Goodwin Regulatory News (GDWN)

PRELIMINARY ANNOUNCEMENT

Goodwin PLC today announces its preliminary results for the year ended 30th April 2013.

Chairman's statement

I am pleased to report that the pre-tax profit for the Group for the twelve month period ending 30th April 2013 was £20.3 million (2012: £12.3 million), an increase of 65.0% on a revenue of £127.0 million (2012: £107.9 million) which is up 17.7% on the figures reported for the same period last financial year. The Directors propose an ordinary dividend of 35.290p (2012: 32.082p) and also an extraordinary dividend of 50% of the ordinary dividend of 17.645p (2012: Nil).

The gross profit earned of £40.6 million was higher by 31.8% than for the previous financial year. This improvement in gross profit and net pre-tax profit earned stems from the efficiency resulting from vertical integration between Group companies, their very dynamic performance in meeting customer needs as well as economic designs and excellent manufacturing efficiencies. This comment relates especially to our UK valve company, Goodwin International within our mechanical engineering segment. The refractories engineering segment businesses were still suffering from lack of confidence in the global economy, especially in the last three months of the calendar year 2012, where our seven companies supplying the jewellery manufacturing business saw a down turn. As we started the new financial year our global jewellery powder sales have finally recovered to the pre-recession 2008 figures.

The Group order work load as at 30th April 2013 has increased by 16% (2012: 22%) as compared to the same time last financial year and stood at £89.2 million which represents about six months work for most of the Group companies. The Group, whilst being diverse, still focuses much attention on the worldwide energy industries be they oil, gas and LNG or high efficiency gas and coal fired power generation. Both these two sectors by definition have a long term future as the world population continues to grow and attain higher living standards, especially in the Pacific Basin. Also, the more mature markets are striving to increase the efficiency of their power generation capacity and reduce their CO2 output into the atmosphere as well as replace ageing facilities.

The decision to only increase the ordinary dividend by 10% to £2.54 million but grant an extraordinary 50% bonus dividend is designed to reward shareholders for their loyalty but similarly not to commit the Company to a base dividend that it would maybe have difficulty in maintaining in coming years. The past financial year was an exceptional year, but with the Group order book 16% higher as at 30th April 2013 and with the petrochemical industry remaining buoyant along with significant orders being won by two companies which were short of orders (Goodwin Steel Castings £7.6 million and Easat Antennas £3.9 million), it may allow the Group to perform similarly well next year also.

The Group was successful in the three grant applications mentioned in the half year statement. Capital investment on a building programme of additional larger factory units adjacent to our foundry and machine shop sites and an expanded apprentice training programme in the UK has now been embarked upon with total expenditure over four years of some £19 million supported by money from the UK Government of about £5.7 million. The first grant is to provide high integrity Inconel 625 castings for a 25 MW one tenth scale prototype gas turbine for an electricity generating plant that will have the planned highest efficiency in the world with 100% CO2 capture.  The second grant is to assist with the training of the first 75 of 125 apprentices over the next four years to help support the Group's targeted growth plans. The third grant is for the development of a 7.09 acre site adjacent to our foundry to allow for expansion of activity in the coming years as we had become land locked on our 130 year old site. We purchased the 7.09 acres of land during the previous financial year. Also within this third grant is money towards expanding the Goodwin International machine shop and the development of a new range of valves.

The Group considers Research and Development as key to securing long term growth. Including R&D capital projects, the Group spent £2.6 million on R&D in the current year on various projects to reduce manufacturing cost or develop new products where we consider there to be significant market potential over the next ten or more years. This equated to 12.8% of pre-tax profits for the year ended 30th April 2013 (2012: 7.5%), which is significantly higher than our historical norms due in the main to our R&D expenditure on products associated with higher efficiency electricity generation allied to CO2emissions capture. Our R&D spend in future years is expected to revert to more sustainable levels once this project has been completed.

In response to several requests, we have taken the opportunity to update the Information for Investors section of our website with a presentation 'Embracing Technology and Globalising Sales', which gives further information on the Group's activities - www.goodwin.co.uk/2013.

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

Consolidated income statement

for the year ended 30 April 2013

Consolidated statement of comprehensive income

for the year ended 30 April 2013

Consolidated statement of changes in equity

for the year ended 30 April 2013

Consolidated balance sheet

at 30 April 2013

Consolidated cash flow statement

for the year ended 30 April 2013

Risks and Uncertainties

The Group's operations expose it to a variety of risks and uncertainties, including:

Market risk: The Group provides a range of products and services, and there is a risk that the demand for these services will vary from time to time because of competitor action or economic cycles. As shown in Note 2 to the financial statements to be published shortly, the Group operates across a range of geographical regions, and its turnover is split across the UK, Europe, USA, the Pacific Basin and the rest of the world. This spread reduces risk in any one territory. Similarly, the Group operates in both mechanical engineering and refractory engineering sectors, mitigating the risk of a downturn in any one product area. The potential risk of the loss of any key customer is limited as, typically, no single customer accounts for more than 10% of turnover.

Technical risk: The Group develops and launches new products as part of its strategy to enhance the long-term value of the Group. Such development projects carry business risks, including reputational risk, abortive expenditure and potential customer claims which may have a material impact on the Group. The potential risk here is seen as small given the Group is developing products in areas in which it is knowledgeable and new products are extensively tested prior to their release into the market.

Health and safety: The Group's operations involve the typical health and safety hazards inherent in manufacturing and business operations. The Group is subject to numerous laws and regulations relating to health and safety around the world. Hazards are managed by carrying out risk assessments and introducing appropriate controls.

Acquisitions: The Group's growth plan over recent years has included a number of acquisitions. There is the risk that these, or future acquisitions, fail to provide the planned value. This risk is mitigated through extensive financial and technical due diligence during the acquisition process and the Group's knowledge of the markets they operate in.

Financial risk: The principal financial risks faced by the Group are changes in market prices (interest rates, foreign exchange rates and commodity prices), credit risks and liquidity. The Group has in place risk management policies that seek to limit the adverse effects on the financial performance of the Group by using various instruments and techniques, including credit insurance, stage payments, forward foreign exchange contracts and interest rate swaps. Further information on the financial risk management objectives and policies is set out in note 20 to the financial statements to be published shortly.

This report contains forward-looking statements and information based on current expectations, and assumptions and forecasts made by the Group. These expectations and assumptions are subject to various known and unknown risks, uncertainties and other factors, which could lead to substantial differences between the actual future results, financial performance and the estimates and historical results given in this report. Many of these factors are outside the Group's control. The Group accepts no liability to publicly revise or update these forward-looking statements or adjust them to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.

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

We confirm that to the best of our knowledge:

• The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and

• The Directors' Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

J. W. Goodwin, Chairman

R. S. Goodwin, Managing Director

J. Connolly, Director

M. S. Goodwin, Director

A. J. Baylay, Director

S. R. Goodwin, Director

S. C. Birks, Director

B. R. E. Goodwin, Director

Basis of preparation

Goodwin PLC is a company incorporated in the UK.

The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). The comparative results for the year ended 30th April 2012 have also been prepared on this basis.

New IFRS standards and interpretations adopted during 2013

In 2013 the following amendments had been endorsed by the EU, became effective and therefore were adopted by the Group:

·; Amendments to IAS 12 Income Taxes - Deferred Tax: Recovery of Underlying Assets

·; Amendments to IFRS 7 Financial Instruments: Disclosures -Transfers of Financial Assets

·; Annual Improvement Projects to IFRS's. The Annual Improvement Project to IFRS's provides a vehicle for making non-urgent but necessary amendments to IFRS's. Amendments to a number of standards have been adopted.

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

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 IAS 1 Presentation of Items of Other Comprehensive Income (effective for annual periods beginning on or after 1 July 2012)

·; IAS 27 (2011) Separate Financial Statements (effective for annual periods beginning on or after 1 January 2014)

·; IAS 28 (2011) Investments in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2014)

·; Amendments to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014)

·; Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2013)

·; IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014)

·; IFRS 11 Joint Arrangements (effective for annual periods beginning on or after 1 January 2014)

·; IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014)

·; IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013).

The Group has considered the impact of these new standards and interpretations in future periods on profit, earnings per share and net assets. None of the above standards or interpretations are expected to have a material impact.

The financial information previously set out does not constitute the Company's statutory accounts for the years ended 30th April 2013 or 2012 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies, and those for 2013 will be delivered in due course. The auditors have reported on those accounts; their report was:

i. unqualified;

ii. did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and

iii. did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

Copies of the 2013 accounts are expected to be posted to shareholders within the next two weeks and will also be available on the Company's website: www.goodwin.co.uk and from the Company's Registered Office: Ivy House Foundry, Hanley, Stoke-on-Trent ST1 3NR.

Note 1 Segmental information

Products and services from which reportable segments derive their revenues

For the purposes of management reporting to the chief operating decision maker, the Board of Directors, the Group is organised into two reportable operating divisions: mechanical engineering and refractory engineering. Financial information for each operating division is also available in a disaggregated form in line with the identified cash generating units. Segment assets and liabilities include items directly attributable to segments as well as those that can be allocated on a reasonable basis. In accordance with the requirements of IFRS 8 the Group's reportable segments, based on information reported to the Group's Board of Directors for the purposes of resource allocation and assessment of segment performance are as follows;

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

·; Refractories Engineering - powder manufacture and mineral processing

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

Segmental information

For the purposes of monitoring segment performance and allocating resources between segments, the Group's Board of Directors monitors the tangible and financial assets attributable to each segment. All assets and liabilities are allocated to reportable segments with the exception of those held by the parent Company ('PLC') and those held as consolidation adjustments.

Geographical segments

The Group operates in the following principal locations.

In presenting the information on geographical segments, revenue is based on the location of its customers and assets on the location of the assets.

Note 2

The directors propose the payment of an ordinary dividend of 35.290p per share (2012: 32.082p) and an extraordinary dividend of 17.654p per share (2012: Nil). If approved by shareholders, the ordinary and extraordinary dividends will be paid on 11th October 2013 to shareholders on the register at the close of business on 13th September 2013.

Note 3

The earnings per ordinary share has been calculated on profit after taxation for the year attributable to equity holders of the parent of £15,247,000 (2012: £8,952,000) and by reference to the 7,200,000 ordinary shares in issue throughout both years. The company has no share options or other diluting instruments and accordingly there is no difference in the calculation of diluted earnings per share.

Note 4

The Annual General Meeting will be held at 10.30 a.m. on 9th October 2013 at Crewe Hall, Weston Road, Crewe, Cheshire CW1 6UZ.

END