Goodwin Regulatory News (GDWN)

GOODWIN PLC

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year ended 31st October 2015

CHAIRMAN'S STATEMENT

The pre-tax profit for the Group for the first six month period ending 31st October 2015 was £6.03 million (2014: £13.45 million).

As mentioned in the full year accounts to 30th April 2015, we started the new financial year with a work load 22% lower than the year before and this coupled with tighter pricing in this difficult market has led to the reduction in pre-tax profits and activity with £61.22 million sales output (2014: £72.97 million) for the half year just completed.

The sales order input in the first six months of the new financial year was 16% higher than that in the same period last financial year but it must be said that this increased level of order input was only achieved by quoting tenders with tighter margins.

Good progress has been made in further expanding the activity of the refractory engineering division. Towards the end of the last financial year, Goodwin Refractory Services purchased the assets of a casting powder company and now supplies a significant amount of tyre tread moulding powder both in Europe and the Pacific Basin. In October 2015 Dupré Minerals and Hoben International purchased assets which enable both companies to expand their manufacturing facilities to produce more vermiculite and perlite to be sold under the name Silvaperl®. We are hopeful that this purchase will start to generate significant benefits during the second half of this financial year.

The investment expenditure mentioned in the above paragraph amounted to £4.77 million and has improved the profit potential of all three companies. In addition, there has been capital expenditure during this financial period of £5.80 million, the lion's share of which is investment in new machinery for Goodwin International to enhance and increase its machining capability to allow the company to further expand its specialist large five axis CNC machining capability. We expect an increase of £8 million in order input for this type of work this year. Easat Antennas was awarded a research and development grant which over the next two years will enhance its radar supply capability. All these initiatives, in part, will mitigate the effects of the downturn in the oil, gas and mining industries.

To enable us to undertake larger contracts, an extra £10 million line of five year committed bank facility (unutilised) has been arranged as payment cycles are less certain in current economic conditions.

J. W. Goodwin

Chairman 18th December 2015

Management report

The turnover for the first six months of this new financial year decreased by 16.1%. The pre-tax profit has decreased by 55.2% in the first half of the financial year.

Manufacturing efficiency combined with continued high quality and global sourcing of high integrity materials has brought our customers savings despite adverse currency and market conditions. A full complement of apprentices has again been set on and the opportunity has been taken to train for our extended specialist capacity. The outstanding quotations for work in new areas should if successful aid recovery.

Turnover

Sales revenue of £61,220,000 for the half year represents a 16.1% decrease over the £72,970,000 achieved during the same period last year.

Profit Before Tax

Profit before tax for the six months of £6,028,000 is down 55.2% from the £13,450,000 achieved for the same six month period last year.

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 page 6 of the Group annual accounts to 30th April 2015 which describes the principal risks and uncertainties, and to note 20 (page 44) which describes in detail the key financial risks and uncertainties affecting the business such as credit risk and foreign exchange risk. The risks remain unchanged at the end of October 2015.

Judging the future relationship of the major currency pairs of the US Dollar, Sterling and the Euro continues to be a challenge but it is likely that we will see continued strengthening of the US Dollar, which should aid our competitiveness in many of our markets.

Report on Expected Developments

This report describes the expected developments of the Group during the year ended 30th April 2016. 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.

2016/17 Outlook

Whilst currently depressed, we still have a good order book backlog in most of our companies. Time will tell whether we can find satisfactory levels of work to fill the gap temporarily caused by the slow down in the oil, gas and mining industries which we think will be quieter for a couple of years.

Going concern

The cash flow has deteriorated since the start of the financial year, in part due to the level of capital expenditure and also due to the current higher levels of debtors and work in progress. We expect to see an improvement in the cash flow position by the financial year end.

After reviewing the situation, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.

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 18th December 2015

Condensed consolidated income statement

for the half year to 31st October 2015

Condensed consolidated statement of comprehensive income

for the half year to 31st October 2015

Condensed consolidated statement of changes in equity

for the half year to 31st October 2015

Condensed consolidated balance sheet

as at 31st October 2015

Condensed consolidated cash flow statement

for the half year ended 31st October 2015

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 2015 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 2015 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 2015.

The comparative figures for the financial year ended 30th April 2015 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 18th December 2015.

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 2015. New standards to be adopted in the current year as below, effective for annual periods beginning on or after 1st July 2014, are not expected to have a significant impact on the financial statements.

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:

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 2015.

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

· Refractory 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 £4,897,000 (six months to 31st October 2014: £10,186,000). 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 2015 the capital utilised was £105,780,000 as shown below:

9. Property, Plant and Equipment

Fixed asset additions were £5,797,000 during the six month period to 31st October 2015, with the Group progressing on its capital projects. Other movements in fixed assets were: depreciation of £2,401,000; a decrease due to the effect of exchange adjustments of £588,000; disposals of £50,000 and an acquisition of £39,000.

Fixed asset additions were £7,262,000 with capital grants received of £320,000 during the six month period to 31st October 2014, with the Group progressing on its capital projects. Other movements in fixed assets were: depreciation of £2,484,000; capitalised interest of £18,000; an increase due to the effect of exchange adjustments of £129,000; and disposals of £249,000.

10. Intangible assets

During the six month period to 31st October 2015, intangible assets were increased by £3,500,000 and by the acquisition of £1,405,000 (note 11) and by additions to goodwill of £53,000 (being increased interest in existing subsidiaries by virtue of a minority dividend been paid); reduced by amortisation of £184,000 and reduced by exchange adjustments of £169,000.

During the six month period to 31st October 2014, intangible assets were increased by additions to goodwill of £80,000 being increased interest in existing subsidiaries by virtue of a minority dividend been paid; reduced by amortisation of £212,000 and reduced by exchange adjustments of £286,000.

11. Acquisition

A small electronics company was acquired during the six months to 31st October 2015 for a consideration of £1,561,000 (with £106,000 of bank overdraft). Assets acquired included a provisional value of intangible assets and goodwill of £1,405,000.

12. 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 31st October 2015. 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).