Last checked at 16 Dec 2020 07:00
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 |
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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:
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| Unaudited Half Year to | Unaudited Half Year to | Audited Year Ended |
| 31st October | 31st October | 30th April |
| 2020 | 2019 | 2020 |
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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 |
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Gearing % (excluding deferred consideration) | 29.8 | 25.7 | 17.9 |
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Non cash charges (in £millions) |
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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 |
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Total non cash charges (in £ millions) | 3.6 | 3.8 | 7.5 |
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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 |
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Revenue | 62,628 | 70,090 | 144,512 |
Cost of sales | (46,404) | (50,610) | (109,743) |
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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) |
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Operating profit | 6,071 | 7,825 | 12,858 |
Financial expenses | (323) | (449) | (809) |
Share of profit of associate companies | 26 | 30 | 66 |
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Profit before taxation | 5,774 | 7,406 | 12,115 |
Tax on profit | (1,289) | (1,812) | (3,775) |
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Profit after taxation | 4,485 | 5,594 | 8,340 |
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Attributable to: |
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Equity holders of the parent | 4,171 | 5,260 | 7,866 |
Non-controlling interests | 314 | 334 | 474 |
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Profit for the period | 4,485 | 5,594 | 8,340 |
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Basic earnings per ordinary share (Note 9) | 56.64p | 72.92p | 107.93p |
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Diluted earnings per ordinary share (Note 9) | 55.42p | 69.77p | 103.31p |
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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 |
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Profit for the period | 4,485 | 5,594 | 8,340 |
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Other comprehensive income / (expense) |
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Items that are or may be reclassified subsequently to the income statement |
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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 |
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Other comprehensive income / (expense) for the period, net of income tax | 1,382 | 1,496 | (1,283) |
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Total comprehensive income for the period | 5,867 | 7,090 | 7,057 |
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Attributable to: |
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Equity holders of the parent | 5,465 | 6,761 | 6,587 |
Non-controlling interests | 402 | 329 | 470 |
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| 5,867 | 7,090 | 7,057 |
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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) |
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Balance at 1st May 2020 | 736 | 361 | 5,244 | (499) | (743) | 99,918 | 105,017 | 4,585 | 109,602 |
Total comprehensive income: |
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Profit | - | - | - | - | - | 4,171 | 4,171 | 314 | 4,485 |
Other comprehensive income: |
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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) |
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Balance at 31st October 2020 | 752 | 863 | 5,244 | (431) | (19) | 98,073 | 104,482 | 4,862 | 109,344 |
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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) |
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Balance at 1st May 2019 | 720 | 1,044 | 4,991 | (573) | (426) | 99,409 | 105,165 | 4,126 | 109,291 |
Total comprehensive income: |
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Profit | - | - | - | - | - | 5,260 | 5,260 | 334 | 5,594 |
Other comprehensive income: |
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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) | - | - | - |
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Balance at 31st October 2019 | 736 | 1,204 | 4,991 | 1,364 | (601) | 97,321 | 105,015 | 4,444 | 109,459 |
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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 |
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(Audited) |
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Balance at 1st May 2019 | 720 | 1,044 | 4,991 | (573) | (426) | 99,409 | 105,165 | 4,126 | 109,291 |
| |
Total comprehensive income: |
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Profit | - | - | - | - | - | 7,866 | 7,866 | 474 | 8,340 |
| |
Other comprehensive income: |
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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) |
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Total comprehensive income for the period | - | (964) | - | 74 | (317) | 7,794 | 6,587 | 470 | 7,057 |
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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) |
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Disposal of equity investments | - | (77) | - | - | - | - | (77) | - | (77) |
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Reclassification | - | 358 | - | - | - | (358) | - | - | - |
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Balance at 30th April 2020 | 736 | 361 | 5,244 | (499) | (743) | 99,918 | 105,017 | 4,585 | 109,602 |
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Condensed Consolidated Balance Sheet
as at 31st October 2020
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| Unaudited | Unaudited | Audited |
|
| as at | as at | as at |
|
| 31st October | 31st October | 30th April |
|
| 2020 | 2019 | 2020 |
|
| £'000 | £'000 | £'000 |
Non-current assets |
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|
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 |
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| 107,037 | 98,940 | 101,481 |
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Current assets |
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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 |
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| 102,805 | 106,820 | 90,793 |
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Total assets |
| 209,842 | 205,760 | 192,274 |
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Current liabilities |
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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 |
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| 86,079 | 64,648 | 63,476 |
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Non-current liabilities |
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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 |
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| 14,419 | 31,653 | 19,196 |
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Total liabilities |
| 100,498 | 96,301 | 82,672 |
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Net assets |
| 109,344 | 109,459 | 109,602 |
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Equity attributable to equity holders of the parent |
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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 |
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Total equity attributable to equity holders of the parent | 104,482 | 105,015 | 105,017 | |
Non-controlling interests |
| 4,862 | 4,444 | 4,585 |
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Total equity |
| 109,344 | 109,459 | 109,602 |
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* 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
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| 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 |
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Profit from continuing operations after tax | 4,485 | 5,594 | 8,340 |
Adjustments for: |
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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 |
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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) |
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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) |
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Net cash from operating activities | 2,913 | 4,675 | 19,173 |
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Cash flow from investing activities |
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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) |
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Net cash outflow from investing activities | (8,879) | (3,526) | (8,966) |
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Cash flows from financing activities |
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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 |
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Net cash inflow / (outflow) from financing activities | 5,451 | 4,378 | (716) |
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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) |
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Closing cash and cash equivalents (note 13) | 9,043 | 6,076 | 9,449 |
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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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