Source - LSE Regulatory
RNS Number : 7754I
Goodwin PLC
16 December 2020
 

GOODWIN PLC

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year ended 31st October 2020

 

CHAIRMAN'S STATEMENT

 

The pre-tax profit for the Group for the six month period ending 31st October 2020 was £5.8 million (2019 £7.4 million) a 22% decrease on revenue of £62.6 million. The Group cash flow and banking headroom are in line with the Board's expectations, and the order book remains robust at £174 million as at 31st October 2020 but caution is needed with the Covid-19 uncertainty delaying some capital projects and the downturn in the oil and gas industry, which is now likely to be a permanent feature and so a smaller percentage of our targeted business going forwards.

Within the Refractory Engineering Division, the current activity levels are climbing to similar levels to those seen prior to the onset of Covid-19.  However, we remain uncertain where we will stand after the effects of the second and possible third lock down.  The Castaldo silicone rubber technology and plant that we purchased during the previous financial year has been successfully relocated from the USA to our company in Thailand, Siam Casting Powders. This plant is now installed, commissioned and producing.

Without neglecting the huge recognition due to the dedicated hard work of all Group employees, through careful management of overhead and expenditure combined with the quality of our customer base and the order book that has been built with them, the Group has suffered less than many throughout the pandemic, for which we are grateful. With the high levels of uncertainty that Covid-19 continues to subject the world to, coupled with the side effects of Brexit in the UK, there have been exceedingly challenging trading conditions, which should correct themselves with the markets we address, once normality can resume.

T. J. W. Goodwin

 

Chairman

16th December 2020

 

Management report

Financial Highlights

 

Unaudited      Half Year to 31st October 2019

Unaudited       Half Year to

Audited           Year Ended

 

31st October

31st October

30th April

 

2020

2019

2020

 

£'m

£'m

£'m

Consolidated Results

 

 

 

Revenue

62.6

70.1

144.5

Operating profit

6.1

7.8

12.9

Profit before tax

5.8

7.4

12.1

Profit after tax

4.5

5.6

8.3

Capital Expenditure (owned and finance lease assets)

8.3

3.0

6.1

Earnings per share - basic

56.64p

72.92p

107.93p

Earnings per share  - diluted

55.42p

69.77p

103.31p

Turnover

Sales revenue of £62,628,000 for the half year represents a 11% decrease from the £70,090,000 achieved during the same period last year.

Profit Before Tax

Profit before tax for the six months of £5,774,000 is a 22% decrease from the £7,406,000 achieved for the same six month period last year.

Key performance indicators

The key performance indicators for the business are listed below:

 

 

 

 

 

Unaudited      Half Year to

Unaudited       Half Year to

Audited           Year Ended

 

31st October

31st October

30th April

 

2020

2019

2020

 

 

 

 

Gross profit as a % of turnover

25.9

27.8

24.1

Other income (in £ millions)

-

0.7

0.7

Profit before tax (in £ millions)

5.8

7.4

12.1

 

 

 

 

Gearing % (excluding deferred consideration)

29.8

25.7

17.9

 

 

 

 

Non cash charges (in £millions)

 

 

 

Depreciation (in £ millions)

2.7

3.2

5.9

Depreciation of finance leased assets (in £ millions)

0.2

0.1

0.3

Amortisation (in £ millions)

0.7

0.5

1.3

 

                 

                 

                 

Total non cash charges (in £ millions)

3.6

3.8

7.5

 

                 

                 

                 

 

Alternative performance measures mentioned above are defined in note 36 on page 86 of the Group Annual accounts to 30th April 2020.

2020/21 Outlook

With the upcoming completion of several radar systems in East Asia, the commencement of manufacturing works across our nuclear contracts and, hopefully, an improving Refractory Engineering Division performance, we expect the second half year pre-tax profits to be similar, if not improving on, the first half of this financial year.

Despite conditions remaining tough for our foundry, which is still transitioning away from its historic baseload of petrochemical related work, it is well placed to benefit from the upcoming increase in military expenditure and nuclear related casting requirements as its precision heavy castings niche skillset will be required. However, like all projects within this industry, a significant amount of time is required until the design and procurement of components can occur and value can be realised. Armed with the baseload of casting nuclear waste boxes we believe that going forward it will be able to build its way back to sustainable profitability over time.

Within the Refractory Engineering Division, trading conditions remain difficult due to several market sectors being affected by lockdowns with reduced confidence in consumer spending. The short to medium term outlook will be dependent on the market recovery and consumer spending.

The Board continues to manage working capital and expenditure to maintain a modest level of gearing. Prior to the end of this current financial year, we will be repaying the Bank of England CCFF loan that we took out as an insurance policy against global financial trauma caused by Covid-19.

Risks and Uncertainties

The Group, mainly through its centralised management structure, makes best endeavours to have in place internal control procedures to identify and manage the key risks and uncertainties affecting the Group. We would refer you to pages 11 to 13 of the Group Annual Accounts to 30th April 2020 which describe the principal risks and uncertainties, and to note 28 (starting on page 75) which describes in detail the key financial risks and uncertainties affecting the business such as credit risk and foreign exchange risk.

Judging the future relationship of the major currency pairs of the US Dollar, Sterling and the Euro continues to be a challenge.

Report on Expected Developments

This report describes the expected developments of the Group during the year ended 30th April 2021. 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.

Going concern

The Group continues to trade profitably and with the current order book level we are confident that this will continue and improve, especially as we move in to the next financial year, dependent, in the main, on Covid-19 related resolutions as discussed elsewhere in the accounts. As in previous periods, the levels of depreciation and amortisation (both non cash items) remain significant thus masking the true cash generating capability of the Group. As at 31st October 2020, the Group net debt stood at £31.1 million (31st Oct 2019 £27.2 million) as set out in note 10 to these accounts. Whilst the net debt levels are higher than those recorded as at April 2020 and October 2019 the gearing level at 29.8% is still modest and our banking headroom (facilities versus utilisation) is significant. Furthermore, within the second half of this financial year we would expect to significantly reduce our investment in working capital.  Given the foregoing, the Directors do not see an issue with the continued ability of the Group to meet its financial commitments and so have drawn up these accounts on a going concern basis.

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

The Directors confirm to the best of their knowledge that 1) 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 2) 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).

T.J. W. Goodwin

 

Chairman

16th December 2020

 

 

Condensed Consolidated Statement of Profit or Loss

for the half year to 31st October 2020

 

 

Unaudited

Unaudited

Audited

 

Half Year to

Half Year to

Year Ended

 

31st October

31st October

30th April

 

2020

2019

2020

 

£'000

£'000

£'000

Continuing operations

 

 

 

Revenue

62,628

70,090

144,512

Cost of sales

(46,404)

(50,610)

(109,743)

 

                 

                 

                 

Gross profit

16,224

19,480

34,769

Other income

-

689

690

Distribution expenses

(1,320)

(1,629)

(2,792)

Administrative expenses

(8,833)

(10,715)

(19,809)

 

                 

                 

                 

Operating profit

6,071

7,825

12,858

Financial expenses

(323)

(449)

(809)

Share of profit of associate companies

26

30

66

 

                 

                 

                 

Profit before taxation

5,774

7,406

12,115

Tax on profit

(1,289)

(1,812)

(3,775)

 

                 

                 

                 

Profit after taxation

4,485

5,594

8,340

 

                 

                 

                 

Attributable to:

 

 

 

Equity holders of the parent

4,171

5,260

7,866

Non-controlling interests

314

334

474

 

                 

                 

                 

Profit for the period

4,485

5,594

8,340

 

                 

                 

                 

Basic earnings per ordinary share (Note 9)

56.64p

72.92p

107.93p

 

                 

                 

                 

Diluted earnings per ordinary share (Note 9)

55.42p

69.77p

103.31p

 

                 

                 

                 

 

Condensed Consolidated Statement of Comprehensive Income

for the half year to 31st October 2020

 

 

Unaudited

Unaudited

Audited

 

Half Year to

Half Year to

Year Ended

 

31st October

31st October

30th April

 

2020

2019

2020

 

£'000

£'000

£'000

 

 

 

 

Profit for the period

4,485

5,594

8,340

 

 

 

 

Other comprehensive income / (expense)

 

 

 

 

 

 

 

Items that are or may be reclassified subsequently to the income statement

 

 

 

Foreign exchange translation differences

593

(162)

(1,007)

Goodwill arising from purchase of non-controlling interest in subsidiaries

-

(63)

(72)

Effective portion of changes in fair value of cash flow hedges

(293)

1,928

(355)

Ineffective portion of changes in fair value of cash flow hedges

(617)

-

-

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

935

379

522

Effective portion of changes in fair value of cost of hedging

88

(515)

(843)

Ineffective portion of change in fair value cost of hedging

581

-

-

Change in fair value of cost of hedging transferred to profit or loss

281

276

395

Tax on items that are or may be reclassified subsequently to profit or loss

(186)

(347)

77

 

                 

                 

                 

Other comprehensive income / (expense) for the period, net of income tax

1,382

1,496

(1,283)

 

                 

                 

                 

Total comprehensive income for the period

5,867

7,090

7,057

 

                 

                 

                 

Attributable to:

 

 

 

Equity holders of the parent

5,465

6,761

6,587

Non-controlling interests

402

329

470

 

                 

                 

                 

 

5,867

7,090

7,057

 

                 

                 

                 

 

Condensed Consolidated Statement of Changes in Equity

for the half year to 31st October 2020

 

Share capital

Translat-ion reserve

Share-based payments reserve

Cash flow hedge reserve

Cost of hedging reserve

Retained earnings

Total attribut-able to equity holders of the parent

Non-controll-ing interests

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Half year to 31st October 2020

(Unaudited)

 

 

 

 

 

 

 

 

 

Balance at 1st May 2020

736

361

5,244

(499)

(743)

99,918

105,017

4,585

109,602

Total comprehensive income:

 

 

 

 

 

 

 

 

 

Profit

-

-

-

-

-

4,171

4,171

314

4,485

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Foreign exchange translation differences

-

502

-

-

-

-

502

91

593

Net movements on cash flow hedges

-

-

-

68

724

-

792

(3)

789

Total comprehensive income for the period

-

502

-

68

724

4,171

5,465

402

5,867

Issue of shares

16

-

-

-

-

-

16

-

16

Dividends paid

-

-

-

-

-

(6,016)

(6,016)

(125)

(6,141)

 

                 

                 

                 

                 

                 

                 

                 

                 

                 

Balance at 31st October 2020

752

863

5,244

(431)

(19)

98,073

104,482

4,862

109,344

 

                 

                 

                 

                 

                 

                 

                 

                 

                 

 

Condensed Consolidated Statement of Changes in Equity

for the half year to 31st October 2020

 

Share capital

Translat-ion reserve

Share-based payments reserve

Cash flow hedge reserve

Cost of hedging reserve

Retained earnings

Total attribut-able to equity holders of the parent

Non-controll-ing interests

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Half year to 31st October 2019

(Unaudited)

 

 

 

 

 

 

 

 

 

Balance at 1st May 2019

720

1,044

4,991

(573)

(426)

99,409

105,165

4,126

109,291

Total comprehensive income:

 

 

 

 

 

 

 

 

 

Profit

-

-

-

-

-

5,260

5,260

334

5,594

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Goodwill arising from purchase of NCI interest in subsidiary

-

-

-

-

-

(63)

(63)

-

(63)

Foreign exchange translation differences

-

(198)

-

-

-

-

(198)

36

(162)

Net movements on cash flow hedges

-

-

-

1,937

(175)

-

1,762

(41)

1,721

Total comprehensive income for the period

-

(198)

-

1,937

(175)

5,197

6,761

329

7,090

Issue of shares

16

-

-

-

-

-

16

-

16

Dividends paid

-

-

-

-

-

(6,927)

(6,927)

-

(6,927)

Acquisition of NCI without a change of control

-

-

-

-

-

-

-

(11)

(11)

Other transactions

-

358

-

-

-

(358)

-

-

-

 

                 

                 

                 

                 

                 

                 

                 

                 

                 

Balance at 31st October 2019

736

1,204

4,991

1,364

(601)

97,321

105,015

4,444

109,459

 

                 

                 

                 

                 

                 

                 

                 

                 

                 

 

Condensed Consolidated Statement of Changes in Equity

for the half year to 31st October 2020

 

Share capital

Translat-ion reserve

Share-based payments reserve

Cash flow hedge reserve

Cost of hedging reserve

Retained earnings

Total attribut-able to equity holders of the parent

Non-controll-ing interests

Total equity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Year ended 30th April 2020

 

 

 

 

 

 

 

 

 

 

(Audited)

 

 

 

 

 

 

 

 

 

 

Balance at 1st May 2019

720

1,044

4,991

(573)

(426)

99,409

105,165

4,126

109,291

 

Total comprehensive income:

 

 

 

 

 

 

 

 

 

 

Profit

-

-

-

-

-

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)

 

Net movements on cash flow hedges

-

-

-

74

(317)

-

(243)

39

(204)

 

Total comprehensive income for the period

-

(964)

-

74

(317)

7,794

6,587

470

7,057

 

Issue of shares

16

-

-

-

-

-

16

-

16

 

Tax on equity-settled share-based payment transactions

-

-

253

-

-

-

253

-

253

 

Dividends paid

-

-

-

-

-

(6,927)

(6,927)

-

(6,927)

 

Acquisition of NCI without a change of control

-

-

-

-

-

-

-

(11)

(11)

 

Disposal of equity investments

-

(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

 

 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                       

 

Condensed Consolidated Balance Sheet

as at 31st October 2020

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

as at

as at

as at     

 

 

31st October

31st October

 30th April

 

 

2020

2019

2020

 

 

£'000

£'000

£'000

Non-current assets

 

 

 

 

Property, plant and equipment

 

80,132

75,279

74,969

Investment in associates

 

853

817

816

Intangible assets

 

24,770

22,483

24,695

Derivative financial assets

 

1,145

-

749

Other financial assets at amortised cost

 

137

361

252

 

 

                 

                 

                 

 

 

107,037

98,940

101,481

 

 

                 

                 

                 

Current assets

 

 

 

 

Inventories

 

45,359

56,913

44,887

Contract assets

 

15,685

9,846

6,558

Trade and other financial assets

 

23,959

24,620

24,486

Other receivables

 

5,669

3,694

4,506

Deferred tax asset

 

151

84

60

Derivative financial assets

 

1,067

2,247

456

Cash and cash equivalents

 

10,915

9,416

9,840

 

 

                 

                 

                 

 

 

102,805

106,820

90,793

 

 

                 

                 

                 

Total assets

 

209,842

205,760

192,274

 

 

                 

                 

                 

Current liabilities

 

 

 

 

Bank overdrafts and interest-bearing liabilities

 

33,661

9,551

14,624

Contract liabilities *

 

25,461

27,068

18,965

Trade payables and other financial liabilities

 

19,724

18,174

23,485

Other payables

 

4,260

6,471

3,298

Deferred consideration

 

-

204

-

Derivative financial liabilities

 

1,011

1,552

1,071

Liabilities for current tax

 

1,881

1,393

1,873

Warranty provision

 

81

235

160

 

 

                 

                 

                 

 

 

86,079

64,648

63,476

 

 

                 

                 

                 

Non-current liabilities

 

 

 

 

Interest-bearing liabilities

 

9,709

28,652

15,599

Derivative financial liabilities

 

474

-

202

Warranty provision

 

414

219

324

Deferred tax liabilities

 

3,822

2,782

3,071

 

 

                 

                 

                 

 

 

14,419

31,653

19,196

 

 

                 

                 

                 

Total liabilities

 

100,498

96,301

82,672

 

 

                 

                 

                 

Net assets

 

109,344

109,459

109,602

 

 

                 

                 

                 

 

 

 

 

 

Equity attributable to equity holders of the parent

 

 

 

Share capital

 

752

736

736

Translation reserve

 

863

1,204

361

Share-based payments reserve

 

5,244

4,991

5,244

Cash flow hedge reserve

 

(431)

1,364

(499)

Cost of hedging reserve

 

(19)

(601)

(743)

Retained earnings

 

98,073

97,321

99,918

 

 

                 

                 

                 

Total equity attributable to equity holders of the parent

104,482

105,015

105,017

Non-controlling interests

 

4,862

4,444

4,585

 

 

                 

                 

                 

Total equity

 

109,344

109,459

109,602

 

 

                 

                 

                 

*      Contract liabilities include advance payments from customers of £24,991,000, with the balance of £470,000 being costs accrued for contracts.

Condensed Consolidated Statement of Cash Flows

for the half year ended 31st October 2020

 

 

 

 

 

Unaudited

Unaudited

Audited

 

Half Year  to 31st October 2020

Half Year to 31st October

2019

Year ended 30th April 

2020

 

£'000

£'000

£'000

Cash flow from operating activities

 

 

 

Profit from continuing operations after tax

4,485

5,594

8,340

Adjustments for:

 

 

 

Depreciation

2,715

3,180

5,874

Depreciation of right-of-use assets - formerly finance leases

159

141

290

Depreciation of right-of-use assets - formerly operating leases

265

248

537

Amortisation of intangible assets

745

484

1,328

Financial expenses

323

449

809

Foreign exchange losses

48

143

203

(Profit) / loss on sale of property, plant and equipment

(32)

2

52

Share of profit of associate companies

(26)

(30)

(66)

Profit on disposal of subsidiary

-

-

(172)

Tax expense

1,289

1,812

3,775

 

                 

                 

                 

Operating profit before changes in working capital and provisions

9,971

12,023

20,970

Decrease / (increase) in inventories

85

(6,430)

4,748

Increase in contract assets

(9,083)

(6,107)

(2,863)

Increase in trade and other receivables

(53)

(849)

(2,549)

Increase in contract liabilities

6,509

8,829

874

(Decrease) / increase in trade and other payables

(3,351)

(522)

2,310

Decrease / (increase) in unhedged derivative balances

181

(126)

(980)

 

                 

                 

                 

Cash inflow from operations

4,259

6,818

22,510

Interest paid

(346)

(320)

(747)

Interest element of lease obligations - formerly finance leases

(14)

(21)

(41)

Interest element of lease obligations - formerly operating leases

(28)

(27)

(56)

Corporation tax paid

(958)

(1,775)

(2,493)

 

                 

                 

                 

Net cash from operating activities

2,913

4,675

19,173

 

 

 

 

Cash flow from investing activities

 

 

 

Proceeds from sale of property, plant and equipment

136

75

139

Acquisition of property, plant and equipment

(7,965)

(3,156)

(6,062)

Additional investment in existing subsidiaries

-

(74)

(83)

Acquisition of intangible assets

(600)

(74)

(1,855)

Development expenditure capitalised

(450)

(297)

(1,105)

 

                 

                 

                 

Net cash outflow from investing activities

(8,879)

(3,526)

(8,966)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issue of share capital

16

16

16

Payment of capital element of finance lease obligations

(524)

(547)

(954)

Payment of capital element of operating lease liabilities

(263)

(167)

(509)

Proceeds from new finance leases

704

54

102

Dividends paid

(6,016)

(6,927)

(6,927)

Dividends paid to non-controlling interests

(125)

-

-

Net proceeds from loans and committed facilities

11,659

11,949

7,556

 

                 

                 

                 

Net cash inflow / (outflow) from financing activities

5,451

4,378

(716)

 

                 

                 

                 

Net (decrease) / increase in cash and cash equivalents

(515)

5,527

9,491

Cash and cash equivalents at beginning of year

9,449

493

493

Effect of exchange rate fluctuations on cash held

109

56

(535)

 

                 

                 

                 

Closing cash and cash equivalents (note 13)

9,043

6,076

9,449

 

                 

                 

                 

Notes

to the Condensed Consolidated Interim Financial Statements

1.         Reporting entity

Goodwin PLC (the "Company") is a company incorporated in England and Wales. The unaudited condensed consolidated interim financial statements of the Company as at and for the six months ended 31st October 2020 comprise the Company, its subsidiaries, and the Group's interests in associates (together referred to as the "Group").

The audited consolidated financial statements of the Group as at and for the year ended 30th April 2020 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 audited consolidated financial statements of the Group as at and for the year ended 30th April 2020.

The comparative figures for the financial year ended 30th April 2020 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.

The Audit Committee has reviewed these unaudited condensed consolidated interim financial statements and has advised the Board of Directors that, taken as a whole, they are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's half year performance.  These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on 16TH December 2020.

3.         Significant accounting policies

The accounting policies applied by the Group in these unaudited condensed consolidated financial statements are the same as those applied by the Group in its audited consolidated financial statements as at and for the year ended 30th April 2020. The changes in accounting policies are to be reflected in the Group's consolidated financial statements as at and for the year ending 30th April 2021.

The following standards and amendments became effective and therefore were adopted by the Group.

· 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 Group has considered the impact on profit, earnings per share and net assets in future periods, of the other new standards and interpretations referred to above, and none of the above standards or interpretations is expected to have a material impact.

New IFRS standards, amendments and interpretations not adopted

The IASB and IFRIC have issued additional standards and amendments which are effective for periods starting after the date of these financial statements. The following standards and amendments have not yet been adopted by the Group:

· Amendments to IFRS 16 - Covid-19 Related Rent Concessions (effective for annual periods beginning on or after 1st June 2020)

· Annual Improvements to IFRS Standards 2018-2000 Cycle (effective for annual periods beginning on or after 1st January 2022)

· Amendments to IFRS 3 - Reference to the Conceptual Framework (effective for annual periods beginning on or after 1st January 2022)

 

4.         Accounting estimates and judgements

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 unaudited 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 audited consolidated financial statements as at and for the year ended 30th April 2020.

The tax charge in the period is based on management's estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period, and the impact of any disallowed costs.

5.         Operating Segments

Products and services from which reportable segments derive their revenues

In accordance with the requirements of IFRS 8 "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:

•              Mechanical Engineering      - casting, machining and general engineering

•              Refractory Engineering        - powder manufacture and mineral processing

Information regarding the Group's operating segments is reported in the following tables. 

Segment Revenue

 

Mechanical Engineering

Refractory Engineering

Sub Total

 

Unaudited Half Year Ended   31st October 2020 

Unaudited Half Year Ended    31st October 2019 

Audited Year  Ended 30th    April  2020

Unaudited Half Year Ended   31st October 2020

Unaudited Half Year Ended   31st October 2019 

Audited Year  Ended  30th    April    2020

Unaudited Half Year Ended   31st October 2020

Unaudited Half Year Ended    31st October 2019 

Audited Year  Ended 30th   April   2020

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Revenue

 

 

 

 

 

 

 

 

 

External sales

43,121

47,244

100,078

19,507

22,846

44,434

62,628

70,090

144,512

Inter-segment sales

9,418

13,085

25,821

4,651

4,757

8,361

14,069

17,842

34,182

 

                

                

                

                

                

                

                

                

                

Total revenue

52,539

60,329

125,899

24,158

27,603

52,795

76,697

87,932

178,694

 

                

                

                

                

                

                

 

 

 

Reconciliation to consolidated revenues:

 

 

 

 

 

 

 

Inter-segment sales

 

 

 

 

 

 

(14,069)

(17,842)

(34,182)

 

 

 

 

 

 

 

                

                

                

Consolidated revenue for the period

 

 

 

 

62,628

70,090

144,512

 

 

 

 

 

 

 

                

                

                

 

Segment profits

 

 

 

 

 

 

 

 

 

 

 

Mechanical Engineering

Refractory Engineering

Sub Total

 

Unaudited Half Year Ended      31st   October  2020 

Unaudited Half Year Ended       31st    October   2019 

Audited Year    Ended   30th      April     2020

Unaudited Half Year Ended   31st October 2020

Unaudited Half Year Ended   31st October 2019 

Audited Year  Ended  30th    April    2020

Unaudited Half Year Ended   31st October 2020

Unaudited Half Year Ended      31st   October 2019 

Audited Year  Ended 30th   April   2020

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Profits

 

 

 

 

 

 

 

 

 

Segment result including associates

4,587

5,419

8,065

2,309

3,446

7,034

6,896

8,865

15,099

 

                 

                 

                 

                

                

                

 

 

 

Group administration costs

 

 

 

 

(799)

(1,010)

(2,175)

Group finance and expenses

 

 

 

 

(323)

(449)

(809)

 

 

 

 

 

 

 

                

                

                

Consolidated profit before tax for the period

 

 

 

 

5,774

7,406

12,115

Tax

 

 

 

 

(1,289)

(1,812)

(3,775)

 

 

 

 

 

 

 

                

                

                

Consolidated profit after tax for the period

 

 

 

 

4,485

5,594

8,340

 

 

 

 

 

 

 

                

                

                

 

Segment Assets and Liabilities

 

Segmental total assets

Segmental total liabilities

Segmental net assets

 

Unaudited Half Year Ended      31st   October  2020 

Unaudited Half Year Ended       31st    October   2019 

Audited Year    Ended   30th      April     2020

Unaudited Half Year Ended   31st October 2020

Unaudited Half Year Ended   31st October 2019 

Audited Year  Ended  30th    April    2020

Unaudited Half Year Ended   31st October 2020

Unaudited Half Year Ended      31st   October 2019 

Audited Year  Ended 30th   April   2020

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Mechanical Engineering

105,602

110,736

95,193

78,068

80,245

72,207

27,534

30,491

22,986

Refractory Engineering

42,239

44,191

41,962

21,643

23,125

22,850

20,596

21,066

19,112

 

                

                

                

                

                

                

                

                

                

Sub total reportable segment

147,841

154,927

137,155

99,711

103,370

95,057

48,130

51,557

42,098

 

                

                

                

                

                

                

 

 

 

Goodwin PLC (the Company) net assets

 

 

 

 

76,944

73,384

83,415

Elimination of Goodwin PLC investments

 

 

 

 

(25,801)

(25,301)

(25,801)

Goodwill

 

 

 

 

10,071

9,819

9,890

 

 

 

 

 

 

 

                

                

                

Consolidated total net assets

 

 

 

 

109,344

109,459

109,602

 

 

 

 

 

 

 

                

                

                

Segmental property, plant and equipment (PPE) capital expenditure (owned and finance lease assets)

 

 

 

 

Goodwin PLC

 

 

 

 

4,701

1,456

2,824

Mechanical Engineering

 

 

 

 

2,489

1,249

2,655

Refractory Engineering

 

 

 

 

1,069

259

633

 

 

 

 

 

 

 

                

                

                

 

 

 

 

 

8,259

2,964

6,112

 

 

 

 

 

 

 

                

                

                

 

6.     Geographical segments

 

Half Year Ended 31st October 2020

Half Year Ended 31st October 2019

 

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

 

Revenue

Operational net assets

Non-current assets

PPE capital expenditure

Revenue

Operational net assets

Non-current assets

PPE capital expenditure

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

UK

17,928

72,558

85,076

6,638

16,836

73,865

80,895

2,623

Rest of Europe

9,598

9,208

3,515

183

10,852

6,990

3,496

80

USA

5,557

-

-

-

6,787

-

-

-

Pacific Basin

13,267

14,734

8,875

615

16,377

15,464

7,528

122

Rest of World

16,278

12,844

9,571

823

19,238

13,140

7,021

139

 

                 

                 

                 

                 

                 

                 

                 

                 

Total

62,628

109,344

107,037

8,259

70,090

109,459

98,940

2,964

 

                 

                 

                 

                 

                 

                 

                 

                 

 

 

 

 

 

Year Ended 30th April 2020

 

 

 

 

 

Audited

Audited

Audited

Audited

 

 

 

 

 

Revenue

Operational net assets

Non-current assets

PPE capital expenditure

 

 

 

 

 

£'000

£'000

£'000

£'000

UK

 

 

 

 

39,609

76,467

84,198

5,148

Rest of Europe

 

 

 

 

20,004

8,346

3,439

173

USA

 

 

 

 

12,749

-

-

-

Pacific Basin

 

 

 

 

34,844

13,513

7,132

225

Rest of World

 

 

 

 

37,306

11,276

6,712

566

 

 

 

 

 

                 

                 

                 

                 

Total

 

 

 

 

144,512

109,602

101,481

6,112

 

 

 

 

 

                 

                 

                 

                 

 

7.         Revenue

The Group's revenue is derived from contracts with customers.  The following tables provide an analysis of revenue by geographical market and by product line.

 

 

Mechanical Engineering

Refractory Engineering

Total

 

 

£'000

£'000

£'000

Primary Geographical markets

 

 

 

 

 

 

 

 

 

Unaudited half year ended 31st October 2020

 

 

 

 

UK

 

12,548

5,380

17,928

Rest of Europe

 

6,677

2,921

9,598

USA

 

5,444

113

5,557

Pacific Basin

 

4,698

8,569

13,267

Rest of World

 

13,754

2,524

16,278

 

 

                 

                 

                 

Total

 

43,121

19,507

62,628

 

 

                 

                 

                 

 

 

 

 

 

 

                   

 

 

 

Mechanical Engineering

Refractory Engineering

Total

 

 

£'000

£'000

£'000

Primary Geographical markets

 

 

 

 

 

 

 

 

 

Unaudited half year ended 31st October 2019

 

 

 

 

UK

 

11,584

5,252

16,836

Rest of Europe

 

7,053

3,799

10,852

USA

 

6,735

52

6,787

Pacific Basin

 

6,988

9,389

16,377

Rest of World

 

14,884

4,354

19,238

 

 

                 

                 

                 

Total

 

47,244

22,846

70,090

 

 

                 

                 

                 

 

 

 

 

 

Product lines

 

 

 

 

 

 

 

 

 

Unaudited half year ended 31st October 2020

 

 

 

 

Standard products and consumables

 

4,487

19,507

23,994

Minimum period contracts for goods and services

 

1,626

-

1,626

Bespoke engineered products - over time

 

27,306

-

27,306

Bespoke engineered products - point in time

 

9,702

-

9,702

 

 

                 

                 

                 

Total

 

43,121

19,507

62,628

 

 

                 

                 

                 

 

 

 

 

 

Unaudited half year ended 31st October 2019

 

 

 

 

Standard products and consumables

 

5,131

22,846

27,977

Minimum period contracts for goods and services

 

2,171

-

2,171

Bespoke engineered products - over time

 

25,146

-

25,146

Bespoke engineered products - point in time

 

14,796

-

14,796

 

 

                 

                 

                 

Total

 

47,244

22,846

70,090

 

 

                 

                 

                 

 

 

 

 

 

 

8.         Dividends

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

 

 

 

Unaudited

Unaudited

Audited

 

 

Half Year to

Half Year to

Year Ended

 

 

31st October 2020

31st October 2019

30th April 2020

 

 

£'000

£'000

£'000

Equity Dividends Paid:

 

 

 

 

Ordinary dividends paid during the period in respect of the year ended 30th April 2020 (81.71p per share)

 

6,016

-

-

Ordinary dividends paid during the period in respect of the year ended 30th April 2019 (96.21p per share)

 

-

6,927

6,927

 

 

                 

                 

                 

Total dividends paid during the period

 

6,016

6,927

6,927

 

 

                 

                 

                 

 

 

 

 

 

 

9.         Earnings Per Share

The calculation of the basic earnings per ordinary share is based on the number of ordinary shares in issue. The weighted average number of ordinary shares in issue during the six months ended 31st October 2020 was 7,364,087 (31st October 2019: 7,213,304).  The relevant profits attributable to ordinary shareholders were £4,171,000, (six months ended 31st October 2019: £5,260,000).

There is a share option scheme in place for the Directors of the Company under the Company's Equity Long Term Incentive Plan (LTIP), based on the Company exceeding a target growth in the total shareholder return of the Company over the period from 1st May 2016 to 30th April 2019.  Under the scheme, a maximum of 489,600 share options vested at 1st May 2019 of which 163,200 were exercised during this period and 163,200 during the previous six month period. The total number of shares used as the denominator for the diluted earnings per share is 7,526,719 (half year ended 31st October 2019: 7,538,727; year ended 30th April 2020: 7,613,654).

10.       Capital Management, Issuance and Repayment of Debt

At 31st October 2020 the capital utilised was £135,603,000, as shown below:

 

 

 

Unaudited

Unaudited

Audited

 

 

as at

as at

as at

 

 

31st October 2020

31st October 2019

30th April 2020

 

 

£'000

£'000

£'000

 

 

 

 

 

Cash and cash equivalents

 

(10,915)

(9,416)

(9,840)

Lease liabilities - finance leases (note 14)

 

1,451

1,684

1,256

Bank loans and committed facilities (note 14)

 

38,713

31,390

27,010

Bank overdrafts (note 14)

 

1,872

3,340

391

Deferred consideration

 

-

204

-

 

 

                 

                 

                 

Net debt

 

31,121

27,202

18,817

Total equity attributable to equity holders of the parent

 

104,482

105,015

105,017

 

 

                 

                 

                 

Capital

 

135,603

132,217

123,834

 

 

                 

                 

                 

 

11.       Property, Plant and Equipment

 

 

 

 

 

 

 

 

 

 

Unaudited

Unaudited

Unaudited

Unaudited

 

 

as at

as at

as at

as at

 

 

31st October 2020

31st October 2020

31st October 2020

31st October 2020

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Owned assets

Right-of-use assets - formerly finance leases

Right-of-use assets - formerly operating leases

Total

Net book value at the beginning of the period

 

69,626

3,805

1,538

74,969

Additions

 

7,498

761

-

8,259

Disposals (at net book value)

 

(104)

-

-

(104)

Depreciation

 

(2,715)

(159)

(265)

(3,139)

Exchange adjustment

 

99

19

29

147

 

 

                 

                 

                 

                 

Net book value at the end of the period

 

74,404

4,426

1,302

80,132

 

 

                 

                 

                 

                 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

Unaudited

Unaudited

Unaudited

 

 

as at

as at

as at

as at

 

 

31st October 2019

31st October 2019

31st October 2019

31st October 2019

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Owned assets

Right-of-use assets - formerly finance leases

Right-of-use assets - formerly operating leases

Total

 

 

 

 

 

 

Net book value at the beginning of the period

 

74,106

-

-

74,106

Balance recognised on transition to IFRS 16

 

-

-

1,055

1,055

Additions

 

2,887

77

929

3,893

Transfer to right-of-use assets - on transition

 

(3,959)

3,959

-

-

Disposals (at net book value)

 

(77)

-

-

(77)

Depreciation

 

(3,180)

(141)

(248)

(3,569)

Exchange adjustment

 

(162)

(10)

43

(129)

 

 

                 

                 

                 

                 

Net book value at the end of the period

 

69,615

3,885

1,779

75,279

 

 

                 

                 

                 

                 

 

 

 

 

 

 

 

12.       Intangible assets

 

 

 

Unaudited

Unaudited

 

 

as at

as at

 

 

31st October 2020

31st October 2019

 

 

£'000

£'000

 

 

 

 

Net book value at the beginning of the period

 

24,695

22,354

Additions

 

564

535

Amortisation

 

(745)

(484)

Exchange adjustment

 

256

78

 

 

                 

                 

Net book value at the end of the period

 

24,770

22,483

 

 

                 

                 

 

 

 

 

 

13.       Cash and cash equivalents

 

 

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

as at

as at

as at

 

 

31st October 2020

31st October 2019

30th April 2020

 

 

£'000

£'000

£'000

 

 

 

 

 

Cash and cash equivalents per balance sheet

 

10,915

9,416

9,840

Bank overdrafts

 

(1,872)

(3,340)

(391)

 

 

                 

                 

                 

Cash and cash equivalents per cash flow statement

 

9,043

6,076

9,449

 

 

                 

                 

                 

 

14.       Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

as at

as at

as at

 

 

31st October 2020

31st October 2019

30th April 2020

 

 

£'000

£'000

£'000

 

 

 

 

 

Bank overdrafts

 

1,872

3,340

391

Bank loans and committed facilities

 

30,749

4,740

12,750

Lease liabilities - formerly finance leases

 

731

948

992

Lease liabilities - formerly operating leases

 

309

523

491

 

 

                 

                 

                 

Due within one year

 

33,661

9,551

14,624

 

 

                 

                 

                 

 

 

Bank loans and committed facilities

 

7,964

26,650

14,260

Lease liabilities - formerly finance leases

 

720

736

264

Lease liabilities - formerly operating leases

 

1,025

1,266

1,075

 

 

                 

                 

                 

Due after more than one year

 

9,709

28,652

15,599

 

 

                 

                 

                 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank overdrafts

 

1,872

3,340

391

Bank loans and committed facilities

 

38,713

31,390

27,010

Lease liabilities - formerly finance leases

 

1,451

1,684

1,256

Lease liabilities - formerly operating leases

 

1,334

1,789

1,566

 

 

                 

                 

                 

Total

 

43,370

38,203

30,223

 

 

                 

                 

                 

 

15.       Total Financial Assets and Financial Liabilities

The following table sets out the Group's accounting classification of its financial assets and financial liabilities, and their carrying amounts at 31st October 2020.  The carrying amount is a reasonable approximation of fair value for all financial assets and financial liabilities.

 

 

 

 

 

 

 

 

 

 

Fair value - hedging instruments

FVTPL

Amortised cost

Total carrying amount / fair value amount

 

 

£'000

£'000

£'000

£'000

Financial assets measured at fair value

 

 

 

 

 

Forward exchange contracts used for hedging

 

1,152

-

-

1,152

Other forward exchange contracts

 

-

1,060

-

1,060

 

 

                 

                 

                 

                 

 

 

1,152

1,060

-

2,212

 

 

                 

                 

                 

                 

Financial assets not measured at fair value

 

 

 

 

 

Cash and cash equivalents

 

-

-

10,915

10,915

Contract assets

 

-

-

15,685

15,685

Trade receivables and other financial assets

 

-

-

24,096

24,096

 

 

                 

                 

                 

                 

 

 

-

-

50,696

50,696

 

 

                 

                 

                 

                 

Financial liabilities measured at fair value

 

 

 

 

 

Forward exchange contracts used for hedging

 

753

-

-

753

Other forward exchange contracts

 

-

732

-

732

 

 

                 

                 

                 

                 

 

 

753

732

-

1,485

 

 

                 

                 

                 

                 

 

 

 

 

 

 

Financial liabilities not measured at fair value

 

 

 

 

 

Bank overdrafts

 

-

-

1,872

1,872

Bank loans

 

-

-

38,713

38,713

Finance lease liabilities

 

-

-

1,451

1,451

Contract liabilities

 

-

-

25,461

25,461

Trade payables and other financial liabilities

 

-

-

19,724

19,724

 

 

                 

                 

                 

                 

 

 

-

-

87,221

87,221

 

 

                 

                 

                 

                 

 

 

 

 

 

 

 

The forward exchange contract assets and liabilities fair values in the above table are derived using Level 2 inputs as defined by IFRS 7 as detailed in the paragraph below.

IFRS 7 requires that the classification of financial instruments at fair value be determined by reference to the source of inputs used to derive the fair value. This classification uses the following three-level hierarchy:  Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

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