Last checked at 21 Aug 2009 09:30
ANNOUNCEMENT TO BE RELEASED ON FRIDAY, 21ST AUGUST 2009
PRELIMINARY ANNOUNCEMENT
Goodwin PLC today announces its preliminary results for the year to 30th April 2009.
CHAIRMAN'S STATEMENT
I am pleased to report annual pre-tax profits for the Group for the year to 30th April 2009 of £13.1 million (2008: £9.8 million), an increase of 33% on a revenue of £100.7 million (2008: £80.6 million) which is up 24.9 % on the previous year.
The directors propose an ordinary dividend of 27.777p per share (2008: 23.004p), an increase of 20.7 %. To reward our shareholders for their loyalty and for accepting a prudent dividend policy over the years that has allowed the company to fund significant capital investments, which in themselves have enabled the Group to successfully grow both in the UK and overseas, the Board is also recommending an extraordinary dividend of 27.777p per share. The timing of this additional dividend payment will allow shareholders to maximise their position in relation to the 10% tax increase that the Government has implemented on dividends to help finance the banking crisis costs.
The results for the year were accomplished by the Group's continued high level of sales into the oil and gas markets, as well as the power generation markets worldwide. The results also benefitted from the profits from our recently acquired German valve manufacturing subsidiary, Noreva GmbH, which more than doubled its pre-tax profits to £3.1 million in its second full year of trading as part of the Group.
The new financial year commencing 1st May 2009 was started with order books at £57 million which should allow our companies to have the opportunity of achieving a good performance in the new financial year, but it is unlikely due to the global trading environment that there will be any growth in pre-tax profit for the year ending 30th April 2010.
I had previously reported in my year end statement dated August 2008 and the October 2008 half year interim statement that it was policy to reduce the group debt levels to zero in the near future. I am pleased to say that with the focused efforts of our management team, this goal was achieved by our year end, 30th April 2009. We embarked on this debt reduction programme as, for more than a year, our Board had become increasingly concerned about our main clearing bank. This concern turned out to be well founded as towards the end of 2008, despite the Group's excellent reported financial performance, the same facilities as we had previously enjoyed were not on offer and, although we had banked with them since 1903, we changed banks. Our new banks, Barclays and Lloyds TSB, who offered the company the facilities it requested, are now our main bankers.
This year we decided to avail ourselves of £12 million of committed facilities rather than relying solely on utilising on demand facilities as we were unsure that should we need facilities in the future that they would be available to us in these uncertain economic conditions. As a key performance indicator it can be seen that the cash flow generated from operating activities by the Group to 30th April 2009 was £14.28 million (2008: £11.20 million). The policy decision to maximise cash flow rather than profits will undoubtedly result in a fall off in growth in pre-tax profits over the next 18 months, but the Board think that it is more important to trade with a strong balance sheet in the current global financial climate.
The consolidation of the refractory engineering group of companies was completed by 30th April 2009, with the newly acquired UK SRS manufacturing activity consolidated into Hoben International and Goodwin Refractory Services and the completion of the Gold Star Brazil manufacturing plant and offices. As yet, the synergy benefits of purchasing SRS Holdings are hardly visible in profit terms as the jewellery casting and precision casting for car parts industries are overall at least 22 % down worldwide this year and we will have to be patient for the sales input of these companies to recover when these markets start recovering which we expect will commence in the first quarter of 2011. We are, however, expecting the profits of the refractory engineering division to significantly increase this financial year now that we are able to focus on running the businesses rather than consolidating them.
In September 2008 Jeff Dyer, who had been a Director of Goodwin PLC for 12 years, retired. He had worked for the Goodwin Group for over 44 years with his focus in the last 8 years on Easat Antennas. The Board takes the opportunity of thanking him for his work over the years which helped move the Group forward and we wish him much happiness in his retirement.
The Board again wishes to thank the employees for their never ending efforts in pushing the Group performance forward.
J. W. GOODWIN
Chairman
Consolidated income statement
for the year ended 30th April 2009
| 2009 | 2008 | ||
| £000 | £000 | ||
| Continuing operations | |||
| Revenue | 100,684 | 80,578 | |
| Cost of sales | (71,985) | (58,201) | |
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| Gross profit | 28,699 | 22,377 | |
| Distribution expenses | (4,805) | (2,842) | |
| Administrative expenses | (10,072) | (8,873) | |
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| Operating profit | 13,822 | 10,662 | |
| Financial expenses | (878) | (844) | |
| Share of profit of associate company | 171 | - | |
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| Profit before taxation | 13,115 | 9,818 | |
| Tax on profit | (4,003) | (3,035) | |
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| Profit after taxation | 9,112 | 6,783 | |
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| Attributable to: | |||
| Equity holders of the parent | 8,779 | 6,562 | |
| Minority interest | 333 | 221 | |
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| Profit for the year | 9,112 | 6,783 | |
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| Basic and diluted earnings per ordinary share | 121.93p | 91.14p | |
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Consolidated statement of recognised income and expense
for the year ended 30th April 2009
| 2009 | 2008 | ||
| £000 | £000 | ||
| Foreign exchange translation differences | 1,090 | 109 | |
| Effective portion of changes in fair value of cash flow hedges | (7,131) | (1,218) | |
| Change in fair value of cash flow hedges transferred to profit or loss | 922 | (838) | |
| Tax recognised on income and expenses recognised directly in equity | 1,739 | 595 | |
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| Net expense recognised directly in equity | (3,380) | (1,352) | |
| Profit for the year | 9,112 | 6,783 | |
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| Total recognised income and expense | 5,732 | 5,431 | |
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| Total recognised income and expense for the period is attributable to: | |||
| Equity holders of the parent | 5,124 | 5,210 | |
| Minority interest | 608 | 221 | |
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| 5,732 | 5,431 | ||
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Consolidated balance sheet
at 30th April 2009
| 2009 | 2008 | ||
| £000 | £000 | ||
| Non-current assets | |||
| Property, plant and equipment | 20,689 | 16,376 | |
| Investment in associate | 673 | - | |
| Intangible assets | 10,837 | 5,331 | |
| Deferred tax asset | 606 | - | |
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| 32,805 | 21,707 | ||
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| Current assets | |||
| Inventories | 16,530 | 15,038 | |
| Trade and other receivables | 21,921 | 20,620 | |
| Derivative financial assets | 708 | 154 | |
| Cash and cash equivalents | 10,237 | 1,812 | |
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| 49,396 | 37,624 | ||
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| Total assets | 82,201 | 59,331 | |
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| Current liabilities | |||
| Bank overdraft | 1,057 | 1,532 | |
| Other interest-bearing loans and borrowings | 458 | 2,549 | |
| Trade and other payables | 25,203 | 23,552 | |
| Derivative financial liabilities | 9,509 | 1,873 | |
| Liabilities for current tax | 2,618 | 1,613 | |
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| 38,845 | 31,119 | ||
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| Non-current liabilities | |||
| Other interest-bearing loans and borrowings | 8,307 | 830 | |
| Deferred consideration | 5,562 | 1,607 | |
| Deferred tax liabilities | - | 968 | |
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| 13,869 | 3,405 | ||
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| Total liabilities | 52,714 | 34,524 | |
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| Net assets | 29,487 | 24,807 | |
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| Equity attributable to equity holders of the parent | |||
| Share capital | 720 | 720 | |
| Translation reserve | 957 | 142 | |
| Cash flow hedge reserve | (5,247) | (777) | |
| Retained earnings | 30,575 | 23,447 | |
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| Total equity attributable to equity holders of the parent | 27,005 | 23,532 | |
| Minority interest | 2,482 | 1,275 | |
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| Total equity | 29,487 | 24,807 | |
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Consolidated cash flow statement
at 30th April 2009
| 2009 | 2008 | ||
| £000 | £000 | ||
| Cash flow from operating activities | |||
| Profit from continuing operations after tax | 9,112 | 6,783 | |
| Adjustments for: | |||
| Depreciation | 2,263 | 1,831 | |
| Amortisation of intangible assets Goodwill write off | 475 37 | 458 - | |
| Financial expense | 878 | 844 | |
| (Profit) / loss on sale of property, plant and equipment | (725) | 7 | |
| Share of profit of associate company | (171) | - | |
| Tax expense | 4,003 | 3,035 | |
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| Operating profit before changes in working capital and provisions | 15,872 | 12,958 | |
| Decrease / ( Increase) in trade and other receivables | 1,028 | (3,428) | |
| Increase in inventories | (308) | (213) | |
| Increase in trade and other payables (excluding payments on account) | 356 | 2,989 | |
| Increase in payments on account | 933 | 2,199 | |
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| Cash generated from operations | 17,881 | 14,505 | |
| Interest paid | (759) | (684) | |
| Corporation tax paid | (2,788) | (2,557) | |
| Interest element of finance lease obligations | (54) | (62) | |
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| Net cash from operating activities | 14,280 | 11,202 | |
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| Cash flow from investing activities | |||
| Proceeds from sale of property, plant and equipment | 769 | 12 | |
| Acquisition of property, plant and equipment | (7,157) | (3,245) | |
| Acquisition of intangible assets | (255) | (594) | |
| Acquisition of subsidiary net of cash acquired | (2,788) | (145) | |
| Dividends received from associate company | 226 | - | |
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| Net cash from investing activities | (9,205) | (3,972) | |
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| Cash flows from financing activities | |||
| Payment of capital element of finance lease obligations | (416) | (518) | |
| Dividends paid | (1,651) | (1,325) | |
| Proceeds from / (repayment of) loans | 5,589 | (3,056) | |
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| Net cash from financing activities | 3,522 | (4,899) | |
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| Net increase in cash and cash equivalents | 8,597 | 2,331 | |
| Opening cash and cash equivalents | 280 | (2,081) | |
| Effect of exchange rate fluctuations on cash held | 303 | 30 | |
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| Closing cash and cash equivalents | 9,180 | 280 | |
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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. 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
The Directors, set out below, confirm that to their best knowledge:
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
the management report incorporated into and referenced from the Directors' Report shown in the Annual Financial Statements 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.
JW Goodwin, Chairman
RS Goodwin, Managing Director
FA Gaffney, Director
J Connolly, Director.
MS Goodwin, Director
RESULTS FOR THE YEAR ENDED 30TH APRIL 2009
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 2008 have also been prepared on this basis.
2. The Group is managed as one business but 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.
| 2009 | 2008 | |||||
| Revenue | Operational assets | PPE Capital expenditure | Revenue | Operational assets | PPE Capital Expenditure | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| UK | 17,022 | 20,323 | 3,886 | 15,325 | 20,622 | 4,077 |
| Rest of Europe | 23,269 | 2,816 | 379 | 21,686 | 936 | 401 |
| USA | 12,313 | - | - | 7,084 | - | - |
| Pacific Basin | 27,019 | 4,146 | 102 | 16,123 | 1,288 | 86 |
| Rest of world | 21,061 | 2,202 | 1,604 | 20,360 | 1,961 | 209 |
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| Total | 100,684 | 29,487 | 5,971 | 80,578 | 24,807 | 4,773 |
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3. The Directors propose the payment of an ordinary dividend of 27.777p per share (2007: 23.004p) and an extraordinary dividend of 27.777p (2008: £nil). The proposed dividend will be paid on 16th October 2009 to shareholders on the register at the close of business on 18th September 2009.
4. The earnings per ordinary share has been calculated on profit after taxation for the year attributable to equity holders of the parent of £8,779,000 (2008: £6,562,000) 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 14th October 2009 at Crewe Hall, Weston Road, Crewe, Cheshire CW1 6UZ.
7. Copies of the 2009 accounts are expected to be posted to shareholders in the week commencing 24th August 2009 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 2009 or 2008 but is derived from those accounts. Statutory accounts for 2008 have been delivered to the registrar of companies, and those for 2009 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