Goodwin Regulatory News (GDWN)

21 Dec 2007 09:00

Goodwin PLC21 December 2007 GOODWIN PLC CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 OCTOBER 2007 CHAIRMAN'S STATEMENT I am pleased to report that the pre-tax profits for the Group for the six monthperiod ending 31st October 2007 were £4.37 million (2006: £2.83 Million), anincrease of 54% on a revenue of £34.96 million which is up 15 % on the sameperiod last financial year. The order books of all Group companies remain buoyant and it would be surprising if the current level of activity were to drop in the second half of the year. The Group's continued investment in terms of time and money in order to develop manufacturing and sales operations in the rapidly expanding Pacific Basin countries is progressively resulting in a larger proportion of Group profits emanating from this region and the Board considers this effort will position the Group well in future years. Goodwin Steel Castings continues to win multi million dollar orders for valvesand components for use in high efficiency electrical power generating plant, beit in China, India or the USA. Goodwin International, having recently expanded its range of check valves toinclude the nozzle check valve to complement its dual plate check valve, andwith its new sister company in Germany, Noreva GmbH, is expected yet again thisyear to win record levels of orders from the oil, gas and LNG industries worldwide which have an impressive five year investment programme to keep pace withthe increasing world demand. The Refractory Engineering Division with manufacturing units in the UK,Thailand, China and India continues to expand and we are starting now to seeeconomies of scale benefits, especially with our new UK vermiculite facilitywhich is scheduled to be fully commissioned in January 2008. Internet Central has engineered a hardware/software platform that provides astable leading edge technology voice over internet protocal (VOIP) telephoneexchange system that is now being sold through a growing number of distributionchannels, which should enable this company to continue its growth in turnoverand profitability. The Board continues to investigate opportunities of achieving additional growthin terms of turnover and profitability but it remains Board policy that theGroup should finance any such growth from its own profit streams and thatexpansion would be in areas where our experience and core skills can bediscerningly utilised. The Group continues to invest and carry out research into products that willresult in reduced environmental pollution. This is especially the case forproducts that are needed to improve the efficiency of coal and gas fired powerstations which represent over 65 % of world power generating capacity. John W GoodwinChairman 21st December 2007 Management report During the six months to 31st October 2007 the Group has manufactured productsfor customers whose markets are very much driven by environmental needs. The Group has continued to invest in research with a view to protecting itsniche market in the power generation industry. The emphasis is firmly placed onresearching and supplying products which when incorporated into our customers'plants give the benefit of reduced CO2 emissions. Within the oil, gas and LNG industries the last six months have seen dramaticrises in fuel costs and this has created more investment opportunities and agreater need for the valves we manufacture. The Group's investment invermiculite, used in many insulating applications has been significant and withthe imminent commissioning of our new facility in the UK, we hope to be in agood position to meet an encouraging demand stimulated by the much higher energy costs and grants for energy saving. This new £2 million facility will becommissioned in January 2008. The incidence of flooding seems to be rising and during the period oneparticular flood in South Yorkshire and another to the north of Birminghamknocked out the internet connectivity for thousands of users. This reallybrought home the dependency on the internet for communications by both businessand domestic users. In addition to this BT made clear their plans for converting existing telephone exchanges away from ISDN and advertised the technology changes coming using voice over internet protocol (VOIP) for the 21st century. Our internet company has led the way locally for providing multiple resilient internet connectivity (having initially thought about denial of access to areas in the event of a disaster such as bird flu). The result was that many customers who lost connectivity through flooding had alternative backup routes provided by Internet Central, which has also launched a leading telephone exchange for VOIP in the last 6 months. Our overseas subsidiaries have been growing at rates in excess of the GDP growth rates in their domestic economies. During the period there have been noexceptional or material adverse events and no changes to composition of theGroup. Two intellectual property infringement cases have been pursued via litigationand have been successful. The Group will continue to actively protect itsintellectual property. Financial Highlights Unaudited Unaudited Audited Half year to Half year to Year ended 31st October 31st October 30th April 2007 2006 2007Consolidated Results £m £m £m Sales Revenue 34.96 30.51 65.31Operating Profit 4.84 3.11 7.76Profit before tax 4.37 2.83 7.04Profit after tax 3.04 1.95 4.84 ----- ----- -----Capital Expenditure 1.72 1.81 2.68Net debt* 9.00 7.12 8.99* Bank and lease borrowings less cash on hand ----- ----- -----Earnings per share (Basic and Diluted) 40.42p 26.40p 65.1p Revenue: up by 15% Sales revenue was £34.96 million, which represents a 15% increase over the£30.51 million achieved during the same period last year. The Group's marketsshowed healthy overall trends during the first half of 2007 driven bysignificant revenue growth in almost all the Group's segments. We are pleased to report that our newly acquired subsidiary, Noreva GmbH, is performing well.As can be seen from the segmental analysis, the geographical spread shows a more balanced input from territories throughout the world. Operating Profit: up by 56% The operating profit for the 6 months of £4.84 million represents an increase of 56% over the £3.11 million achieved during the 6 months to 31st October 2006. Increased gross margins and control of overhead costs have combined to generate the significant improvement in the operating profit. Net Debt Despite the sustained growth in the Group's turnover and the significantinvestment made by the Group (both fixed assets and external acquisitions) theoverall level of debt remains modest in relation to the net assets of the Group. As reported in the Group's full year accounts, the directors considerthat the market value of the Group's freehold land and buildings is in excessof the values disclosed in the Group balance sheet. Report on Expected Developments This report describes the expected developments of the Group during the yearended 30th April 2008. The report may contain forward-looking statements andinformation 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. 2008 Outlook The outlook remains buoyant and we remain enthusiastic about our products andour markets. It is hoped that Government policy on carbon emissions in steelmaking will not jeopardise the tremendous contribution our Group is making inthe UK to the world wide reduction of carbon emissions from power stations. We are concerned about the planning and electricity availability in the UK andlong term we believe in the urgent need for nuclear power. Now the Governmenthas announced its intent to allocate specific sites, we intend to continue ourrepresentation and learning within this field to provide an indigenous component supply capability. The Group already has supplied components into this industry. Despite the continuing weakness of the US Dollar the Group currently sees noreason to expect a deterioration in performance during the second half of thefinancial year. Responsibility statement of the directors in respect of the half-yearlyfinancial report The directors confirm to the best of their knowledge that this condensed set offinancial statements has been prepared in accordance with InternationalAccounting Standard 34, 'Interim Financial Reporting' , as adopted by theEuropean Union and that the Interim Management Report and condensed financialstatements include a fair review of the information required by Disclosure andTransparency Rules 4.2.7 and 4.2.8 of the United Kingdom's Financial ServiceAuthority. J.W. GoodwinChairman 21st December 2007 Condensed consolidated interim income statementfor the half year ended October 2007 Unaudited Unaudited Audited Half year to Half year to Year ended 31st October 31st October 30th April 2007 2006 2007 £000 £000 £000Continuing operationsRevenue 34,958 30,509 65,314Cost of sales (25,395) (23,117) (50,135) ------ ------ ------Gross profit 9,563 7,392 15,179 Distribution costs (1,401) (935) (1,903)Administrative expenses (3,320) (3,349) (5,518) ------ ------ ------Operating profit 4,842 3,108 7,758Financial expenses (474) (280) (716) ------ ------ ------Profit before taxation 4,368 2,828 7,042Tax on profit (1,328) (874) (2,198) ------ ------ ------Profit after taxation 3,040 1,954 4,844 ====== ====== ======Attributable to:Equity holders of the parent 2,910 1,901 4,687Minority interest 130 53 157 ------ ------ ------Profit for the period 3,040 1,954 4,844 ====== ====== ======Basic and diluted earnings per ordinary share 40.42p 26.40p 65.10p Condensed consolidated interim statement of recognised income and expensefor the half year ended 31st October 2007 Unaudited Unaudited Audited Half year to Half year to Year ended 31st October 31st October 30th April 2007 2006 2007 £000 £000 £000Foreign exchange translationdifferences (11) (47) 9Effective portion of changes in fair value of cash flow hedges 917 390 589Change in fair value of cash flow hedges transferred to profit or loss (94) (780) (935)Tax recognised on income and expenses recognised directly in equity (211) 117 104 ----- ----- -----Net income and expense recognised directly in equity 601 (320) (233)Profit for the period 3,040 1,954 4,844 ----- ----- -----Total recognised income and expense 3,641 1,634 4,611 ===== ===== =====Total recognised income and expense forthe period is attributable to: Equity holders of the parent 3,511 1,581 4,454 Minority interest 130 53 157 ----- ----- ----- 3,641 1,634 4,611 ===== ===== ===== Condensed consolidated interim balance sheetat 31st October 2007 Unaudited Unaudited Audited Half Year to Half Year to Year ended 31st October 31st October 30 April 2006 2007 2007 £000 £000 £000Non-current assetsProperty, plant and equipment 14,188 12,097 13,305Intangible assets 4,815 327 5,050 ------ ------ ------ 19,003 12,424 18,355 ------ ------ ------Current assetsInventories 14,405 12,512 14,367Financial assets 20,862 15,216 17,186Cash and cash equivalents 470 514 412 ------ ------ ------ 35,737 28,242 31,965 ------ ------ ------Total assets 54,740 40,666 50,320 ------ ------ ------Current liabilitiesBank overdraft 2,922 6,564 2,493Other interest-bearing loans and borrowings 5,622 396 5,626Trade and other payables 16,994 12,532 16,598Tax payable 1,276 707 1,303 ------ ------ ------ 26,814 20,199 26,020 ------ ------ ------Non-current liabilitiesOther interest-bearing loans and borrowings 959 677 1,280Deferred consideration 1,558 - 1,509Deferred tax liabilities 1,652 1,429 1,395 ------ ------ ------ 4,169 2,106 4,184 ------ ------ ------Total liabilities 30,983 22,305 30,204 ------ ------ ------Net assets 23,757 18,361 20,116 ====== ====== ======Equity attributable to equity holdersof the parentShare capital 720 720 720Translation reserve 22 (23) 33Cash flow hedge reserve 1,296 653 684Retained earnings 21,120 16,524 18,210 ------ ------ ------ 23,158 17,874 19,647Minority interest 599 487 469 ------ ------ ------Total equity 23,757 18,361 20,116 ====== ====== ====== Condensed consolidated interim cash flow statementfor the half year ended 31st October 2007 Unaudited Unaudited Audited Half Year to Half Year to Year ended 31st October 31st October 30th April 2006 2007 2007 £000 £000 £000Cash flow from operating activitiesProfit for the year 3,040 1,954 4,844 Adjustments for: Depreciation 843 767 1,495 Amortisation of intangible assets 235 26 101 Financial expense 474 280 716 Loss on sale of property, plant and equipment 2 8 9 Tax expense 1,328 874 2,198 ------ ------ ------Operating profit before changes in working capital and provisions 5,922 3,909 9,363 Increase in trade and other receivables (3,073) (1,966) (2,910) Decrease / (Increase) in inventories 15 (2,242) (1,736) (Decrease)/increase in trade and other payables (excluding payments on account) (1,215) 457 (597) Increase/(decrease) in payments on 1,811 (537) 1,793 account ------ ------ ------Cash generated from operations 3,460 (379) 5,913 Interest paid (439) (261) (657) Corporation tax paid (1,309) (920) (1,768) Interest element of finance lease obligations (35) (19) (59) ------ ------ ------Net cash from operating activities 1,677 (1,579) 3,429 ------ ------ ------Cash flow from investing activities Proceeds from sale of property, plant and equipment 5 7 25 Acquisition of property, plant and equipment (1,721) (1,287) (2,403) Acquisition of customer list - - (880) Acquisition of subsidiary net of cash acquired - - (2,739) ------ ------ ------ Net cash from investing activities (1,716) (1,280) (5,997) ------ ------ ------Cash flows from financing activities Payment of capital element of finance lease obligations (328) (156) (382) Dividends paid - - (1,100) Proceeds of new loans - - 5,000 ------ ------ ------Net cash from financing activities (328) (156) 3,518 Net (decrease) / increase in cash and cash equivalents (367) (3,015) 950 Opening cash and cash equivalents (2,081) (3,024) (3,024) Effect of exchange rate fluctuations on cash held (4) (11) (7) ------ ------- ------Closing cash and cash equivalents (2,452) (6,050) (2,081) ====== ======= ====== Notes to the condensed consolidated interim financial statements 1 Reporting entity Goodwin PLC (the "Company") is a company incorporated in the UK. The condensedconsolidated interim financial statements of the Company as at and for the sixmonths ended 31st October 2007 comprise the Company and its subsidiaries(together referred to as the "Group"). The consolidated financial statements of the Group as at and for the year ended30th April 2007 are available upon request from the Company's registered officeat Ivy House Foundry, Hanley, Stoke on Trent ST1 3NR or via the Company's website: www.goodwin.co.uk. 2 Statement of compliance These condensed consolidated interim financial statements have been prepared inaccordance with International Financial Reporting Standard (IFRS) 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 consolidated financial statements of the Group as at and for the year ended 30th April 2007. The financial information for the six months ended 31st October 2007 and thecomparative figures for the six months ended 31st October 2006 have not beenaudited or reviewed. The summarised financial information in respect of the year ended 30th April 2007 is not the Company's statutory accounts for that financial year. Those accounts, which were prepared under IFRS as adopted in the EU, have been delivered to the Registrar of Companies. The report of the auditor was (i) unqualified; (ii) did no include a reference to any matters towhich the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or section 237(3) of the Companies Act 1985. These condensed consolidated interim financial statements were approved by theBoard of Directors on 21st December 2007. 3 Significant accounting policies Except as described below, the accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30th April 2007. IAS 34 states the tax measurement basis may depart from the basis adopted in the year end accounts. In accordance with IAS 34, the interim tax charge shown in these condensed accounts is based on the estimated full year tax rate for the year ended 30th April 2008 of 29.84% for corporation tax, with deferred taxbeing provided at a rate of 28%. 4 Estimates The preparation of interim financial statements requires management to makejudgements, estimates and assumptions that affect the application of accountingpolicies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these consolidated interim financial statements, the significantjudgements made by management in applying the Group's accounting policies andthe key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30th April 2007. 5 Segmental analysis Segment information is presented in respect of the Group's business andgeographic segments. The primary format business segment is based on the Group's management and internal reporting structure. Business segment The Group has one significant primary trading activity that of mechanical andrefractory engineering so no further analysis is provided. Geographical segment Half year ended Half year ended Year ended 31st October 31st October 30th April 2007 2006 2007 Revenue Operat Capital Revenue Operat Capital Revenue Operat Capital ional expend ional expend ional expend assets iture assets iture assets iture £000 £000 £000 £000 £000 £000 £000 £000 £000UK 8,717 20,904 1,638 6,280 16,909 1,497 12,754 18,020 2,786Rest of Europe 9,146 1,038 - 2,112 72 - 9,911 545 -USA 2,854 - - 1,162 - - 4,544 - -PacificBasin 6,350 1,075 48 14,129 672 161 27,466 868 203Rest of world 7,891 740 35 6,826 708 154 10,639 683 153 Total 34,958 23,757 1,721 30,509 18,361 1,812 65,314 20,116 3,142 The Group is managed as one business but operates in the above principallocations. In presenting the information on geographical segments, revenue isbased 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. Half year ended Half year ended Year ended 31st October 31st October 30th April 2007 2006 2007 £000 £000 £000Equity dividends:Paid dividend (April 2006: 15.278p per share) - - 1,100 Proposed dividend (April 2007: 18.403p per share) - - 1,325 ====== ====== ===== 7 Earnings per share The calculation of the earnings per ordinary share is based on the number ofordinary shares in issue during all periods of 7,200,000 and on the profit forthe period attributable to ordinary shareholders of £2,910,000 (31st October2006: £1,901,000). The company has no share options or diluting earnings pershare. 8 Significant acquisition of plant, property and equipment As referred to in the Management Report, the Group is nearing the completion ofits new vermiculite plant. In the six month period to 31st October 2007, thecapital expenditure on this activity has been £912,000. END This information is provided by RNS The company news service from the London Stock Exchange