Goodwin Regulatory News (GDWN)

PRELIMINARY ANNOUNCEMENT

Goodwin PLC today announces its preliminary results for the year to 30th April 2012.

Chairman's Statement

I am pleased to report that the pre-tax profit for the Group for the twelve month period ending 30th April 2012 was £12.3 million (2011: £8.1 million), an increase of 51% on a revenue of £107.9 million (2011: £92.9 million) which is up 16.15% on the figures reported for the same period last financial year. The Directors propose a dividend of 32.082p (2011: 29.166p).

The gross profit earned of £30.8 million was higher by 21.3% than for the previous financial year. This improvement in gross profit and net pre-tax profit earned stems from the recovery in performance of our two valve companies, especially Goodwin International. The foundry also reported record profits.

The Group order work load as at 30th April 2012 was 22% higher than the same period last year and stood at £78 million which still represents about seven months work at higher levels of activity. The Group, whilst being diverse, still focuses much attention on the world wide energy industries be they oil and gas or high efficiency power generation. Both these two sectors by definition have a long term future as the world population continues to grow and attain higher living standards especially in the Pacific Basin and also as the more mature markets strive to increase the efficiency of their power generation capacity and reduce their CO2 output into the atmosphere as well as replace ageing facilities.

The decision to only increase the dividend by 10% to £2.31 million will assist the company in being able to finance three significant projects that will be started subject to approval of the grant applications that we have submitted. The first grant application, which is to the Employer Ownership Pilot Fund, is to set up a much larger apprentice training school that will train 125 engineering apprentices to levels 3 and 4 over the next five years. The second application which is a Regional Growth Fund application is to expand the clean activity of the foundry on our adjacent 7.9 acre site as well as to start a new valve company and build four office/ factory units on the same site. The third application is for a CCS (Carbon Capture & Storage) grant where our foundry will develop further the manufacturing capability of two super nickel alloys for use in high temperature gas and steam turbines, on which we will advise you further at the half year.

As a key performance indicator, R & D continues within all Group companies whether it is to reduce manufacturing cost or develop new products that we consider there is a significant need for in the market over the next ten or more years. The Group considers the level of R & D expenditure sustainable and this year it comprised 7.5% of pre-tax profits, appropriate for securing the long term growth of the group.

As detailed in note 20 to the financial statements to be published shortly, at 30th April 2012 our capital base was £60 million, an increase of £3 million over the previous year, and the Group had unutilised bank facilities of £15 million. With Group activity levels likely to be significantly higher this coming financial year, gearing levels (currently at 33%) and cash flow remains under pressure due to the need for increased levels of working capital to finance higher levels of debtors and work in progress as well as the funding needed for the three projects should they proceed. A decision will be taken in the second quarter as to whether the Group takes on additional lines of credit and maintains a safety buffer on our banking facilities or whether the increased working capital needs are funded from post tax profits. The former route will be the more likely one.

We are once again grateful to our UK and overseas employees for their hard work in improving the performance of the Group.

Consolidated income statement

for the year ended 30th April 2012

Consolidated statement of comprehensive income

for the year ended 30th April 2012

Consolidated statement of changes in equity

for the year ended 30th April 2012

Consolidated balance sheet

at 30th April 2012

Consolidated cash flow statement

for the year ended 30th April 2012

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. As shown in Note 2 to the financial statements to be published shortly, the Group operates across a range of geographical regions, and its turnover is split across the UK, Europe, North America, the Pacific Basin and the rest of the world. This spread reduces risk in any one territory. Similarly, the Group operates in both mechanical engineering 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 is set out in note 20 to the financial statements to be published shortly.

This report contains 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.

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

We confirm that to the best of our knowledge:

·; The financial statements to be published shortly, 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 Directors' Report to be published shortly includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

J. W. Goodwin Chairman

R. S. Goodwin Managing Director

J. Connolly Director

F. A. Gaffney Director

M. S. Goodwin Director

A. J. Baylay Director

S. R. Goodwin Director

RESULTS FOR THE YEAR ENDED 30TH APRIL 2012

NOTES

Basis of preparation

Goodwin PLC is a company incorporated in the UK.

The Group's financial statements have been approved by the Directors and prepared in accordance with International Financial Reporting Standards as adopted by the European Union (adopted IFRSs'). The comparative results for the year ended 30th April 2011 have also been prepared on this basis. The comparative results for the year ended 30th April 2011 have been restated as detailed in Note 1. The following new accounting standards and interpretations have been adopted in the current financial year as they are mandatory for the year ended 30th April 2012:

- IAS24 (Revised) - Related Party Transactions (effective for annual periods beginning on or after 1st January 2011)

- Annual Improvement Projects to IFRS's

- Amendments to IAS 1 Presentation of statement of changes in equity (effective for annual periods beginning on or after 1st January 2011)

The adoption of these standards, amendments and interpretations has not had a material impact on the Group's financial statements.

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

- Amendments to IAS 12 - Deferred tax and recovery of the underlying assets (effective for annual periods beginning on or after 1st January 2012)

- Amendments to IAS 1- Presentation of items of other comprehensive income (effective for periods beginning on or after 1st July 2012)

The Group does not anticipate that the adoption of the above amendments will have a material effect on its financial statements on initial adoption.

The financial information previously set out does not constitute the Company's statutory accounts for the years ended 30th April 2012 or 2011 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their report was:

i. unqualified;

ii. did not include references 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.

Copies of the 2012 accounts are expected to be posted to shareholders within the next two weeks 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.

Note 1 Prior year adjustment

Following discussions with the Financial Reporting Review Panel, the Group has reviewed its accounting treatment of intangibles. This has resulted in the Group now recognising deferred taxation liabilities on intangible assets arising on acquisitions in accordance with IAS 12 "Income Taxes", including intangible assets acquired in previous years which has resulted in a prior year adjustment. 

The Group has also taken the opportunity to review its measurement of intangible assets in foreign currency acquisitions. In previous years, the measurement of intangible assets on acquisitions was initially recognised at the sterling equivalent using the exchange rate at the time of the original transaction but then continued to be measured using that original exchange rate. The intangible assets on acquisitions are now being measured to the sterling equivalent at each balance sheet date using the exchange rate at each balance sheet date in accordance with the Group's accounting policy. This correction has also resulted in a prior year adjustment.

The effect of these prior year adjustments has been to increase net assets by £1,138,000 at 30th April 2010 and by £1,345,000 at 30th April 2011. The effect on profit and loss reserves has been to increase profit and loss reserves at 30th April 2010 by £122,000, and increase reported profit for 2011 by £36,000, being additional amortisation of intangible assets of £57,000, and a decrease in the deferred tax charge by £93,000. The earnings per share for the year ended 30th April 2011 has been restated from 50.39p to 50.89p.

Effect of prior year adjustments on previously reported balance sheets

Other disclosure adjustments to figures previously reported in the 2011 financial statements:

Following discussion with the Financial Reporting Review Panel, as a part of the review of the 2011 figures, the Group has made the following disclosure adjustments to previously reported 2011 amounts in the 2011 financial statements: warranty provisions of £1,641,000 were previously included in accruals but are now shown separately in the balance sheet; tax paid for 2011 was previously disclosed in the cashflow statement at £2,517,000 but has been restated by £878,000 to £3,395,000, with a restatement of £878,000 in the increase in trade and other payables from £1,653,000 to £2,531,000; the total of £765,000 previously disclosed for foreign exchange (gains)/losses of £48,000 plus gains on derivatives at fair value through profit and loss of £717,000 in 2011, have been restated to £531,000 and £234,000 respectively in note 3 to the accounts to be published shortly; the split of total capital expenditure by area in the segmental analysis has been restated. These disclosure adjustments had no effect on income, total equity or net assets.

Note 2 Segmental information

Products and services from which reportable segments derive their revenues

For the purposes of management reporting to the chief operating decision maker, the Group is organised into two reportable operating divisions: mechanical engineering and refractory engineering. Financial information for each operating division is also available in a disaggregated form in line with the identified cash generating units. Segment assets and liabilities include items directly attributable to segments as well as those that can be allocated on a reasonable basis. 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 of segment performance are as follows;

·; Mechanical Engineering - casting, machining and general engineering design

·; Refractories Engineering - powder manufacture and mineral processing

Information regarding the Group's operating segments is reported below. Associates are included in Refractories Engineering.

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 ('PLC').

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.

Note 3

The Directors propose the payment of an ordinary dividend of 32.082p per ordinary share (2011: ordinary dividend of 29.166p). The proposed dividend will be paid on 15th October 2012 to shareholders on the register at the close of business on 14h September 2012.

Note 4

The earnings per ordinary share has been calculated on profit after taxation for the year attributable to equity holders of the parent of £8,952,000 (2011: £3,664,000 restated see note 1) 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.

Note 5

The Annual General Meeting will be held at 10.30 a.m. on 11th October 2012 at Crewe Hall, Weston Road, Crewe, Cheshire CW1 6UZ.

END