

93,928

100,684

Cost of sales

 

(64,057)

(71,985)

 

 

              

              

Gross profit

 

29,871

28,699


 

 

 

Distribution expenses

 

(4,595)

(4,805)

Administrative expenses

 

(11,232)

(10,072)

 

 

              

              

Operating profit

 

14,044

13,822


 

 

 

Financial expenses

 

(959)

(878)

Share of profit of associate companies

 

226

171

 

 

              

              

Profit before taxation

 

13,311

13,115

 

 

 

 

Tax on profit

 

(3,980)

(4,003)

 

 

              

              

Profit after taxation

 

9,331

9,112

 

 

              

              

Attributable to:

 

 

 

Equity holders of the parent

 

8,507

8,779

Minority interest

 

824

333


 

              

              

Profit for the year

 

9,331

9,112

 

 

              

              

Basic and diluted earnings per ordinary share

 

118.15p

121.93p

 

 

              

              

 

Consolidated statement of comprehensive income

for the year ended 30th April 2010

 


 

2010

2009

 

 

£'000

£'000

 

 

 

 

Profit for the year

 

9,331

9,112


 

 

 

Other comprehensive income/(expense) for the year

 

 

 

Foreign exchange translation differences

 

382

1,090

Effective portion of changes in fair value of cash flow hedges

 

328

(7,131)

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

 

6,858

922

Tax (charge)/credit recognised on unrealised income and expenses recognised directly in equity

 

 

(2,012)

 

1,739


 

              

              

 

 

5,556

(3,380)

 

 

 

 


 

              

              

Total comprehensive income  for the year

 

14,887

5,732


 

              

              

Attributable to:

 

 

 

  Equity holders of the parent

 

13,922

5,124

  Minority interest

 

965

608


 

              

              


 

14,887

5,732


 

              

              


 

 

 

 

Consolidated statement of changes in equity

for the year ended 30th April 2010

 

 

Share

capital

Translation reserve

Cash flow

 hedging

 reserve

Retained

earnings

Total

Minority

interest

Total

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Year ended 30th April 2010

 

 

 

 

 

Balance at 1st May 2009

720

957

(5,247)

30,575

27,005

2,482

29,487

Total comprehensive income for the year

-

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

 

             

                     

                     

                   

                   

                   

                   

Year ended 30th April 2009

 

 

 

 

 

Balance at 1st May 2008

720

142

(777)

23,447

23,532

1,275

24,807

Total comprehensive income for the year

-

815

(4,470)

8,779

5,124

608

5,732

Dividends paid

-

-

-

(1,651)

(1,651)

(275)

(1,926)

Acquisition of subsidiaries

-

-

-

-

-

874

874


            

                      

                      

                    

                   

                    

                      

Balance at 30th April 2009

720

957

(5,247)

30,575

27,005

2,482

29,487

 

             

                     

                   

                   

                   

                   

                      

 

Consolidated balance sheet

at 30th April 2010

 

 

 

2010

2009

 

 

 £'000

 £'000

Non-current assets

 

 

 

Property, plant and equipment

 

23,260

20,689

Investment in associates

 

919

673

Intangible assets

 

10,671

10,837

Deferred tax asset

 

-

606

 

 

              

              

 

 

34,850

32,805

 

 

              

              

Current assets

 

 

 

Inventories

 

18,085

16,530

Trade and other receivables

 

21,815

21,921

Derivative financial assets

 

635

708

Cash and cash equivalents

 

10,710

10,237

 

 

              

              

 

 

51,245

49,396

 

 

              

              

 

 

 

 

Total assets

 

86,095

82,201

 

 

              

              

Current liabilities

 

 

 

Bank overdraft

 

887

1,057

Other interest-bearing loans and borrowings

 

139

458

Trade and other payables

 

23,629

25,203

Derivative financial liabilities

 

1,306

9,509

Liabilities for current tax

 

2,150

2,618

 

 

              

              


 

28,111

38,845

 

 

              

              

Non-current liabilities

 

 

 

Other interest-bearing loans and borrowings

 

10,358

8,307

Deferred consideration

 

5,911

5,562

Deferred tax liabilities

 

1,546

-

 

 

              

              


 

17,815

13,869

 

 

              

              

Total liabilities

 

45,926

52,714


 

              

              


 

 

 

Net assets

 

40,169

29,487

 

 

              

              

Equity attributable to equity holders of the parent

 

 

 

Share capital

 

720

720

Translation reserve

 

1,199

957

Cash flow hedge reserve

 

(74)

(5,247)

Retained earnings

 

35,082

30,575

 

 

              

              

Total equity attributable to equity holders of the parent

 

36,927

27,005


 

 

 

Minority interest

 

3,242

2,482

 

 

              

              

Total equity

 

40,169

            

29,487

             

 

Consolidated cash flow statement

for the year ended 30th April 2010

 

 

 

2010

2009

 

 

£'000

£'000

Cash flow from operating activities

 

 

 

Profit from continuing operations after tax

 

9,331

9,112

  Adjustments for:

 

 

 

  Depreciation

 

2,832

2,263

  Amortisation of intangible assets

 

456

475

  Goodwill write off

 

-

37

  Financial expense

 

959

878

  Loss/ (profit)  on sale of property, plant and equipment

 

86

(725)

  Share of profit of associate companies

 

(226)

(171)

  Tax expense

 

3,980

4,003


 

              

              

Operating  profit before changes in working capital and provisions

 

17,418

15,872

 

 

 

 

 Decrease in trade and other receivables

 

203

1,028

  Increase in inventories

 

(1,595)

(308)

  (Decrease)/increase in trade and other payables (excluding payments on

  account)

 

 

(1,581)

 

356

  (Decrease)/increase in payments on account

 

(1,825)

933


 

              

              

Cash generated from operations

 

12,620

17,881


 

 

 

  Interest paid

 

(564)

(759)

  Corporation tax paid

 

(4,240)

(2,788)

  Interest element of finance lease obligations

 

(15)

(54)


 

              

              

Net cash from operating activities

 

7,801

14,280


 

                    

                 

Cash flow from investing activities

 

 

 

  Proceeds from sale of property, plant and equipment

 

17

769

  Acquisition of property, plant and equipment

 

(4,235)

(7,157)

  Acquisition of intangible assets

 

-

(255)

  Acquisition of subsidiary net of cash acquired

 

(290)

(2,788)

  Acquisition of associated undertaking

 

(40)

-

  Payment of deferred purchase creditor

 

(500)

-

  Dividends received from associate company

 

119

226


 

              

              

Net cash from investing activities

 

(4,929)

(9,205)


 

                     

                 

Cash flows from financing activities

 

 

 

  Payment of capital element of finance lease obligations

 

(275)

(416)

  Dividends paid

 

(4,000)

(1,651)

  Proceeds from loans

 

2,007

5,589


 

              

              

Net cash from financing activities

 

(2,268)

3,522


 

              

              


 

              

              

Net increase in cash and cash equivalents

 

604

8,597

  Cash and cash equivalents at beginning of year

 

9,180

280

  Effect of exchange rate fluctuations on cash held

 

39

303


 

              

              

Cash and cash equivalents at end of year

 

9,823

9,180


 

              

              

 

Risks and Uncertainties

The Group's operations expose it to a variety of risks and uncertainties, including:

Market risk: The Group provides a range of products and services, and there is a risk that the demand for these services will vary from time to time because of competitor action or economic cycles.  The Group operates across a range of geographical regions, and its turnover is split across the UK, Europe, North America and the Pacific Basin and the rest of the world.  This spread reduces risk in any one territory.  Similarly, the Group operates in both mechanical and refractory engineering sectors, mitigating the risk of a downturn in any one product area.  The potential risk of the loss of any key customer is limited as, typically, no single customer accounts for more than 10% of turnover.

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 small given the Group is developing products in areas in which it is knowledgeable and new products are extensively tested prior to their release into the market.

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.

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 extensive financial and technical due diligence during the acquisition process and the Group's  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), credit risks and liquidity. 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 and interest rate caps and swaps.  Further information on the financial risk management objectives and policies will be set out in note 19 to the financial statements to be published shortly.

 

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to our best knowledge:

a)         the financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and

b)         the management report incorporated into and referenced from the Directors' Report includes a fair review of the development and performance of the business and position of the Company and its undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

 

J. W. Goodwin, Chairman

R. S. Goodwin, Managing Director

F. A. Gaffney, Director

J. Connolly, Director

M. S. Goodwin, Director

 

RESULTS FOR THE YEAR ENDED 30TH APRIL 2010

 

NOTES

 

1.         As required, the Group's financial statements have been prepared and approved in accordance with International Financial Reporting Standards as adopted by the EU (IFRS) and the above accounts have been prepared on this basis.  The comparative results for the year ended 30th April 2009 have also been prepared on this basis.

2.         Segmental information          

            In accordance with the requirements of IFRS 8 the Group's reportable segments, based on information reported to the Group's Board of Directors for the purposes of resource allocation and assessment segment performance are as follows:

     Engineering    - casting, machining and general engineering design

     Refractories    - powder manufacture and mineral processing

Information regarding the Group's operating segments is reported below.  Amounts reported for the prior year have been restated to conform to the requirements of IFRS 8

 

 

Engineering

 £'000

Refractories

 £'000

Sub Total

 £'000

Year Ended 30th April

2010

2009

2010

2009

2010

2009

Revenue

 

 

 

 

 

 

External sales

70,982

80,754

22,981

18,286

93,963

99,040

Intra-Group sales

15,028

_______

16,013

_______

3,104

_______

2,614

_______

18,132

_______

18,627

_______

 

 

 

 

 

 

 

Total revenue

86,010

96,767

26,085

20,900

112,095

117,667

 

_______

_______

_______

_______

 

 

Reconciliation to consolidated revenue:

 

 

 

 

 

 

Intra-Group sales

 

 

 

 

(18,132)

(18,627)

Net consolidation adjustments

 

 

 

 

(35)

-

IAS 39 adjustment

 

 

 

 

-

_______

1,644

_______

 

 

 

 

 

 

 

Consolidated revenue for the year

 

 

 

 

93,928

_______

100,684

_______

 

 

 

 

 

 

 

Profits

 

 

 

 

 

 

Segment result including associates

11,533

_______

13,705

_______

3,299

_______

340

_______

14,832

14,045

 

Group administration costs

 

 

 

 

(368)

(792)

Group finance and treasury costs

 

 

 

 

(1,284)

(134)

Other (net)

 

 

 

 

131

_______

(4)

_______

Consolidated profit before tax for the year

 

 

 

 

13,311

13,115

 

 

 

 

(3,980)

_______

(4,003)

_______

Consolidated profit after tax for the year

 

 

 

 

9,331

_______

9,112

_______

 

 

 

Segmental total assets

Segmental total liabilities

Segmental net assets

Year Ended 30th April

2010

2009

2010

2009

2010

2009

 

£'000

£'000

£'000

£'000

£'000

£'000

Segmental net assets

 

 

 

 

 

 

Engineering

44,010

40,535

32,003

31,515

12,007

9,020

Refractories

22,668

20,249

12,338

11,326

10,330

8,923

 

                         

                      

             

                    

             

                         

 

Sub total reportable segment

 

66,678

 

60,784

 

44,341

 

42,841

 

22,337

 

 

17,943

 

                         

                    

             

                   

 

 

PLC net assets

 

 

 

 

25,072

23,736

Investments elimination/ Goodwill adjustments

 

 

 

 

(6,611)

(6,608)

Other consolidation adjustments

 

 

 

 

(1,426)

(1,717)

Foreign exchange/IAS39

 

 

 

 

797

(3,867)

 

 

 

 

 

                 

                 

 

Consolidated total net assets

 

 

 

 

 

40,169

 

29,487

 

 

 

 

 

                 

                 

For the purposes of monitoring segment performance and allocating resources between segments, the Group's Board of Directors monitors the tangible and financial assets attributable to each segment.  All assets are allocated to reportable segments with the exception of those held by the parent  Company.

 

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 2010

 

Year ended 30th April 2009

 

 

 

Revenue

Operational net  assets

Non current assets

PPE Capital

expend-iture

 

Revenue

Operational net assets

Non current assets

PPE Capital

expend-iture

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

UK

18,332

29,459

30,764

3,741

17,022

20,323

28,379

3,886

Rest of  Europe

22,251

3,872

723

798

23,269

2,816

1,311

379

USA

9,277

-

-

-

12,313

-

-

-

Pacific Basin

24,035

3,697

128

50

27,019

4,146

681

102

Rest of world

20,033

3,141

3,235

518

21,061

2,202

2,434

1,604

 

              

              

              

              

              

              

              

              

Total

93,928

40,169

34,850

5,107

100,684

29,487

32,805

5,971

 

              

              

              

              

              

              

              

              

 

3.           The Directors propose the payment of an ordinary dividend of 27.777p per ordinary share (2009: ordinary dividend of 27.777p plus an extraordinary dividend of 27.777p).  The proposed dividend will be paid on 15th October 2010 to shareholders on the register at the close of business on 17th September 2010.

 

4.             The earnings per ordinary share has been calculated on profit after taxation for the year attributable to equity holders of the parent of  £8,507,000 (2009: £8,779,000) and by reference to the 7,200,000 ordinary shares in issue throughout both years.  The company has no share options or other diluting instruments and accordingly there is no difference in the calculation of diluted earnings per share.

 

5.             The Annual General Meeting will be held at 10.30 a.m. on  13th October 2010 at Crewe Hall, Weston Road, Crewe, Cheshire CW1 6UZ.

               

7.             Copies of the 2010 accounts are expected to be posted to shareholders at the end of   week commencing 23rd August 2010 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.

 

8.             The financial information set out above does not constitute the company's statutory accounts for the years ended 30th April 2010 or 2009 but is derived from those accounts. Statutory accounts for 2009 have been delivered to the registrar of companies, and those for 2010 will be delivered in due course. The auditors have reported on those accounts; their report 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) had nothing to report by exception under the Companies Act 2006.

 

 

END

 


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