Goodwin Regulatory News (GDWN)

GOODWIN PLC

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year ended 31st October 2013

Chairman's Statement

I am pleased to report that the pre-tax profits for the Group for the six month period ending 31st October 2013 were £12.3 million (2012: £10.4 million), an increase of 18% from a revenue of £71.3 million.

The Group order book remains healthy and represents an order back log on average of just over six months although this is not evenly spread amongst the 20 trading companies. The continued excellent profitability achieved results from the dynamic performance of our employees and our companies being able to address the market needs.

The significant capital expenditure programme detailed in the year end accounts is progressing according to plan and should help the Group continue to grow in years to come be it by nature of additional trained skilled workers and managers, additional manufacturing facilities or additional products for our companies to make and sell.

The Company has since the year end secured an additional £8 million of committed bank facilities as, despite the cash generation we are planning over the next two years, the Board considered it a prudent policy to guarantee that our facilities would continue to be available to the Group should they be needed.

The Company's strategy focus and business as described on the investors section of the website www.goodwin.co.uk/2013/full-presentation continues to be based on maintaining an engineering commitment with investment criteria aimed at profitable, efficient, economic supply of technically advanced products to growth markets.

The challenge faced in nearly all our Group companies is to ensure we have in place enough competent trained people to cope with our growth and global activities. It is our team of people that is creating the success and growth and it remains a key corporate management activity to ensure that this demand is satisfied. We have many young people progressing within the Company and our investment in and further training of these people will determine the future. In the mean time, the Board wishes to thank all our employees for their unwavering loyalty, devotion and hard work.

J. W. Goodwin

Chairman

19th December 2013

Management report

The turnover for the first 6 months of this new financial year increased slightly by 4% but was some 10% behind the possibility based on work load due to delays on certain contracts resulting from changed order requirements and slow processing of documents for approval. This has had an unacceptable effect on the Group cash flow and management is seeking to redress this issue in the second half of the financial year. Management have also had to contend with the disruption caused by the significant construction and training programmes currently being undertaken.

The pre-tax profit has increased by 18% in the first half of the financial year and the current order backlog is sufficient for the activity level in the Group in the second half of the financial year to be similar to the first half. Goodwin International in particular out of the engineering companies again has performed exceptionally well and has continued to expand its manufacturing facilities to cope with the work load.

Turnover

Sales revenue of £71.3 million for the half year represents a 4% increase over the £68.4 million achieved during the same period last year.

Profit Before Tax

Profit before tax for the six months of £12.3 million is up 18% from the £10.4 million achieved for the same six month period last year.

Risks and Uncertainties

The Group has in place internal control procedures which, in conjunction with its centralised management structure, identify and manage the key risks and uncertainties affecting the Group.

We would refer you to note 20 (page 35) of the Group annual accounts to 30th April 2013 which describes in detail the key risks and uncertainties affecting the business such as credit risk and foreign exchange risk. This position remains unchanged at the end of October 2013.

As we wrote in our half yearly report this time last year, our biggest risk / unknown is the relationship of the major currency pairs. The US Dollar at the moment seems to be firming up at a weaker position than of late, which will start to put pressure on margins when we are competing with suppliers in the USA or countries that have their currencies closely linked to the US Dollar. There also appears to be a similar weakness in the Euro with the exchange rate to the Pound Sterling often being around the 1.20 mark. The Japanese have also taken aggressive steps to weaken their currency which perversely may help us win more business in Japan as their main contractors become more competitive when they are bidding internationally. Our global competitiveness should in part be protected by our overseas manufacturing and material sourcing activities, but the continued volatility of exchange rates remains a concern as it must be to all international trading companies.

Report on Expected Developments

This report describes the expected developments of the Group during the year ended 30th April 2014. 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.

2014 Outlook

The order book is again at a new historical high for the Group providing opportunity for a similar pre-tax profit result in the second half of the financial year.

All three grant assisted projects are progressing well with the third group of 25 apprentices starting in February 2014. The major building programme on the site adjacent to the foundry will have its first phase completed on schedule by January 2014, as will the construction work at Goodwin International. The foundry has made for Toshiba in Japan the super nickel castings for the NET POWER high efficiency turbine and has also cast the same castings in a next generation super nickel alloy.

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).

J. W. Goodwin

Chairman 19th December 2013

Condensed consolidated income statement

for the half year to 31st October 2013

Condensed consolidated statement of comprehensive income

for the half year to 31st October 2013

Condensed consolidated statement of changes in equity

for the half year to 31st October 2013

Condensed consolidated balance sheet

as at 31st October 2013

Condensed consolidated cash flow statement

for the half year ended 31st October 2013

Notes

 to the condensed consolidated financial statements

1 Reporting entity

Goodwin PLC (the "Company") is a company incorporated in England. The unaudited condensed consolidated interim financial statements of the Company as at and for the six months ended 31st October 2013 comprises 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 2013 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 2013.

The comparative figures for the financial year ended 30th April 2013 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.

These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on 19th December 2013.

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 2013. New standards to be adopted in the current year, being IFRS 13, Amendments to IAS1 and the Annual Improvements project, are not expected to have a significant impact on the financial statements.

4 Estimates

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 2013.

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 Business Segments

Products and services from which reportable segments derive their revenues

In accordance with the requirements of IFRS8 "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

· Refractories Engineering - powder manufacture and mineral processing

Information regarding the Group's operating segments is reported below. 

Segment revenues and profits

Segmental assets and liabilities

Geographical segments

The Group operates in the above 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.

 6. Dividends

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

7. Earnings per share

The calculation of the earnings per ordinary share is based on the number of ordinary shares in issue during all periods of 7,200,000 and on the profit for the six months attributable to ordinary shareholders of £9,452,000 (six months to 31st October 2012: £7,613,000). The Company has no share options or other diluting interest and accordingly, there is no difference in the calculation of diluted earnings per share.

8. Capital Management, issuance and repayment of debt

At 31st October 2013 the capital utilised was £79,694,000 as shown below:

9. Property, Plant and Equipment

Fixed asset additions were £8,315,000 during the six month period to 31st October 2013, with the Group progressing on its capital projects, most of which were still in the course of construction at the period end. Other movements in fixed assets were: capital grants received of £364,000; capitalised interest of £42,000; depreciation of £1,749,000; and other reductions due to the effect of exchange adjustments of £900,000, and disposals of £20,000.

During the six month period to 31st October 2012: the Group had fixed asset additions of £4,154,000 on various capital projects throughout the Group; depreciation of £1,629,000; and other movements were the effect of exchange adjustments of £161,000, and disposals of £107,000.

10. Intangible assets

During the six month period to 31st October 2013, intangible assets were increased by additions to goodwill of £286,000, being increased interest in existing subsidiaries by virtue of a minority dividend been paid and the acquisition of part of a minority interest in an existing subsidiary; reduced by amortisation of £357,000 and reduced by exchange adjustments of £6,000.

During the six month period to 31st October 2012, intangible assets were reduced by amortisation of £396,000 and exchange adjustments of £90,000.

11. Total financial assets and financial liabilities

The table below sets out the Group's accounting classification of its financial assets and financial liabilities, and their carrying values/fair values at 31 October 2013. The fair values of all financial assets and financial liabilities are not materially different to the carrying values.

Derivative financial assets and financial liabilities fair values in the above table are derived using Level 2 inputs as defined by IFRS 7 as detailed in the paragraph below*. All other financial assets and financial liabilities fair values are determined using Level 3 inputs.

*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).