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 30^th 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 30^th 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
Tax					(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.

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