D I R E C T O R S R E P O R T A N D A C C O U N T S
3 Ot h A P R I L 2 O 1 4
INDEX
Notice of AGM
Notes to Notice of AGM
STRATEGIC REPORT
Chairman’s Statement
Objectives, Strategy and Business Model
Principal Risks and Uncertainties
Corporate Social Responsibility
DIRECTORS’ REPORTS
Report of the Directors
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Policy and Report
Statement of Directors’ responsibilities in respect of the Annual Report and the
financial statements
AUDITOR’S REPORT
Independent auditor’s report to the members of Goodwin PLC
FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated cash flow statement
1
2
3
5
6
7
9
11
13
15
20
21
23
24
25
26
27
NOTES TO THE FINANCIAL STATEMENTS
28 Notes to the consolidated financial statements
52
53 Notes to the Company financial statements
Company balance sheet
57 FIVE YEAR FINANCIAL SUMMARY
999
GOODWIN PLC
www.goodwin.co.uk
Registered in England and Wales, Number 305907
Established 1883
Directors:
J. W. Goodwin (Chairman)
R. S. Goodwin (Managing Director)
J. Connolly
M. S. Goodwin
A. J. Baylay
S. R. Goodwin
S. C. Birks
B. R. E. Goodwin
Secretary and registered office:
Mrs. P. Ashley, B.A., A.C.I.S.
Ivy House Foundry, Hanley,
Stoke-on-Trent, ST1 3NR
Registrar and share transfer office:
Computershare Investor Services PLC,
P.O. Box No. 82,
Bristol, BS99 7NH
Auditors:
KPMG LLP,
One Snowhill, Snowhill Queensway, Birmingham, B4 6GH
NOTICE IS HEREBY GIVEN that the SEVENTY NINTH ANNUAL GENERAL MEETING of
the company will be held at 10.30 am on Wednesday, 8th October, 2014 at Crewe Hall,
Weston Road, Crewe, Cheshire CW1 6UZ, for the purpose of considering and, if thought fit,
passing the following resolutions which are proposed as ordinary resolutions.
1. To receive the Directors’ Reports and the audited financial statements for the year ended
30th April, 2014.
2. To approve the payment of the proposed ordinary dividend on the ordinary shares.
3. To re-elect Mr. A. J. Baylay as a Director.
4. To re-elect Mr. S. R. Goodwin as a Director.
5. To approve the Company’s Remuneration Policy as stated on pages 15 to 16 of the
Directors’ Reports.
6. To approve the Directors’ Remuneration Report for the year ended 30th April, 2014 as
stated on pages 17 to 19 of the Directors’ Reports.
7. To re-appoint KPMG LLP as auditor and to authorise the Directors to determine their
remuneration.
By Order of the Board
P. ASHLEY
Secretary
Registered Office:
Ivy House Foundry,
Hanley, Stoke-on-Trent.
25th July, 2014
1
NOTES TO NOTICE OF ANNUAL GENERAL MEETING:
1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on
their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the Annual General
Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held
by that shareholder. A proxy need not be a shareholder of the Company. A proxy form which may be used to
make such appointment and give proxy instructions accompanies this notice.
2. To be valid any proxy form or other instrument appointing a proxy must be received by post, by scanned copy
sent to proxies@goodwingroup.com or (during normal business hours only) by hand at Ivy House Foundry,
Hanley, Stoke-on-Trent, ST1 3NR no later than 10.30am on 6th October, 2014.
3. The return of a completed proxy form or other such instrument will not prevent a shareholder attending the
Annual General Meeting and voting in person if he/she wishes to do so.
4. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder
by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy
for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish
to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to
the exercise of voting rights.
5. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2
above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by
shareholders of the Company.
6. To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by
the Company of the votes they may cast), shareholders must be registered in the Register of Members of the
Company at 10.30am on 6th October, 2014 (or, in the event of any adjournment, 10.30am on the date which is two
days before the time of the adjourned meeting). Changes to the Register of Members after the relevant deadline
shall be disregarded in determining the rights of any person to attend and vote at the meeting.
7. As at 24th July, 2014 (being the last business day prior to the publication of this Notice) the Company’s issued
share capital consists of 7,200,000 ordinary shares, carrying one vote each. Therefore, the total voting rights in
the Company as at 24th July, 2014 are 7,200,000.
8. Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company
under section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement
setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the
conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected
with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and
reports were laid in accordance with section 437 of the Companies Act 2006. The Company may not require the
shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528
of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527
of the Companies Act 2006, it must forward the statement to the Company’s auditor not later than the time when
it makes the statement available on the website. The business which may be dealt with at the Annual General
Meeting includes any statement that the Company has been required under section 527 of the Companies Act
2006 to publish on a website.
9. In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at
the meeting so that (i) if a corporate shareholder has appointed the chairman of the meeting as its corporate
representative with instructions to vote on a poll in accordance with the directions of all of the other corporate
representatives for that shareholder at the meeting, then on a poll those corporate representatives will give
voting directions to the chairman and the chairman will vote (or withhold a vote) as corporate representative
in accordance with those directions; and (ii) if more than one corporate representative for the same corporate
shareholder attends the meeting but the corporate shareholder has not appointed the chairman of the meeting
as its corporate representative, a designated corporate representative will be nominated, from those corporate
representatives who attend, who will vote on a poll and the other corporate representatives will give voting
directions to that designated corporate representative. Corporate shareholders are referred to the guidance issued
by the Institute of Chartered Secretaries and Administrators on proxies and corporate representatives (www.icsa.
org.uk) for further details of this procedure. The guidance includes a sample form of representation letter if the
chairman is being appointed as described in (i) above.
10. None of the Directors have service contracts with the Company.
11. If approved by shareholders the ordinary dividends will be paid to shareholders on 10th October, 2014.
2
STRATEGIC REPORT
GOODWIN PLC
CHAIRMAN’S STATEMENT
I am pleased to report that the pre-tax profit for the Group for the twelve month period ended
30th April, 2014 was £24.1 million (2013: £20.3 million), an increase of 18.7% on a revenue of
£130.8 million (2013: £127.0 million). The Directors propose an ordinary dividend of 42.348p per
share (2013: ordinary dividend of 35.290p, extraordinary dividend of 17.645p).
The gross profit earned of £44.8 million was higher by 10.5% than for the previous financial year.
This further improvement in gross profit and pre-tax profit earned stems from the energy market
sector having remained buoyant throughout the financial year, allowing us to make use of our
investment on capital equipment working 24 hours a day, 6.5 days a week, especially at Goodwin
International and Goodwin Steel Castings.
The tax charge has been substantially lower this year for three main reasons: the Group has
benefited from firstly the recently enacted patent box relief, secondly the lower effective
corporation tax rate within the UK, and thirdly the revision of prior year estimates.
The Group continues to focus on mechanical engineering and refractory engineering as described
below and in our business model and strategy on page 5. Our activities, products and KPI’s are
detailed on our website www.goodwin.co.uk/2014.
Other than our traditional business in the oil and gas and power generation industries, our
Mechanical Engineering Division continues to target engineering work for large construction
projects which we believe will continue to add to our market sector diversity. The Group order
work load as at 30th April, 2014 was 10% higher than 12 months earlier and stood at £101 million,
which should provide the Group with an opportunity of further improvement in this new financial
year. However, since the commencement of the new financial year there has been a noticeable
slow down in order input from the oil and gas industries which is in line with the statements in the
press by a number of chairmen of major oil companies, who have indicated that they are slowing
down their capital investment programmes. Whether we are able to further increase our global
market penetration and find additional customers to overcome this only time will tell, but any
impact is more likely to affect the financial year 2015/2016.
Whilst the energy mix is changing over the long term, it is considered that fossil fuels will likely
remain the dominant energy resource in the future and hold 80% of the energy mix by 2035.
Crude oil, natural gas (including shale gas) and coal we think will be evenly split in the energy
market and it is unlikely by then that there will be any dominant energy form. These 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. Over the past 50 years the world population has
more than doubled from 3.2 billion to 7.3 billion people and in that same time the average energy
consumption per person has also gone up by 50%. As the developing world continues to evolve,
this average increase in energy consumption per person on the planet is unlikely to subside,
so long term there will remain a significant demand for industrial products for the fossil fuel
industries.
In my statement last year, I noted that the Group’s Refractory Division had suffered a downturn.
I am pleased to report that this year the Refractory Division, despite the continuing difficult
market conditions, has delivered a 6.9% increase in sales and a 19.3% increase in pre-tax profits
over the previous financial year. We are hopeful given the hard work by all involved that this trend
will continue in this new financial year.
As detailed in note 8 to the financial statements, the dividend this year is proposed to be
£3,049,056, an increase of 20% on last year’s ordinary dividend, similar to the increase in profit
for the year. Despite having £15.5 million of capital expenditure this last year we will likely need
to further invest over the next two years if we are to maintain our position as the leading global
supplier of super nickel cast alloys.
Shareholders’ equity has risen by £15.2 million from £58.4 million at 30th April, 2013 to
£73.6 million at 30th April, 2014, and Total Shareholder Return has again substantially increased
this year by more than 100% but very much more over a 5, 10 or 20 year period (see page 16 for
full details).
3
STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
The Group has invested heavily during the year on land and buildings and on plant and
machinery. This expenditure will generate some of the additional capacity needed for the future
growth of the Group. It is pleasing that the cash flow situation, that was unsatisfactory last
year, has significantly improved through the hard work of many Group personnel, despite the
very substantial capital investments this year. However, we must remain vigilant as a further
£12.7 million of additional capital expenditure has already been authorised for the new financial
year. Of this, £4.0 million was already committed as at the balance sheet date with an additional
£8.7 million being sanctioned subsequent to the year end. As mentioned above we will likely need
to further invest in our super nickel alloy casting manufacturing capability as well as in certain
other specific projects if we are to sustain future growth in exports. The expected growth will also
result in increased working capital needs. Financial incentives from the Government will enable
the release of necessary capital expenditure which otherwise may be constrained by our cash
management.
Research and Development costs of £2.0 million during the year were mainly on the ongoing
projects associated with higher efficiency electricity generation allied to CO2 capture. In the
previous year, R&D spend was £2.6 million.
As part of our risk analysis, external independent reviews have been carried out on the Group’s
financial arrangements, insurance policy wordings, insured values, cyber security, intellectual
property rights, health of key staff and operatives, energy efficiency and business continuity.
The assessments, which are being undertaken by specialist firms with extensive global experience,
remain work in progress, but to date no significant issues have come to light. The reviews have
contributed to the Group’s awareness of business risks and training needs as our stream of
apprentices progress in the Group.
We are once again extremely grateful to our UK and overseas directors and employees for their
hard work in driving forward the performance of the Group.
25th July, 2014
J. W. Goodwin
Chairman
4
STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL
The Group’s main OBJECTIVE is to have a sustainable long term engineering based business with good potential
for profitable growth while providing a fair return to our shareholders.
The Board’s STRATEGY to achieve this is:
• to supply a range of technically advanced products to growth markets in the mechanical engineering and
refractory engineering segments in which we have built up a global reputation for engineering excellence, quality,
efficiency, reliability, price and delivery;
• to manufacture advanced technical products profitably, efficiently, and economically;
• to maintain an ongoing programme of investment in plant, facilities, sales and marketing, research and
development with a view to increasing efficiency, reducing costs, increasing performance, delivering better
products for our customers, expanding our global customer base and keeping us at the forefront of technology
within our markets;
• to control our working capital and investment programme to ensure a safe level of gearing;
• to maintain a strong capital base to retain investor, customer, creditor and market confidence and so help sustain
future development of the business;
• to support a local presence and a local workforce in order to stay close to our customers;
• to invest in training and development of skills for the Group’s future.
BUSINESS MODEL
The Group’s focus is on manufacturing within two sectors; mechanical engineering and refractory engineering and
through this division of our manufacturing activities, the Group benefits from market diversity. Further details of our
business and products are shown on our website www.goodwin.co.uk/2014
Mechanical Engineering
The Group produces a wide range of dual plate and axial nozzle check valves to serve the oil, petrochemical, gas,
LNG and water treatment markets. We create value by globally sourcing the best quality raw material at good prices,
manufacturing in highly efficient facilities using up to date technology to provide the very reliable products to the
required specification, at competitive prices and with timely deliveries.
Our mechanical engineering markets also include high alloy castings, machining and general engineering products
which typically form part of large construction projects such as power generation plants, oil refineries, high
integrity offshore structural components and bridges. The Group through its foundry and CNC machine shop has
the capability to pour the castings, radiograph and also finish them in-house. This capability is also targeting the
defence industry.
Goodwin International, the largest company in the Mechanical Engineering Division, designs and manufactures dual
plate and axial nozzle valves and also undertakes specialised CNC machining and fabrication work. Noreva GmbH
also designs and manufactures axial nozzle valves. Both Goodwin International and Noreva purchase the majority
of their sand mould castings from Goodwin Steel Castings and this vertical integration gives rise to competitive
benefits, increased efficiencies, and timely deliveries.
At Goodwin Pumps India we manufacture a superior range of submersible slurry pumps for end users in India,
China, Brazil and Africa. Easat Antennas designs and builds bespoke high-performance radar antennas to the global
market of major defence contractors, civil aviation authorities and border security agencies. We create value on
these by innovative design and assembly in our own facilities using bought in or engineered in-house components.
Refractory Engineering
Within the Refractory Engineering Division, Goodwin Refractory Services, GRS (UK), creates value by developing,
manufacturing and selling investment casting powders, waxes, silicone rubber and machinery for use in the
following operations: jewellery casting, aerospace, tyre moulding, and the compressor wheels for turbochargers.
The Division has six other investment casting powder companies around the world that carry out the same activities
as GRS (UK), located in China, India, Thailand and Brazil. These seven companies are vertically integrated with
another of our UK refractory companies, Hoben International, which manufactures cristobalite that it sells to the
seven group jewellery casting manufacturing companies, as well as producing ground silica which also goes into
casting powders.
The other UK refractory company is Dupré Minerals which focuses on producing exfoliated vermiculite that is used
in insulation, brake linings and fire protection products including textiles that can withstand high temperatures.
Dupré also sells consumables to the shell moulding casting industry.
5
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
The Group’s operations expose it to a variety of risks and uncertainties, the principal ones being as follows. These
risks are no different to previous years, and they are not expected to change substantially in the foreseeable future.
Market risk: The Group provides a range of products and services, and there is a risk that the demand for these
products and services will vary from time to time because of competitor action or economic cycles or international
trade friction or even wars. As shown in note 2 to the financial statements, 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.
As described in the Business Model, the Group generates significant sales from the worldwide energy markets.
Whilst these markets may suffer short term short declines, over the medium to long term the growing worldwide
demand for energy will ensure these markets remain buoyant.
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
manageable given the Group is developing products in areas in which it is knowledgeable and new products are
tested prior to their release into the market.
Product failure/Contractual risk: The risks that the Group supplies products that fail or are not manufactured to
specification are risks that all manufacturing companies are exposed to but we try to minimise these risks through
the use of highly skilled personnel operating within robust quality control system environments using third party
accreditations where appropriate. With regard to the risk of failure in relation to new products coming on line, the
additional risks here are minimised at the R&D stage, where prototype testing and the deployment of a robust closed
loop product performance quality control system provides feed back to the design department for the products
we manufacture and sell. The risk of not meeting safety expectations, or causing significant adverse impacts to
customers or the environment is countered by the combination of the controls mentioned within this section. The
risk of product obsolescence is countered by R&D investment.
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, as
well as attending safety training courses.
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 financial and
technical due diligence during the acquisition process and the Group’s inherent 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). Detailed information on the financial risk management objectives and
policies is set out in note 20 to the financial statements. 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.
Regulatory compliance: The Group’s operations are subject to a wide range of laws and regulations. Both within
Goodwin PLC and its subsidiaries, the Directors and Senior Managers within the companies make best endeavours
to comply with the relevant laws and regulations.
6
STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY
Greenhouse Gas (“GHG”) emissions
Since 2011 we have been reporting on the increase/decrease in our CO2 emissions. This is our first GHG emissions
report in line with the new UK reporting requirements for this year.
It should be noted that with our super nickel alloy castings, we have been at the forefront of CO2 reduction technology
in future electricity generating plants to be built worldwide, some of which will have the planned highest efficiency
in the world with 100% CO2 capture. Compared to most other companies, we have invested significant R&D into CO2
reduction with our specialist alloys that will be used in these more efficient power generating plants, and we have
received a Government grant for this environmentally important project. So, while not attempting to quantify the
effects, to put a true and balanced perspective on the Group’s CO2 impact on the environment, consideration should
be given to the benefits of the very much reduced CO2 emission levels of the modern turbines and power generation
equipment into which some of our technically advanced manufactured products are to be incorporated, resulting
in the annual savings in CO2 vastly outweighing the environmental burden imposed at the manufacturing stage.
The Group is acutely aware of its CO2 emissions which are kept as low as possible. Goodwin Steel Castings is a key
emitter and has a Climate Change Agreement, the requirements of which it satisfies and under which it claims the
allowable Climate Change Levy relief. The Group is looking at the possibility of installing a wind turbine at one of its
manufacturing sites which, if implemented, will reduce emissions.
The reported CO2 emissions are detailed below:
The sites reporting GHG data are the same as those consolidated in the Group’s financial statements, and we have
included all material qualifying emissions around the Group for the year to 30th April, 2014. Prior year data has not
been captured as the regulatory requirements had not come into effect. We have used the reporting guidance set
out by the DEFRA environmental reporting guidelines published in June 2013, and used the methodology set out in
their July 2013 paper, to report our Scope 1 and Scope 2 emissions, using the latest DEFRA emission factors issued
this year:
Scope 1 – direct emissions (from company facilities and vehicles)
Scope 2 – indirect emissions (from electricity purchased for own use)
Total Scope 1 and Scope 2 emissions
Intensity – emissions of total CO2 equivalent reported above per £1million of Group revenue
Donations
The Company made no political donations during the year.
Donations by the Group for charitable purposes amounted to £114,368 (2013 £88,250).
2014
Tonnes of CO2e
57,138
10,462
67,600
517
Employee consultation
The Group takes seriously its responsibilities to employees and, as a policy, provides employees systematically
with information on matters of concern to them. It is also the policy of the Group to consult where appropriate, on
an annual basis, with employees or their representatives so that their views may be taken into account in making
decisions likely to affect their interests.
Employment of disabled persons
The policy of the Group is to offer the same opportunity to disabled people, and those who become disabled, as to
all others in respect of recruitment and career advancement, provided their disability does not prevent them from
carrying out the duties required of them.
Health and Safety
ISO 18001 accreditation is the global standard that we are working towards and our two largest engineering
companies employing 640 people have attained accreditation.
Gender Diversity
The Group is committed to ensuring that everyone should have the same opportunities for employment and
promotion based on ability, qualifications and suitability for the work in question. The following table sets out a
breakdown of our average number of employees during 2014 by gender:
Main Board and Company Secretary
Senior Management
Employees
Total
Male
8
120
770
898
%
89%
94%
84%
85%
7
Female
1
7
148
156
%
11%
6%
16%
15%
Total
9
127
918
1,054
STRATEGIC REPORT
FORWARD LOOKING STATEMENTS
The Strategic Report contains forward-looking type 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.
The Strategic Report was approved by the Board on 25th July, 2014 and is signed on its behalf by:
J. W. Goodwin
Director
R. S. Goodwin
Director
8
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS
The Directors have pleasure in presenting their reports and audited financial statements for the year ended
30th April, 2014.
The Directors have presented their Strategic Report on pages 3 to 8. The Strategic Report is intended to be an
analysis of the development and performance of Goodwin PLC, and contains a description of the principal risks
and uncertainties facing the Group and an indication of likely future developments. The Chairman’s Statement
is part of the Strategic Report of the Directors for the year, and provides the financial review, including some of
the key performance indicators, and future trends of the business. Also included in the Strategic Report for the
year are the Group’s Objectives, Strategy and Business Model on page 5, the Principal Risks and Uncertainties on
page 6, and the Corporate Social Responsibility Report on page 7. The Strategic Report includes details of R&D in
the Chairman’s Statement.
The Board considers that the Chairman’s Statement, the Strategic Report, the Directors’ Reports, and the Financial
Statements, taken as a whole, are fair, balanced and understandable and that they provide the information considered
appropriate for shareholders to assess the Group’s performance during the financial year and at the year end, and
to assess the business model and strategy.
The Strategic Report was approved by the Board of Directors on 25th July, 2014.
Proposed ordinary dividends
The Directors recommend that an ordinary dividend of 42.348p per share (2013: 35.290p) be paid to shareholders
on the register at the close of business on 12th September, 2014. If approved by shareholders, the ordinary dividend
will be paid to shareholders on 10th October, 2014.
Directors
The Directors of the Company who have served during the year are set out below.
J. W. Goodwin
R. S. Goodwin
J. Connolly
M. S. Goodwin
A. J. Baylay
S. R. Goodwin
S. C. Birks
B. R. E. Goodwin
The Directors retiring in accordance with the Articles are Mr. A. J. Baylay and Mr S. R. Goodwin who, being eligible,
offer themselves for re-election.
No Director has a service agreement with the Company, nor any beneficial interest in the share capital of any
subsidiary undertaking.
The Company does not have any share option schemes for employees or directors. No equity sharing or long term
incentive plans that would diminish shareholder value will be put in place unless voted upon at an Annual General
Meeting.
Shareholdings
The Company has been notified that as at 23rd July, 2014 the following had an interest in 3% or more of the issued
share capital of the Company:
J. W. and R. S. Goodwin 2,058,631 shares (28.59%), J. W. and R. S. Goodwin 1,269,967 shares (17.64%). These shares
are registered in the names of J. M Securities Limited and J. M. Securities (No. 3) Limited respectively. J. H. Ridley
493,738 shares (6.86%), Rulegale Nominees (JAMSCLT) 400,507 shares (5.56%).
Share capital
The Company’s issued share capital comprises a single class of share capital which is divided into ordinary shares
of 10p each. Information concerning the issued share capital in the Company is set out in note 19 to the financial
statements on page 43.
All of the Company’s shares are ranked equally and the rights and obligations attaching to the Company’s shares are
set out in the Company’s Articles of Association, copies of which can be obtained from Companies House in England
and Wales or by writing to the Company Secretary.
There are no restrictions on the voting rights of shares and there are no restrictions in their transfer other than:
• Certain restrictions as may from time to time be imposed by laws and regulations (for example insider trading
laws); and
• Pursuant to the Model Code whereby Directors of the Company require approval to deal in the Company’s shares.
Additionally, the Company is not aware of any agreements between shareholders of the Company that may result
in restrictions on the transfer of ordinary shares or voting rights.
The Directors have not been given the authority to issue or buy back the shares of the Company.
9
DIRECTORS’ REPORTS
Change in control
REPORT OF THE DIRECTORS (continued)
The Group’s committed loan facilities include a change of control clause, which states that a change of control of
the parent Company will be classed as an event of default and would enable the providers at their discretion to
withdraw the facilities.
Shareholder relations
All shareholders are encouraged to participate in the Company’s Annual General Meeting. No shareholder meeting
has been called to discuss any business other than ordinary business at the Annual General Meeting.
The Board complies with the recommendations of the UK Corporate Governance Code that the notice of the Annual
General Meeting and related papers should be sent to shareholders at least twenty working days before the meeting.
The Directors attend the Annual General Meeting. The Chairman and other members of the Board will be available
to answer questions at the forthcoming Annual General Meeting. In addition, proxy votes will be counted and the
results announced after any vote on a show of hands.
The Chairman ensures that the views of shareholders are communicated to the Board as a whole, ensuring that
Directors develop an understanding of the views of shareholders. Any individual requests for information from
shareholders are dealt with by the Chairman, and where any such requests are subject to restraint in that any
disclosure would give rise to share price sensitive information, then the requests would be declined, or referred to
the Board for release to all shareholders through the Stock Exchange.
Going concern
With the current level of order input, the opportunity for continued profitability remains good for the next twelve
months. The impact of working capital requirements on our banking facilities given the expected level of activity
and capital spend commitments will require close management. 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.
Auditors
In accordance with Section 489 of the Companies Act 2006 and the recommendation of the Board of Directors, a
resolution is to be proposed at the Annual General Meeting for the re-appointment of KPMG LLP as auditor of the
Company.
Approved by the Board of Directors and signed on its behalf by:
J. W. Goodwin
Chairman
Ivy House Foundry,
Hanley,
Stoke-on-Trent,
ST1 3NR
25th July, 2014
10
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT
Introduction
The Board comprises eight Directors; the Audit Committee comprises the Company Secretary, (chairman), and three
Board Directors. The Board and the Audit Committee fulfil the roles required for effective corporate governance and
the Board considers that it has the right governance to execute its strategy to achieve its objectives.
The Board has always felt that it should be recognised that what may be appropriate for the larger company may
not necessarily be so for the smaller company, a point raised previously in the Cadbury Code of Best Practice. Whilst
conscious of its non-compliance with certain aspects of the revised Code as detailed below, it does not believe
that at this stage in the Group’s development and circumstances it is appropriate to change its own operational or
governance structure with the sole objective of achieving compliance with the revised Code given that the Board’s
current corporate governance strategy has been accepted by a large majority of its shareholders.
In view of the Group’s present size and proven track record, non-executive directors are not thought to be appropriate,
due to the time and cost likely to be involved and the lack of opportunity for adding significant value to the business.
Part of the Board’s policy for corporate governance, where considered appropriate, is to engage independent bodies
comprising external consultants for independent expert opinion on various matters. As before, where it does not
comply, the Board is happy to provide its explanations for not doing so on the basis that it believes that such non-
compliance is more appropriate to the shareholders’ and the Group’s long term interests.
Compliance statement under the UK Corporate Governance Code, revised October 2012
The Company is required to report on compliance throughout the year. In relation to all of the provisions except
those mentioned below, the Company complied throughout the period.
The Group does not comply with aspects of the Code’s requirements under paragraphs A4, B1, and C3 in terms of
having either a senior independent director or other non-executive directors on the Board and the requirement to
have non-executive directors on the Audit Committee. It does not have a Remuneration Committee or a Nominations
Committee as required under paragraphs B2 and D2.
The roles of the Chairman in running the Board and the Managing Director in running the Group’s businesses are
well understood. It is not considered necessary to have written job descriptions. This is contrary to paragraph A2.1.
The Chairman and Managing Director do not retire by rotation, which is contrary to paragraph B7 of the Code.
There is no formal schedule of matters reserved for the Board, which is contrary to paragraph A1.1.
The Board
During the year, the Board met formally twelve times, and details of attendees at these meetings are set out below:
...
J. W. Goodwin (Chairman)
...
R. S. Goodwin (Managing Director) ...
...
...
J. Connolly ...
...
...
M. S. Goodwin
...
...
A. J. Baylay ...
...
...
S. R. Goodwin
...
...
S. C. Birks
...
...
...
B. R. E. Goodwin
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
12 out of 12 attended
12 out of 12 attended
12 out of 12 attended
12 out of 12 attended
12 out of 12 attended
12 out of 12 attended
12 out of 12 attended
12 out of 12 attended
The Chairman and Managing Director do not retire by rotation. With this exception, all Directors retire at the first
Annual General Meeting after their initial appointment and then by rotation at least every three years.
The Board retains full responsibility for the direction and control of the Group and, whilst there is no formal schedule
of matters reserved for the Board, all acquisitions and disposals of assets, investments and material capital-related
projects are, as a matter of course, specifically reserved for Board decision.
The Board meets regularly with an agenda to discuss corporate strategy; to formulate and monitor the progress of
business plans for all subsidiaries and to identify, evaluate and manage the business risks faced. The management
philosophy of the Group is to operate its subsidiaries on an autonomous basis, subject to overall supervision and
evaluation by the Board, with formally defined areas of responsibility and delegation of authority. The Group has
formal lines of reporting in place with subsidiary management meeting with the Board on a regular basis. Regular
informal meetings are also held to enable all members of the Board to discuss relevant issues with local management
and staff at the business units.
The Audit Committee
The Audit Committee is made up of the following: J. W. Goodwin, R. S. Goodwin, and J. Connolly as Board Directors,
and P. Ashley (chairman) as Company Secretary and the Audit Committee reports to the Board. In view of the Group’s
size, proven track record, and close involvement in the day to day running of the business by the Board of Directors,
non-executive directors are not thought to be appropriate. The Audit Committee has met formally four times since
the issue of the Annual Report for the year ended 30th April, 2013, with all members attending each meeting. The
responsibility of the Audit Committee is explained in the Audit Committee Report on pages 13 to 14. The Audit
Committee takes into account the Company’s corporate Mission Statement, objectives and strategy, and reviews
investor correspondence and comments, regulatory changes, current issues and market trends. The Audit Committee
uses expert opinion where considered appropriate.
11
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
Board evaluation
The Managing Director and Chairman address the development and training needs of the Board as a whole. An
evaluation of the effectiveness and performance of the Board and the Directors of subsidiaries has been carried out
by the Managing Director and Chairman, by way of personal discussions and individual performance evaluation.
All Directors have reasonable access to the Company Secretary and to independent professional advice at the
Company’s expense.
External audit
The external auditor is appointed annually at the Annual General Meeting. The Board, following review and
recommendations received from the Audit Committee, considers the re-appointment of the auditor, and assesses on
an annual basis the qualification, expertise, cost, independence and objectivity of the external auditor. In addition,
the Audit Committee monitors the level of non-audit services provided to the Group by the external auditor to ensure
that their independence is not compromised.
Disclosure of information to auditors
The Directors who held office at the date of approval of this Corporate Governance Report confirm that, so far as
they are each aware, there is no relevant audit information of which the Company’s auditors are unaware; and each
Director has taken reasonable steps to make himself aware of any relevant audit information and to establish that
the Company’s auditors are aware of that information.
Internal Control and Risk Management
The Board has overall responsibility for the Group’s systems of internal controls and risk management which are
designed to manage rather than eliminate risk and provide reasonable reassurance against material misstatement
or loss.
The Board has primary responsibility for controlling: operational risks; financial risks including funding and
capital spend; compliance risks; and political risks. The Audit Committee has been delegated responsibility for
corporate reporting, financial risk management and to regularly review the effectiveness of the Group’s internal
controls together with consideration of any reports from the external auditor. The Audit Committee Report is on
pages 13 to 14. Except as noted within this Corporate Governance Report, the Board confirms that the internal control
systems comply with the UK Corporate Governance Code.
The Group’s main systems of internal controls includes regular visits and discussions between Board Directors and
subsidiary management on all aspects of the business including financial reporting, risk reporting, and compliance
reporting. In addition, there is Board representation with Goodwin PLC Directors on the boards of the subsidiaries.
Any concerns are reported to the members of the Audit Committee and to the Board. The Group maintains a risk
register, has business continuity programmes, and has insurance programmes that are all regularly reviewed.
These procedures have been in place throughout the year and up to the date of this report and accord with the FRC
publication ‘Internal Control: Guidance for Directors on the UK Corporate Governance Code’. The Board considers that
the close involvement of Board Directors in all areas of the day-to-day operations of the Group’s business, including
considering reports from management and discussions with senior personnel throughout the Group, represents the
most effective control over its financial and business risks system, by providing an on-going process for identifying,
evaluating and managing the principal risks faced by the Group. In particular, authority is limited to Board Directors
in key risk areas such as treasury management, capital expenditure and other investment decisions.
The close involvement of Board Directors in the day to day operations of the business ensures that the Board has the
financial and non financial controls under constant review, and so it is not currently considered that formal Board
reviews of these controls would provide any additional benefit in terms of the effectiveness of the Group’s internal
control systems.
The Board recognises the importance of an effective internal audit function to assist with the management and review
of internal controls and business risk. The Internal Audit Department is currently in the process of being reformed due
to a change in personnel and we are aiming to significantly enhance our capability in this area. The Board Directors
and senior management will continue to have close involvement on a day-to-day operational basis and the scope
and results of internal audit work to be performed will be kept under review in the coming year.
The Board considers that certain functions are best carried out by independent external bodies with specific expertise,
who then report to the Board directly or through the Audit Committee. To further the Group’s commitment to maintaining
strong corporate governance we can confirm that since the last annual report, we have appointed an international
firm of accountants so that certain key business risk areas are reviewed by those skilled in business continuity and
due process. Also during the year, the Board has commissioned external reviews of the Group’s insurance, banking,
property, and data protection by independent experts.
The Board confirms that it has not been advised of any material failures or weaknesses in the Group’s internal
control systems.
Approved by the Board of Directors and signed on its behalf by:
J. W. Goodwin
Chairman
Ivy House Foundry,
Hanley, Stoke-on-Trent, ST1 3NR
25th July, 2014
12
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT
The key role of the Audit Committee is to provide confidence in the integrity of the Group’s financial risk management,
internal financial controls and corporate reporting. The Audit Committee, as empowered by the Group’s Board of
Directors, has responsibility for:
1. Ensuring the integrity of the Group’s full year Annual Report, half year Interim Report and quarterly Interim
Management Statements; that they provide the information necessary for shareholders to assess the Group’s
performance; and recommending them to the Board for approval.
2. Ensuring the Group carries effective and relevant financial and non financial internal controls and risk management
systems.
3. Making recommendations to the Group’s Board of Directors on the appointment and remuneration of the Group’s
external auditor; ensuring independence of the auditor; the effectiveness of the audit process; and that the Group
receives value for money from the audit.
4. Reviewing any significant comments brought to its attention by Directors or other employees of the Group.
5. Reviewing the Group’s “whistle-blowing” procedures.
6. Reviewing the scope of work for the internal audit function.
The Audit Committee discharges each of its above responsibilities as follows:
1. Ensuring the integrity of the Group’s Annual Report, half year Interim Report and quarterly Interim
Management Statements:
Members of the Audit Committee are involved in the day to day running of the Group, including regular meetings
held between members of the Audit Committee, other Directors, General Managers and Senior Management
of the UK subsidiaries. Each overseas subsidiary is typically visited during the year by a member of the Audit
Committee, or by a Main Board Director, for meetings with the General Managers and Senior Management with
reports sent back to the Audit Committee. On a formal basis, members of the Audit Committee are involved in
quarterly discussions with the General Managers and Senior Management of each subsidiary where the positions
taken on subjective financial matters are discussed. Any areas where the Audit Committee feels that the positions
taken within any particular subsidiary are either inappropriate or merit further discussion are documented for
further discussion by the Board of Directors.
The Audit Committee reviews the quarterly Interim Management Statements and advises the Board of Directors
that they are fair, balanced and understandable and provide the information necessary for shareholders to assess
the Group’s quarterly performance.
For the half year Interim Report, the Audit Committee reviews the financial and non-financial content, including
the Chairman’s Statement, and reviews the Financial Statements and qualitative notes of the Financial Statements,
to ensure that they are balanced, relevant, compliant with relevant accounting standards / legislation, and are
consistent and complete. The Audit Committee advises the Board of Directors whether the half year Interim Report
taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders
to assess the Group’s half year performance. The figures in the half year Interim Report are not audited, but the
external auditors are given sight of these before publication.
For the full year Annual Report, the Audit Committee reviews the financial and non-financial content of the
Strategic Report, including the Chairman’s Statement; the Corporate Governance Report; the Directors Report;
the Directors’ Remuneration Policy and Report; and reviews the Financial Statements and the qualitative notes
to the Financial Statements to ensure that the content is balanced, relevant, compliant with relevant accounting
standards / legislation, and are consistent and complete. The Audit Committee has discussed the full year Annual
Report with the Group External Auditor. The Audit Committee confirmed to the Board that in its opinion the draft
of the Annual Report for the year ended 30th April, 2014 taken as a whole is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s full year performance, its position
at the year end, and its business model and strategy.
2. Ensuring the Group carries effective and relevant internal controls and financial risk management
systems.
To assess the effectiveness of systems for internal financial controls, financial reporting and financial risk
management, the Audit Committee reviews reports from Main Board Directors on the Group’s subsidiaries;
reviews reports from General Managers of the Group’s subsidiaries; reviews monthly financial reports; reviews
reports from internal and external audit; reviews reports from independent external consultants; and reviews the
Group’s risk register, business continuity programmes, and levels of insurance.
13
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
During the year, the Group has supplemented its extensive internal knowledge with independent external reports
from the following:
i) The Group’s external auditors’ review and comment on internal controls to the Audit Committee (KPMG LLP)
ii) The review of the Group’s UK tax compliance (Baker Tilly)
iii) The use of other independent external consultants who are specialists in their fields:
a) Business Continuity and Risk Assessments (PwC)
b) Insurance Portfolio (AON)
c) Asset Valuations for insurance purposes (Charterfields)
d) Bank facilities and management of foreign exchange risks (JC Rathbone)
e) Propriety of insurance contracts (Mactavish)
f) IT security assessment (Sec-1)
The Audit Committee has confirmed its view to the Board that in its opinion the Group carries relevant internal
controls and risk management systems appropriate to minimise the perceived risks of the Group’s business.
3. The Group’s external auditor.
The Audit Committee has met formally with the Group’s external auditor, KPMG LLP, to discuss the full year
Annual Report, and has met with and discussed matters with them as part of the audit process during the current
financial year being reported on. No material concerns were raised during these meetings or discussions. The Audit
Committee was satisfied with the external auditor’s performance, independence, the effectiveness of the audit
process, and the level of audit remuneration, and has recommended to the Board to propose the re-appointment
of KPMG LLP as the external auditor at the Annual General Meeting on 8th October, 2014.
4. Reviewing significant comments.
There is regular contact with Directors and employees and open and honest discussion is encouraged.
5. Whistle-blowing Procedures.
The Group has a whistle blowing policy in place whereby employees can report any suspected misconduct or
concerns, either anonymously on a dedicated telephone line, or to the Chairman, the Company Secretary or the
external auditors. Such calls are investigated and are reported to the Audit Committee. The Audit Committee has
confirmed to the Board that the Group’s whistle-blowing policy and procedures are appropriate.
6. Internal Audit.
The Internal Audit department is currently in the process of being reformed due to a change in personnel.
The Audit Committee is closely involved with the recruitment process.
7. Significant judgements relating to the Financial Statements
The Audit Committee reviewed what it considered to be the significant judgement areas within the Group annual
accounts for the year ended 30th April, 2014. The Audit Committee also took account of the findings of KPMG LLP
in relation to their external audit work for the year.
In particular, the Audit Committee considered the following principal risk areas:
Revenue recognition - whether sales recorded in the year were generally in compliance with the IAS 18
revenue recognition standard.
The adequacy of the Group’s provisions in relation to its sales contracts (both warranties and net realisable
value issues with regard to the year end work in progress).
In addition, the Audit Committee also considered other areas including the adequacy of the Group’s debtor
impairment reserves and the adequacy of the Group’s provision against damaged, slow moving and obsolete
stocks.
Following the review and having held discussions with management where appropriate as well as KPMG LLP
themselves, the Audit Committee was of the opinion that the significant judgements contained within these
Financial Statements were both justified and appropriate.
P. Ashley
Chairman of the Audit Committee
Ivy House Foundry,
Hanley, Stoke-on-Trent, ST1 3NR
25th July, 2014
14
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT
This report includes the Group’s Remuneration Policy for Directors, and sets out the Annual Directors’ Remuneration
Report.
Group’s Remuneration Policy for Directors
The Group’s policy in respect of Directors’ remuneration is to provide individual packages which are determined
having due regard to the Group’s current and projected profitability, the employee’s specific areas of responsibility and
performance, their related knowledge and experience in the Group’s specific fields of operation, the external labour
market and their personal circumstances whereby a package to remunerate and motivate the individual so as to best
serve the Group is set. Individual salaries are also indirectly linked up and down to the time allocated and perceived
effort by the Director to the Group’s business. Many Directors, as indeed employees, put in hours of work way beyond
what could be requested and such personal devotion to duty by a Director is rewarded without formulae. All Board
members have access to independent advice when considered appropriate. In forming its policy consideration has
been given to the UK Corporate Governance Code best practice provisions on remuneration policy, service contracts
and compensation and has considered the remuneration levels of directors of comparative companies.
At present, it is not considered necessary to include a fixed formula performance related element within the
remuneration of individual Directors.
The Group’s Remuneration Policy applies to existing Directors and will apply to any new Board appointments.
The remuneration policy for other employees is broadly based on principles consistent with the policy for Directors.
Salary reviews take into account Group performance as well as subsidiary performance, local pay and market conditions.
Whilst being aware of the new requirements to show in graph form the breakdown of base pay, bonus pay, pension
and long term benefits, the Group is unable to comply with this requirement as Directors are not paid in accordance
with any specific performance criteria or KPIs. Directors are paid based on their level of activity within the Group,
their knowledge and experience of the Group’s activities or similar, the performance of the Group versus market
opportunity whilst also considering the Director’s personal circumstances and the salary needed to ensure continuity
of employment. This in itself may result in decreases or increases in Director salary within any year as illustrated in
the matrix below.
Element of
Pay
Purpose and Link to
Strategy
Operation
Maximum
Performance
Targets
Changes for
2013/2014
Salary
Bonus
Long Term
Incentive Plan
Pension
Reflects the Directors’
level of activity
within the Group,
their knowledge
and experience
of the Company’s
activities or similar,
the performance of
the Group versus
market opportunity,
whilst also considering
the salary needed to
ensure continuity of
employment.
No bonus strategy or
incentive is agreed
or contractual with
any Director. Should
any be awarded, it
is discretionary and
generally between
0% and 25%, but with
a maximum of 60%,
as determined by the
Managing Director
and audited by the
Chairman.
There are no share
option schemes or
short or long term
incentive schemes for
Directors.
All Directors have 3%
added to their gross
remuneration which,
by nature of salary
sacrifice is put into
a pension scheme
where they have direct
dealings with the
selected investment
fund provider.
Reviewed
annually at the
anniversary of
the previous
salary
adjustment for
the individual
Director.
Generally in line
with inflation and
the wage/salary
increase awarded
to employees, but
this is not rigid.
The Group’s
performance,
good or bad, may
result in the salary
being flexed.
The Managing
Director sets the
base increase in
salaries. For the
period May 2013
to April 2014 the
increase was 1.6%.
60% of salary.
N/A
No exceptional
bonuses were paid
this year.
Following
review of
the half year
and year end
results of the
Company.
N/A
N/A
N/A
N/A
Monthly
payments.
Currently
3% of gross
remuneration.
N/A
This policy
was adopted in
October 2013
for the Directors
and entire UK
workforce.
15
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
Element of
Pay
Purpose and Link to
Strategy
Operation
Maximum
Performance
Targets
Changes for
2013/2014
Other benefits Fully expensed car or
N/A
cash alternative, health
insurance or other
services.
N/A as no scheme
exists.
N/A
Share
Ownership
Guidelines
N/A
N/A
N/A
N/A
See details of
the Directors’
emoluments on
Page 19.
N/A
As will be seen below, the long term ongoing Total Shareholder Return on investment ( TSR ) is more than acceptable,
whether it be over five years, ten years or twenty years, but this has been achieved by the Directors and the Company
taking long term policy decisions that at the time did not necessarily produce what a short term trader would have
wanted in terms of annual profit and dividend. It is for this reason that Goodwin PLC has no desire to put excessive
annual bonuses as a prime motivator to its Directors as this so often leads to undiscerning decisions being made
that detrimentally affect the long term wealth of a company. Directors’ remuneration is designed to promote the
long-term success of the Company.
In any company there are specific individual circumstances that on occasions will merit special treatment in a given
year for a director either to keep or look after the person, indeed no different than we may do for an employee. In
the matrix of remuneration for Directors you will note the Company has given itself flexibility to deal with specific
circumstances which may not even be able to be made public for confidentiality reasons of which there are many.
However, bearing in mind the performance of the Company over the past 20 years and more and that the Director
salaries are anything but excessive versus the norm of other PLCs, this is the Board’s policy.
The Company has found over the years that this method of managing remuneration, which is principally monitored by
the Managing Director and audited by the Chairman, has produced a team of cohesive Directors who have achieved
results that surpass the average PLC performance, be it of the FTSE 100 or the FTSE 350, by a large margin. The
unacceptable results over the past six years of many supposedly Blue Chip companies run with independent boards
with very much incentivised executive directors is something that the Board of Goodwin PLC has no intention of
emulating and, as such, whilst Goodwin PLC will try to adopt the Listing Rules in form of presentation, there will be
significant areas of omission in the disclosure of remuneration details for the reasons stated above.
For reference the TSR of Goodwin PLC versus the FTSE 100 and the FTSE 350 is shown below for not only the last
five but also the last ten years and the last twenty years.
TSR for last 5 Years
TSR for last 10 Years
TSR for last 20 Years
...
...
...
...
...
...
...
...
...
Goodwin
415%
2,142%
23,983%
FTSE 100
85%
110%
318%
FTSE 350
93%
124%
345%
As is required by the Listing Rules, we show in graph form both the increase in salary of the Managing Director of
Goodwin PLC and the TSR over the past ten years. We however do not list out the salary of the Financial Director
of Goodwin PLC versus the TSR as in Goodwin we have a Group Chief Accountant (John Connolly) who carries out
75% of the duties of a Financial Director and who is also a Director of Goodwin PLC, but we do not have what would
generally be known as a Financial Director. This is for the reason that certain decisions that outsiders might consider
are the sole responsibility of the Financial Director are not. In Goodwin it is a team effort and such decisions are made
not only by the Group Chief Accountant but also by the Managing Director and the Chairman.
The Company put the Remuneration Policy to the vote of the Annual General Meeting last year, and will be doing so
again this year and every three years thereafter as is required by the Listing Rules.
For confidentiality and flexibility reasons, the Board policy is not to disclose exit/termination payments to Directors
but the policy is to remain within the law, to fairly compensate good leavers and minimise payments to bad leavers.
In the last ten years the Company has managed to avoid paying any termination payments to bad leavers. It is,
however, Board policy to limit termination payments to a maximum of 100% of gross annual salary and should such
amount be exceeded than it will be reported in the annual accounts giving the reason why.
It is confirmed that there are and will be no equity sharing or long term incentive plans that will diminish shareholder
value unless voted upon at an Annual General Meeting. The Company takes seriously its responsibility for ensuring
a fair deal between employees, shareholders, customers and the local community and maintaining an appropriate
balance.
The Company does not use or pay any external advisors or consultants for remuneration or incentive policy. Shareholder
engagement is by nature of the Annual Report and Accounts, the Annual General Meeting and the votes therein.
16
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report
This report is submitted in accordance with the Directors’ Remuneration Report Regulations.
Consideration by the Directors of matters relating to Directors’ remuneration
The Company’s Remuneration Policy for Directors is set by the Board as a whole and is described in pages 15 to 16.
The Policy has been followed in the financial year to 30th April, 2014 and will be followed in the next financial year.
The Board of Directors are also the key management personnel as defined in IAS 24.
Service contracts
None of the Directors has a service contract, a Director may resign at any time by notice in writing to the Board. There
are no set minimum notice periods but all Directors other than the Chairman and Managing Director are subject to
retirement by rotation and as employees also have notice periods in accordance with law. No compensation as of
right is payable to Directors on leaving office.
Relative importance of spend on pay
The table below shows shareholder distributions and total employee expenditure, and the percentage change in both
Ordinary dividends proposed in respect of the year
...
Extraordinary dividends proposed in respect of the year
Total dividends proposed in respect of the year ...
Total employee expenditure
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
3,049)
–)
2013)
£’000)
2,541)
1,270)
%)
20.0%)
)
3,049)
3,811)
...
...
...
... 36,451)
33,422)
9.1%)
Approval of the Company’s Remuneration Policy for Directors and the Annual Directors’ Remuneration
Report
An ordinary resolution for the approval of the Company’s Remuneration Policy for Directors and the Annual Director’s
Remuneration Report will be put to shareholders at the forthcoming Annual General Meeting. The Company’s
Remuneration Policy for Directors and the Annual Directors’ Remuneration Report presented in the accounts to
30th April, 2013 was put to the shareholders at last year’s Annual General Meeting on 9th October, 2013. With respect
to the Company’s Remuneration Policy, 96.9% of proxy votes were cast in favour of the policy. The Annual Directors’
Remuneration Report was accepted with 96.6% of proxy votes cast in favour.
Total shareholder return
The following graphs compare the Group’s total shareholder return over the ten and twenty years ended 30th April,
2014 with various FTSE indices. The graphs also show the increase in the earnings of the Managing Director for
these periods.
The base earnings of the Managing Director during the year has increased by 1.6% from the previous year, but this
year there was £Nil exceptional bonus paid (2013: £25,000). The total earnings of the Managing Director for the last
five years are:
2010
£’000
2011
£’000
2012
£’000
2013
£’000
2014
£’000
308
320
349
385
360
During the year, the Group followed the UK Government’s requirements to set up Auto Enrolment Pension
arrangements. Excluding the increased pension payments during this year, the basic average earnings of all
employees of the Group as a whole has increased by 3.2% from the previous year.
17
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Goodwin Total Shareholder Return (TSR)
10 Years Ended 30th April, 2014
2,500%
2,000%
1,500%
1,000%
500%
e
g
n
a
h
C
%
e
v
i
t
a
l
u
m
u
C
0%
Apr 2004
Apr 2005
Apr 2006
Apr 2007
Apr 2008
Apr 2009
Apr 2010
Apr 2011
Apr 2012
Apr 2013
Apr 2014
Goodwin Total Shareholder Return (TSR)
20 Years Ended 30th April, 2014
e
g
n
a
h
C
%
e
v
i
t
a
l
u
m
u
C
25,000%
20,000%
15,000%
10,000%
5,000%
0%
Apr 1994
Apr 1996
Apr 1998
Apr 2000
Apr 2002
Apr 2004
Apr 2006
Apr 2008
Apr 2010
Apr 2012
Apr 2014
Goodwin
FTSE 100
FTSE 350
Small Cap
Ind and Eng
MD Earnings
Goodwin
FTSE 100
FTSE 350
Small Cap
Ind and Eng
MD Earnings
The increase in the share price since 1994 plus dividends re-invested would mean that £1.00 invested
in 1994 would at 30th April, 2014 be worth £239.83. The increase in the share price since 2004 plus
dividends re-invested would mean that £1.00 invested in 2004 would at 30th April, 2014 be worth £21.42.
18
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
The auditors are required to report on the following information contained in this section of the Annual Directors’
Remuneration Report.
Directors interests in the share capital of the Company
The interests of the Directors in the share capital of the Company at the beginning and end of the financial year
were as follows:
Number of 10p ordinary shares
30th April,
30th April,*
2013
2014*
Beneficial
...
...
...
...
J. W. Goodwin ...
R. S. Goodwin ...
J. W. Goodwin and R. S. Goodwin
J. W. Goodwin and R. S. Goodwin
...
J. Connolly
M. S. Goodwin ...
S. R. Goodwin ...
...
A. J. Baylay
B. R. E. Goodwin
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Non beneficial
J. W. Goodwin and E. M. Goodwin ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
58,899*
24,915*
2,058,631*
1,269,976*
722*
84,152*
104,980*
1,200*
47,590*
67,369
33,338
2,040,631
1,254,372
722
99,768
108,881
1,200
51,491
14,166*
14,166
Since 30th April, 2014, B. R. E. Goodwin has purchased 687 shares. His total holding is now 48,277 shares. There
have been no other changes in the Directors’ interests between 30th April, 2014 and 25th July, 2014.
Details of individual emoluments and compensation
Single Total Figure Table
Total
Total
Salary Benefits
in kind
...
J. W. Goodwin
...
R. S. Goodwin
...
J. Connolly ...
...
M. S. Goodwin
...
S. R. Goodwin
...
A. J. Baylay ...
S. C. Birks* ...
...
B. R. E. Goodwin* ...
F. A. Gaffney (retired 28th March, 2013)
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014
£’000
308
308
213
226
154
113
134
116
–
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Other
money
or assets
receiv-
able
2014
£’000
–
–
–
–
–
–
–
–
–
2014
£’000
45
45
41
27
3
17
15
2
–
Pension
contrib-
utions
2014
£’000
7
7
4
4
2
2
2
2
–
2014
£’000
360
360
258
257
159
132
151
120
–
2013
£’000
385
385
248
238
159
132
77
62
136
1,822
Total ...
...
...
...
...
...
...
1,572
195
–
30
1,797
*S. C. Birks & B. R. E. Goodwin were appointed as Directors on the 14th November, 2012 and their remuneration for
the previous year reflects the salary and benefits paid to them as Directors since that date.
Benefits-in-kind consist of the provision of a fully-expensed motor vehicle, cash alternative scheme, healthcare
insurance or other services.
There are no share option schemes or other long term incentive schemes.
Total pension entitlements
During the year, the Group has followed the Government’s requirements to set up a pension scheme for all UK
employees including Directors. Under this Auto Enrolment Pension arrangement each Director has an amount of 3%
of gross remuneration paid into a pension scheme where they have direct dealings with the selected investment fund
provider. The pension contributions are to money purchase pension schemes which are independent of the Company.
The Company has no obligations to make any payments in relation to pensions when a Director leaves service by
nature of removal from office, resignation or retirement.
The Annual Directors’ Remuneration Report was approved by the Board on 25th July, 2014 and is signed on its behalf by:
J. W. GOODWIN
Director
R. S. GOODWIN
Director
19
DIRECTORS’ REPORTS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE
ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial
year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted
by the EU and applicable law and have elected to prepare the parent Company financial statements in accordance
with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law the Directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and parent Company and of their income statement or profit
or loss for that period.
In preparing each of the Group and parent Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
•
•
for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted
by the EU;
for the parent Company financial statements, state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the parent Company financial statements;
and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and the parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report,
Report of the Directors, Corporate Governance Report, Audit Committee Report and Directors’ Remuneration Report
that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
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 Strategic Report and the Directors’ Reports include 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
Director
R. S. GOODWIN
Director
25th July, 2014
20
AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
to the Members of
GOODWIN PLC ONLY
OPINIONS AND CONCLUSIONS ARISING FROM OUR AUDIT
1. Our opinion on the financial statements is unmodified
We have audited the financial statements of Goodwin PLC for the year ended 30th April, 2014 set out on pages
23 to 56. In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs
as at 30th April, 2014 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting
Standards as adopted by the European Union;
• the parent Company financial statements have been properly prepared in accordance with UK Accounting
Standards; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006
and, as regards the Group financial statements, Article 4 of the IAS Regulation.
2. Our assessment of risks of material misstatement
In arriving at our audit opinion above on the financial statements the risk of material misstatement that had the
greatest effect on our audit were as follows:
Recognition of revenue (With regard to the £130 million revenue reported for the year ended
30th April, 2014)
Refer to page 14 (Board report), page 32 (accounting policy) and pages 33 to 34 (financial disclosures)
The risk – The Group’s commercial terms agreed with customers determine the point at which revenue can be
recognised in accordance with accounting standards. As these commercial terms can be complex and vary between
components of the Group a detailed review is required by the Group in identifying the appropriate accounting
treatment in each case and in particular the milestone in the arrangement when revenue can be recognised. The
most significant risk is that the Group might inappropriately arrive at or apply an accounting treatment for the
transaction such that the accounting for the transaction does not reflect the timing of transfer of the significant
risks and rewards of ownership to the buyer. This could lead to revenue and profit being recognised in the incorrect
period.
Our response – Our audit procedures included, among others, for the significant commercial terms applied by
the Group making our own independent assessment, with reference to the relevant accounting standards, of the
milestone or milestones at which it would be appropriate to recognise revenue. Those assessments were compared
to the actual accounting treatment applied by the Group. For a selection of significant actual revenue transactions,
focussed on the periods immediately prior to and after the year end, we obtained customer purchase orders,
shipping documentation and sales invoices to identify the commercial terms agreed with the customer. We then
tested whether the actual accounting treatment applied by the Group for those revenue transactions was in line
with our expected accounting treatment for those specific commercial terms.
Warranty provision (With regard to the £0.7 million provision held at the year ended 30th April, 2014)
Refer to page 14 (Board report), page 32 (accounting policy) and page 40 (financial disclosures)
The risk – Certain of the Group’s products incorporate the right to return under a pre-agreed warranty policy
with its customers. The warranty periods offered vary between the components of the Group and markets (in
line with commercial terms agreed with the customer). Determination as to whether to recognise a provision
and the amount of the provision to be recognised requires the Group to make judgements and estimates that
are inherently subjective, including the likelihood of claims arising, the number of parts affected and the cost of
rectification of those parts.
Our response – Our audit procedures included among others, discussions with operational management as to
current and historical quality issues and known or expected warranty claims, corroboration of these discussions
through review of board minutes and credit notes and, where available, inspection of customer correspondence
regarding known warranty issues in order to assess the completeness and accuracy of the warranty provision.
For specific provisions, we assessed the calculation of the provision taking into account available supporting
documentation such as customer correspondence and management cost estimates. We critically challenged
the key management judgements made in determining the Group’s provisions including a comparison of these
judgements to historical product return levels. We also considered the adequacy of the Group’s disclosures.
3. Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at £1.5m. This has been determined with
reference to a benchmark of Group profit before taxation (of which it represents 6.2%), which we consider to be
one of the principal considerations for members of the Company in assessing the financial performance of the
Group.
21
AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
to the Members of
GOODWIN PLC ONLY (continued)
3. Our application of materiality and an overview of the scope of our audit (continued)
We agreed with the Audit Committee to report to it all corrected and uncorrected misstatements we identified
through our audit with an individual value in excess of £75,000 and all other cumulative audit misstatements.
Audits for Group reporting purposes were performed by component auditors at the key reporting component
in Germany and by the Group audit team in the United Kingdom. In addition, specified audit procedures were
performed by component auditors in Thailand, India and China. These Group procedures covered 97% of total
group revenue; 101% of Group profit before taxation; and 95% of total Group assets.
The audits undertaken for Group reporting purposes at the key reporting components of the Group were all
performed to materiality levels set by, or agreed with, the Group audit team. These materiality levels were set
individually for each component and ranged from £6,000 to £1,044,000.
Detailed audit instructions were sent to all the auditors in these locations. These instructions covered the significant
audit areas that should be covered by these audits (which included the relevant risks of material misstatement
detailed above) and set out the information required to be reported back to the Group audit team. Telephone
meetings were held with the auditors in Germany.
4. Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion:
• the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006; and
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
5. We have nothing to report on in respect of the matters on which we are required to report by exception
Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our
audit, we have identified other information in the annual report that contains a material inconsistency with either
that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between the knowledge we acquired during our audit and the
Directors’ statement that they consider that the annual report and financial statements taken as a whole is fair,
balanced and understandable and provides the information necessary for shareholders to assess the Group’s
performance, business model and strategy; or
• the Audit Committee report does not appropriately address matters communicated by us to the Audit Committee.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
• the Directors’ statement, set out on page 10, in relation to going concern;
• the part of the Corporate Governance Statement on page 11 relating to the Company’s compliance with the nine
provisions of the 2010 UK Corporate Governance Code specified for our review.
We have nothing to report in respect of the above responsibilities.
Scope of report and responsibilities
As explained more fully in the Directors’ Responsibilities Statement, set out on page 20, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view. A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate. This report is made solely to the Company’s members as a body
and subject to important explanations and disclaimers regarding our responsibilities, published on our website
at www.kpmg.com/uk/auditscopeukco2013a, which are incorporated into this report as if set out in full and should
be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of
our opinions.
25th July, 2014
Simon Purkess (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
One Snowhill, Snowhill Queensway, Birmingham, B4 6GH
22
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 30th April, 2014
CONTINUING OPERATIONS
Revenue
...
Cost of sales
...
...
GROSS PROFIT ...
...
Distribution expenses
...
...
...
...
Administrative expenses
OPERATING PROFIT ...
Financial expenses
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Share of profit of associate companies
PROFIT BEFORE TAXATION
Tax on profit ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Notes
2
2014)
£’000)
2013)
£’000)
130,828)
(86,010)
126,964)
(86,404)
44,818)
(3,783)
(16,494)
24,541)
(760)
314)
24,095)
(4,448)
40,560)
(3,378)
(16,026)
21,156)
(1,133)
273)
20,296)
(4,609)
5
11
2, 3
6
PROFIT AFTER TAXATION ...
...
...
...
...
...
...
...
19,647)
15,687)
ATTRIBUTABLE TO:
Equity holders of the parent
Non-controlling interests
...
...
...
...
...
...
...
...
...
...
...
...
...
...
19
19,035)
612)
15,247)
440)
PROFIT FOR THE YEAR
...
...
...
...
...
...
...
...
19,647)
15,687)
BASIC AND DILUTED EARNINGS PER ORDINARY SHARE
...
...
7
264.38p)
211.76p)
The notes on pages 28 to 56 form part of these financial statements.
23
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th April, 2014
2014)
£’000)
2013)
£’000)
PROFIT FOR THE YEAR
...
...
...
...
...
...
...
...
...
19,647)
15,687)
OTHER COMPREHENSIVE (EXPENSE)/INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME
STATEMENT:
Foreign exchange translation differences
...
...
...
Effective portion of changes in fair value of cash flow hedges
...
...
...
...
...
...
Change in fair value of cash flow hedges transferred to the income statement
(2,270)
2,245)
218)
1,123)
(170)
(492)
Tax charge on items that may be reclassified subsequently to the income
...
statement
...
...
...
...
...
...
...
...
...
OTHER COMPREHENSIVE (EXPENSE)/INCOME FOR THE YEAR, NET
...
OF INCOME TAX
...
...
...
...
...
...
...
...
...
...
(522)
149)
(329)
610)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
...
...
...
...
19,318)
16,297)
ATTRIBUTABLE TO:
Equity holders of the parent
Non-controlling interests
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
19,244)
74)
15,627)
670)
19,318)
16,297)
24
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30th April, 2014
)
)
)
)
Trans-) Cash flow)
lation)
reserve)
£’000)
Share)
capital)
£’000)
Non-)
hedging) Retained) holders of) controlling)
interests)
earnings) the parent)
reserve)
£’000)
£’000)
£’000)
£’000)
Total)
equity)
£’000)
Total)
attributable)
to equity)
Year ended 30th April, 2014
Balance at 1st May, 2013
...
720)
1,723)
(746)
56,657)
58,354)
4,173)
62,527)
Total comprehensive income:
Profit
...
...
...
...
Other comprehensive income:
Foreign exchange translation
...
differences
...
...
Net movements on cash flow
...
hedges ...
...
...
–)
–)
–)
–)
–)
19,035)
19,035)
612)
19,647)
(1,732)
–)
–)
1,941)
–)
–)
(1,732)
(538)
(2,270)
1,941)
–)
1,941)
Total comprehensive
income for the year
...
–)
(1,732)
1,941)
19,035)
19,244)
74)
19,318)
Transactions with owners of
the Company recognised
directly in equity
Purchase of non-controlling
interest without a change
in control
Dividends paid ...
...
...
–)
–)
–)
–)
–)
–)
(197)
(197)
(44)
(241)
(3,811)
(3,811)
(223)
(4,034)
Balance at 30th April, 2014
720)
(9)
1,195)
71,684)
73,590)
3,980)
77,570)
Year ended 30th April, 2013
Balance at 1st May, 2012
...
720)
830)
(233)
43,720)
45,037)
3,671)
48,708)
Total comprehensive income:
Profit
...
...
...
...
Other comprehensive income:
Foreign exchange translation
...
differences
...
...
Net movements on cash flow
...
hedges ...
...
...
Total comprehensive
income for the year
...
Transactions with owners of
the Company recognised
directly in equity
–)
–)
–)
–)
–)
–)
15,247)
15,247)
440)
15,687)
893)
–)
–)
(513)
–)
–)
893)
230)
1,123)
(513)
–)
(513)
893)
(513)
15,247)
15,627)
670)
16,297)
Dividends paid ...
...
...
–)
–)
–)
(2,310)
(2,310)
(168)
(2,478)
Balance at 30th April, 2013
720)
1,723)
(746)
56,657)
58,354)
4,173)
62,527)
25
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
At 30th April, 2014
NON-CURRENT ASSETS
Property, plant and equipment
...
...
Investment in associates
...
Intangible assets ...
CURRENT ASSETS
Inventories ...
...
...
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
...
...
...
...
...
...
...
...
...
...
...
TOTAL ASSETS
CURRENT LIABILITIES
...
Interest-bearing loans and borrowings
Bank overdraft
...
...
...
...
Trade and other payables
Deferred consideration
...
Derivative financial liabilities ...
...
Liabilities for current tax
...
...
Warranty provision
...
...
...
...
...
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings
Warranty provision
...
Deferred tax liabilities ...
...
...
...
...
TOTAL LIABILITIES
Notes
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
9
11
10
14
15
20
16
16
17
18
18
20
12
17
12
13
2014)
£’000)
44,096)
1,193)
10,634)
55,923)
31,215)
32,851)
2,517)
6,233)
72,816)
2013)
£’000)
33,308)
1,314)
11,496)
46,118)
31,833)
34,953)
809)
5,514)
73,109)
128,739)
119,227)
–)
2,391)
33,685)
500)
1,119)
2,401)
383)
40,479)
7,485)
336)
2,869)
77)
1,902)
29,994)
500)
1,231)
2,423)
378)
36,505)
17,130)
484)
2,581)
10,690)
20,195)
51,169)
56,700)
NET ASSETS ...
...
...
...
...
...
...
...
...
...
...
77,570)
62,527)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
...
...
...
...
...
Share capital
...
Translation reserve
...
Cash flow hedge reserve
...
Retained earnings
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
19
19
19
19
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
720)
(9)
1,195)
71,684)
73,590)
NON-CONTROLLING INTERESTS
...
...
...
...
...
...
...
19
3,980)
720)
1,723)
(746)
56,657)
58,354)
4,173)
TOTAL EQUITY
...
...
...
...
...
...
...
...
...
...
77,570)
62,527)
These financial statements were approved by the Board of Directors on 25th July, 2014 and signed on its behalf by:
J. W. GOODWIN
Director
R. S. GOODWIN
Director
Company Registration Number: 305907
26
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30th April, 2014
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations after tax
...
...
...
...
19,647)
15,687)
2014)
£’000)
2014)
£’000)
2013)
£’000)
2013)
£’000)
...
...
Adjustments for:
Depreciation ...
...
Amortisation of intangible assets
Financial expense ...
...
...
Loss/(profit) on sale of property, plant and equipment
Share of profit of associate companies
...
Tax expense ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
3,415)
703)
760)
13)
(314)
4,448)
OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS 28,672)
2,484)
(115)
Decrease/(increase) in trade and other receivables
...
...
...
...
...
...
...
(Increase)/decrease in inventories
Increase in trade and other payables
(excluding payments on account)
Increase in payments on account
...
...
CASH GENERATED FROM OPERATIONS
...
...
...
Corporation tax paid
Interest paid ...
...
...
...
...
Interest element of finance lease obligations
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
1,835)
1,794)
34,670)
(814)
(4,688)
(31)
NET CASH FROM OPERATING ACTIVITIES ...
...
...
...
29,137)
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Proceeds from disposal of intangible assets ...
Acquisition of property, plant and equipment
Purchase of non-controlling interest
...
Additional payment for existing subsidiary ...
Payment of deferred purchase creditor
...
Dividends received from associate companies
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
46)
)–)
(15,082)
(241)
(45)
–)
201)
144)
265)
(9,409)
–)
(8)
(2,755)
308)
2,792)
738)
1,133)
(20)
(273)
4,609)
24,666)
(9,144)
1,098)
85)
1,577)
18,282)
(1,097)
(4,581)
(19)
12,585)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES ...
...
(15,121)
(11,455)
CASH FLOWS FROM FINANCING ACTIVITIES
...
...
Payment of capital element of finance lease obligations ...
...
Dividends paid
...
...
Dividends paid to non-controlling interests ...
...
Proceeds from loans and committed facilities
...
Proceeds from finance leases
...
...
Repayment of loans and committed facilities
...
...
...
Finance fees ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
(401)
(3,811)
(223)
–)
356)
(8,791)
(56)
(303)
(2,310)
(168)
4,345)
683)
(3,077)
–)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(12,926)
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
...
Effect of exchange rate fluctuations on cash held ...
...
...
...
...
CASH AND CASH EQUIVALENTS AT END OF YEAR (see note 16)
1,090)
5,437)
(294)
6,233)
(830)
300)
5,019)
118)
5,437)
27
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
Goodwin PLC (the “Company”) is incorporated in the UK.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as
the “Group”) and equity account the Group’s interest in associates. The parent Company financial statements
present information about the Company as a separate entity and not about its Group.
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 Company has elected to prepare its
parent Company financial statements in accordance with UK GAAP; these are presented on pages 52 to 56.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods
presented in these Group financial statements.
Judgements made by the Directors, in the application of these accounting policies that have significant effect on
the financial statements and estimates with a significant risk of material adjustment in the next year are discussed
in note 25.
With the current level of order input, the opportunity for continued profitability remains good for the next twelve
months. The impact of working capital requirements on our banking facilities given the expected level of activity
and capital spend commitments will require close management. 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.
New IFRS standards and interpretations adopted during 2014
In 2014 the following amendments had been endorsed by the EU, became effective and therefore were adopted
by the Group:
• Amendments to IAS 1 Presentation of Items of Other Comprehensive Income
• Amendments to IFRS 13 Fair Value Measurement
• 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.
Measurement convention
The financial statements are rounded to the nearest thousand pounds.
The financial statements are based on the historical cost basis except where the measurement of balances at fair
value is required as below.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent
of the voting power of another entity. Associates are accounted for using the equity method and are initially
recognised at cost. The Group’s investment includes goodwill identified on acquisition, net of any accumulated
impairment losses. The consolidated financial statements include the Group’s share of the total recognised
income and expense and equity movements of equity accounted investees, from the date that significant influence
commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest
in an equity accounted investee, the Group’s carrying amount is reduced to nil and recognition of further losses is
discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments
on behalf of an investee.
28
NOTES TO THE FINANCIAL STATEMENTS
Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at
the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the income statement within operating profit.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling
at the dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
consolidation, are translated to sterling at foreign exchange rates ruling at the balance sheet date. The revenues
and expenses of foreign operations are translated at an average rate for the period where this rate approximates
to the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are taken directly to the translation
reserve. They are released into the income statement upon disposal of the foreign operation.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group has become
a party to the contractual provisions of the instrument. The principal financial assets and liabilities of the Group
are as follows:
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand including cash deposits with an original maturity
of three months or less.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are
included as a component of cash and cash equivalents for the purpose only of the statement of cash flows.
Trade receivables
Trade receivables do not carry interest and are initially recognised at fair value and are subsequently measured at
their amortised cost using the effective interest method where material as reduced by allowances for impairment
when there is objective evidence of impairment. A provision for impairment is established when the carrying
value of the receivable exceeds the present value of the future cash flow discounted using the original effective
interest rate. The carrying value of the receivable is reduced through the use of an impairment account and any
impairment loss is recognised in the income statement.
Recognition and valuation of equity instruments
Equity instruments are stated at par value. For ordinary share capital, the par value is recognised in share capital
and the premium in the share premium reserve.
Recognition and valuation of financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
Bank borrowings
Interest bearing bank loans and overdrafts are initially recorded at their fair value less attributable transaction
costs. They are subsequently carried at their amortised cost and finance charges and are recognised in the
income statement over the term of the instrument using an effective rate of interest. Bank overdrafts that form
an integral part of the Group’s cash management are included as a component of cash and cash equivalents for
the purpose only of the statement of cash flows.
Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently at amortised cost using the
effective interest method where material.
Derivative financial instruments and hedging
Derivative financial instruments
Derivative financial instruments are recognised at fair value. The fair value of interest rate swaps is the estimated
amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account
current interest rates and the current creditworthiness of the swap counterparties. The fair value of forward
exchange contracts is equal to the present value of the difference between the contractual forward price and
the current forward price for the residual maturity of the contract. For derivatives that do not form part of a
designated hedge relationship, the gain or loss on re-measurement to fair value is recognised immediately in
the income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant
gain or loss depends on the nature of the item being hedged (see below).
29
NOTES TO THE FINANCIAL STATEMENTS
Derivative financial instruments and hedging (continued)
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised
asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative
financial instrument is recognised directly in the hedging reserve. Any ineffective portion of the hedge is recognised
immediately in the income statement.
For cash flow hedges, the associated cumulative gain or loss is removed from equity and recognised in the
income statement in the same period or periods during which the hedged forecast transaction affects the income
statement.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the
hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at
that point remains in equity and is recognised in accordance with the above policy when the transaction occurs.
If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised
in equity is recognised in the income statement immediately.
When the forecast transaction subsequently results in the recognition of a non-financial asset or non-financial
liability, the associated cumulative gain or loss is removed from the hedging reserve and is included in the initial
cost or other carrying amount of the non-financial asset or liability.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.
Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are
classified as finance leases. Where land and buildings are held under finance leases the accounting treatment of
the land is considered separately from that of the buildings. Leased assets acquired by way of finance lease are
stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments
at inception of the lease, less accumulated depreciation and impairment losses. Lease payments are accounted
for as described below.
Depreciation is charged to the income statement over the estimated useful lives of each part of an item of
property, plant and equipment on the following bases:
...
...
Freehold land
...
...
Freehold buildings
...
Leasehold property
...
...
Plant and machinery ...
...
...
...
Tooling
...
Fixtures and fittings ...
...
Assets in the course of construction are not depreciated.
2% on cost
over period of lease
10% to 25% on reducing balance or cost
15% or 25% on reducing balance
over estimated production life
15% to 25% on reducing balance
... Nil
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Motor vehicles ...
...
...
Intangible assets and goodwill
All business combinations are accounted for by applying the purchase method. Goodwill represents amounts
arising on acquisition of businesses. In respect of business acquisitions that have occurred since 1st May, 2006,
goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable
assets and contingent liabilities acquired. For acquisitions prior to the adoption of Revised IFRS 3 “Business
Combinations” (1st May, 2010), cost includes directly attributable acquisition costs. For acquisitions after this
date, such costs are charged to the income statement. Identifiable intangibles are those which can be sold
separately or which arise from legal rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating
units and is not amortised but is tested annually for impairment.
In respect of acquisitions prior to 1st May, 2006, goodwill is included at transition date on the basis of its
deemed cost, which represents the amount recorded under UK GAAP which was broadly comparable save
that only separable intangibles were recognised and goodwill was amortised. On transition, amortisation of
goodwill has ceased as required by IFRS 1.
Negative goodwill arising on an acquisition is recognised immediately in the income statement.
Expenditure on research activities is recognised in the income statement as an expense as incurred.
Expenditure on development activities is capitalised if the product or process is technically and commercially
feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes
the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure
is recognised in the income statement as an expense as incurred. Capitalised development expenditure is
stated at cost less accumulated amortisation and impairment losses.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and
impairment losses.
30
NOTES TO THE FINANCIAL STATEMENTS
Intangible assets and goodwill (continued)
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill
are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from
the date they are available for use. The estimated useful lives are as follows:
• Capitalised development costs
• Manufacturing rights
• Brand names
• Order book
• Distribution rights
5 years
6-15 years
3-15 years
1 year
25 years
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in, first-out principle
and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and
condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of
overheads based on normal operating capacity.
Government grants
Government grants relating to income are recognised in the income statement as a deduction from the expenses
that they are intended to compensate.
Government grants relating to assets are recognised in the balance sheet as a deduction in the carrying amount
of the asset. Depreciation is charged on the value of the asset less the associated grant.
Amounts of grants received are shown in notes 3 and 9.
Put option in respect of a minority interest in a subsidiary
Where the Group has, through a put option, an obligation to purchase shares in a subsidiary from a minority
interest, a financial liability is recognised for the present value of the estimated consideration payable under the
put option and the minority interest is not recognised.
For acquisitions made prior to the adoption of Revised IFRS 3 “Business Combinations” (1st May, 2010) at each
reporting date, changes in the carrying amount of the liability arising from variations in the estimated fair value
of the purchase consideration (excluding the effect of the unwinding of the discount, which is accounted for
as a financial expense) are recognised by adjusting the carrying amount of the goodwill recognised on initial
recognition of the business combination. For acquisitions after adoption of Revised IFRS 3, any changes in the
liability are recognised in the income statement.
Impairment
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
Recoverable amount is the greater of an asset’s or cash generating unit’s fair value less costs to sell or value in
use.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the
recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds
its recoverable amount. Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying
amount of any goodwill allocated to cash generating units and then to reduce the carrying amount of the other
assets in the unit on a pro rata basis. A cash generating unit is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use were
tested for impairment as at 1st May, 2006, the date of transition to Adopted IFRSs, even though no indication of
impairment existed.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss
may no longer exist and there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation
as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the
obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the
risks specific to the liability.
31
NOTES TO THE FINANCIAL STATEMENTS
Warranty provisions
The Group carries a warranty provision with respect to one of its product lines. The warranties are negotiated at
contract placement stage and typically where given to a customer the warranty has a duration of between 2 and
4 years. At the expiry of the warranty period, to the extent not utilised the warranty provision is then released
back into the income statement.
Revenue
Revenue represents the amounts (excluding value added taxes and other sales taxes) derived from the provision
of goods and services to external customers. Revenue is recognised at the time the principal risks and rewards
transfer to the customer typically being either shipment or customer acceptance.
Leases
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the
term of the lease. Lease incentives received are recognised in the income statement as an integral part of the
total lease expense.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding
liability. The finance charge is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
Financial expenses
Financial expenses comprise interest payable, interest on finance leases using the effective interest method and
the unwinding of the discount on provisions. Borrowing costs that are directly attributable to the acquisition,
construction or production of an asset that takes a substantial time to be prepared for use, are capitalised as part
of the cost of that asset.
Interest income and interest payable is recognised in the income statement as it accrues.
Pension costs
The Group contributes to a defined contribution pension scheme for UK employees under an Auto Enrolment
Pension arrangement as required by Government legislation. The assets of the scheme are held in independently
administered funds. Group pension costs are charged to the income statement in the year for which contributions
are payable.
Contributions to the schemes are made on a monthly basis, and at the end of the financial year there was one
month’s contributions outstanding, which were paid in the following month.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences
are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a business combination, and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The
amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
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:
•
IAS 27 (2011) Separate Financial Statements (effective for annual periods beginning on or after 1st January,
2014)
IAS 28 (2011) Investments in Associates and Joint Ventures (effective for annual periods beginning on or after
1st January, 2014)
•
• Amendments to IAS 32 Financial Instruments: Presentation – Offsetting Financial Assets and Financial
Liabilities (effective for annual periods beginning on or after 1st January, 2014)
32
NOTES TO THE FINANCIAL STATEMENTS
New IFRS standards, amendments and interpretations not adopted (continued)
•
IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on or after 1st January,
2014)
IFRS 11 Joint Arrangements (effective for annual periods beginning on or after 1st January, 2014)
IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on or after
1st January, 2014)
IFRS 14 Regulatory Deferral Accounts (effective for annual periods beginning on or after 1st January, 2016)
IFRS 15 Revenue from Contracts with Customers (effective for annual periods beginning on or after
1st January, 2017)
•
•
•
•
• Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets: Clarification of
acceptable Methods of Depreciation and Amortisation (effective for annual periods beginning on or after
1st January, 2016)
IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1st January, 2018)
•
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.
2. 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
– powder manufacture and mineral processing
• Refractory Engineering
Information regarding the Group’s operating segments is reported below. Associates are included in Refractory
Engineering.
Year ended 30th April
Revenue
External sales ...
...
Inter-segment sales ...
Mechanical
Engineering
2014)
£’000)
2013)
£’000)
Refractory
Engineering
2014)
£’000)
2013)
£’000)
Sub Total
2014)
£’000)
2013)
£’000)
...
...
...
...
99,044)
20,725)
97,227)
22,407)
31,784)
4,576)
29,737) 130,828) 126,964)
26,995)
25,301)
4,588)
Total revenue ...
...
...
...
119,769) 119,634)
36,360)
34,325)
156,129) 153,959)
Reconciliation to
consolidated revenue:
Inter-segment sales ...
...
...
)
(25,301)
(26,995)
Consolidated revenue for the year
)
) 130,828) 126,964)
Profits
Segment result including associates
19,290)
18,889)
3,763)
3,154)
23,053)
22,043)
Group centre
Group finance expenses
...
...
...
...
Consolidated profit before
tax for the year
...
...
Tax
...
...
...
...
...
...
...
...
Consolidated profit after
tax for the year
...
...
...
)
)
)
)
33
)
)
)
)
)
)
1,802)
(760)
(614)
(1,133)
24,095)
(4,448)
20,296)
(4,609)
19,647)
15,687)
NOTES TO THE FINANCIAL STATEMENTS
2. Segmental information (continued)
Year ended 30th April
Segmental net assets
Mechanical Engineering
Refractory Engineering
...
...
...
...
Segmental
total assets
2014)
£’000)
2013)
£’000)
Segmental
total liabilities
2014)
£’000)
2013)
£’000)
Segmental
net assets
2014)
£’000)
2013)
£’000)
69,717)
66,047)
54,254)
50,339)
15,463)
15,708)
24,399)
25,079)
11,482)
11,749)
12,917)
13,330)
Sub total reportable segment
...
94,116)
91,126)
65,736)
62,088)
28,380)
29,038)
PLC net assets ...
...
...
...
Investments elimination/
Goodwill adjustments
...
...
Other consolidation adjustments ...
))
)
)
)
Consolidated total net assets
...
58,526)
43,214)
(8,869)
(8,357)
(467)
(1,368)
)
77,570)
62,527)
)
)
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.
Year ended 30th April, 2014
Year ended 30th April, 2013
Revenue
£’000
UK
Rest of Europe
USA
Pacific Basin
Rest of World
27,684
25,209
16,541
36,225
25,169
Opera-
tional
net
assets
£’000
63,355
5,755
–
7,522
938
PPE
Capital
current expendi-
Non
assets
£’000
49,891
130
–
1,038
4,864
ture Revenue
£’000
£’000
14,143
253
–
217
866
26,865
21,456
8,010
43,056
27,577
Opera-
tional
net
assets
£’000
47,952
4,909
–
7,339
2,327
Non
current
assets
£’000
38,815
555
–
1,430
5,318
PPE
Capital
expendi-
ture
£’000
8,116
62
–
1,171
449
Total
130,828
77,570
55,923
15,479
126,964
62,527
46,118
9,798
34
NOTES TO THE FINANCIAL STATEMENTS
3. Expenses and auditors’ remuneration
Included in profit before taxation are the following:
Government grants received against associated R&D and training costs
...
Depreciation:
Owned assets ...
...
Assets held under finance lease ...
...
...
...
Amortisation of intangible assets
Loss/(profit) on sale of property, plant and equipment
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Operating lease rentals:
Rental of premises
...
Short term plant hire ...
...
...
...
...
...
...
...
...
...
Research and development expensed as incurred ...
...
Impairment of trade receivables charged to the income statement
Foreign exchange (gains)/losses
...
...
Losses/(gains) on derivatives at fair value through the income statement ...
Fees receivable by the auditors and their associates in respect of:
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Audit of these financial statements
...
Audit of the financial statements of subsidiaries
...
Other audit related services
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
(1,411)
3,141)
274)
703)
13)
420)
165)
1,839)
244)
(322)
642)
54)
101)
2)
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2013)
£’000)
(610)
2,587)
205)
738)
(20)
406)
245)
1,409)
222)
1,170)
(894)
42)
86)
–)
4. Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year, analysed by
category, was as follows:
Number of employees
2013)
2014)
1,008)
46)
1,054)
2014)
£’000)
32,320)
3,649)
482)
36,451)
2014)
£’000)
31)
814)
(85)
760)
965)
45)
1,010)
2013)
£’000)
29,933)
3,464)
25)
33,422)
2013)
£’000)
19)
1,114)
–)
1,133)
Works personnel
...
Administration staff ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
The aggregate payroll costs of these persons were as follows:
Wages and salaries ...
Social security costs ...
Other pension costs ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
5. Financial expenses
Interest expense on finance leases
Interest expense on bank loans and overdrafts
Capitalised interest on fixed asset projects ...
...
...
Financial expenses
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
35
NOTES TO THE FINANCIAL STATEMENTS
6. Taxation
Recognised in the income statement
Current tax expense
Current year
Adjustments for prior years
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Deferred tax expense
Origination and reversal of temporary differences – current year
...
Origination and reversal of temporary differences – prior year adjustment ...
Origination and reversal of temporary differences – rate change to prior year
...
2014)
£’000)
5,241)
(575)
4,666)
(120)
183)
(281)
(218)
2013)
£’000)
4,820)
(94)
4,726)
309)
(426)
–)
(117)
Total tax expense
...
...
...
...
...
...
...
...
...
...
...
4,448)
4,609)
Reconciliation of effective tax rate
Profit before tax
...
...
...
...
...
...
...
...
Tax using the UK corporation tax rate of 22.84% (2013: 23.92%)
...
...
...
Non-deductible expenses
...
Over provision in prior years
...
...
...
Research and development tax credit ...
...
...
...
Patent box tax credit
...
...
...
Losses not utilised ...
...
...
...
Rate change to prior year
...
...
Witholding tax unrelieved
...
...
...
Differences in overseas tax rates
...
...
...
Associate companies tax ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Total tax expense
...
...
...
...
...
...
...
...
2014)
£’000)
2013)
£’000)
24,095)
20,296)
5,503)
84)
(392)
(87)
(776)
211)
(281)
43)
203)
(60)
4,448)
4,854)
27)
(520)
(40)
–)
–)
–)
31)
331)
(74)
4,609)
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
The Group’s total amount of taxes payable in respect of the year ending 30th April, 2014 comprising Corporation
Tax, PAYE and National Insurance was £15 million.
Deferred tax recognised directly in equity
The following amounts are included in the consolidated statement of comprehensive income:
Cash flow hedge deferred tax charge/(credit)
...
...
...
...
...
...
2014)
£’000)
522)
2013)
£’000)
(149)
7. Earnings per share
The earnings per ordinary share has been calculated on profit for the year attributable to ordinary shareholders
of £19,035,000 (2013: £15,247,000) and by reference to the 7,200,000 ordinary shares in issue throughout both
years.
The Company has no share options or other diluting interests and accordingly, there is no difference in the
calculation of diluted earnings per share.
36
NOTES TO THE FINANCIAL STATEMENTS
8. Dividends
2014)
£’000)
2013)
£’000)
Paid ordinary dividends during the year in respect of prior years
35.290p (2013: 32.082p) per qualifying ordinary share ...
...
...
...
...
...
2,541)
2,310)
Paid extraordinary dividends during the year in respect of prior years
...
17.645p (2013: Nilp) per qualifying ordinary share
...
...
...
...
...
1,270)
–)
3,811)
2,310)
After the balance sheet date an ordinary dividend of 42.348p per qualifying ordinary share was proposed by the
Directors (2013: Ordinary dividend of 35.290p, extraordinary dividend of 17.645p).
The proposed current year ordinary dividend of £3,049,000 has not been provided for within these Financial
Statements (2013: Proposed ordinary dividend of £2,541,000 and proposed extraordinary dividend of £1,270,000
were not provided for within the comparative figures).
9. Property, plant and equipment
)
Land and) Plant and)
buildings) equipment)
£’000)
£’000)
Assets in)
Fixtures) course of)
and) construc-)
tion)
£’000)
fittings)
£’000)
Cost
...
At 1st May, 2012 ...
...
Additions ...
...
...
Reclassification ...
Disposals ...
...
...
Exchange adjustment ...
At 30th April, 2013
...
...
At 1st May, 2013 ...
...
...
Additions ...
...
Reclassification ...
Disposals ...
...
...
Exchange adjustment ...
At 30th April, 2014
...
Depreciation
...
At 1st May, 2012 ...
...
Charged in year ...
Disposals ...
...
...
Exchange adjustment ...
At 30th April, 2013
...
...
At 1st May, 2013 ...
...
Charged in year ...
...
...
Disposals ...
Exchange adjustment ...
At 30th April, 2014
...
Net book value
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Total)
£’000)
50,128)
9,798)
–)
(386)
371)
12,515)
2,390)
1,877)
–)
129)
33,692)
3,520)
–)
(349)
213)
2,058)
515)
–)
(37)
15)
1,863)
3,373)
(1,877)
–)
14)
16,911)
37,076)
2,551)
3,373)
59,911)
16,911)
6,756)
874)
–)
(931)
37,076)
7,569)
2,499)
(140)
(624)
2,551)
427)
–)
–)
(33)
3,373)
727)
(3,373)
–)
–)
59,911)
15,479)
–)
(140)
(1,588)
23,610)
46,380)
2,945)
727)
73,662)
1,972)
224)
–)
14)
20,572)
2,339)
(225)
131)
1,376)
229)
(37)
8)
2,210)
22,817)
1,576)
2,210)
295)
–)
(54)
22,817)
2,934)
(81)
(302)
1,576)
186)
–)
(15)
2,451)
25,368)
1,747)
–)
–)
–)
–)
–)
–)
–)
–)
–)
_)
23,920)
2,792)
(262)
153)
26,603)
26,603)
3,415)
(81)
(371)
29,566)
At 1st May, 2012 ...
...
...
...
...
10,543)
13,120)
At 30th April, 2013 and 1st May, 2013 ...
...
14,701)
14,259)
682)
975)
1,863)
26,208)
3,373)
33,308)
At 30th April, 2014 ...
...
...
...
21,159)
21,012)
1,198)
727)
44,096)
Plant and machinery
At 30 April, 2014 the net carrying amount of leased plant and machinery was £1,561,000 (2013: £1,479,000). The
leased equipment secures lease obligations (see note 17).
Assets in the course of construction of £727,000 (2013: £3,373,000) includes £165,000 of plant and equipment not
commissioned at the year end (2013: £2,467,000).
Government grants related to tangible fixed assets
Additions to plant and equipment are after deducting grants receivable of £887,000 (2013: £562,000).
37
NOTES TO THE FINANCIAL STATEMENTS
10. Intangible assets
Cost
Balance at 1st May, 2012
...
Additions ...
Disposal ...
...
Exchange adjustment ...
...
...
Brand) Order) bution) facturing)
rights)
£’000)
) Distri-) Manu-) Develop-)
ment)
costs)
Total)
£’000) £’000)
Goodwill) names) book) rights)
£’000) £’000) £’000) £’000)
...
...
...
...
...
...
...
...
8,370)
8)
–)
169)
5,212)
–)
–)
129)
168)
–)
–)
6)
632)
–)
(632)
–)
978)
–)
–)
–)
201) 15,561)
8)
(632)
304)
–)
–)
–)
Balance at 30th April, 2013 ...
... 8,547) 5,341)
174)
Additions ...
...
Exchange adjustment ...
...
...
...
...
...
45)
(140)
–)
(109)
–)
(5)
Balance at 30th April, 2014 ...
... 8,452) 5,232)
169)
Amortisation
Balance at 1st May, 2012
Amortisation for the year
Disposal ...
...
Exchange adjustment ...
...
...
...
...
...
Balance at 30th April, 2013 ...
Amortisation for the year
Exchange adjustment ...
...
...
Balance at 30th April, 2014 ...
Net book value
At 1st May, 2012 ...
At 30th April, 2013
At 30th April, 2014
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
–)
–)
–)
–)
2,010)
593)
–)
46)
168)
–)
–)
6)
–) 2,649)
174)
–)
–)
593)
(45)
–)
(5)
–) 3,197)
169)
8,370)
3,202)
8,547)
2,692)
... 8,452) 2,035)
–)
–)
–)
–)
–)
–)
–)
50)
25)
(75)
–)
–)
–)
–)
–)
582)
–)
–)
978)
201) 15,241)
–)
–)
–)
–)
45)
(254)
978)
201) 15,032)
601)
120)
–)
–)
721)
110)
–)
831)
377)
257)
147)
201)
–)
–)
–)
3,030)
738)
(75)
52)
201) 3,745)
–)
–)
703)
(50)
201) 4,398)
–) 12,531)
–) 11,496)
–) 10,634)
During the current year, the £45,000 of additions to goodwill relates to increased interest in Noreva GmbH by
virtue of a minority dividend paid.
During the previous year, the Group disposed of the rights, that it acquired in the year ended 30 April, 2011, to
distribute vermiculite from a Ugandan mine, with net book value at disposal of £557,000. The disposal resulted
in nil profit/loss, with a cash receipt of £265,000 and £292,000 of adjustments to trading balances. The £8,000
of additions to goodwill relates to increased interest in Noreva GmbH by virtue of a minority dividend paid.
Amortisation charge
The amortisation charge of £703,000 (2013: £738,000) is recognised in cost of sales in the income statement.
38
NOTES TO THE FINANCIAL STATEMENTS
10. Intangible assets (continued)
Impairment testing for cash generating units containing goodwill
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might
be impaired. For the purpose of impairment testing, goodwill is allocated to the relevant subsidiary which is the
lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate
carrying amounts of goodwill allocated to each unit are:
Noreva GmbH
...
Goodwin Refractory Services Holdings Limited
...
Other
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014
£’000
4,397
3,346
709
8,452
2013
£’000
4,492
3,346
709
8,547
An impairment test is a comparison of the carrying value of the assets of a cash generating unit (“CGU”) to their
recoverable amount, based on a value-in-use calculation. Recoverable amount is the greater of value-in-use and
market value. Where the recoverable amount is less than the carrying value an impairment results. During the year
each CGU containing goodwill was separately assessed and tested for impairment. No impairment of the carrying
value of goodwill was indicated by this review.
As part of testing goodwill for impairment detailed forecasts of operating cash flows for the next five years are used,
which are based on approved budgets and plans by the Board. The forecasts represent the best estimate of future
performance of the CGU based on past performance and expectations for the market development of the CGU.
A number of key assumptions are used as part of impairment testing. These key assumptions, such as the CGU’s
position within its relevant market; its ability to generate profitable orders within that market; expected growth
rates both in the market and geographically, are made by management who also take into account past experience
and knowledge of forecast future performance together with other relevant external sources of information.
The forecast projections use growth rate forecasts of 15% (2013: 15%) extrapolated over the minimum expected life
span of the unit. Projections beyond the 5 year detailed forecasts do not assume any growth. The forecasts are then
discounted at appropriate rates considering the perceived levels of risk, ranging from 12%-15% (2013: 12%-15%).
The estimates and assumptions made in connection with the impairment testing could differ from future actual
results of operations and cash flows. A reasonably likely variation in the assumptions would not give rise to an
impairment. However, future events could cause the Group to conclude that impairment indicators exist and that
the asset values associated with a given operation have become impaired.
11. Investments in subsidiaries and associates
The Group has the following principal subsidiaries and associates:
...
...
...
Subsidiaries
Mechanical Engineering:
...
...
Goodwin Steel Castings Limited
...
...
Goodwin International Limited ...
...
...
...
Easat Antennas Limited ...
...
Goodwin Korea Co. Limited
...
...
...
Goodwin Pumps India Private Limited
...
...
Goodwin Shanghai Co. Limited
Noreva GmbH
...
...
Goodwin (Shanxi) Pump Company Limited ...
Goodwin Valve and Pump Company Limited
...
Internet Central Limited ...
JSR Technology Limited ...
...
Refractory Engineering:
Dupré Minerals Limited ...
Goodwin Refractory Services Limited
Hoben International Limited
Gold Star Powders India Private Limited
Siam Casting Powders Limited ...
Ultratec Jewelry Supplies Limited
SRS Guangzhou Limited ...
Gold Star Brazil Limited ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Country of
Class of
incorporation shares held
% held
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
... Great Britain
... Great Britain
... Great Britain
... South Korea
...
India
... China
... Germany
... China
... Brazil
... Great Britain
... Great Britain
... Great Britain
... Great Britain
... Great Britain
...
India
... Thailand
... China
... China
... Brazil
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
97
95
80
100
87.5*
100
100
82.5
75
Ordinary/Preference 100
100
Ordinary
100
Ordinary
80
Ordinary
51
Ordinary
51
Ordinary
51
Ordinary
51
Ordinary
...
...
...
Associates
Jewelry Plaster Limited ...
...
Asian Industrial Investment Casting Powders Private Limited ...
Goodwin Tet Property Company Limited
...
*Whilst Noreva is a 87.5% owned subsidiary the company has been treated as a 100% subsidiary by virtue of there
being both put and call options in place for the remaining 12.5% of the share capital. A 3% non-controlling interest
in Easat Antennas Limited was purchased during the year.
All of the above companies are included as part of the consolidated accounts and are involved in mechanical and
refractory engineering.
The Group’s share of profit after tax in its associates for the year ended 30 April, 2014 was £314,000 (2013: £273,000).
... Thailand
India
... Thailand
Ordinary
Ordinary
Ordinary
49
40
49
...
...
...
39
NOTES TO THE FINANCIAL STATEMENTS
11. Investments in subsidiaries and associates (continued)
Summary financial information of Group share of associates was:
Balance at 1st May ...
...
Profit before tax
...
...
Tax
...
...
...
Dividend
Exchange adjustment
...
...
...
...
...
Balance at 30th April
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
1,314)
374)
(60)
(201)
(234)
2013)
£’000)
1,238)
347)
(74)
(308)
111)
1,193)
1,314)
2014
)
)
)
)
Liabilities) Revenues)
£’000)
£’000)
Assets)
£’000)
... 1,007)
...
Jewelry Plaster Limited
837)
Goodwin Tet Property Company Limited
...
4)
Asian Industrial Investment Casting Powders Private Limited
...
...
...
...
...
...
1,848)
Assets)
£’000)
163)
492)
–)
655)
1,082)
122)
18)
1,222)
2013
)
)
Liabilities)
£’000)
)
)
Revenues)
£’000)
...
Jewelry Plaster Limited
...
Goodwin Tet Property Company Limited
...
Asian Industrial Investment Casting Powders Private Limited
...
...
...
...
...
...
1,163)
1,061)
16)
2,240)
231)
695)
–)
926)
12. Warranty provision
Balance at 1st May ...
...
Utilised
(Credited)/charged to the income statement
Exchange adjustment
...
...
...
...
...
...
...
...
...
...
Balance at 30th April
...
...
...
Warranty due within one year
Warranty due after one year
Balance at 30th April
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
1,068)
130)
16)
1,214)
2014)
£’000)
862)
–)
(117)
(26)
719)
383)
336)
719)
Share of)
Profit)
after Tax)
£’000)
287)
42)
(15)
314)
Share of)
Profit)
after Tax)
£’000)
255)
27)
(9)
273)
2013)
£’000)
1,225)
(695)
289)
43)
862)
378)
484)
862)
Provisions for warranties primarily relate to products sold and generally covers a period of between 2 and 4 years.
40
NOTES TO THE FINANCIAL STATEMENTS
13. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Property, plant and equipment
Derivative financial instruments
Intangible assets ...
...
Other temporary differences ...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
–)
–)
–)
152)
152)
2013)
£’000)
–)
272)
–)
–)
272)
Assets
Liabilities
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
2,133)
280)
608)
–)
3,021)
2014)
£’000)
152)
(3,021)
(2,869)
plant &)
Property) Derivative)
financial)
equipment) instruments)
£’000)
£’000)
)
Intangible)
Other)
temporary)
Assets) differences)
£’000)
£’000)
Balance at 1st May, 2012
Recognised in income
Recognised in equity
Exchange adjustment
Balance at 30th April, 2013
Recognised in income
Recognised in equity
Exchange adjustment
...
...
...
...
...
...
Balance at 30th April, 2014 ...
...
...
...
...
...
...
...
2,038)
55)
–)
(12)
2,081)
48)
–)
4)
2,133)
(84)
(39)
(149)
–)
(272)
30)
522)
–)
280)
878)
(133)
–)
27)
772)
(144)
–)
(20)
608)
–)
–)
–)
–)
–)
(152)
–)
–)
(152)
2013)
£’000)
2,081)
–)
772)
–)
2,853)
2013)
£’000)
272)
(2,853)
(2,581)
)
)
Total)
£’000)
2,832)
(117)
(149)
15)
2,581)
(218)
522)
(16)
2,869)
Within the current and previous year, the Group has no material tax losses where a deferred tax asset has been
recognised.
Within the UK 2013 Budget on the 20th March, 2013 it was announced that the UK corporation tax rate
would reduce to 20% by 2015. A reduction in the UK corporation tax rate from 23% to 21% (effective from
1st April, 2014), and a further reduction to 20% (effective from 1st April, 2014) were substantively enacted on
2nd July, 2013. The deferred tax liability reported at 30th April, 2014 has been calculated based on the 20% tax
rate substantively enacted at the balance sheet date.
14. Inventories
Raw materials and consumables
...
Work in progress ...
...
...
Finished goods
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
15,449)
11,942)
3,824)
31,215)
2013)
£’000)
16,172)
12,549)
3,112)
31,833)
41
NOTES TO THE FINANCIAL STATEMENTS
15. Trade and other receivables
Trade receivables ...
Other receivables ...
...
Prepayments
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
16. Cash and cash equivalents
Cash and cash equivalents per balance sheet
...
Bank overdrafts
...
...
...
...
...
...
...
...
Cash and cash equivalents per cash flow statement
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
28,953)
2,606)
1,292)
2013)
£’000)
30,870)
3,035)
1,048)
32,851)
34,953)
2014)
£’000)
6,233)
–)
6,233)
2013)
£’000)
5,514)
(77)
5,437)
17. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing bank loans and
borrowings. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 20.
Non-current liabilities
Finance lease liabilities ...
...
Bank loans and committed facilities ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Current liabilities
Finance lease liabilities ...
...
Bank loans and committed facilities ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Finance lease liabilities
Finance lease liabilities are payable as follows:
...
Less than one year ...
Between one and five years
Minimum
lease
payments
£’000
475
595
...
...
2014
Minimum
lease
Interest Principal payments
£’000
404
698
£’000
27
29
£’000
448
566
2014)
£’000)
566)
6,919)
2013)
£’000)
678)
16,452)
7,485)
17,130)
381)
1,521)
1,902)
448)
1,943)
2,391)
2013
Interest
£’000
23
20
Principal
£’000
381
678
18. Trade and other payables
1,070
56
1,014
1,102
43
1,059
Current liabilities
Trade payables
...
Non-trade payables and accrued expenses
Other taxation and social security costs
Payments received on account
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014
£’000
17,152
6,861
2,558
7,114
33,685
Deferred and contingent considerations on acquisitions
...
...
...
...
500
2013
£’000
15,479
7,203
1,992
5,320
29,994
500
The deferred consideration at 30th April, 2014 and 30th April, 2013 of £500,000 relates to the acquisition of
Noreva GmbH.
The liability for deferred consideration is calculated on the basis of payments being made at the earliest opportunity
under the legal agreement.
42
19. Capital and reserves
NOTES TO THE FINANCIAL STATEMENTS
Reconciliation of movement in capital and reserves
)
)
Trans-) Cash flow)
lation)
reserve)
£’000)
)
)Total)
attributable)
to equity)
)
)
Non-)
hedge) Retained) holders of) controlling)
interest)
£’000)
earnings) the parent)
£’000)
reserve)
£’000)
£’000)
Share)
capital)
£’000)
Total)
equity)
£’000)
Balance at 30th April, 2012
720)
830)
(233)
43,720)
45,037)
3,671)
48,708)
Total comprehensive
...
income
...
Dividends paid
...
...
...
–)
–)
893)
–)
(513)
15,247)
15,627)
670)
16,297)
–)
(2,310)
(2,310)
(168)
(2,478)
Balance at 30th April, 2013
720)
1,723)
(746)
56,657)
58,354)
4,173)
62,527)
Total comprehensive
...
income
...
...
–)
(1,732)
1,941)
19,035)
19,244)
74)
19,318)
Purchase of non-controlling
interest without a change
...
...
in control
...
Dividends paid
...
...
–)
–)
–)
–)
–)
–)
(197)
(197)
(44)
(241)
(3,811)
(3,811)
(223)
(4,034)
Balance at 30th April, 2014
720)
(9)
1,195)
71,684)
73,590)
3,980)
77,570)
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations.
Cash flow hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedge instruments related to hedged transactions that have not yet occurred.
The aggregate deferred tax relating to items that are recognised in equity is a liability of £299,000 (2013: asset
of £223,000).
Share capital
2014
£’000
2013
£’000
Authorised, allotted, called up and fully paid:
7,200,000 ordinary shares of 10p each ...
...
...
...
...
...
...
...
720
720
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company.
20. Financial risk management
The Group’s operations expose it to a variety of financial risks that include the effects of 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.
Risk management policies have been set by the Board and applied by the Group.
a) Credit risk
The Group’s financial assets are cash and cash equivalents and trade and other receivables, the carrying
amounts of which represent the Group’s maximum exposure to credit risk in relation to financial assets.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned
by international credit rating agencies.
The Group’s credit risk is primarily attributable to its trade receivables, and is managed through the following
processes:
i) The majority of orders accepted by Group companies are taken with credit insurance coverage.
ii) Some orders are accepted with no credit insurance but with letters of credit.
iii) Some orders are accepted with no credit insurance and no letter of credit but with an internal analysis of
the customer’s size, credit worthiness, historic profitability and payment record.
iv) A few orders (less than 10%) are taken at risk following review by more than two Board members.
v) Major orders are normally accompanied by stage payments which go towards mitigating our credit risk.
43
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure
to credit risk at the reporting date was:
Trade and other receivables
Cash at bank and cash equivalents
Derivative financial assets
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Carrying amount
Notes
15
16
20(e)
2014)
£’000)
31,559)
6,233)
2,517)
2013)
£’000)
33,905)
5,514)
809)
40,309)
40,228)
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
...
UK
...
Rest of Europe
USA ...
...
Pacific Basin
Rest of World
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
The ageing of trade receivables and impairments at the reporting date were:
)
Net)
2014)
£’000)
)
Gross)
2014)
£’000)
Impairment)
provision)
2014)
£’000)
...
Not past due ...
...
...
Past due 1-30 days ...
Past due 31-90 days ...
...
Past due more than 90 days
18,912) 18,912)
5,834)
2,819)
2,185)
5,834)
2,819)
1,388)
–)
–)
–)
(797)
)
Net)
2013)
£’000)
21,272)
3,762)
4,036)
1,800)
Carrying amount
2014)
£’000)
8,104)
6,955)
2,114)
6,445)
5,335)
28,953)
2013)
£’000)
5,972)
4,854)
3,231)
12,046)
4,767)
30,870)
)
Gross)
2013)
£’000)
Impairment)
provision)
2013)
£’000)
21,272)
3,762)
4,036)
2,430)
–)
–)
–)
(630)
(630)
28,953) 29,750)
(797)
30,870)
31,500)
There are no significant credit risks arising from the above assets and management believes the credit
quality of customers is good based on a review of past payment history and the current financial status of
the customers. Included in trade receivables are retentions which are job specific and have varying due dates
depending on the complexity of the job. These are included in the not past due category. The Group has
not renegotiated the terms of any trade receivables and has not pledged any trade receivables as security.
The Directors estimate that the fair value of the Group’s trade and other receivables is approximate to their
carrying values.
2014)
£’000)
630)
(34)
244)
(43)
797)
2013)
£’000)
431)
–)
222)
(23)
630)
An analysis of the provision for impairment of receivables is as follows:
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
At beginning of year
Exchange adjustment
...
Impairment charged through the income statement
Impairment provision utilised during the year
...
...
...
...
...
...
...
...
...
At end of year
...
...
...
...
...
...
44
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
At the year end the Group had the following unutilised bank facilities in respect of which all conditions
precedent had been met:
Uncommitted)
2013)
2014)
£’000)
£’000)
Committed)
2014)
£’000)
2013)
£’000)
Total)
2014)
£’000)
2013)
£’000)
Unutilised bank facilities
...
22,346)
20,715)
15,000)
750)
37,346)
21,465)
The Group’s principal borrowing facilities are provided by 3 banks in the form of borrowings and short term
overdraft facilities. The quantum of borrowing facilities available to the Group is reviewed regularly in light
of current working capital requirements and the need for capital investment for the long term future for the
Group.
Maturity analysis
The table below analyses the Group’s financial liabilities into maturity groupings based on the period
outstanding at the balance sheet date up to the contractual maturity date. All figures are contracted gross
cashflows that have not been discounted.
Non-derivative financial liabilities
...
Bank loans and committed facilities
...
Finance leases
...
Trade and other payables ...
...
Deferred considerations on acquisitions
...
...
...
Total
...
...
...
...
...
...
Non-derivative financial liabilities
...
...
Overdrafts
...
Bank loans and committed facilities
...
Finance leases
...
...
...
Trade and other payables ...
Deferred consideration on acquisition ...
...
...
...
...
...
Total
...
...
...
...
...
...
2014
Contractual cash flows
Within)
1 year) 1-5 years)
£’000)
£’000)
2,000)
475)
33,685)
500)
7,000)
595)
–)
–)
Total)
£’000)
9,000)
1,070)
33,685)
500)
Carrying)
value)
2014)
Total)
£’000)
8,862)
1,014)
33,685)
500)
36,660)
7,595)
44,255)
44,061)
2013
Contractual cash flows
Within)
1 year)
£’000)
77)
1,550)
404)
29,994)
500)
1-5 years)
£’000)
–)
16,480)
698)
–)
–)
Total)
£’000)
77)
18,030)
1,102)
29,994)
500)
Carrying)
value)
2013)
Total)
£’000)
77)
17,973)
1,059)
29,994)
500)
32,525)
17,178)
49,703)
49,603)
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
45
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
c) Market risk
Foreign exchange risk
The Group is subject to fluctuations in exchange rates on its net investments overseas and transactional
monetary assets and liabilities not denominated in the operating (or “functional”) currency of the operating
unit involved.
The Group is exposed to fluctuations in several currencies which give rise to the net currency gains and losses
recognised in the income statement.
The Group at its discretion is empowered to hedge its estimated annual foreign currency exposure in respect
of forecast sales and purchases if the Board deems it appropriate after having taken into account the expected
movement in the foreign exchange rates. The Group uses forward exchange contracts to hedge its foreign
currency risk. Most of the foreign exchange contracts have maturities of less than one year after the balance
sheet date. Where necessary, the forward exchange contracts are rolled over at maturity.
In respect of other monetary assets and liabilities held in currencies, the Group ensures that the net exposure
is eliminated through the use of forward exchange contracts or spot transactions at the time the contractual
commitment is in place.
Currency profile of financial assets and liabilities
2014)
US)
Dollar)
£’000)
2013)
US)
Dollar)
£’000)
2014)
2013)
2014)
2013)
2014)
2013)
Euro)
£’000)
Euro) Other)
£’000)
£’000)
Other)
£’000)
Total)
£’000)
Total)
£’000)
Trade and other
receivables
Cash and cash
equivalents
Trade and other
payables
9,691)
11,652)
3,549)
1,581)
952)
420)
365)
44)
–)
–)
–) 13,240)
13,233)
3)
1,317)
467)
(243)
(69)
(3,369)
(1,891)
(5,964)
(4,693)
(9,576)
(6,653)
10,400)
12,003)
545)
(266)
(5,964)
(4,690)
4,981)
7,047)
The following significant exchange rates applied during the year:
US Dollar
...
Euro
...
...
...
...
...
...
...
...
...
...
1.6016)
1.2097)
1.5750)
1.1938)
1.6886)
1.2180)
2014)
2013)
2014)
2013)
1.5532)
1.1795)
Average
Exchange rate
Reporting date
spot rate
46
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
c) Market risk (continued)
Interest rate risk
The Group is subject to fluctuations in interest rates on its borrowings and surplus cash. The Group is aware
of the financial products available to ensure against adverse movements in interest rates. Formal reviews
are undertaken to determine whether such instruments are appropriate for the Group. During the year, no
new interest rate swaps or caps were entered into.
The Group has taken out in previous years £5 million of interest rate protection in the form of swaps which
expire in October, 2016.
The table below shows the Group’s financial assets and liabilities split by those bearing fixed and floating
rates and those that are non-interest bearing.
Fixed rate
2014)
£’000)
2013)
£’000)
Floating rate Non-interest bearing
2014)
£’000)
2014)
£’000)
2013)
£’000)
2013)
£’000)
Total
2014)
£’000)
2013)
£’000)
–)
6,233)
5,514)
–)
–)
6,233)
5,514)
–)
–)
–)
–)
–)
–)
–) 35,368)
35,762) 35,368)
35,762)
–)
(77)
(37,662)
–)
(34,148)
–)
(37,662)
–)
(34,148)
(77)
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
Bank overdrafts
Bank loans and
committed
facilities
Finance lease
liabilities
–)
–)
–)
–)
–)
–)
(8,862)
(17,973)
(708)
(1,059)
–)
–)
–)
(8,862)
(17,973)
–)
(1,014)
(1,059)
(3,337)
(13,595)
(2,294)
1,614)
(5,937)
(11,981)
(306)
(306)
–)
–)
Other receivables and other payables include derivatives.
d) Capital management
The Group’s main objective when managing capital is to safeguard the Group’s ability to continue as a
going concern in order to provide returns to shareholders. The Board maintains a strong capital base
so as to maintain investor, creditor and market confidence and to sustain future development of the
business. Operations are funded through various shareholder’s funds, bank debt, finance leases and,
where appropriate, deferred consideration on acquisitions. The capital structure of the Group reflects the
judgement of the Board as to the appropriate balance of funding required. At 30th April, 2014, the capital
used was £77.7 million, (2013: £72.4 million) as shown in the following table:
...
Cash and cash equivalents
...
Bank overdrafts ...
Finance leases
...
...
Bank loans and committed facilities
...
Deferred consideration
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Net debt
...
Total equity attributable to equity holders of the parent
...
...
...
...
...
...
...
Capital
...
...
...
...
...
...
...
2014)
£’000)
(6,233)
–)
1,014)
8,862)
500)
2013)
£’000)
(5,514)
77)
1,059)
17,973)
500)
4,143)
73,590)
14,095)
58,354)
77,733)
72,449)
The Group aims to maintain a strong credit rating and headroom whilst optimising return to shareholders
through an appropriate balance of debt and equity funding. The Group’s strategy is to target a debt to
equity ratio below 30%, adjusted where appropriate for the effect of acquisitions. At 30th April, 2014 net
debt was £4.1 million (2013: £14.1 million). The net debt and debt/equity ratio is expected to increase during
the coming year as the approved capital projects are financed.
The Group manages its capital structure and makes adjustments to it with regard to the risks inherent in the
business and in light of changes to economic conditions.
Working capital is managed in order to generate maximum conversion of profits into cash and cash
equivalents. Dividends are paid from current year profits, thereby maintaining equity.
The policy for debt is to ensure a smooth debt maturity profile with the objective of ensuring continuity of
funding. The repayment profile for the debt is shown in note 20(b).
There were no changes in the Group’s approach to capital management during the year.
47
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
d) Capital management (continued)
Currency derivatives
The Group utilises currency derivatives to hedge future transactions and cash flows. The Group is party to
a variety of foreign currency forward contracts in the management of its exchange rate exposures.
Forecast transactions
The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges and
states them at fair value.
The nominal value of forward exchange contracts used as hedges of forecast transactions at 30th April, 2014,
in sterling terms, was £38.9 million spread across USD, EUR, INR and JPY denominated contracts. The fair
value of these at 30th April, 2014 was an asset of £1,977,000 (being assets totalling £2,444,000, and liabilities
totalling £467,000). The Group also has a number of forward contracts not designated as cash flow hedges,
and therefore recorded at fair value through the income statement. The nominal value of these contracts
at 30th April, 2014, in sterling terms, was £12.7 million spread across USD, EUR, and INR denominated
contracts. The fair value of these at 30th April, 2014 was a liability of £95,000 (being assets totalling £73,000,
and liabilities totalling £168,000).
The nominal value of forward exchange contracts used as hedges of forecast transactions at 30th April, 2013,
in sterling terms, was £35.1 million spread across USD and EUR denominated contracts. The fair value of
these at 30th April, 2013 was a liability of £192,000 (being assets totalling £78,000, and liabilities totalling
£270,000). The Group also has a number of forward contracts not designated as cash flow hedges, and
therefore recorded at fair value through the income statement. The nominal value of these contracts at 30th
April, 2013, in sterling terms, was £30.9 million spread across USD, EUR and INR denominated contracts.
The fair value of these at 30th April, 2013 was an asset of £547,000 (being assets totalling £731,000, and
liabilities totalling £184,000).
Recognised assets and liabilities
Changes in the fair value of forward exchange contracts that economically hedge monetary assets and
liabilities in foreign currencies and for which no hedge accounting is applied are recognised in the income
statement. Both the changes in fair value of the forward contracts and the foreign exchange gains and losses
relating to the monetary items are recognised as part of administrative expenses.
Interest rate swaps
The Group uses interest rate swaps contracts to manage its exposure to interest rate movements on its bank
borrowings. The nominal value of these contracts at the year end was £5 million (2013: £5 million).
The fair value of swaps entered into at 30th April, 2014 was estimated at £484,000 liability (2013: £777,000
liability). Of these swaps, the fair value of those designated as cash flow hedges at 30th April, 2014 was
£484,000 liability (2013: £777,000 liability).
Derivative financial instruments
For cash flow hedges the following table sets out the periods when the cash flows are expected to occur and
when they are expected to affect profit or loss:
2014
Periods in which cash flows and profits are expected to occur
Carrying)
amount)
£’000)
Expected)
cash flow)
£’000)
Within)
1 year)
£’000)
Between)
1 and)
5 years)
£’000)
Over)
5 years)
£’000)
Forward exchange contracts
...
Assets
...
Liabilities
...
...
...
...
...
...
2,444)
(467)
2,444)
(467)
2,444)
(467)
Interest rate swaps
...
Liabilities
...
...
...
(484)
(484)
(199)
1,493)
1,493)
)1,778)
–)
–)
(285)
(285)
–)
–)
–)
–)
2013
Periods in which cash flows and profits are expected to occur
Carrying)
amount)
£’000)
Expected)
cash flow)
£’000)
Within)
1 year)
£’000)
Between)
1 and)
5 years)
£’000)
Over)
5 years)
£’000)
Forward exchange contracts
...
Assets
...
Liabilities
...
...
...
...
...
...
Interest rate swaps
Liabilities
...
...
...
...
78)
(270)
(777)
(969)
78)
(270)
(777)
(969)
48
78)
(270)
(227)
419)
–)
–)
(550)
(550)
–)
–)
–)
–)
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
d) Capital management (continued)
Derivative financial instruments (continued)
Sensitivity analysis
The Group has calculated the following sensitivities based on available data from forward contract markets
for the principal foreign currencies in which the Group operates. Given recent fluctuations in rates, it is
deemed sensible to provide the quantum for a 1% change in rates to aid understanding. These figures can
be extrapolated proportionately to obtain an estimate of the impact of large movements.
Impact on equity
1% increase in US Dollar fx rate against pound sterling
...
1% increase in Euro fx rate against pound sterling
1% increase in India Rupee fx rate against pound sterling
1% increase in Japan Yen fx rate against pound sterling
1% decrease in US Dollar fx rate against pound sterling
1% decrease in Euro fx rate against pound sterling
...
1% decrease in India Rupee fx rate against pound sterling
1% decrease in Japan Yen fx rate against pound sterling
Impact on the income statement
1% increase in US Dollar fx rate against pound sterling
1% increase in India Rupee fx rate against pound sterling
1% increase in Euro fx rate against pound sterling
...
1% decrease in US Dollar fx rate against pound sterling
1% decrease in India Rupee fx rate against pound sterling
1% decrease in Euro fx rate against pound sterling
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
(Profit)/loss)
(414)
–)
64)
15)
414)
–)
(64)
(15)
2013)
£’000)
(Profit)/loss)
(312)
(43)
–)
–)
312)
43)
–)
–)
(85)
7)
(37)
85)
(7)
37)
(160)
36)
(120)
160)
(36)
120)
The Group has calculated the following sensitivities based on available data from forward markets for fixed
and floating interest rates. Management believe that these reflect the most probable rate movements.
Impact on equity
1% increase in base rate of interest ...
Impact on profit or loss
1% increase in base rate of interest ...
...
...
...
...
...
...
(124)
2014)
£’000)
2013)
£’000)
(248)
...
...
...
...
...
...
–)
–)
e) Total financial assets and liabilities
The table below sets out the Group’s accounting classification of each class of financial assets and liabilities,
and their fair values at 30th April, 2014 and 30th April, 2013.
30th April, 2014
30th April, 2013
Carrying
amount
£’000
Fair value
£’000
Carrying
amount
£’000
Fair value
£’000
Financial assets
Cash and cash equivalents
...
...
...
6,233
6,233
5,514
5,514
Receivables
Trade receivables ...
Other receivables ...
...
...
...
...
...
...
...
...
28,953
2,606
28,953
2,606
30,870
3,035
30,870
3,035
At fair value through the income statement
Derivative financial assets not designated in
...
a cash flow hedge relationship
...
Designated cash flow hedge relationships
Derivative financial assets designated and
effective as cash flow hedging instruments
73
73
731
731
2,444
2,444
78
78
Total financial assets ...
...
...
...
40,309
40,309
40,228
40,228
49
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
e) Total financial assets and liabilities (continued)
Financial liabilities
Financial liabilities at amortised cost
...
...
...
...
...
Bank overdraft
...
...
Trade payables
...
Other payables
...
...
Deferred consideration ...
...
Finance lease liabilities ...
Bank loans and committed facilities ...
...
...
Corporation tax
...
...
...
...
...
...
...
30th April, 2014
30th April, 2013
Carrying
amount
£’000
–
17,152
9,419
500
1,014
8,862
2,358
...
...
...
...
...
...
...
Fair value
£’000
–
17,152
9,419
500
1,014
8,862
2,358
Carrying
amount
£’000
77
15,479
9,195
500
1,059
17,973
2,423
Fair value
£’000
77
15,479
9,195
500
1,059
17,973
2,423
At fair value through the income statement
Derivative financial liabilities not designated
...
in a cash flow hedge relationship ...
Designated cash flow hedge relationships
Derivative financial liabilities designated and
effective as cash flow hedging instruments
168
168
184
184
Total financial liabilities
...
...
...
40,424
40,424
951
951
1,047
47,937
1,047
47,937
Derivative financial 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. All other financial assets and 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).
Under IAS 39, all derivative financial instruments not in a hedge relationship are classified as derivatives at
fair value through the income statement. The Group does not use derivatives for speculative purposes. All
transactions in derivative financial instruments are underpinned by firm orders from customers or to suppliers
or where there is a high degree of certainty that orders will be received.
For short term cash and cash equivalents, trade and other receivables, trade and other payables and floating
rate borrowings, the fair values are the same as carrying value. For fixed rate borrowings, forward currency
contracts and interest rate instruments fair values have been calculated by discounting the cash flows at
prevailing appropriate market rates. Other assets reflect management’s estimate of value on an appropriate
basis.
21. Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
...
Between one and five years ...
...
...
...
...
...
Land and)
buildings)
£’000)
236)
413)
649)
Other)
£’000)
46)
112)
158)
Total)
2014)
£’000)
282)
525)
807)
Total)
2013)
£’000)
352)
422)
774)
50
NOTES TO THE FINANCIAL STATEMENTS
22. Capital commitments
Contracted capital commitments at 30th April, 2014 for which no provision has been made in these financial
statements were £4,004,000 (2013: £6,005,000). As at the year end, the Board had approved a further £45,000
(2013: £5,821,000) of capital expenditure, which has not yet been contracted for, and for which no provision has
been made in these financial statements.
23. Guarantees and contingencies
Year ended
30th April, 2014
30th April, 2013
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Total)
£’000)
15,234)
13,636)
Number of)
contracts)
428)
383)
The Group has issued bank backed guarantee and bond commitments principally in order to secure its contracts.
24. Subsequent events
After the balance sheet date an ordinary dividend of 42.348p per qualifying ordinary share was proposed by the
Directors (2013: Ordinary dividend of 35.290p and extraordinary dividend of 17.654p).
The current year proposed ordinary dividend of £3,049,000 has not been provided for within these Financial
Statements (2013: Proposed ordinary dividend of £2,541,000 and extraordinary dividend of £1,270,000 were not
provided for within the comparative figures).
Also, after the balance sheet date, the Board of Directors have approved further capital expenditure of
£8.7 million.
25. Accounting estimates and judgements
(a) Recoverability of assets / impairment calculations
The Group’s Directors review the appropriateness of the carrying values of its non-current and current assets.
With regards to the non-current assets, the Directors are of the opinion that the goodwill at the year end
remains unimpaired as the underlying performance of the subsidiaries giving rise to this goodwill is
sufficiently profitable to merit no impairment.
With regard to plant and equipment, the Directors consider that the depreciation rates applied are sufficient,
taking into account both the expected lifespan of the plant and equipment and also the demand in the
marketplace for the goods that the plant produces.
With regard to current assets, the Directors look at the carrying values as stated in the balance sheet and
make full provision for any assets on which there is a high degree of probability that full conversion of such
assets into cash is unlikely.
(b) Derivatives
As stated in note 1, under derivative financial instruments and hedging, the Group has applied the provisions
of IAS 39 with respect to hedge accounting for its effective cash flow hedging on foreign exchange transactions.
For the most part, the hedges are underpinned by firm orders and any balances justified by forecast activities
are within the Group’s normal order inputs in these currencies. In addition to the foreign exchange hedging
the Group also adopts cash flow hedging for its interest rate swap derivative.
(c) Acquisitions
Note 10 contains information about intangible assets recognised on acquisition. These primarily relate to
existing contracts, brand names and customer lists and goodwill acquired as a result of company acquisitions.
In determining the fair value of assets acquired under business combinations, including the valuation of other
intangibles and goodwill, a number of estimates are made. These estimates include the expected life spans
of the products underpinning the intangible assets together with the returns expected and the risk attaching
to those returns.
(d) Deferred taxation
Deferred taxation has been estimated using the best information available, including seeking the opinions
of independent experts when applicable. Deferred taxation at the balance sheet date has been provided at
a rate of 20% (2013: 23%).
(e) Warranties
The mechanical engineering segment of the Group operates within capital goods markets. Typically some
of these goods are sold with warranties. The Group’s Directors review the need for provisions that may be
required for any rework and provisions are made in the accounts as deemed appropriate.
51
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY BALANCE SHEET
At 30th April, 2014
FIXED ASSETS
Intangible assets
Tangible assets
Investments ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
CURRENT ASSETS
Debtors
Cash at bank and in hand
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Note
C4
C5
C6
C7
CREDITORS: amounts falling due within one year
...
...
...
...
C8
2014)
£’000)
524)
29,152)
17,112)
2013)
£’000)
780)
17,934)
17,518)
46,788)
36,232)
31,008)
2,568)
33,576)
(14,052)
28,089)
1,686)
29,775)
(5,752)
NET CURRENT ASSETS
...
...
...
...
...
...
...
...
19,524)
24,023)
TOTAL ASSETS LESS CURRENT LIABILITIES
...
...
...
...
66,312)
60,255)
CREDITORS: amounts falling due after more than one year
...
...
C9
(7,174)
(16,776)
PROVISIONS FOR LIABILITIES
...
...
...
...
...
...
...
C10
(612)
(265)
NET ASSETS
...
...
...
...
...
...
...
...
...
...
58,526)
43,214)
CAPITAL AND RESERVES
Called up share capital
Hedge reserve
...
...
...
Profit and loss account ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
C11
C12
C12
720)
(387)
720)
(598)
58,193)
43,092)
TOTAL SHAREHOLDERS’ FUNDS
...
...
...
...
...
...
58,526)
43,214)
These financial statements were approved by the board of Directors on 25th July, 2014 and signed on its behalf by:)
J. W. GOODWIN
Director
R. S. GOODWIN
Director
Company Registration Number: 305907
52
NOTES TO THE FINANCIAL STATEMENTS
C1 UK GAAP accounting policies
Principal accounting policies
The Company has elected to prepare its financial statements under UK GAAP.
The following accounting policies have been applied consistently in dealing with items which are considered
material in relation to these financial statements.
Basis of accounting
The financial statements have been prepared under the historical cost accounting rules, except for derivatives
which are valued at fair value, and in accordance with applicable Accounting Standards.
The Company is exempt under S408(3) Companies Act 2006 from the requirement to present its own profit
and loss account.
In accordance with FRS 1, the Company is exempt from preparing its own cash flow statement. In accordance
with FRS 8 “Related parties”, the Company is exempt from disclosing transactions with its subsidiaries.
The Company has adopted the requirements of FRS 29 and has taken the exemption under that standard from
disclosure on the grounds that the Group financial statements contain disclosures in compliance with IFRS 7.
Investment in subsidiary undertakings
In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less amounts
written off for impairment.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling
at the balance sheet date and the gains and losses on translation are included in the profit and loss account.
Intangible fixed assets and amortisation
Manufacturing rights, brand names and customer lists purchased by the Company are amortised to nil by
equal annual instalments over their useful economic lives, generally their respective unexpired periods, of
between 6 and 15 years.
Tangible fixed assets and depreciation
Depreciation is calculated so as to write down the cost of fixed assets to their anticipated residual value over
their estimated useful lives. The method of calculation and the annual rates applied are as follows:
...
...
Freehold land ...
...
Freehold buildings
...
...
Plant and machinery ...
...
Motor vehicles ...
...
Fixtures and fittings ...
...
Assets in the course of construction are not depreciated.
Nil
2% on cost
10% to 25% on reducing balance or 25% on cost
15% or 25% on reducing balance
25% on reducing balance
...
...
...
...
...
...
...
...
...
...
Government grants on fixed assets
Government grants relating to fixed assets are recognised in the balance sheet as an accrual, and are released
into the profit and loss account pro-rata to the depreciation on the associated fixed asset.
Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because
of timing differences between the treatment of certain items for taxation and accounting purposes. Except
where otherwise required by accounting standards, full provision without discounting is made for all timing
differences which have arisen but not reversed at the balance sheet date.
The Company does not make a deferred tax provision for the aggregate amount of temporary differences
associated with undistributed earnings of subsidiaries. No liability has been recognised in respect of these
differences both on the grounds of materiality and because the Group is in a position to control the timing
of the reversal of the temporary differences and it is probable that such differences will not reverse in the
foreseeable future.
Temporary differences arising in connection with interests in associates and joint ventures are insignificant.
Leasing
Where the Company enters into a lease which entails taking substantially all the risks and rewards of ownership
of an asset, the lease is treated as a “finance lease”. The asset is recorded in the balance sheet as a tangible
fixed asset and is depreciated over its estimated useful life, or the term of the lease, whichever is shorter.
Future instalments under such leases, net of finance charges, are included with creditors. Rentals payable
are apportioned between the finance element, which is charged to the profit and loss account, and the capital
element which reduces the outstanding obligation for future instalments.
All other leases are accounted for as “operating leases” and the rental charges are charged to the profit and
loss account on a straight line basis over the life of the lease.
Financial Instruments
The Company uses financial instruments to manage financial risks associated with the Group’s underlying
business activities and the financing of those business activities. The Company does not undertake any trading
in financial instruments.
Derivatives are initially recognised at fair value on the date that the contract is entered into and subsequently
re-measured in future periods at their fair value. The method of recognising the resulting change in fair value
is dependent on whether the derivative is designated as a hedging instrument.
The fair value of interest rate swaps is the estimated amount that the Company would receive or pay to
terminate the swaps at the balance sheet date, taking into account current interest rates and the current credit
worthiness of the swap counterparties.
53
NOTES TO THE FINANCIAL STATEMENTS
C2 Profit for the financial year
The Company’s profit for the financial year was £18,912,000 (2013: £13,682,000).
Included in profit before taxation are the following:
Fees receivable by the auditors and their associates in respect of:
...
Audit of these financial statements
...
...
...
...
...
...
2014)
£’000)
16)
2013)
£’000)
16)
Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the
Company’s financial statements, have not been disclosed as the information is required instead to be disclosed
on a consolidated basis (see note 3 of the Group accounts).
C3 Directors’ costs
Details of Directors’ remuneration are set out in the Directors’ Remuneration Report on pages 17 to 19.
C4
Intangible fixed assets
Brand Name)
and customer)
list)
£’000)
Manufacturing)
rights)
£’000)
Intellectual)
Property)
Rights and)
Non-Compete)
£’000)
Total)
£’000)
Cost
At beginning and end of year
Amortisation
At beginning of year
Charged in year ...
At end of year
...
...
...
...
Net book value
At 30th April, 2014 ...
At 30th April, 2013
...
...
...
...
...
...
...
...
...
...
...
...
880)
706)
110)
816)
64)
174)
827)
312)
55)
367)
460)
515)
594)
2,301)
503)
91)
594)
–)
91)
1,521)
256)
1,777)
524)
780)
The brand name and customer list reflects the purchase of an intangible asset to assist an existing manufacturing
process at one of the Group’s subsidiaries. The manufacturing rights brought forward reflect the payment
in a previous period for an irrevocable licence for the Goodwin Group to manufacture the Noreva range of
nozzle check valves in the UK. These rights will be amortised over 15 years in line with the expected life of
the asset with appropriate royalties being charged to the UK subsidiary carrying on the manufacturing of
the valves. The intangible asset, being in effect an inter company transaction, does not feature in the Group
accounts as an intangible asset.
C5
Tangible fixed assets
Freehold)
land and)
Plant and)
buildings) machinery)
£’000)
£’000)
Fixtures)
and)
Assets)
in course of)
fittings) construction)
£’000)
£’000)
Cost
At beginning of year
Additions ...
...
Transfer
...
...
At end of year
...
Depreciation
At beginning of year
Charge for year ...
At end of year
...
...
...
...
...
...
...
...
Net book value
At 30th April, 2014 ...
At 30th April, 2013
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Total)
£’000)
26,230)
12,176)
–)
11,717)
6,899)
906)
9,526)
4,479)
2,364)
1,717)
71)
–)
3,270)
727)
(3,270)
19,522)
16,369)
1,788)
727)
38,406)
1,781)
99)
1,880)
5,344)
746)
1,171)
113)
6,090)
1,284)
–)
–)
–)
8,296)
958)
9,254)
17,642)
10,279)
9,936)
4,182)
504)
546)
727) 29,152)
3,270)
17,934)
54
NOTES TO THE FINANCIAL STATEMENTS
Shares in)
associated)
Shares in)
Group)
undertakings) undertakings)
£’000)
£’000)
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
277)
–)
–)
277)
17,241)
242)
(648)
16,835)
C6
Fixed asset investments
Cost and net book value
At beginning of year ...
Additions
...
Transfer to Group company
...
...
...
At end of year
...
...
During the year, the Company invested £242,000 in Group undertakings, mainly being £241,000 in
Easat Antennas Limited, and transferred its investment in Sandersfire International Limited to Hoben
International Limited.
A list of principal subsidiaries is given in note 11 of the Group accounts.
C7 Debtors
Amounts owed by Group undertakings ...
...
...
Other debtors ...
...
...
Derivative valuations ...
...
...
Prepayments and accrued income
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
C8 Creditors: amounts falling due within one year
...
Bank loans and overdrafts ...
...
Amounts owed to Group undertakings ...
...
Finance lease liabilities
...
Other taxation and social security
...
Derivative valuations ...
...
Intra-Group derivatives
Deferred consideration on acquisitions ...
...
Accruals and deferred income
...
...
Corporation tax
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
C9 Creditors: amounts falling due after more than one year
Bank loans
...
...
Finance lease liabilities ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
C10 Provisions for liabilities
2014)
£’000)
29,227)
–)
1,645)
136)
2013)
£’000)
27,315)
395)
268)
111)
31,008)
28,089)
2014)
£’000)
1,943)
6,151)
353)
229)
484)
1,645)
500)
2,747)
–)
14,052)
2014)
£’000)
6,919)
255)
2013)
£’000)
87)
2,072)
353)
280)
953)
92)
500)
1,381)
34)
5,752)
2013)
£’000)
16,168)
608)
7,174)
16,776)
Deferred taxation
...
At beginning of year
Debit to the profit and loss for the year
Debit to the hedging reserve for the year
...
...
At end of year
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
The elements of deferred taxation are as follows:
Difference between accumulated depreciation and
...
amortisation and capital allowances
...
...
Taxation on derivative financial instruments
...
...
...
...
...
...
...
...
...
...
2014)
£’000)
709)
(97)
612)
55
2014)
£’000)
265)
266)
81)
612)
2013)
£’000)
644)
(379)
265)
NOTES TO THE FINANCIAL STATEMENTS
C11 Called up share capital
Authorised, allotted, called up and fully paid:
...
7,200,000 ordinary shares of 10p each
...
...
...
...
...
...
720)
2014)
£’000)
2013)
£’000)
720)
C12 Share capital and reserves
Reconciliation of movement in capital and reserves.
Share)
capital)
£’000)
Hedge)
reserve)
£’000)
Profit)
and loss)
account)
£’000)
2014)
Total)
£’000)
2013)
Total)
£’000)
At beginning of year ...
Profit for the year
...
Dividends
At end of year ...
...
...
...
...
...
...
...
...
...
...
...
720)
(598)
43,092)
43,214)
31,832)
–)
–)
211)
–)
18,912)
(3,811)
19,123)
(3,811)
13,692)
(2,310)
720)
(387)
58,193)
58,526)
43,214)
C13 Contingent liabilities
The Company is jointly and severally liable for value added tax due by other members of the Group amounting
to £Nil (2013: £Nil).
C14 Commitments
Contracted capital commitments at 30th April, 2014 for which no provision has been made in these financial
statements were £4,004,000 (2013: £6,005,000).
C15 Subsequent events
Apart from the dividends declared (see note C16), and further capital expenditure of £5.5 million approved
by the Directors, no significant events have occurred after the balance sheet date.
C16 Dividends
2014)
£’000)
Paid ordinary dividends during the year in respect of prior year
35.290p (2013: 32.082p) per qualifying ordinary share ...
...
...
...
2,541)
2013)
£’000)
2,310)
Paid extraordinary dividends during the year in respect of prior year
17.645p (2013: Nilp) per qualifying ordinary share
...
...
...
...
1,270)
–)
3,811)
2,310)
After the balance sheet date an ordinary dividend of 42.348p per qualifying ordinary share was proposed by the
Directors (2013: Ordinary dividend of 35.290p, extraordinary dividend of 17.645p).
The proposed current year ordinary dividend of £3,049,000 has not been provided for within these Financial
Statements (2013: Proposed ordinary dividend of £2,541,000 and extraordinary dividend of £1,270,000 not
provided for).
56
Continuing operations
...
...
Revenue ...
Profit before tax taxation
Tax on profit
...
Profit after taxation ...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
Basic and diluted earnings per ordinary share
Total equity
...
...
...
...
...
...
FIVE YEAR FINANCIAL SUMMARY
(2010)
(£’000)
(2011)
(£’000)
(2012)
(£’000)
(2013)
(£’000)
)2014)
)£’000)
(92,996)
(13,311)
(3,980)
(9,331)
(92,908)
(8,148)
(3,904)
(4,244)
(107,911)
(12,273)
((2,938)
(9,335)
(126,964)
(20,296)
((4,609)
(15,687)
)130,828)
)24,095)
(4,448)
)19,647)
(118.15p)
(50.89p)
(124.33p)
(211.76p)
)264.38p)
(41,307)
(45,662)
(48,708)
(62,527)
)77,570)
...
...
...
...
...
...
57