INDEX
Notice of AGM
Notes to Notice of AGM
GROUP STRATEGIC REPORT
Chairman’s Statement
Summary of Consolidated Income Statement and Statement of Comprehensive Income
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
NOTES TO THE FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
Company Balance Sheet
Company Statement of Changes in Equity
Notes to the Company Financial Statements
1
2
3
5
6
11
12
14
16
18
21
28
29
34
35
36
37
38
39
69
70
71
78
FIVE YEAR FINANCIAL SUMMARY
GOODWIN PLC
www.goodwin.co.uk
Registered in England and Wales, Number 305907
Established 1883
Directors:
J. W. Goodwin (Chairman)
J. Connolly
S. R. Goodwin
B. R. E. Goodwin
J. E. Kelly (Non-Executive Director)
R. S. Goodwin (Managing Director)
M. S. Goodwin
S. C. Birks
T. J. W. 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,
The Pavilions, Bridgwater Road,
Bristol, BS99 6ZZ
Auditor:
KPMG LLP,
One Snowhill, Snow Hill Queensway, Birmingham, B4 6GH
NOTICE IS HEREBY GIVEN that the EIGHTY-THIRD ANNUAL GENERAL MEETING of the
Company will be held at 10.30am on Wednesday, 3rd October, 2018 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.
2.
3.
4.
5.
6.
7.
To receive the Directors’ Reports and the audited financial statements for the year
ended 30th April, 2018.
To approve the payment of the proposed ordinary dividend on the ordinary shares.
To re-elect Mr. M. S. Goodwin as a Director.
To re-elect Mr. T. J. W. Goodwin as a Director.
To re-elect Mrs. J. E. Kelly as a Non-Executive Director.
To approve the Directors' Remuneration Report (excluding the Directors Remuneration
Policy) for the year ended 30th April, 2018, as stated on pages 24 to 27 of the Directors'
Report.
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
26th July, 2018
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 1st October, 2018.
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 1st October, 2018 (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 25th July, 2018 (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 26th July, 2018 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 has a service contract with the Company.
11. If approved by shareholders the ordinary dividends will be paid to shareholders on 5th October, 2018.
2
GROUP STRATEGIC REPORT
GOODWIN PLC
CHAIRMAN’S STATEMENT
We are pleased to report a 44% increase in pre-tax profits to £13.30 million (2017: £9.24 million)
on revenues of £125 million (2017: £132 million). The Directors propose an increased dividend
of 83.473p (2017: 42.348p) for the reasons outlined in the Group Strategic report on pages 9 and
10 of these accounts.
The Refractory Division’s trading profits have risen from £4.2 million at April 2016 to £7.5 million
at April 2018, excluding its sale of land in India which realised an additional £1.6 million of pre-tax
profit. The success of our Indian operations has meant that for some time we have been operating
out of much larger, bespoke built, freehold premises and during the year the right opportunity
arose for us to dispose of our redundant original freehold investment in the country. Without the
land sale, the Group pre-tax profits have risen 26% year on year and with the land sale included
there has been a 44% increase in the reported Group pre-tax profits. Again excluding the land
sale, the Refractory Division’s growth in pre-tax profits over the past two years equates to a
compound growth rate of 34% per annum and has been most welcome at a time when capital
expenditure in the oil and gas industry has been so constricted. The ten refractory engineering
companies of which seven are overseas in India, China, Thailand and Brazil have the benefit of
seeing much higher in-country GDP growth each year than is experienced in Europe and the USA.
Our Refractory Engineering Division increased its contribution to Group performance by achieving
an average increase in turnover last financial year of 12% and an increase in trading profitability
of 27%. This was assisted by the demise of our historic investment casting moulding powder
competitor Kerr who had been the global leader in the period 1960 to 2000 but last year ceased
trading jewellery investment casting powders. Whilst the diversification of the Group makes it
harder to manage, it does permit the Group to avoid massive performance troughs such as could
have been caused by the oil and gas industry decline over the past three and a half years.
In the Mechanical Engineering Division we are pleased to report that our three largest engineering
companies - Goodwin International Ltd., Noreva GmbH and Goodwin Steel Castings Ltd. - through
their focussed efforts over the past four years are now being rewarded with substantial orders
that are coming from areas other than oil and gas, which will improve the Group’s profitability
in this new financial year.
When the oil and gas industry starts re-investing and the mining industry does likewise
especially in copper production due to the need for the installation of electric car charging points
worldwide, we would expect the profit generation of the Mechanical Engineering Division and
the Refractory Division to remain around 50%/50% over the next two years with growth in
profitability in both divisions.
A further point of interest is that for the first time ever the pre-tax profits from our overseas
companies (excluding the land sale) equalled those from our UK companies. Going forward as
the oil and gas markets recover, we would expect this to move towards 60% of profits arising
from our UK trading companies and 40% coming from our overseas companies.
It would be inappropriate not to make mention of how very difficult the last two financial years
have been for the foundry, Goodwin Steel Castings. Indeed for all foundries worldwide other
than those addressing the automotive industry and the aerospace industry, it has been a very
challenging three years. Many foundries worldwide have either closed or merged in this period.
At Goodwin we have taken the opportunity over the past eighteen months to reposition the
foundry such that we can address more efficiently very large high integrity castings for nuclear
fuel reprocessing and for military boat building programmes in the USA, the UK and other
overseas countries.
This investment in larger and more sophisticated plant combined with the design and manufacture
of high performance materials during this very quiet period simply would not have been
possible if the foundry had been as busy as it had been for the prior profitable twenty years.
As an indication that this decision to invest in the foundry was justified, we are pleased to
announce that in June, 2018 Goodwin Steel Castings won a contract for castings to be cast over
the next four years for the US Navy at a value of $19.5 million. We expect this contract to be
3
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
the first of many going forward for the specialized steel that is required and that Goodwin over
a four year period obtained US Navy approval to manufacture last financial year.
Easat Radar Systems similarly had a very difficult year last financial year with project delays
associated with contract changes to the scope of work, but again Easat has won a major
programme for sixteen primary radar antennas for civilian airports. There is also another
significant military programme that will likely be won in the next twelve months.
The Company’s business metabolism is divided between growth, maintenance and investment
in innovation.
Growth this year, compared to last, is 44% on profit, gross profit margin from 25.6% to 28.6%,
return on capital employed from 8.4% to 12.3%, cash generation as net cash flow from operating
activities from £5.285 million to £31.099 million and order input to individual companies from
£138 million to £150 million.
Maintenance can be described as a decrease in gearing from 31% to 11%, intangible fixed assets
increased from £18.2 million to £21.1 million, fixed assets additions per year up from £7.6 million
to £9.4 million, net debt down from £28 million to £11 million, return on investment up from
6.8% to 8.5%.
Our investment in innovation can be described in terms of people, products and markets. Sales
per employee increased from £114,000 to £120,000 and we have a high percentage of employees
(45%) in the 22 to 40 age range reflecting more apprentices having graduated and continuing to
do so. We have travelled to 26 countries to obtain new business mostly outside of Europe.
Much effort has been put into gaining new approvals for products, the manufacturing of which
has started thanks to the past years’ research and development and capital investment. Investor
valuation of these new products will in time be determined by the financial results but assessing
the potential market size and competitiveness combined with their intellectual property rights and
the employee skill base shown on our websites gives a current view of the potential. US Energy
Information Administration has forecast world energy demand will increase from 2015 to 2040
by 28%. Our axial valve and radar developments, our high integrity alloy castings for defence
and civil nuclear together with refractories to tackle lithium battery fires remain works in
progress that are part of our investment for the future.
The capital expenditure within the oil and gas industry in the financial year just completed has
remained low as the major oil and gas companies have been rebuilding their balance sheets
with the price of oil now between US$70 and US$80 per barrel. With energy consumption rising
at 2.3% per year and the oil surpluses having virtually disappeared, it is now possible that the
activity in the oil, gas and LNG markets will start increasing in early 2019 rather than 2020 as
we had earlier thought. We are well placed to take advantage of any increase in demand from
these markets.
In our last year’s Annual Report Statement and at the interim half year report, mention was made
of substantial effort being made to improve the cash flow. We are pleased to say that as at the
30th April, 2018, the Group cash flow has improved by £17 million over the past twelve months
and this is after paying the dividend, corporation tax and some £9 million of capital investment.
Whilst all companies have focused on improving their cash flow, one must remember that the
pre-tax profit reported of £13.30 million is after having deducted non cash charges of £6.4 million
for depreciation / amortisation adjustments. The Group gearing as at the 30th April, 2018 was
just 11%. It is for this reason and with our vision for the future that the Board feels confident
that the alteration of the dividend policy is safe and viable now and going forward.
We would like to take the opportunity of thanking all our employees, managers and Directors
both in the UK and overseas for working so hard to achieve these improved trading results
which it is likely will improve again in the new financial year, especially so as the order intake
as we write is 16% increased as compared to the same time last year.
26th July, 2018
Alternative performance measures mentioned above are defined in note 29 on page 68.
4
J. W. Goodwin
Chairman
GROUP STRATEGIC REPORT
GOODWIN PLC
CONSOLIDATED INCOME STATEMENT
for the year ended 30th April, 2018
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
… … … … … … … … …
PROFIT AFTER TAXATION… … … … … … … …
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
Non-controlling interests
… … … … … … …
PROFIT FOR THE YEAR … … … … … … … …
2018
£’000
124,811
(89,143)
35,668
(3,359)
(18,729)
13,580
(590)
310
13,300
(3,865)
9,435
8,504
931
9,435
2017
£’000
131,587
(97,836)
33,751
(3,486)
(20,317)
9,948
(873)
169
9,244
(2,487)
6,757
6,082
675
6,757
BASIC AND DILUTED EARNINGS PER ORDINARY SHARE … …
118.11p
84.47p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2018
PROFIT FOR THE YEAR … … … … … … … … …
OTHER COMPREHENSIVE INCOME / (EXPENSE)
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME
STATEMENT:
2018
£’000
9,435
2017
£’000
6,757
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
Tax charge on items that may be reclassified subsequently to the income
(152)
(294)
5,108
statement
… … … … … … … … … …
(818)
OTHER COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR, NET
OF INCOME TAX
… … … … … … … … … …
3,844
3,619
(6,526)
2,142
738
(27)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR … … … …
13,279
6,730
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … … …
Non-controlling interests
… … … … … … … …
12,245
1,034
13,279
5,654
1,076
6,730
The full financial statements and accompanying notes are on pages 34 to 68.
5
GROUP 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, whilst at all times taking
appropriate steps to ensure the health and sfaety of our employees and customers;
• 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/2018.
Mechanical Engineering
The Group designs, manufactures and sells a wide range of dual plate check valves, axial nozzle
check valves and axial piston control and isolation valves to serve the oil, petrochemical, gas, LNG
and water markets. We generate value by creating leading edge technology designs, globally
sourcing the best quality raw material at good prices, manufacturing in highly efficient facilities
using up to date technology to provide 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, Goodwin Steel Castings, has the capability to pour high performance
alloy castings up to 35 tonnes, radiograph and also finish CNC machine and fabricate them at
the foundry’s sister company, Goodwin International. This capability is targeting the defence
industry and nuclear fuel processing as well as the oil and gas industry.
Goodwin International, the largest company in the mechanical engineering division, designs and
manufactures dual plate check valves, axial nozzle check valves and axial piston control and
isolation valves and also undertakes specialised CNC machining and fabrication work. Goodwin
International also has a division that is focussed on manufacturing / machining high precision,
high integrity components that are utilised in nuclear propulsion systems and nuclear fuel
reprocessing and handling systems. Noreva GmbH also designs, manufactures and sells axial
nozzle check valves. Both Goodwin International and Noreva purchase the majority of the value
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, Australia and Africa. Easat Radar Systems designs and builds bespoke
high-performance radar antenna systems for the global market of major defence contractors,
civil aviation authorities and border security agencies. We create value on these by innovative
design, assembly and testing in our own facilities using bought in or engineered in-house
components.
6
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
Refractory Engineering
Within the refractory engineering division, Goodwin Refractory Services (GRS) primarily generates
gross margin from designing, manufacturing and selling investment casting powders and waxes
to the jewellery casting industry. GRS also manufactures and sells investment casting powders
to the tyre mould and aerospace industries. The refractory division has eight other investment
powder manufacturing companies located in China, India, Thailand and Brazil which sell the
casting powders directly and through distributors to the jewellery casting industry.
These companies are vertically integrated with another of our UK companies, Hoben International,
which manufactures cristobalite which it sells to the nine casting powder manufacturing
companies as well as producing ground silica that also goes into casting powders. Hoben
International now also manufactures different grades of perlite.
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
technical textiles that can withstand exposure to high temperatures and for lithium battery fire
extinguishers. Dupré also sells consumable refractories to the shell moulding casting industry.
BUSINESS DIVERSITY AND PERFORMANCE
As can be seen in note 2 to these Financial Statements, in the year to 30th April, 2018 the refractory
engineering division generated just over 50% of the Group’s operating profits and the mechanical
engineering division just less than 50%. The profitability of the refractory engineering division
benefited from a non trading capital gain of £1.6 million associated with the sale of the original
Indian investment powder company’s land and buildings that were purchased in 2003 as was
reported in the half year accounts in October 2017. Just after the year end in May 2018, additional
land to the land purchased in 2005 by Goodwin Pumps India was purchased for £1.6 million to
accommodate the significantly increasing business activity in India of both our investment
casting powder company and the Goodwin slurry pump company.
For the next financial year i.e. before the oil and gas business really starts to become busy, we
expect this 50/50 balance of pre-tax profitability between the two divisions to be maintained as
the year on year growth of the refractory engineering division at 25% is currently greater than
that of the mechanical engineering division. Thereafter we estimate the business balance is likely
to move to 60%/40% in favour of the mechanical engineering division.
From the geographical segmentation report on page 47 of these Accounts it can be seen that the
revenue is fairly evenly spread between the Pacific Basin Countries, UK, Rest of Europe and
the rest of the world. The rest of Europe figure includes the sales from Noreva, our valve
company based in Germany and from NRPL, our radar transceiver company based in Finland.
The sales into the USA are relatively low at 2% but over the next two years we expect this to
grow significantly with sales to the US Navy and the US Airforce which should further enhance
the diversity of our territorial market spread.
BREXIT
As a result of Brexit Sterling remains weak as compared to the period leading up to the referendum
vote. We have considered the impact of this on the consolidation of the results of our overseas
companies and would comment as follows:
The percentage of Goodwin Group turnover to countries within Europe (excluding turnover of our
English companies to England and European turnover of our European subsidiaries) is less
than 10% of total Group annual revenue and similarly the percentage of Group annual pre-tax
profit derived from these same sales is less than 7.5% of Group pre-tax profit. These two
percentages exclude the oil and gas European contractor business won on international tender
by Goodwin International Ltd as 90% of oil, gas and LNG international construction contracts
that we might participate in, whether placed in Europe or elsewhere, are to American standards
and this will not be changing as a feature of Brexit. These contracts for valves with the large
European oil, gas and LNG international contractors are rarely delivered into Europe.
Sales from Goodwin Group companies to Europe are not our corporate focus nor have they been
for the past 20 years. Our Group focus on maintaining and growing sales, both from our English
companies and our overseas companies, is in countries that have and have had GDP annual
7
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
BREXIT (continued)
growth over the past more than ten years some 200% greater than has been enjoyed by the
average of the European countries and these include:
China, India, Australia, African continent countries, South American countries, Middle Eastern
countries, USA, Canada, Japan, South Korea, Thailand and neighbouring countries.
KEY PERFORMANCE INDICATORS
The key performance indicators for the business are listed below:
Gross profit as a %
of turnover
Profit before
tax (in £ millions)
Gearing % (excluding
deferred consideration)
Sales per employee
per year (in £’000)
Dividends proposed
(in £ millions)
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018
27.8
28.5
29.9
27.3
28.5
31.9
34.3
32.5
27.8
25.6
28.6
9.8
13.1
13.3
8.1
12.3
20.3
24.1
20.1
12.3
9.2
13.3
13.7
(1.5)
1.8
22.1
25.9
23.3
5.0
11.7
25.6
31.4
10.8
112.4
128.4
112.4
105.5
113.7
125.7
124.1
111.8
105.4
114.0 119.8
1.7
4.0
2.0
2.1
2.3
3.8
3.0
3.0
3.0
3.0
6.0
Alternative performance measures mentioned above are defined in note 29 on page 68.
8
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
CHANGES TO DIVIDEND POLICY
The Directors have been analysing the current and historic business performance and, whilst over
the prior three years to the financial year that has just been completed, there had been a fall off
in Group profitability associated with the vast contraction in capital expenditure in the oil, gas and
mining markets we consider this is only temporary.
Twenty five years ago in 1993, the majority of Group sales were associated with products made
under licence for which our manufacturing companies paid licence fees to our licensors and our
sales territory was limited to Europe in the main by our licensors. By the mid 1990s Goodwin had
designed and developed our own range of products that were technically and commercially
competitive, many of which we patented and that our Group companies could sell worldwide,
especially to the developing markets where annual growth rates of GDP were very much higher
than Europe.
In the 1980s and early 1990s much of our trading profit was repatriated to our licensors as licence
fees. Since the mid 1990s the Group has not manufactured and sold products under licence.
Now with a global sales activity, we have in comparison to former years saved significant amounts
of cash and increased profits as we no longer pay these manufacturing licence fees. Also since
the mid 1990s the Group spent considerable money in developing our global sales network,
especially in the Pacific Basin, and also started undertaking large engineering projects.
The transformation described above applies to Goodwin International, Goodwin Steel Castings,
Goodwin Refractory Services and Noreva GmbH, all of whom have a number of patents.
Easat Radar Systems has also benefitted from the process.
Today the Group primarily manufactures its own products that it sells direct to market in 96
different countries.
In the early 1980s following Goodwin having extracted itself from profitably making radial tyre
building machinery when there was a permanent drop in consumption of tyres per car
associated with the radial tyre that lasted twice as long as the cross ply tyre, Goodwin started
making pumps and valves under licences from two USA companies. Between the early 1980s to
the mid 1990s when Goodwin made pumps and valves under USA licences Goodwin struggled
to make significant profits due to the licence fees paid on the then new products – pumps
and valves which we manufactured and sold into competitive markets.
For the past twenty years the Group has made significant profits that grew at the rate of about
20% per year compound (except in the three years prior to the financial year just completed due
to the recent oil and gas industry contraction). The majority of these profits made in this 20 year
period, more than 75% after paying tax, had been reinvested into designing and developing
new products and expanding our global markets for our mechanical and refractory engineering
companies. Money was also spent on buying high efficiency and technologically advanced
manufacturing plant and machinery, training our people, setting up overseas sales organisations
and companies and/or in buying complementary or competitive companies.
For our major product ranges whether it be dual plate check valves, nozzle valves, axial piston
valves, radar antenna systems, high integrity alloy castings, investment casting powders,
vermiculite products, cristobalite, our product offerings are now in the top three in the world and
most are number one.
It is for this reason and having re-invested over £130 million pounds of our post-tax profits in the
subsidiary companies and on acquisitions over the past twenty years, the company is in a more
robust state.
The Board has now concluded that it is appropriate to modify the dividend policy going forward
until further notice. Historically averaging it over the past twenty years, the dividend, as a
percentage of post-tax profits plus depreciation and amortisation, has been 20%, it is now
planned to increase this figure to 38% starting for the year just completed subject to
shareholders voting in favour of this at the AGM on 3rd October, 2018.
9
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
Conversely our investment into designing and developing new products for our mechanical
and refractory engineering companies, buying high efficiency and technologically advanced
manufacturing plant and machinery, setting up overseas sales organisations and companies
and/or in buying complementary or competitive companies which has cost on average 70% of
post-tax profits plus depreciation and amortisation over the past twenty years, we plan to limit
this activity to a maximum on a three year rolling annual average of 55% of post-tax profits plus
depreciation and amortisation.
10
GROUP STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's operations expose it to a variety of risks and uncertainties. These risks are no different to previous
years and they are not expected to change substantially in the foreseeable future. The Directors confirm that they
have carried out a robust assessment of the principal risks facing the Company, including those that would threaten
its business model, future performance, solvency or liquidity. The key risks are discussed below.
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 as was seen over the past
two financial years. 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
not only from the worldwide energy markets but also from nuclear propulsion systems, military ship building and
the jewellery consumer market that our investment casting powder companies indirectly supply through the supply
of investment casting moulding powders, waxes and silicone rubber. As we have recently seen in the oil, gas and
metal/ore mining markets, these markets suffered short-term declines, but over the medium to long-term the growing
worldwide demand for energy and metal especially copper 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 research and development 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 and the purchase of product liability insurance. The risk of product obsolescence is
countered by research and development 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, secured and unsecured credit lines,
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 ensure we comply with the relevant laws and regulations.
Assessment of principal risks: Changes and likely impact: As part of the Board’s risk management and
control of principal risks, areas of monitoring and expert advice undertaken are reported upon by the Audit
Committee on pages 18 to 20.
11
GROUP STRATEGIC REPORT
Greenhouse Gas (“GHG”) emissions
CORPORATE SOCIAL RESPONSIBILITY
Since 2011 we have been reporting on the increase / decrease in our CO2 emissions, and this is our fourth GHG
emissions report in line with the latest UK reporting requirements.
Due to lower capital expenditure by our customers and lower production, less gas and electricity has been used
in our manufacturing. We have used the version of the factors that correlate with the data from the calendar
year in which the greatest portion of our data falls, which are the 2017 factors.
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 years to 30th April, 2018 and 30th April, 2017.
We have used the reporting guidance set out by the DEFRA environmental reporting guidelines for 2017 (expiry
31st July, 2018) and used the methodology set out therein, to report our Scope 1 and Scope 2 emissions, using
the IEA “full set” emission factors 2016, covering both OECD and non OECD countries.
We also report under the Carbon Reduction Commitment scheme and the Energy Saving Opportunity Scheme.
Under the latter, we have a target to reduce all space heating and lighting by 5% by 2020. UK LED lighting
installations are progressing, with savings to date calculated as 3.5% of lighting power consumption. All new
processes and equipment are assessed for energy savings. Examples include lower power computers combined
with productivity savings. A new heat treatment furnace using recuperative heating should result in a 36% fuel
saving. The largest savings have been by installing processes locally, rather than subcontracting, thereby saving
on transport costs. Despite the savings, some innovative products, with highly improved operating performance
capable of working at more extreme temperatures and pressures, do need extra processing which uses more
manufacturing energy.
The energy policy is managed by the Group’s Energy Savings Opportunity Scheme (ESOS) auditor, reporting to
M. S. Goodwin.
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 £1 million
of Group revenue
2018
Tonnes of CO2e
2017
Tonnes of CO2e
33,840
7,794
41,634
334
52,280
9,396
61,676
471
Donations
The Company made no political donations during the year (2017: £nil).
Donations by the Group for charitable purposes amounted to £53,079 (2017: £46,500). The majority of these were
made to local communities within the Group’s operating environments.
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 in accordance with the requirements of the Equality Act 2010.
Health and Safety
Last year we reported on progress in our subsidiaries achieving ISO18001 accreditation when three of our large
companies had achieved this accreditation. This year we have five subsidiaries accredited to ISO18001 but there
has also been a new global Health and Safety standard released called ISO45001. It is Group policy over the next
two years to convert the existing ISO18001 accredited subsidiaries over to ISO45001 and within a further two
years to have all subsidiaries with a turnover greater than £5 million also to obtain this accreditation.
Community issues
During the year the Company has continued to communicate to all employees our culture of responsibility and
support for local communities where possible.
Supply chain ethics
We visit major suppliers and write letters in line with the United Nations Global Compact voluntary initiative.
The letters invite our major suppliers to adopt, implement and evidence adequate compliance policies.
12
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Diversity Policy
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 Group invests in training
and development of skills for the Group’s future and has a long-term aim that the composition of our workforce
should reflect that of the community it serves. Our Diversity policy is implemented through training and
development, recruitment, our business culture and the Board’s Strategy.
The following tables set out the breakdown of our average number of employees and Board members by gender
and age:
Breakdown by gender
Year ended 30th April, 2018
Main Board and Company Secretary
Senior Management
Employees
Total
Breakdown by age
Year ended 30th
April, 2018
Main Board and
Company Secretary
Senior Management
Employees
Total
Age
16 to
21
0
0
86
86
%
0%
0%
9%
8%
Male
8
57
801
866
%
80%
90%
83%
83%
Female
2
6
168
176
%
20%
10%
17%
17%
Total
10
63
969
1,042
Age
22 to
40
5
15
452
%
50%
24%
47%
Age
41 to
65
3
47
417
472
45%
467
45%
%
Age
Over 65
%
Total
30%
75%
43%
2
1
14
17
20%
1%
1%
2%
10
63
969
1,042
FORWARD-LOOKING STATEMENTS
The Group 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 for future events or developments, whether as a result of new
information, future events or otherwise, except to the extent legally required.
The Group Strategic Report was approved by the Board on 26th July, 2018, and is signed on its behalf by:
J. W. Goodwin
Director
R. S. Goodwin
Director
13
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS
The Directors have pleasure in presenting their reports and audited financial statements for the year ended
30th April, 2018.
The Directors have presented their Group Strategic Report on pages 6 to 13. The Group 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 Group 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 Group Strategic Report
for the year are the Group’s Objectives, Strategy and Business Model on page 6, the Principal Risks and
Uncertainties on page 11, and the Corporate Social Responsibility Report on page 12.
The Board considers that the Chairman’s Statement, the Group 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 position and performance during the financial year
and at the year end, and to assess the business model and strategy.
Proposed ordinary dividends
The Directors recommend that an ordinary dividend of 83.473p per share (2017: 42.348p) be paid to shareholders
on the register at the close of business on 7th September, 2018. If approved by shareholders, the ordinary
dividend will be paid to shareholders on 5th October, 2018.
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
S. R. Goodwin
S. C. Birks
B. R. E. Goodwin
T. J. W. Goodwin
J. E. Kelly (Non-Executive Director)
The Directors retiring in accordance with the Articles are Mr. M. S. Goodwin, Mr. T. J. W. Goodwin and Mrs. J. E.
Kelly 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.
Shareholdings
The Company has been notified that as at 23rd July, 2018, the following had an interest in 3% or more of the issued
share capital of the Company:
J. W. and R. S. Goodwin 2,129,146 shares (29.57%), J. W. and R. S. Goodwin 1,328,882 shares (18.46%). These shares
are registered in the names of J. M. Securities Limited and J. M. Securities (No. 3) Limited respectively. J. H. Ridley
502,343 shares (6.98%), Rulegale Nominees (JAMSCLT) 319,640 shares (4.44%).
In line with LR 9.2.2A R, relating to Controlling Shareholders, the Company confirms that a written and legally binding
agreement is in place, which complies with the independence provisions set out in LR 6.1.4D R.
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 58.
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 Market Abuse Regulation 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.
Following the passing of a Resolution at the Company’s AGM on 5th October, 2016 to approve an Equity Long Term
Incentive Plan (“LTIP”) for the Executive Directors, the Directors have statutory authority to issue shares in connection
with the exercise of options granted under the LTIP. The Directors have not been given authority to issue or buy
back shares of the Company other than in respect of the LTIP.
14
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Research and development
The Group invests significantly in research and development. The more material investments during the year
included our ongoing axial flow control valve developments, vermiculite dispersions and radar systems.
Change in control
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 for the next twelve months.
With a year end gearing level of 10.8% (2017:31.4%) and significant headroom between bank facilities available and
utilisation, the Directors after having reviewed the situation believe there is a reasonable expectation that the Group
has adequate resources to continue in operational existence for twelve months from the date of approval of these
financial statements, and have continued to adopt the going concern basis in preparing the financial statements.
Viability Statement
The Directors have considered the viability of the Group over an extended period of 3 years. The degree of difficulty
in forecasting increases with time periods of more than one year, but the Directors again having reviewed the
situation have a reasonable expectation that the Group has adequate resources to continue over this period.
The assessment factored in the future projected profitability of the Group which when subjected to sensible stress
testing (for example a delayed recovery within the oil and gas markets) still resulted in a profitable outlook. The
Group’s gearing levels remain relatively modest and, as disclosed within note 20, our unutilised bank facilities are
significant. The 3 year viability review assumes we will be able to refinance our existing bank facilities as they come
up for renewal but we feel this assumption is reasonable given the financial position of the Group.
Auditor
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
26th July, 2018
15
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT
Introduction
The Board comprises eight Directors and an independent Non-Executive Director; the Audit Committee comprises
the Non-Executive Audit Committee Chairman, two Board Directors and the Company Secretary. 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.
For the past three years the Company has had one Non-Executive Director who is also the Chairman of the Audit
Committee. This is not in full compliance with the revised Code, but for a small company, due to the limits of time
availability and cost, the Board considers this as an optimum compromise that is beneficial to shareholders and the
Group’s long-term interests. For specific independent expertise the Board engages independent consultants.
Compliance statement under the UK Corporate Governance Code 2016
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.
As noted in the introduction above, the Group does not comply with aspects of the Code’s requirements under
provisions A4.1, A4.2, B1.2, and C3.1 in terms of having a senior independent Director. Since 14th April, 2015 a
Non-Executive Director with the role of Chairman of the Audit Committee has been appointed. The Group
does not have a Remuneration Committee or a Nominations Committee as required under provisions B2 and
D2.1 and 2.2.
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 provision A2.1.
The Chairman and Managing Director do not retire by rotation, which is contrary to provision B7.1 of the Code.
There is no formal schedule of matters reserved for the Board, which is contrary to provision A1.1.
The Board
During the year, the Board met formally nine 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 … … … … …
S. R. Goodwin … … … … …
S. C. Birks … … … … … …
B. R. E. Goodwin … … … … …
T. J. W. Goodwin … … … … …
J. E. Kelly … … … … … …
9 out of 9 attended
9 out of 9 attended
9 out of 9 attended
9 out of 9 attended
8 out of 9 attended
9 out of 9 attended
9 out of 9 attended
7 out of 9 attended
6 out of 9 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. E. Kelly (Chairman), J. W. Goodwin, R. S. Goodwin and
P. Ashley as Company Secretary and the Audit Committee reports to the Board. The Audit Committee has met
formally seven times since the issue of the Annual Report for the year ended 30th April, 2017, with all members
attending each meeting. The responsibility of the Audit Committee is explained in the Audit Committee Report on
pages 18 to 20. 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.
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.
16
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
Board evaluation (continued)
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 auditor
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 auditor is unaware; and each
Director has taken reasonable steps to make himself aware of any relevant audit information and to establish that
the Company’s auditor is 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 18 to 20. 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, and the Group internal auditor, 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 are on-going to ensure
accordance with the FRC publication ‘Risk Management, Internal Control and Related Financial and Business
Reporting’. 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 ongoing 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 Group internal auditor has made good progress reviewing internal
controls, procedures and accounting systems. 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.
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
26th July, 2018
17
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. Reviewing and checking the Group’s full year and half year Accounts and the Annual Report, as presented to
the Audit Committee, to ensure that they are, in their view, fair, appropriate, representative of the Group’s
performance and that they provide the information necessary for shareholders to assess the Group's
performance.
2. Reviewing the Group’s financial and non-financial internal controls and risk management systems and
commenting on whether they are relevant and effective.
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 comments and feedback brought to its attention by Directors or other employees of the Group.
5. Reviewing the Group’s “whistle-blowing” procedures and reviewing any significant reports.
6. Reviewing the scope of work for the internal audit function and the resultant reports.
7. Reviewing significant accounting estimates and judgements relating to the financial statements with the
external auditor and members of the Board.
8. Review and comment to the Board on major capital purchases or company acquisitions being proposed by the
Board of a unit or linked value greater than £2 million.
9. Review gross proposed or actual capital expenditure of all Group companies to ensure it complies with the limits
agreed to be in place at the time.
The Audit Committee discharges each of its above responsibilities as follows:
1. Examining the integrity of the Group’s Annual Report and half year Interim Report:
The Chairman of the Audit Committee is an independent Non-Executive Director. The other members of the
committee either are persons with experience in the Group’s typical products and or markets or have historical
knowledge of the business and activities of the Group. Regular meetings are held between members of the Audit
Committee, other Directors of Goodwin PLC and its subsidiaries, General Managers and Senior Management of
the UK subsidiaries. Each overseas subsidiary is typically visited at least once 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 of Goodwin PLC.
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 help ensure that they are balanced, relevant, compliant with relevant accounting standards / legislation, and
are consistent and complete. The Audit Committee reports to the Board of Directors their views as to 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 auditor is given sight of these before publication.
For the full year Annual Report, the Audit Committee reviews the financial and non-financial content of the Group
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 examine whether 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 and their views with the Group external auditor. The Audit Committee confirmed to the Board that in its
opinion the proposed Annual Report for the year ended 30th April, 2018 appropriately represents the Group’s
trading position and, 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
objectives, strategy and business model.
2. Helping to ensure the Group carries effective and relevant financial and non-financial 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 the Group Chief Accountant; reviews reports from General Managers of the Group’s
18
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
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.
2018 Audit Committee Risk Programme
The terms of reference for the Audit Committee and how it discharges its duties have been presented to the Board
and ratified.
Risk Management:
As a method of adding formality to the management of risk within all Group companies, the Board has nominated
Steven Birks, a Goodwin PLC Director, to mentor each subsidiary in enhancing their risk analysis and control.
He will spend one day per week on this task and areas being scrutinized in detail, other than risks individual
to each company, are:
a) having appropriate limits of contract liability
b) having appropriate levels and types of insurance
c) ensuring appropriate control of cash flow
d) ensuring health and safety continues to be given priority and that there is a progressive plan for improvement
e) ensuring product development and life cycles are managed relative to the global market
f) ensuring that the provision of trained and skilled manpower is appropriately matched to the requirements of
each company
g) risk analysis and preventative measures associated with the installation and commissioning of new plant,
modified plant and new processes.
A review has been requested of the effectiveness of KYC, credit insurance, political risk insurance and contract
terms and conditions in the event of contract slippage or frustration by governments and their clients.
Market risk
This remains as stated last year and, upon review, no customer accounts for more than 10% of the Group
turnover. The country and sector dependency for the year is shown by the charts on the Investor’s section of
the Company website.
Technical risk
This remains as stated last year with the added aspect that the expanded facilities will be handling larger
components. Production bottlenecks will need addressing as markets (oil and gas) improve and greater
demand ensues. The flexibility to ramp up production when required will be important.
Product failure/contract risk
This has been reviewed and is unchanged from that previously stated.
Acquisitions
No further acquisitions have been made.
Financial risk
This has been reviewed and is as stated last year with the perceived increased volatility in exchange rates and
the possibility of high foreign exchange hedging costs for forward long term contracts.
Regulatory compliance
This is as stated last year with the increased workload of monitoring change as legislation varies with the
implementation of Brexit. A programme of training and testing for competency has been set up.
Human Resources
Following a review by the Board of the age profile of senior managers, management capacity overload within
each Group company and skill gaps, a recruitment initiative is underway, which has been reviewed by the
Audit Committee.
Last year’s initiatives have also been reviewed as work progresses.
• Easat Radar Systems Ltd’s production quality assurance testing on tight time scales which has been mitigated
with the installation of our own anechoic test chamber. No further comment.
• The criticality of plant maintenance and gas fuel supply at Hoben International Ltd, partly mitigated by
investigating dual sourcing. No further comment.
• The risk of increased cost of new equipment if not procured and brought on line on schedule at Goodwin
Steel Castings Ltd. The review confirmed that the installation of new equipment is on schedule.
• The need for increased legal resource to review difficult international sales contracts that are part of major
government programmes. In-country lawyers have been utilised where necessary.
During the year the Audit Committee monitored work as follows:
Commitment to and investment in information security
•
considerable effort has been put in to implement the requirements of the General Data Protection Regulations
(GDPR)
19
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
•
•
training has been undertaken on data analytics and behavioural monitoring utilising Alien Vault
the creation of an up to date electronic network diagram of our ICT infrastructure has been continued
• disaster recovery remains an important consideration and exercises have been undertaken to test some
aspects of this. We continue to be vigilant in this area.
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
KPMG LLP has been the Group’s auditor for more than 20 years and whilst, during this time, no formal competitive
tender process has taken place, the Directors (historically) and the Audit Committee latterly consider that the cost
of the audit is competitive when compared against listed companies of a similar size. In line with the recent
changes in legislation with regards to auditor appointments, the Company intends to seek competitive tenders
for its audit services within the next 2 years.
KPMG LLP has during the year provided non-audit services to the Group. The cost of these non-audit services is
a small fraction of the annual Group audit fee itself. Given the quantum of non-audit fees involved and that the
Group’s total fees paid to KPMG LLP are very small compared to their total annual fee generation, we believe
that there has been no issue as regards the objectivity and independence resulting from these non-audit services.
The Company has, for many years now, used a different accountancy practice to that of the statutory auditor for
its UK tax services, which further enhances both objectivity and independence.
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 3rd October, 2018.
4. Reviewing comments and feedback
There is regular contact with Directors and employees and open and honest discussion is encouraged.
Shareholders who have asked to visit the Company have done so.
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 auditor. 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 scope and results of internal audit have been reviewed.
The internal audit function operates a random rotation policy which prioritises based on materiality and
endeavours to cover all Group subsidiaries at least once within a three year cycle either via the Group Internal
Auditor or by the Group Managing Director.
7. Accounting estimates and judgements relating to the Financial Statements
The Audit Committee reviewed what it considered to be the accounting estimates and judgement areas within
the Group Annual Report for the year ended 30th April, 2018. 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 area:
Revenue Recognition – whether sales recorded in the year were generally in compliance with the IAS 18
revenue recognition standard.
In terms of perceived non material areas involving estimates and judgements, the following were reviewed:
The adequacy of the Group’s provisions in relation to its sales contracts (net realisable value with regard
to the year end work in progress), the calculation of positions taken on long term work in progress contracts,
and the adequacy of the Group’s debtor impairment reserves and the adequacy of the Group’s provision
against damaged, slow-moving and obsolete stocks.
J. E. Kelly
Chairman of the Audit Committee
26th July, 2018
20
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 the Annual General Meeting on 5th October, 2016, shareholders' approval was given for the Equity Long Term
Incentive Plan (“LTIP”), a performance related incentive plan for Directors of the Company providing incentives to
the Directors to deliver future value to shareholders and subject to stretching targets. Shareholders also approved
a revised Directors' Remuneration Policy incorporating the new LTIP.
The performance target requires the Directors to continue to grow the Total Shareholder Return (“TSR”) of the
Company over and above the 166.09% growth achieved between 2009 and 2016 with the maximum vesting under
the LTIP only achievable if TSR growth equals at least 366.09% over the ten years between 2009 and the end of
the performance period in 2019.
Other than the LTIP for Directors, 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 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.
Operation
Maximum
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.
Performance
Targets
The Group’s
performance,
good or bad, may
result in the salary
being flexed.
Changes for
2017/2018
The Managing
Director sets the
base increase in
salaries. For the
period May, 2017
to April, 2018,
the increase was
generally 3.1%.
Following
review of
the half year
and year end
results of the
Company.
60% of salary
N/A
No exceptional
bonuses were
paid this year.
Element of
Pay
Salary
Bonus
Purpose and
Link to Strategy
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 continu-
ity 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.
21
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
Element of
Pay
Equity Long Term
Incentive Plan
Purpose and
Link to Strategy
Reflects the
Directors’
contribution to
achieving growth
in shareholder
value.
Operation
Maximum
Performance
Targets
Changes for
2017/2018
Awards will entitle
each holder to
earn up to 1% of
the share capital
of the Company
subject to the
performance
condition.
Awards will be
granted in the
form of options
with an exercise
price equal to the
nominal value of
a share. Options
will vest and
become
exercisable
following 30th
April, 2019 but
only subject to
performance
measured at that
time.
N/A
An Award will
vest and become
exercisable over
0.05% of the share
capital of the
Company for
every 10% increase
in the TSR of the
Company at the
end of the three
financial years
ending on 30th
April, 2019 with a
base year of 2009
but excluding the
growth already
achieved up to
30th April, 2016.
Pensions
Other benefits
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.
Fully expensed car
or cash alternative,
health insurance
or other services.
Monthly
payments
Currently 3%
of gross
remuneration
N/A
N/A
N/A
N/A
No changes.
This policy
was adopted
in October 2013
for the Directors
and entire UK
workforce.
See details of the
Directors’
emoluments on
pages 26 and 27.
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 Directors’
salaries are anything but excessive versus the norm of other PLCs, this is the Board’s policy.
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
(10)%
98%
4,016%
FTSE 100
41%
80%
150%
FTSE 350
45%
90%
183%
The TSR achieved by the Company over the past five years is below the average of the FTSE 100 and FTSE 350.
This has been a feature of exceedingly high growth in the period more than five years ago and the effect of the
global contraction of capital expenditure in the oil, gas and mining industries over the past three years. The TSR
for the last ten years and the last twenty years still far outstrips the performance of the FTSE 100 and the FTSE 350
and the logic behind the introduction of the LTIP for the Board of Directors was to try to bring about a significant
improvement to the five year TSR within the next two years.
As is required by the Listing Rules, we show in graph form both the 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 PLC we have a Group Chief Accountant (J. 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 PLC 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.
22
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
The Company put the Remuneration Policy to the vote of the Annual General Meeting in 2016 when it was passed
by 94.22% of those who voted. The Company will be putting the Remuneration Policy to the vote again in 2019,
which is three years from the last vote, 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 then it will be reported in the annual accounts giving the reason why.
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.
23
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 21 to 23.
The Policy has been followed in the financial year to 30th April, 2018, 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 … … … … …
Total employee costs
Average employee numbers … … … … … … … … …
2018
£’000
6,010
… … … … … … … … … 37,137
1,042
2017
£’000
3,049
39,129
1,154
%
97.1%
(5.1%)
(9.9%)
Approval of the Company’s Annual Directors’ Remuneration Report
An ordinary resolution for the approval of the Annual Directors’ Remuneration Report will be put to shareholders
at the forthcoming Annual General Meeting. The Annual Directors’ Remuneration Report presented in the accounts
to 30th April, 2017 was put to the shareholders at last year’s Annual General Meeting on 4th October, 2017. The
Annual Directors’ Remuneration Report was accepted with 95.54% 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,
2018 with various FTSE indices. The graphs also show the changes in the earnings of the Managing Director for
these periods.
The base earnings of the Managing Director during the year have increased by 4.6% from the previous year.
The total earnings of the Managing Director for the last five years are:
2014
£’000
2015
£’000
2016
£’000
2017
£’000
2018
£’000
360
374
369
368
385
Total payroll costs, excluding the Managing Director’s salary, have decreased by 5.1% which is a reflection of the re-
duced average number of employees. The total payroll costs disclosed in note 4 are impacted by the significant de-
terioration of sterling when translating the payroll costs of our overseas operations. During the year the base
increase awarded to employees in the UK companies was 3.1%.
24
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Goodwin Total Shareholder Return (TSR)
10 Years Ended 30th April, 2018
e
g
n
a
h
C
%
e
v
i
t
a
l
u
m
u
C
400%
300%
200%
100%
0%
-50%
A pril 2008
e
g
n
a
h
C
%
e
v
i
t
a
l
u
m
u
C
9,000%
8,000%
7,000%
6,000%
5,000%
4,000%
3,000%
2,000%
1,000%
0%
A pril 1998
G
Goodwin
FTSE 100
FTSE 350
Small Cap
Ind and Eng
MD Earnings
Goodwin
G
FTSE 100
FTSE 350
Small Cap
Ind and Eng
MD Earnings
A pril 2009
A pril 2010
A pril 2011
A pril 2012
A pril 2013
A pril 2014
A pril 2015
A pril 2016
A pril 2017
A pril 2018
Goodwin Total Shareholder Return (TSR)
G
20 Years Ended 30th April, 2018
A pril 2000
A pril 2002
A pril 2004
A pril 2006
A pril 2008
A pril 2010
A pril 2012
A pril 2014
A pril 2016
A pril 2018
The increase in the Goodwin PLC share price since 1998 plus dividends re-invested would mean that £1.00 invested
in 1998 by the 30th April, 2018 would be worth £41.16. The increase in the share price since 2008 plus dividends
re-invested would mean that £1.00 invested in 2008 would at 30th April, 2018 be worth £1.98.
25
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
2017
2018
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 … … … … …
… … … … …
S. C. Birks
B. R. E. Goodwin … … … … …
T. J . W. Goodwin… … … … …
…
…
…
…
…
…
…
…
…
…
31,586
1,031
2,129,146
1,328,882
1,222
68,675
87,530
200
36,400
125,253
29,131
1
2,129,146
1,304,034
722
70,503
92,142
200
39,333
129,330
Non-beneficial
J. W. Goodwin and E. M. Goodwin … …
…
14,166
14,166
There have been no changes in the Directors’ interests between 30th April, 2018 and 26th July, 2018.
Details of individual emoluments and compensation
The following parts of the Remuneration Report are subject to audit.
Single Total Figure Table
Year ended 30th April, 2018
J. W. Goodwin … … … … … …
R. S. Goodwin … … … … … …
J. Connolly … … … … … … …
M. S. Goodwin … … … … … …
S. R. Goodwin … … … … … …
S. C. Birks … … … … … … …
B. R. E. Goodwin … … … … … …
T. J. W. Goodwin … … … … … …
J. E. Kelly … … … … … … …
Total
… … … … … … …
…
…
…
…
…
…
…
…
…
…
Salary Benefits Non-Exec Pension
in kind Director’s contrib-
utions
2018
£’000
11
11
6
6
6
3
3
4
-
fees
2018
£’000
-
-
-
-
-
-
-
-
51
2018
£’000
49
49
31
26
14
22
13
15
-
2018
£’000
325
325
193
202
209
110
116
121
-
Total
2018
£0‘000
385
385
230
234
229
135
132
140
51
1,601
219
51
50
1,921
Single Total Figure Table
Year ended 30th April, 2017
Salary
Benefits
in kind
J. W. Goodwin … … … … … … …
R. S. Goodwin … … … … … … …
J. Connolly … … … … … … … …
M. S. Goodwin … … … … … … …
S. R. Goodwin … … … … … … …
S. C. Birks … … … … … … … …
B. R. E. Goodwin … … … … … … …
T. J. W. Goodwin … … … … … … …
J. E. Kelly … … … … … … … …
2017
£’000
308
308
189
204
187
103
98
120
-
Total
… … … … … … … …
1,517
2017
£’000
49
49
30
27
13
19
13
2
-
202
Non-Exec
Director’s
fees
2017
£’000
-
-
-
-
-
-
-
-
48
Pension
contrib-
utions
2017
£’000
11
11
6
7
6
3
3
3
-
48
50
Total
2017
£’000
368
368
225
238
206
125
114
125
48
1,817
26
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Benefits in kind consist of the provision of a fully expensed car, a cash alternative scheme, healthcare insurance
or other services.
Equity long-term incentive plan (LTIP)
A resolution for the approval of a long-term incentive plan for the Executive Directors was approved at the Annual
General Meeting on 5th October, 2016.
Awards under the LTIP were granted on 5th October, 2016, giving the Directors the ability to earn the awards, subject
to the Company performance, by 30th April, 2019, in the form of options with an exercise price equal to the nominal
value of a share (10p). The share price on 5th October, 2016 was £22.20. The fair value of each option, on the date
the options were granted, measured by a Monte Carlo method, is £4.62. Subject to performance measured at
30th, April 2019, options will vest and become exercisable at that time.
Awards entitle each holder to earn up to 1% of the share capital of the Company subject to the performance condition.
An award will vest and become exercisable over 0.05% of the share capital of the Company for every 10% increase
in the TSR of the Company at the end of the three financial years ending on 30th April, 2019 with a base year of
2009 but excluding the growth already achieved up to 30th April, 2016.
If the minimum level of growth of 10% is achieved, the share options, which will vest, will be 3,600 for each director.
J. W. Goodwin
R. S. Goodwin
J. Connolly
M. S. Goodwin
S. R. Goodwin
S. C. Birks
B. R. E. Goodwin
T. J. W. Goodwin
… … … … … … …
… … … … … … …
… … … … … … …
… … … … … … …
… … … … … … …
… … … … … … …
… … … … … … …
… … … … … … …
Number
of share
options
72,000
72,000
72,000
72,000
72,000
72,000
72,000
72,000
Total
… … … … … … …
576,000
Total pension entitlements
In October 2013, the Group 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 defined contribution 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 26th July, 2018, and is signed on its
behalf by:
J. W. Goodwin
Director
R. S. Goodwin
Director
27
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 International
Financial Reporting Standards as adopted by the European Union (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,
including FRS 101 Reduced Disclosure Framework.
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 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, relevant, reliable 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;
• assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless it is clear that it would be inappropriate.
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 are
responsible for such internal control as they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and 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 Group Strategic Report,
Directors’ Report, Directors’ Remuneration Report and Corporate Governance 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 Group Strategic Report includes a fair review of the development and performance of the business and the
position of the Issuer and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Group’s position and performance, business
model and strategy.
J. W. Goodwin
Director
R. S. Goodwin
Director
26th July, 2018
28
INDEPENDENT AUDITOR’S REPORT
to the members of
Goodwin PLC
29
30
31
32
33
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED INCOME STATEMENT
for the year ended 30th April, 2018
CONTINUING OPERATIONS
Revenue … … … … … … … … … …
2
Cost of sales
… … … … … … … … …
124,811
(89,143)
131,587
(97,836)
Notes
2018
£’000
2017
£’000
GROSS PROFIT… … … … … … … … … …
Distribution expenses … … … … … … … …
Administrative expenses
… … … … … … …
3
35,668
(3,359)
(18,729)
33,751
(3,486)
(20,317)
OPERATING PROFIT … … … … … … … … …
Financial expenses
… … … … … … … …
Share of profit of associate companies … … … … …
PROFIT BEFORE TAXATION
… … … … … … …
Tax on profit
… … … … … … … … …
5
10
2, 3
6
13,580
(590)
310
13,300
(3,865)
9,948
(873)
169
9,244
(2,487)
PROFIT AFTER TAXATION… … … … … … … …
9,435
6,757
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
Non-controlling interests
… … … … … … …
8,504
931
6,082
675
PROFIT FOR THE YEAR … … … … … … … …
9,435
6,757
BASIC AND DILUTED EARNINGS PER ORDINARY SHARE … …
7
118.11p
84.47p
The notes on pages 39 to 68 form part of these financial statements.
34
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2018
PROFIT FOR THE YEAR … … … … … … … … …
OTHER COMPREHENSIVE INCOME / (EXPENSE)
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO THE INCOME
STATEMENT:
2018
£’000
9,435
2017
£’000
6,757
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
Tax charge on items that may be reclassified subsequently to the income
(152)
(294)
5,108
3,619
(6,526)
2,142
statement
… … … … … … … … … …
(818)
738
OTHER COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR, NET
OF INCOME TAX
… … … … … … … … … …
3,844
(27)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR … … … …
13,279
6,730
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … … …
Non-controlling interests
… … … … … … … …
12,245
1,034
13,279
5,654
1,076
6,730
35
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2018
Share
capital
£’000
YEAR ENDED
30TH APRIL, 2018
Share-
based
Total
attributable
to equity
Trans- Cash flow
lation
reserve
£’000
Non-
hedge payments Retained holders of controlling
interests
£’000
reserve earnings the parent
£’000
£’000
reserve
£’000
£’000
Total
equity
£’000
Balance at 1st May, 2017
720
2,154
(4,240)
601
90,201
89,436
4,225
93,661
Total comprehensive income:
Profit … … … …
Other comprehensive income:
Foreign exchange translation
differences … … …
Net movements on cash flow
hedges … … … …
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Equity-settled share-based
payment transactions …
Dividends paid … … …
BALANCE AT
30TH APRIL, 2018
YEAR ENDED
30TH APRIL, 2017
-
-
-
-
-
-
-
(275)
-
-
-
4,016
(275)
4,016
-
-
-
-
8,504
8,504
931
9,435
-
-
(275)
123
(152)
4,016
(20)
3,996
8,504
12,245
1,034 13,279
-
-
-
-
1,024
-
-
(3,137)
1,024
(3,137)
-
-
1,024
(3,137)
720
1,879
(224) 1,625 95,568
99,568
5,259 104,827
Balance at 1st May, 2016 …
720
(1,041)
(594)
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… … … …
Equity-settled share-based
payment transactions …
Dividends paid … … …
BALANCE AT
30TH APRIL, 2017
-
-
-
-
-
-
-
-
3,218
-
-
-
(3,646)
3,218
(3,646)
(23)
-
-
-
-
-
-
-
-
-
-
-
601
87,209
86,294
3,823
90,117
6,082
6,082
675
6,757
-
-
3,218
401
3,619
(3,646)
-
(3,646)
6,082
5,654
1,076
6,730
21
-
(2)
601
1
-
(1)
601
-
(3,111)
(3,111)
(675)
(3,786)
720
2,154
(4,240)
601 90,201
89,436
4,225 93,661
36
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2018
NON-CURRENT ASSETS
… … … … … … …
Property, plant and equipment
Investment in associates
… … … … … … … …
Intangible assets… … … … … … … … … …
Trade and other receivables … … … … … … … …
CURRENT ASSETS
Inventories… … … … … … … … … … …
Trade and other receivables … … … … … … … …
Derivative financial assets … … … … … … … …
Cash and cash equivalents … … … … … … … …
FINANCIAL STATEMENTS
Notes
9
10
11
13
12
13
20
14
2018
£’000
69,154
1,963
21,138
728
92,983
28,850
27,960
364
7,485
64,659
2017
£’000
65,739
2,045
18,240
-
86,024
37,657
26,338
1,756
5,172
70,923
TOTAL ASSETS … … … … … … … … … …
157,642
156,947
CURRENT LIABILITIES
Interest-bearing loans and borrowings … … … … … …
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… … … … … … … … … …
15
16
16
20
17
15
17
18
12,468
26,891
500
1,535
1,174
184
42,752
5,775
329
3,959
10,063
52,815
9,542
22,454
500
2,492
1,592
90
36,670
23,675
305
2,636
26,616
63,286
NET ASSETS … … … … … … … … … … …
104,827
93,661
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital … … … … … … … … … …
Translation reserve … … … … … … … … …
Share-based payments reserve … … … … … … …
… … … … … … … …
Cash flow hedge reserve
… … … … … … … … …
Retained earnings
19
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
NON-CONTROLLING INTERESTS … … … … … … …
720
1,879
1,625
(224)
95,568
99,568
5,259
720
2,154
601
(4,240)
90,201
89,436
4,225
TOTAL EQUITY
… … … … … … … … … …
104,827
93,661
These financial statements were approved by the Board of Directors on 26th July 2018, and signed on its
behalf by:
J.W. Goodwin
Director
R.S. Goodwin
Director
Company Registration Number: 305907
37
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30th April, 2018
2018
£’000
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations after tax
… … … …
Adjustments for:
Depreciation
… … … … … … … …
Amortisation of intangible assets … … … … …
Financial expenses
… … … … … … …
Foreign exchange losses / (gains) … … … … …
(Profit) / loss on sale of property, plant and equipment … …
Share of profit of associate companies … … … …
Equity-settled share-based provisions
… … … …
… … … … … … … …
Tax expense
OPERATING PROFIT BEFORE CHANGES IN WORKING
CAPITAL AND PROVISIONS
(Increase) / decrease in trade and other receivables … …
Decrease / (increase in inventories) … … … … …
Increase / (decrease) in trade and other payables
(excluding payments on account) … … … … …
Decrease / (increase) in cash flow hedge balances
… …
Increase / (decrease) in payments on account … … …
CASH GENERATED FROM OPERATIONS
… … … … … … … …
Interest paid
Corporation tax paid … … … … … … …
Interest element of finance lease obligations … … …
NET CASH FROM OPERATING ACTIVITIES
… … …
2018
£’000
9,435
5,243
1,138
590
277
(1,568)
(310)
1,024
3,865
19,694
(2,625)
8,801
2,213
5,249
2,224
35,556
(665)
(3,703)
(89)
31,099
2017
£’000
2017
£’000
6,757
5,597
938
873
(696)
52
(169)
601
2,487
16,440
8,721
(1,014)
(5,086)
(4,359)
(5,825)
8,877
(802)
(2,675)
(115)
5,285
CASH FLOW FROM INVESTING ACTIVITIES
…
Proceeds from sale of property, plant and equipment
Acquisition of intangible asset
… … … … …
Acquisition of property, plant and equipment … … …
… … … …
Development expenditure capitalised
Dividends received from associate companies … … …
1,888
(378)
(9,010)
(3,334)
441
237
(149)
(7,411)
(791)
-
NET CASH OUTFLOW FROM INVESTING … … … …
(10,393)
(8,114)
CASH FLOWS FROM FINANCING ACTIVITIES
(865)
Payment of capital element of finance lease obligations
…
(3,137)
Dividends paid … … … … … … … …
-
Dividends paid to non-controlling interests
… … …
Proceeds from loans and committed facilities … … …
-
Repayment of loans and committed facilities … … … (12,044)
(930)
(3,111)
(675)
5,871
(44)
NET CASH (OUTFLOW) / INFLOW FROM FINANCING ACTIVITIES
(16,046)
NET INCREASE / (DECREASE) 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 14)
4,660
(1,483)
(277)
2,900
1,111
(1,718)
(413)
648
(1,483)
38
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
Goodwin PLC (the “Company”) is incorporated in England and Wales.
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’s financial statements have been approved by the Directors and prepared in accordance with International
Financial Reporting Standards as adopted by the European Union (EU). The Company has elected to prepare its
financial statements in accordance with Financial Reporting Standard (FRS) 101 issued in the UK. These are
presented on pages 69 to 77.
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 continue to be monitored and managed. After reviewing the situation, the
Directors have a reasonable expectation that the Group has adequate resources to continue in operational
existence for twelve months from the date of approval of these financial statements and have continued to
adopt the going concern basis in preparing the financial statements.
New IFRS standards and interpretations adopted during 2018
In 2018 the following amendments had been endorsed by the EU, became effective and therefore were adopted
by the Group:
•
Amendments to IAS 12 – Recognition of Deferred Tax Assets for unrealised losses (effective for annual
periods beginning on or after 1st January, 2017)
Amendments to IAS 7 – Disclosure initiative (effective for annual periods beginning on or after 1st January, 2017)
Annual Improvements to IFRSs – 2014-2016 Cycle – minor amendments to IFRS 12 (effective for annual
periods beginning on or after 1st January, 2017)
•
•
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.
The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. 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.
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.
39
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Foreign currency (continued)
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 the 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 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).
40
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
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. 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 … … … …
Motor vehicles … … … … …
Tooling … … … … … …
Fixtures and fittings … … … …
Assets in the course of construction are not depreciated.
Nil
2% to 4% on reducing balance or cost
over period of lease
5% to 25% on reducing balance or cost
15% or 25% on reducing balance
over estimated production life
15% to 25% on reducing balance
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.
41
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
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
Minimum expected order unit intake or minimum product life
• Manufacturing rights
6 - 15 years
• Brand names and intellectual property 3 - 15 years
• Customer lists
• Order book
• Distribution rights
• Software and licences
• Non-compete agreements
10 years
1 year
25 years
3 - 4 years
15 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.
42
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
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.
Warranty provisions
The Group carries a warranty provision where applicable. The warranties are negotiated at contract placement
stage and typically, where given to a customer, the warranty has a duration of between 1 and 3 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 is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business by subsidiary companies to
external customers, net of discounts, VAT and other sales related taxes. Revenue is reduced for customer
returns, rebates and other similar allowances. Revenue from the sale of goods is recognised in the income
statement when:
• The significant risks and rewards of ownership have been transferred to the buyer in accordance with the
contracted terms of sale;
• The amount of revenue and costs can be measured reliably;
• The Group retains neither continuing managerial involvement nor effective control over the goods; and
• It is probable that the economic benefits associated with the transaction will flow to the Group.
This is typically on delivery of the products or customer acceptance. However, commercial terms of sale vary
between subsidiary companies.
The Group’s long term contracts are accounted for under IAS 11. Revenue is recognised based on the stage of
completion, provided that the outcome of these construction contracts can be assessed with reasonable certainty.
The stage of completion of a contract is determined either by reference to the proportion of contract costs incurred
for work performed to date versus the estimated total contract costs, or by reference to the right to consideration
in exchange for its performance in transferring the risks and rewards to the customer. Full provision is made for
any estimated losses to complete the contract, and the amount by which recorded revenue of long-term contracts
is in excess of payments on account is classified as amounts recoverable on contracts and is separately disclosed
within trade and other receivables.
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 were one
month’s contributions outstanding, which were paid in the following month.
43
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Termination costs
Employee termination costs are expended in the profit and loss figures in a year as soon as the expense is known
and is certain.
Share-based payment transactions
Share-based payments arrangements, in which the Group receives goods or services as consideration for its own
equity instruments, are accounted for as equity-settled share-based payment transactions regardless of how the
equity instruments are obtained by the Group.
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period in which the employees become unconditionally
entitled to the awards. The fair value of the awards is measured using an option valuation model, taking into
account the terms and conditions upon which the awards were granted.
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:
•
Annual Improvements to IFRSs – 2014-2016 Cycle – minor amendments to IFRS 1 and IAS 28 (effective for
annual periods beginning on or after 1st January, 2018)
IFRS 15 – Revenue from Contracts with Customers (effective for annual periods beginning on or after 1st
January, 2018)
IFRS 15 – Clarifications (effective for annual periods beginning on or after 1st January, 2018)
Amendments to IFRS 2 – Classification and Measurement of Share-based Payment Transactions (effective
for annual periods beginning on or after 1st January, 2018)
Amendments to IAS 40 – Transfers of Investment Property (effective for annual periods beginning on or after
1st January, 2018)
IFRIC Interpretation 22 – Foreign Currency Transactions and Advance Consideration (effective for annual
periods beginning on or after 1st January, 2018)
IFRS 9 – Financial Instruments (effective for annual periods beginning on or after 1st January, 2018)
Amendments to IFRS 4 – Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for
annual periods beginning on or after 1st January, 2018)
Amendments to IFRS 9 – Prepayment Features with Negative Compensation (effective for annual periods
beginning on or after 1st January, 2019)
IFRS 16 - Leases (effective for annual periods beginning on or after 1st January, 2019)
IFRIC Interpretation 23 – Uncertainty over Income Tax Treatments (effective for annual periods beginning on
or after 1st January, 2018)
Amendments to IAS 28 – Long-term Interests in Associates and Joint Ventures (effective for annual periods
beginning on or after 1st January, 2019)
IFRS 17 – Insurance Contracts (effective for annual periods beginning on or after 1st January, 2021)
•
The Group has considered the impact of these new standards and interpretations in future periods on profit,
earnings per share and net assets. The review of the impact of IFRS 9, IFRS 15 and IFRS 16 is still in progress.
None of the other standards or interpretations is expected to have a material impact.
•
•
•
•
•
•
•
•
•
•
•
44
NOTES TO THE FINANCIAL STATEMENTS
New IFRS standards, amendments and interpretations not adopted (continued)
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.
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
• Refractory Engineering
Information regarding the Group’s operating segments is reported below. Associates are included in Refractory
Engineering.
- casting, valve, antenna and pump manufacture and general engineering
- powder manufacture and mineral processing
Revenue
Revenue from goods and services was £116,812,000 and revenue from construction contracts was £7,999,000.
45
NOTES TO THE FINANCIAL STATEMENTS
2. Segmental information (continued)
Year Ended 30th April
Revenue
Mechanical
Engineering
Refractory
Engineering
Sub Total
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
External sales … … … …
Inter-segment sales … … …
80,661
18,839
91,335
29,084
44,150
40,252
124,811
131,587
8,354
6,522
27,193
35,606
Total revenue … … … …
99,500
120,419
52,504
46,774
152,004
167,193
Reconciliation to consolidated revenue:
Inter-segment sales … … …
Consolidated revenue for the year
Year Ended 30th April
Profits
Operating profit including share
(27,193)
(35,606)
124,811
131,587
Mechanical
Engineering
2018
£’000
2017
£’000
Refractory
Engineering
2018
£’000
2017
£’000
Sub Total
2018
£’000
2017
£’000
of associates … … … …
8,282
6,982
9,130
5,933
17,412
12,915
% of total operating profit including
share of associates … … …
Group centre … … … …
LTIP – non cash provision … …
Group finance expenses … …
Consolidated profit before
tax for the year … … …
Tax
… … … … …
Consolidated profit after
tax for the year … … …
Year Ended 30th April
Segmental net assets
48%
54%
52%
46%
100%
100%
(2,498)
(1,024)
(590)
(2,197)
(601)
(873)
13,300
9,244
(3,865)
(2,487)
9,435
6,757
Segmental
total assets
2018
£’000
2017
£’000
Segmental
total liabilities
2018
£’000
2017
£’000
Segmental
net assets
2018
£’000
2017
£’000
Mechanical Engineering … …
Refractory Engineering
… …
79,835
39,534
80,968
41,717
50,113
19,905
65,036
23,321
29,722
19,629
15,932
18,396
Sub total reportable segment …
119,369
122,685
70,018
88,357
49,351
34,328
Goodwin PLC net asset
Elimination of Goodwin PLC investments
Goodwill
… … … …
… …
Consolidated total net assets
…
46
66,715
(20,950)
9,711
71,944
(22,084)
9,473
104,827
93,661
NOTES TO THE FINANCIAL STATEMENTS
2. Segmental information (continued)
Segmental property, plant and equipment (PPE) capital expenditure
Goodwin PLC … … … … … … … … … … … …
Mechanical Engineering … … … … … … … … … …
… … … … … … … … … …
Refractory Engineering
Segmental depreciation, amortisation and impairment
Goodwin PLC … … … … … … … … … … … …
Mechanical Engineering … … … … … … … … … …
… … … … … … … … … …
Refractory Engineering
2018
£’000
6,880
2,176
360
2017
£’000
5,070
1,611
918
9,416
7,599
2018
£’000
2,144
2,629
1,608
2017
£’000
2,258
2,607
1,670
6,381
6,535
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, Goodwin 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, 2018
Year ended 30th April, 2017
Opera-
tional
net
assets
£’000
63,451
10,213
-
14,012
5,985
93,661
Non-
current
assets
£’000
69,693
2,271
-
7,459
6,601
PPE
Capital
expendi-
ture
£’000
6,504
466
-
210
419
86,024
7,599
Revenue
£’000
27,829
31,246
3,742
23,052
38,942
UK
Rest of Europe
USA
Pacific Basin
Rest of World
Opera-
tional
net
assets
£’000
70,558
12,477
-
14,785
7,007
Non-
PPE
Capital
current expendi-
ture
£’000
assets
£’000
76,325
3,281
-
8,003
5,374
8,301
772
-
154
189
Revenue
£’000
24,034
29,712
6,574
33,095
38,172
Total
124,811
104,827
92,983
9,416
131,587
47
NOTES TO THE FINANCIAL STATEMENTS
3. Expenses and auditor’s remuneration
Included in profit before taxation are the following:
Charged / (credited) to the income statement
Depreciation:
Owned assets … … … … … … … … … … …
Assets held under finance lease … … … … … … … …
Amortisation of intangible assets … … … … … … … …
Profit on sale of land and buildings … … … … … … … …
Loss on sale of 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 … … …
Redundancy costs … … … … … … … … … … …
Foreign exchange losses / (gains) … … … … … … … …
Fees receivable by the auditors and the auditor’s associates in respect of:
Audit of these financial statements … … … … … … …
Audit of the financial statements of subsidiaries … … … … …
Other non–audit related services:
Other assurance services … … … … … … … … …
Taxation services … … … … … … … … … …
Share-based payments … … … … … … … … … …
Hedge ineffectiveness transferred to the income statement … … … …
Government grants received against research and development,
2018
£’000
5,010
233
1,138
(1,606)
38
728
89
308
64
106
149
56
119
76
-
1,024
(1,224)
2017
£’000
5,359
238
938
-
52
633
95
1,491
43
857
(200)
58
90
-
4
601
1,224
infrastructure spend and training costs
… … … … … …
(257)
(1,182)
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
2017
2018
Works personnel … … … … … … … … … … …
Administration staff
… … … … … … … … … …
The aggregate payroll costs of these persons were as follows:
993
49
1,042
2018
£’000
Wages and salaries … … … … … … … … … …
Social security costs… … … … … … … … … …
Other pension costs … … … … … … … … … …
32,345
3,303
1,489
1,105
49
1,154
2017
£’000
34,322
3,520
1,287
*37,137
*39,129
*Included within the staff costs are redundancy costs of £106,000 (2017: £857,000).
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on page 26. The
emoluments of the highest paid Director were £385,000 (2017: £368,000). The emoluments included Company
pension contributions of £11,000 (2017: £11,000) which were made to a defined contribution scheme on his behalf.
The number of Directors, who were members of a defined contribution pension scheme, was 8 (2017: 8).
A charge of £1,024,000 for the LTIP (2017: £601,000) has been recognised in the year, but not included in the above
table. Further information is contained in note 28.
5. Financial expenses
Interest expense on finance leases … … … … … … … …
Interest expense on bank loans and overdrafts … … … … … …
Capitalised interest on fixed asset projects … … … … … … …
Financial expenses
… … … … … … … … … …
2018
£’000
89
673
(172)
590
2017
£’000
115
801
(43)
873
48
NOTES TO THE FINANCIAL STATEMENTS
6. Taxation
Recognised in the income statement
Current tax expense
Current year … … … … … … … … … … …
Over provision in prior years … … … … … … … …
Deferred tax expense
Origination and reversal of temporary differences – current year
Origination and reversal of temporary differences – under / (over) provision
… …
in prior years
Origination and reversal of temporary differences – rate change to prior year
2018
£’000
3,361
(97)
3,264
482
155
(36)
601
Total tax expense … … … … … … … … … … …
3,865
Reconciliation of effective tax rate
2018
£’000
Profit before taxation … … … … … … … … … …
13,300
Tax using the UK corporation tax rate of 19.00% (2017: 19.92%) … … …
… … … … … … … … … …
Non-taxable income
Non-deductible expenses
… … … … … … … … …
Other permanent timing differences … … … … … … … …
Under / (over) provision in prior years
… … … … … … …
Losses not recognised … … … … … … … … … …
Equity-settled share-based provision … … … … … … … …
Rate change to prior year
… … … … … … … … …
Withholding tax unrelieved … … … … … … … … …
… … … … … … … …
Difference in overseas tax rates
Difference between corporation and deferred tax rates … … … … …
Effect of equity accounting for associates … … … … … … …
2,527
(43)
90
162
58
274
195
(36)
118
664
(67)
(77)
Total tax expense … … … … … … … … … … …
3,865
2017
£’000
2,464
(60)
2,404
413
(195)
(135)
83
2,487
2017
£’000
9,244
1,841
(90)
24
98
(255)
468
120
(135)
77
439
(66)
(34)
2,487
The Group’s total taxes payable in respect of the year ending 30th April, 2018, comprising Corporation Tax, PAYE
and National Insurance was £14.4 million (2017: £13.8 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) … … … … … …
2018
£’000
818
2017
£’000
(738)
7. Earnings per share
The earnings per ordinary share has been calculated on profit for the year attributable to ordinary shareholders
of £8,504,000 (2017: £6,082,000) and by reference to the 7,200,000 ordinary shares in issue throughout both years.
There is a share option scheme in place for the Directors of the Company under the Company’s Long Term
Investment Plan (LTIP), based on the Company exceeding a target growth in the total shareholder return of the
Company over the period from 1st May, 2016 to 30th April, 2019. Under the LTIP, as at 30th April, 2018, there
would be no share options accruing to the Directors under the LTIP and so there is no difference between the
basic and fully diluted earnings per share of the Company in the current and prior year.
8. Dividends
Paid ordinary dividends during the year in respect of prior years
42.348p (2017: 42.348p) per qualifying ordinary share … … … … …
Dividends paid to minority shareholders in Noreva GmbH … … … …
Total dividends … … … … … … … … … … …
2018
£’000
3,049
88
3,137
2017
£’000
3,049
62
3,111
After the balance sheet date an ordinary dividend of 83.473p per qualifying ordinary share was proposed by the
Directors (2017: Ordinary dividend of 42.348p).
49
NOTES TO THE FINANCIAL STATEMENTS
8. Dividends (continued)
The proposed current year ordinary dividend of £6,010,056 has not been provided for within these financial
statements (2017: Proposed ordinary dividend of £3,049,000 was not provided for within the comparative figures).
As explained in note 10, Noreva is an 87.5% owned subsidiary, which is treated as a 100% owned subsidiary, because
there are both put and call options in place for the remaining 12.5%.
9. Property, plant and equipment
Plant and
Land and
buildings equipment
£’000
£’000
Fixtures
and
fittings
£’000
Assets in
course of
construc-
tion
£’000
Cost
Balance at 1st May, 2016 … … …
Additions … … … … … …
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
30,038
139
(306)
(66)
1,025
65,007
2,602
417
(302)
1,102
4,216
250
201
(936)
46
1,194
4,608
272
-
-
Total
£’000
100,455
7,599
584
(1,304)
2,173
Balance at 30th April, 2017 … …
30,830
68,826
3,777
6,074
109,507
Balance at 1st May, 2017 … … …
Additions … … … … … …
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
30,830
126
69
(243)
(365)
68,826
2,577
1,249
(629)
(191)
3,777
90
(18)
(39)
9
6,074
6,623
(1,300)
-
-
109,507
9,416
-
(911)
(547)
Balance at 30th April, 2018 … …
30,417
71,832
3,819
11,397
117,465
Depreciation
At 1st May, 2016… … … … …
Charged in year … … … … …
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
3,841
919
220
-
98
31,566
4,259
185
(126)
554
2,518
419
179
(889)
25
Balance at 30th April, 2017 … …
5,078
36,438
2,252
Balance at 1st May, 2017 … … …
Charged in year … … … … …
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
5,078
839
43
(74)
(65)
36,438
4,102
(50)
(480)
(54)
2,252
302
7
(37)
10
Balance at 30th April, 2018 … …
5,821
39,956
2,534
-
-
-
-
-
-
-
-
-
-
-
-
37,925
5,597
584
(1,015)
677
43,768
43,768
5,243
-
(591)
(109)
48,311
Net book value
At 1st May, 2016… … … … …
26,197
33,441
At 30th April, 2017 and 1st May, 2017 …
25,752
32,388
1,698
1,525
1,194
62,530
6,074
65,739
At 30th April, 2018 … … … …
24,596
31,876
1,285
11,397
69,154
Plant and machinery
During the year, £Nil (2017: £Nil) of the property, plant and equipment additions were acquired under
finance leases.
At 30th April, 2018, the net carrying amount of leased plant and machinery was £3,780,000 (2017: £4,012,000).
The leased equipment secures lease obligations (see note 15).
Assets in the course of construction of £11,397,000 (2017: £6,074,000) comprise £6,093,000 (2017: £1,906,000) in
relation to land and buildings and £5,304,000 (2017: £4,168,000) for plant and machinery.
Government grants related to tangible fixed assets
Additions to fixed assets are after deducting grants receivable of £Nil (2017: £47,000).
50
NOTES TO THE FINANCIAL STATEMENTS
10. Investments in subsidiaries and associates
The Group has the following principal subsidiaries and associates. Non-principal subsidiaries and associates are
listed in note 26:
Registered Country of
address*
Incorporation
Class of
shares held
Subsidiaries:
Mechanical Engineering:
1
Goodwin Steel Castings Limited
… … …
1
Goodwin International Limited … … … …
1
Easat Radar Systems Limited … … … …
3
Goodwin Korea Company Limited … … …
4
Goodwin Pumps India Private Limited
… …
5
Goodwin Shanghai Company Limited … … …
6
Noreva GmbH
… … … … … …
7
Goodwin (Shanxi) Pump Company Limited … …
8
Goodwin Valve and Pump Company Limited
…
1
Internet Central Limited … … … … …
Goodwin Submersible Pumps Australia Pty. Limited
9
Metal Proving Services Limited … … … …
1
NRPL Aero Oy
… … … … … … 10
Goodwin Submersible Pumps Africa Pty. Limited … 15
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
Ordinary
South Korea
Ordinary
India
Ordinary
China
Ordinary
Germany
Ordinary
China
Brazil
Ordinary
England and Wales Ordinary
Australia
Ordinary
England and Wales Ordinary
Ordinary
Finland
Ordinary
South Africa
% held
100
100
77
95
100
100
87.5**
100
100
82.5
100
100
77
100
Refractory Engineering:
1
Goodwin Refractory Services Limited … … …
1
Dupré Minerals Limited … … … … …
2
Hoben International Limited … … … …
Gold Star Powders India Private Limited … …
4
Siam Casting Powders Limited … … … … 11
Ultratec Jewelry Supplies Limited … … … 12
SRS (Qingdao) Casting Materials Company Limited… 13
8
Gold Star Brazil Limited … … … … …
Refractory Associates:
Jewelry Plaster Limited … … … … … 14
England and Wales Ordinary
100
England and Wales Ordinary/Preference 100
100
England and Wales Ordinary
100
Ordinary
India
55.4
Ordinary
Thailand
51
Ordinary
China
51
Ordinary
China
100
Ordinary
Brazil
Thailand
Ordinary
49
*The registered address for each company can be found in note 27.
**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.
All of the above companies are included as part of the consolidated accounts and are involved in mechanical and
refractory engineering.
NCI – Non-controlling interests
The following subsidiaries each have non-controlling interests:
Registered Country of
address*
Incorporation
Class of
shares held
Mechanical Engineering:
Easat Radar Systems Limited … … … … 1
Goodwin Korea Company Limited … … … 3
Internet Central Limited … … … … … 1
NRPL Aero Oy
… … … … … … 10
Refractory Engineering:
Siam Casting Powders Limited … … … … 11
Ultratec Jewelry Supplies Limited … … … 12
SRS Guangzhou Limited … … … … … 12
SRS (Qingdao) Casting Materials Company Limited 13
Shenzhen King-Top Modern Hi-Tech Company Limited 16
Ying Tai (UK) Limited
… … … … … 1
***NCI – Non-Controlling Interests.
England and Wales Ordinary
South Korea
Ordinary
England and Wales Ordinary
Ordinary
Finland
Ordinary
Thailand
Ordinary
China
Ordinary
China
Ordinary
China
China
Ordinary
England and Wales Ordinary
% held
by
NCI***
23
5
17.5
23
44.6
49
49
49
49
49
51
NOTES TO THE FINANCIAL STATEMENTS
10. Investments in subsidiaries and associates (continued)
Non-controlling interests (continued)
The financial information on subsidiaries with non-controlling interests has been aggregated, analysing the data
by segment, as the entities in each segment have similar characteristics and risk profiles.
Year Ended 30th April
Profit allocated to
non-controlling interests … …
Dividends paid to
non-controlling interests … …
Mechanical
Engineering
Refractory
Engineering
Total
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
314
166
617
-
-
-
509
675
931
-
675
675
Accumulated reserves held
by non-controlling interests
…
904
605
4,355
3,620
5,259
4,225
The summarised financial information below represents the amounts in the financial statements of the
subsidiaries, before any inter-company eliminations, and does not reflect the Group’s share of those amounts.
Year Ended 30th April
Non-current assets … … …
Mechanical
Engineering
2018
£’000
5,707
2017
£’000
3,414
Current assets
… … …
11,491
11,668
Current liabilities
… … …
(9,023)
(12,404)
Non-current liabilities
… …
(3,738)
(157)
Refractory
Engineering
2018
£’000
9,743
9,338
(3,734)
(2,142)
2017
£’000
5,573
9,411
Total
2018
£’000
15,450
20,829
2017
£’000
8,987
21,079
(4,188)
(12,757)
(16,592)
-
(5,880)
(157)
Total net assets of companies with
non-controlling interests
Revenue of companies with
non-controlling interests … …
Profit for the year of companies
with non-controlling interests …
Total comprehensive income of
companies with non-controlling interests
4,437
2,521
13,205
10,796
17,642
13,317
14,887
16,187
14,521
13,213
29,408
29,400
1,518
1,916
705
133
2,064
1,280
3,582
1,985
2,409
2,131
4,325
2,264
Associates
The Group’s share of profit after tax in its associates for the year ended 30th April, 2018 was £310,000 (2017:
£169,000).
Summary financial information of Group share of associates is as follows:
Balance at 1st May
… … … … … … … … … …
Profit before tax … … … … … … … … … … …
Tax … … … … … … … … … … … … …
Dividend … … … … … … … … … … … …
Exchange adjustment … … … … … … … … … …
2018
£’000
2,045
387
(77)
(441)
49
Balance at 30th April… … … … … … … … … …
1,963
Assets
… … … … … … … … … … … …
Liabilities … … … … … … … … … … … …
2,661
(698)
20167
£’000
1,640
203
(34)
-
236
2,045
2,786
(741)
1,963
2,045
52
NOTES TO THE FINANCIAL STATEMENTS
10. Investments in subsidiaries and associates (continued)
Associates (continued)
Summarised financial information of the Group’s individually material associate,
Jewelry Plaster Limited, is as follows:
2018
£’000
Revenue … … … … … … … … … … … …
Profit after tax … … … … … … … … … … …
Non-current assets
… … … … … … … … … …
Current assets … … … … … … … … … … …
Current liabilities … … … … … … … … … … …
1,543
221
385
915
(220)
2017
£’000
1,499
235
322
1,087
(157)
Group equity investment in associate
1,080
1,252
11. Intangible assets
Cost
Balance at 1st May, 2016 …
Additions… … … …
…
Exchange adjustments
Brand
names
and
intellectual
property
£’000
Goodwill
£’000
9,393
75
404
6,753
-
273
Balance at 30th April, 2017
9,872
7,026
Balance at 1st May, 2017 …
Additions… … … …
Disposals… … … …
…
Exchange adjustment
9,872
-
(60)
238
7,026
-
(209)
157
Order
book
£’000
162
-
11
173
173
-
(17)
6
Manufact- Software Develop-
ment
costs
£’000
and
Licences
£’000
uring
rights
£’000
Total
£’000
5,117
-
-
180
149
7
1,631
791
56
23,236
1,015
751
5,117
336
2,478 25,002
5,117
-
-
-
336
378
-
(6)
2,478
3,334
-
32
25,002
3,712
(286)
427
Balance at 30th April, 2018
10,050
6,974
162
5,117
708
5,844 28,855
Amortisation and impairment
Balance at 1st May, 2016 …
Amortisation for the year …
…
Exchange adjustment
Balance at 30th April, 2017
Balance at 1st May, 2017 …
Amortisation for the year …
Disposals… … … …
…
Exchange adjustment
399
-
-
399
399
-
(60)
-
3,935
503
142
4,580
4,580
515
(209)
97
162
-
11
173
173
-
(17)
6
944
297
-
1,241
1,241
295
-
-
20
44
4
68
68
215
-
(2)
211
94
(4)
5,671
938
153
301
6,762
301
113
-
2
6,762
1,138
(286)
103
Balance at 30th April, 2018
339
4,983
162
1,536
281
416
7,717
Net book value
At 1st May, 2016… … …
8,994
2,818
At 30th April, 2017
and 1st May, 2017 … …
9,473
2,446
At 30th April, 2018… …
9,711
1,991
-
-
-
4,173
160
1,420
17,565
3,876
3,581
268
427
2,177
18,240
5,428 21,138
Customer lists are included within brand names and intellectual property or within manufacturing rights, depending
on the nature of the acquisition; non compete agreements are disclosed within manufacturing rights.
During the year, the Group added to its portfolio of intangible assets. The main additions are £142,000 on the
development of a new fire extinguisher project in Dupre Minerals, £270,000 on refractory development projects
in Goodwin Refractory Services, £489,000 on the development of a new valve range by Goodwin International
and £2,318,000 on the development of radar equipment within Easat Radar Systems and NRPL Aero.
Amortisation and impairment charges
The amortisation charge of £1,138,000 (2017: £938,000) is recognised in cost of sales in the income statement.
53
11. Intangible assets (continued)
NOTES TO THE FINANCIAL STATEMENTS
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
… … … … …
… … … … … … … … … …
NRPL Aero Oy…
Other … … … … … … … … … … … …
2018
£’000
4,784
3,346
1,270
311
2017
£’000
4,592
3,346
1,220
315
9,711
9,473
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.
As part of testing goodwill for impairment detailed forecasts of operating cash flows for the next three 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.
At 30th April, 2018, the value in use of goodwill exceeds the carrying value by £26 million (2017: £25 million). The
projections use various growth rates consistent with the profit forecasts of the CGU for the first three years, with
modest growth rates thereafter extrapolated over the minimum expected life span of the unit. The forecasts are then
discounted at an appropriate weighted average cost of capital rate considering the perceived levels of risk, namely
16.9% (2017: 16.8%) for the Mechanical Engineering Division and 15.8% (2017:16.8%) for the Refractory Engineering
Division. Further sensitivity tests are then performed reducing the discounted cash flows by 10% and also increasing
the weighted average cost of capital by 2% to confirm there is no need to consider further a need for impairment.
For the purpose of this exercise, all terminal growth rates are assumed to be zero.
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.
12. Inventories
Raw materials and consumables … … … … … … …
Work in progress … … … … … … … … … …
Finished goods … … … … … … … … … …
The value of inventory written down during the year was £675,000 (2017: £369,000).
The Group carries provisions against inventories as follows:
Raw materials and consumables … … … … … … …
Work in progress … … … … … … … … … …
Finished goods … … … … … … … … … …
2018
£’000
11,726
9,676
7,448
28,850
2018
£’000
208
1,077
456
1,741
2017
£’000
13,314
17,739
6,604
37,657
2017
£’000
381
967
311
1,659
54
NOTES TO THE FINANCIAL STATEMENTS
13. Trade and other receivables
Balances due after more than one year
Other receivables … … … … … … … … … …
2018
£’000
728
2017
£’000
-
This balance is due from an associate company and is repayable within five years. Interest is charged at a
commercial rate.
Balances due within one year
Trade receivables … … … … … … … … … …
Amounts recoverable on contracts … … … … … … …
Other receivables … … … … … … … … … …
Corporation tax receivable … … … … … … … …
… … … … … … … … … …
Prepayments
… … … … … … …
Deferred tax asset (see note 18)
2018
£’000
18,375
6,046
1,678
24
1,810
27
27,960
2017
£’000
21,765
-
2,784
-
1,687
102
26,338
Included within other receivables is a balance of £200,000 (2017: £780,000) due from an associate company.
Amounts recoverable on contracts of £6,046,000 consist of £12,236,000 of contract costs incurred and recognised
profits (less losses), net of progress billings of £6,190,000. Amounts due to customers on contract work of
£212,000 comprise £173,000 of contract costs incurred and recognised profits (less losses) and progress
billings of £385,000 (note 16).
14. Cash and cash equivalents
Cash and cash equivalents per balance sheet … … … … … …
Bank overdrafts … … … … … … … … … … …
2018
£’000
7,485
(4,585)
Cash and cash equivalents per cash flow statement … … … … …
2,900
2017
£’000
5,172
(6,655)
(1,483)
15. 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 … … … … … … … …
Bank overdrafts … … … … … … … … … … …
2018
£’000
1,687
4,088
5,775
861
7,022
4,585
12,468
2017
£’000
2,548
21,127
23,675
865
2,022
6,655
9,542
55
NOTES TO THE FINANCIAL STATEMENTS
15. Interest-bearing loans and borrowings (continued)
Reconciliation of liabilities arising from financing activities
Opening
balance 1st
Closing
exchange balance 30th
May 2017 Cash flows movement April 2018
£’000
Foreign
£’000
£’000
£’000
Bank loans … … … … … … …
Finance lease liabilities … … … … … …
23,149
3,413
(12,044)
(865)
26,562
(12,909)
Opening
balance 1st
5
-
5
11,110
2,548
13,658
May 2016 Cash flows movement
£’000
£’000
£’000
Foreign
Closing
exchange balance 30th
April 2017
£’000
Bank loans … … … … … … …
Finance lease liabilities … … … … … …
17,306
4,339
21,645
5,827
(930)
4,897
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum
lease
payments
£’000
922
1,737
2,659
2018
Interest Principal
£’000
£’000
61
50
111
861
1,687
2,548
Minimum
lease
payments
£’000
951
2,659
3,610
Less than one year … … …
…
Between one and five years
16. Trade and other payables
Current liabilities
Trade payables … … … … … … … … … … …
Non-trade payables and accrued expenses
… … … … … …
Other taxation and social security costs … … … … … … …
Advance payments from customers … … … … … … … …
23,149
3,413
26,562
16
4
20
2017
Interest
£’000
Principal
£’000
86
111
197
865
2,548
3,413
2018
£’000
15,324
4,243
1,580
5,744
26,891
2017
£’000
13,244
3,799
1,806
3,605
22,454
500
Deferred consideration on acquisitions … … … … … … …
500
The deferred consideration at 30th April, 2018, and 30th April, 2017, of £500,000 relates to the acquisition of
Noreva GmbH.
The balance for deferred consideration is disclosed as short-term on the basis that the amount is payable
on demand. Included within advance payments from customers is £212,000 for amounts due to customers on
contract work (note 13).
56
NOTES TO THE FINANCIAL STATEMENTS
17. Warranty provision
Balance at 1st May
… … … … … … … … … …
Generated … … … … … … … … … … … …
Credited to the income statement … … … … … … … …
Exchange adjustment … … … … … … … … … …
Balance at 30th April… … … … … … … … … …
Warranty due within one year … … … … … … … … …
Warranty due after one year … … … … … … … … …
Balance at 30th April… … … … … … … … … …
2018
£’000
395
227
(124)
15
513
184
329
513
2017
£’000
330
43
(4)
26
395
90
305
395
Provisions for warranties relate to products sold and generally cover a period of between 1 and 3 years.
18. Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Property, plant and equipment
… … …
Intangible assets … … … … … …
Derivative financial instruments … … …
Other temporary differences … … … …
2018
£’000
-
-
199
40
239
2017
£’000
-
-
778
116
894
Deferred tax asset (see note 13) … … … … … … … …
Deferred tax liability … … … … … … … … … …
2018
£’000
(2,661)
(1,510)
-
-
(4,171)
2018
£’000
27
(3,959)
(3,932)
Intangible
Derivative
financial
Other
temporary
assets instruments differences
£’000
£’000
£’000
Balance at 1st May, 2016
Recognised in income
Recognised in equity
Exchange adjustment
…
…
…
Balance at 30th April, 2017
Recognised in income
Recognised in equity
Exchange adjustment
…
…
…
…
…
…
…
…
…
Property,
plant and
equipment
£’000
(2,647)
413
-
(24)
(428)
(631)
(73)
(38)
(2,258)
(1,170)
(439)
-
36
(325)
-
(15)
Balance at 30th April, 2018
(2,661)
(1,510)
76
(36)
738
-
778
239
(818)
-
199
(50)
171
-
(5)
116
(76)
-
-
40
2017
£’000
(2,258)
(1,170)
-
-
(3,428)
2017
£’000
102
(2,636)
(2,534)
Total
£’000
(3,049)
(83)
665
(67)
(2,534)
(601)
(818)
21
(3,932)
Within the current and previous year, the Group has no material tax losses where a deferred tax asset has been
recognised. As at 30th April, 2018, the Group has not recognised £1,077,000 of deferred tax assets in relation
to accumulated subsidiary losses (2017: £843,000).
The Finance Act 2016, which included legislation reducing the main rate of corporation tax from 20% to 19%
from 1st April, 2017 and to 17% from 1st April, 2020, was fully enacted on 15th September, 2016. The deferred
tax liability at 30th April, 2017 and 2018 has been calculated based on these rates.
57
NOTES TO THE FINANCIAL STATEMENTS
19. Capital and reserves
Share capital
Authorised, allotted, called up and fully paid:
7,200,000 ordinary shares of 10p each … … … … … … … …
2018 2017
£’000
£’000
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.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations.
Share-based payments reserve
The share-based payments reserve is a non cash-impacting provision, as required by Accounting Standard
IFRS 2, relating to the Long Term Incentive Plan. Further details are included in note 28.
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 an asset of £50,000 (2017: asset of
£864,000).
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 risk 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 backed by credit insurance.
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, creditworthiness, historic profitability and payment record.
iv) A few orders (less than 10%) are taken at risk following review by at least two Board members.
v) Major orders are normally accompanied by stage payments which go towards mitigating our credit risk.
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:
Carrying amount
Trade and other receivables … … … … … …
Cash at bank and cash equivalents … … … … …
Derivative financial assets… … … … … … …
Notes
13
14
20(e)
2018
£’000
26,827
7,485
364
34,676
2017
£’000
24,549
5,172
1,756
31,477
58
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
Exposure to credit risk (continued)
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 … … … … … … … … … …
Carrying amount
2018
£’000
3,209
4,665
441
3,517
6,543
2017
£’000
2,334
6,099
1,286
3,839
8,207
18,375
21,765
The ageing of trade receivables and impairments at the reporting date was:
Net
2018
£’000
Not past due … … … 12,910
2,414
Past due 1-30 days … …
2,321
Past due 31-90 days… …
730
Past due more than 90 days
Gross
2018
£’000
12,910
2,414
2,321
1,159
Impairment
provision
2018
£’000
-
-
-
(429)
Net
2017
£’000
16,455
3,421
1,054
835
Gross
2017
£’000
16,455
3,421
1,054
1,459
18,375
18,804
(429)
21,765
22,389
Impairment
provision
2017
£’000
-
-
-
(624)
(624)
Management believes that there are no significant credit risks remaining with the above net receivables and
that 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.
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 … … … … … … … … … …
2018
£’000
624
2
64
(261)
429
2017
£’000
870
5
43
(294)
624
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
2017
2018
£’000
£’000
Committed
2018
£’000
2017
£’000
Total
2018
£’000
2017
£’000
Unutilised bank facilities
… 12,965
10,232
22,000
11,000
34,965
21,232
The Group’s principal borrowing facilities are provided by 4 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.
59
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
b) Liquidity risk (continued)
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
cash flows that have not been discounted.
2018
Contractual cash flows
Non-derivative financial liabilities
Bank loans and committed facilities … … …
Overdrafts … … … … … … …
… … … … … …
Finance leases
Trade and other payables … … … … …
Deferred considerations on acquisitions … …
Within
1 year
£’000
7,246
4,585
922
25,311
500
1-5 years
£’000
4,334
-
1,737
-
-
Total
£’000
11,580
4,585
2,659
25,311
500
2018
Carrying
value
Total
£’000
11,110
4,585
2,548
25,311
500
Total … … … … … … … …
38,564
6,071
44,635
44,054
The 30th April, 2018 bank loans and committed facilities are repayable as follows: bank overdraft on demand
£5 million, £7 million within year end 30th April, 2019 and £4 million within year end 30th April, 2021. The
interest rates chargeable on these loans are on a floating basis against LIBOR and UK base rate, with bank
margins of less than 2%.
Non-derivative financial liabilities
Bank loans and committed facilities … … …
Overdrafts … … … … … … …
Finance leases
… … … … … …
Trade and other payables … … … … …
Deferred considerations on acquisitions … …
2017
Contractual cash flows
Within
1 year
£’000
2,022
6,655
951
22,454
500
1-5 years
£’000
21,127
-
2,659
-
-
Total
£’000
23,149
6,655
3,610
22,454
500
Total … … … … … … … …
32,582
23,786
56,368
2017
Carrying
value
Total
£’000
23,149
6,655
3,413
22,454
500
56,171
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. All the foreign exchange contracts have maturities within three years 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.
60
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
c) Market risk (continued)
Foreign exchange risk (continued)
Currency profile of financial assets and liabilities:
2018
US
Dollar
£’000
2017
US
Dollar
£’000
2018
2017
2018
2017
2018
2017
Euro
£’000
Euro
£’000
Other
£’000
Other
£’000
Total
£’000
Total
£’000
Trade and other
receivables
Cash and cash
equivalents
Trade and other
payables
2,498
8,324
3,159
2,985
-
-
5,657
11,309
124
(3,968)
235
(202)
(1,825)
(1,940)
(1,466)
(6,110)
(818)
(1,795)
(626)
(478)
(22)
-
(1,466)
(2,273)
1,804
2,561
2,768
2,305
(1,847)
(1,940)
2,725
2,926
The following significant exchange rates applied during the year:
US Dollar … … … … …
Euro … … … … … …
Average
exchange rate
Reporting date
spot rate
2018
1.339
1.132
2017
1.290
1.182
2018
1.377
1.140
2017
1.294
1.188
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 hedge 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 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
Floating rate
Non interest-bearing
Total
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
Cash and cash
equivalents
Trade and other
receivables
Trade and other
payables
Bank overdrafts
Bank loans and
committed
facilities
Finance lease
liabilities
-
928
-
-
-
-
-
-
-
-
7,485
5,172
-
-
7,485
5,172
-
-
26,263
28,094
27,191
28,094
-
(4,585)
-
(6,655)
(27,346)
-
(27,038)
-
(27,346)
(4,585)
(27,038)
(6,655)
(11,110)
(23,149)
(2,548)
(3,413)
-
-
-
-
-
-
(11,110)
(23,149)
(2,548)
(3,413)
(1,620)
(3,413)
(8,210)
(24,632)
(1,083)
1,056
(10,913)
(26,989)
Other receivables and other payables include derivatives.
61
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
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 shareholders’ 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, 2018, the capital
used was £110.8 million (2017: £118.0 million) as shown in the following table:
2018
£’000
Cash and cash equivalents … … … … … … (7,485)
Finance leases … … … … … … … …
2,548
… … … … 11,110
Bank loans and committed facilities
4,585
Overdrafts
500
Deferred consideration
… … … … … … … …
… … … … … …
Net debt … … … … … … … … … 11,258
Total equity attributable to equity holders of the parent … 99,568
2017
£’000
(5,172)
3,413
23,149
6,655
500
28,545
89,436
Capital
110,826
117,981
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 general strategy is to keep the debt
to equity ratio below 30%, adjusted where appropriate for the effect of acquisitions. At 30th April, 2018 net
debt was £11.3 million (2017: £28.6 million). The gearing ratio, excluding deferred consideration from net
debt, is 10.8% (2017: 31.4%).
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.
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, 2018,
in sterling terms, was £12 million spread across USD and EUR denominated contracts. The fair value of
these at 30th April, 2018 was a liability of £294,000 (being assets totalling £Nil and liabilities totalling
£294,000). 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, 2018, in sterling terms, was £35 million spread across USD, EUR and SEK denominated contracts.
The fair value of these at 30th April, 2018 was a liability of £877,000 (being assets totalling £364,000 and
liabilities totalling £1,241,000).
The nominal value of forward exchange contracts used as hedges of forecast transactions at 30th April, 2017,
in sterling terms, was £65 million spread across USD and EUR denominated contracts. The fair value of
these at 30th April, 2017 was a liability of £2,491,000 (being assets totalling £1,000 and liabilities totalling
£2,492,000). The Group also had 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, 2017, in sterling terms, was £56 million spread across USD, EUR and SEK denominated contracts.
The fair value of these at 30th April, 2017 was an asset of £608,000 (being assets totalling £608,000 and
liabilities totalling £Nil).
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 cost of sales.
62
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
d) Capital management (continued)
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:
2018
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
Liabilities … … … …
(294)
(294)
(64)
(230)
-
Forward exchange contracts
Assets
… … … …
Liabilities … … … …
2017
Periods in which cash flows and profits are expected to occur
Carrying
amount
£’000
Expected
cash flow
£’000
1
(2,492)
(2,491)
1
(2,492)
(2,491)
Within
1 year
£’000
1
(2,030)
(2,029)
Between
1 and
5 years
£’000
-
(462)
(462)
Over
5 years
£’000
-
-
-
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% decrease in US Dollar fx rate against pound sterling
… … …
1% decrease in Euro fx rate against pound sterling … … … …
Impact on the income statement
1% increase in US Dollar 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 Euro fx rate against pound sterling … … … …
… … … … … … …
1% increase in interest rates
2018
£’000
(Profit)/loss
(19)
(98)
19
98
2017
£’000
(Profit)/loss
(335)
(232)
335
232
(131)
(207)
131
207
109
(413)
(181)
413
181
129
63
NOTES TO THE FINANCIAL STATEMENTS
20. Financial risk management (continued)
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, 2017 and 30th April, 2016.
Financial assets
Cash and cash equivalents … … …
Receivables
Trade receivables … … … … …
Other receivables… … … … …
30th April, 2018
30th April, 2017
Carrying
amount
£’000
Fair value
£’000
Carrying
amount
£’000
Fair value
£’000
7,485
7,485
5,172
5,172
18,375
8,452
18,375
8,452
21,765
4,471
21,765
4,471
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
364
364
1,755
1,755
-
-
1
1
Total financial assets… … … …
34,676
34,676
33,164
33,164
30th April, 2018
30th April, 2017
Carrying
amount
£’000
Fair value
£’000
Carrying
amount
£’000
Fair value
£’000
Financial liabilities at amortised cost
Trade payables … … … … …
Other payables … … … … …
Deferred consideration … … … …
Finance lease liabilities … … … …
Bank loans and committed facilities… …
15,324
9,987
500
2,548
11,110
15,324
9,987
500
2,548
11,110
13,244
9,210
500
3,413
29,804
13,244
9,210
500
3,413
29,804
1,241
1,241
-
-
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
Total financial liabilities … … …
41,004
41,004
294
294
2,492
58,492
2,492
58,492
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 designated 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 probability 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.
64
NOTES TO THE FINANCIAL STATEMENTS
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
531
450
981
Other
£’000
48
65
113
Total
2018
£’000
579
515
1,094
Total
2017
£’000
613
818
1,431
22. Capital commitments
Contracted capital commitments at 30th April, 2018 for which no provision has been made in these financial
statements were £1,764,000 (2017: £1,733,000).
23. Guarantees and contingencies
The Group has issued bank backed guarantee and bond commitments principally in order to secure its contracts.
308 guarantee and bonds contracts (2017: 323) … … … … …
2018
£’000
11,727
2017
£’000
12,724
24. Subsequent events
After the balance sheet date an ordinary dividend of 83.473p per qualifying ordinary share was proposed by the
Directors (2017: Ordinary dividend of 42.348p).
The current year proposed ordinary dividend of £6,010,056 has not been provided for within these financial
statements (2017: Proposed ordinary dividend of £3,049,000 was not provided for within the comparative figures).
25. Accounting estimates and judgements
The Directors do not consider there to be any particularly key estimates or judgements in preparing the financial
statements. The estimates and judgements outlined below formed the main areas of focus for the Directors
throughout the year.
a) Revenue Recognition
The revenue and costs on long term contracts can extend over significant periods, requiring judgements
to be exercised in the production of forecasts which contain allowances for technical risks and inherent
uncertainties. Profit is recognised progressively as risks have been mitigated or discharged.
b) Stock provisions
The Group's Directors in conjunction with senior management in the subsidiaries regularly review the
recoverability of their stated stock and work in progress balances paying particular attention to net realisable
value and stock obsolescence issues. The judgements exercised here are the determination of the costs to
complete on contracts in progress at the period end and the likelihood of receiving future sales orders for
slow moving stocks. Where it is judged that a provision is deemed necessary the appropriate adjustments
are made in the relevant subsidiary's books at the time a shortfall is identified.
c) Trade debtor provisions
Whilst trade debtors are insured wherever possible, the Directors are able to exercise judgement in relation
to non credit insured contracts as set out under section 20 (a). The Group Directors in conjunction with the
subsidiary credit controllers closely monitor the adherence to payment terms across all accounts (whether
insured or not) and make provision for any losses that are likely to materialise.
65
NOTES TO THE FINANCIAL STATEMENTS
26. Non-principal subsidiaries and associates
Registered Country of
address*
Incorporation
Class of
shares held % held
Non-principal Subsidiaries:
Perfect Audio Visual Limited … … … … …
SRS Guangzhou Limited
Shenzhen King-Top Modern Hi-Tech Company Limited
1
… … … … … 12
16
England and Wales Ordinary
Ordinary
China
Ordinary
China
Holding Companies:
Goodwin Refractory Services Holdings
Limited … … … … … … … …
Ying Tai (UK) Limited … … … … … …
1
1
England and Wales Ordinary
England and Wales Ordinary
Non-principal Associates:
Jewelry Wax Limited … … … … … … 14
Tet Goodwin Property Company Limited … … … 11
Asian Industrial Investment Casting
Powders Private Limited … … … … …
Dormant companies:
Gold Star Powders Limited … … … … …
Net Central Limited … … … … … …
Sandersfire International Limited … … … …
Specialist Refractory Services Limited … … …
4
1
1
1
1
Thailand
Thailand
India
Ordinary
Ordinary
Ordinary
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
*The registered address for each company can be found in note 27.
All of the above companies are included as part of the consolidated accounts.
27. Registered offices of subsidiaries and associates
The registered offices of the companies listed in notes 10 and 26 are listed below.
100
51
51
100
51
49
49
50
100
100
100
100
Ivy House Foundry, Hanley, Stoke-on-Trent ST1 3NR
1.
2. Brassington, Nr. Matlock, Derbyshire DE4 4HF
3. 13-1, Jungbong-daero, 396 Beon-Gil, Seo-gu, Incheon, South Korea
4. 112/2 Chinna Amman Koil Street, Kalavakkam, Thiruporur 603 110, Tamil Nadu, India
5. Suite C, F1, Building #14, Xiya Road No.11, Waigaoqiao Free Trade Zone, 200131, Shanghai, China
6. Hocksteiner Weg 56, D - 41189 Mönchengladbach, Germany
7. Suite 1105, Building 1, Wanguocheng Moma, No.16 Changfeng West Street, Wanbailin District, Taiyuan,
Shanxi Province, 30021, China
8. Rua das Margaridas s/n, Terra Preta - Mairipora – SP, CEP 07600-000, São Paulo, Brazil
9. Level 8, Waterfront Place, 1 Eagle Street, Brisbane Qld 4000, Australia
10. Koivupuistontie 34, Vantaa, 01510 Finland
11. 99/9 Moo5 KhlongYong, Bhudhamontol, Nakhonpathom 73170, Thailand
12. No.73, Jiao Xin Road, Lanhe Town, Nansha District, Guangzhou City, 511480, China
13. 400 metres North from Nan Zhai Committee, Xifuzhen Street, Chengyang District, Qingdao City, 266106, China
14. 3322/5 1st fl. Bangkok Gem & Jewelry Tower, Surawong Road, Bangkok 10500, Thailand
15. Unit 1 Bridgeway Business Park, Cnr Sam Green Road and Pinnacle Close, Tunney Extension 9, Germiston
1401, South Africa
16. No.11 Niu Shi Pu Road, Liu Yue Committee, Heng Gang District, Shenzhen City, Guangdong Province, China
66
NOTES TO THE FINANCIAL STATEMENTS
28.
Share-based payment transactions
The Group has one share option scheme, the LTIP, the terms of which are outlined in the Directors’
remuneration policy and report on pages 21, 22 and 27. The income statement non cash-impacting
provision for the year, recognised in respect of share-based payments is £1,024,000 (2017: £601,000).
Grant date/ Method of Number of Vesting Contractual life
employees settlement instruments conditions of options
entitled
Options granted on Equity 576,000 For every 10% Expiry date:
5th October, 2016 growth in TSR 30th April, 2019
to Main Board 28,800 shares
Directors will vest
Awards entitle each holder to earn up to 1% of the share capital of the Company subject to the performance
condition.
An award will vest and become exercisable over 0.05% of the share capital of the Company for every 10%
increase in the TSR of the Company at the end of the three financial years ending on 30th April, 2019 with
a base year of 2009 but excluding the growth already achieved up to 30th April, 2016.
Number of share options
Outstanding at beginning of year … … … … … … … … 576,000
Granted … … … … … … … … -
-
576,000
2018
2017
Outstanding at end of year … … … … … … … … 576,000
576,000
Exerciseable at end of year … … … … … … … … -
-
The fair value of employee share options was measured by a Monte Carlo model. Measurement inputs and
assumptions are as follows:
Fair value at grant date
Share price at date of grant … … … … … … … … … …
Exercise price … … … … … … … … … …
Expected volatility … … … … … … … … … …
Option life … … … … … … … … … …
Expected dividends … … … … … … … … … …
Risk-free interest rate (based on national government bonds) … … … … …
£2,661,667
£22.20
£0.10
20.0%
2.5 years
1.91%
0.08%
The expected volatility is based on the historic volatility, calculated based on the weighted average remaining
life of the share options, adjusted for any expected changes to future volatility due to publicly available
information.
67
NOTES TO THE FINANCIAL STATEMENTS
29. Alternative performance measures
Measure
Method of calculation / reference
2018
2017
Operating profit (£’000)
Capital employed (£’000)
Consolidated income statement, page 34
Note 20 (d), page 62
13,580
110,826
9,948
117,981
Return on capital employed %
Operating profit / capital employed
12.3
8.4
11,258
500
28,545
500
10,758
28,045
Net debt (£’000)
Deferred consideration (£’000)
Note 20 (d), page 62
Note 20 (d), page 62
Net debt excluding deferred
consideration (£’000)
Net assets attributable to equity holders
of the parent (£’000)
Consolidated balance sheet, page 37
99,568
89,436
Gearing (%)
Net debt (excluding deferred consideration) /
equity, as above
10.8
31.4
Net profit attributable to equity holders
of the parent (£’000)
Net assets attributable to equity holders
of the parent (£’000)
Consolidated balance sheet, page 37
8,504
6,082
Consolidated balance sheet, page 37
99,568
89,436
Return on investment %
Net profit / net assets
8.5
6.8
Revenue (£’000)
Average number of employees
Consolidated income statement, page 34
Note 4, page 48
124,811
1,042
131,587
1,154
Sales per employee (£’000)
Group revenue / average employees
120
114
Refractory division - operating profit
including share of associates (£’000)
Profit on sale of land (£’000)
Note 2, page 46
Note 3, page 48
Refractory division trading profit (£’000)
9,130
(1,606)
5,933
-
7,524
5,933
Annual post tax profit (£’000)
Depreciation (£’000)
Amortisation (£’000)
Consolidated income statement, page 34
Note 9, page 50
Note 11, page 53
9,435
5,243
1,138
6,757
5,597
938
Annual post tax profit before
depreciation and amortisation (£’000)
15,816
13,292
68
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY BALANCE SHEET
at 30th April, 2018
NON-CURRENT ASSETS
Property, plant and equipment … … … … … …
Investment properties … … … … … … …
Investments … … … … … … … … …
Intangible assets … … … … … … … …
Notes
C4
C4
C5
C6
2018
£’000
28,697
17,844
20,950
2,859
2017
£’000
23,200
18,622
22,084
1,140
70,350
65,046
CURRENT ASSETS
Other receivables … … … … … … … …
C7
31,262
Derivative financial assets
… … … … … …
Cash at bank and in hand
… … … … … …
-
56
46,748
1,182
58
31,318
47,988
TOTAL ASSETS
… … … … … … … …
101,668
113,034
CURRENT LIABILITIES
Interest-bearing loans and borrowings
… … … …
Other payables … … … … … … … …
Deferred consideration … … … … … … …
Corporation tax … … … … … … … …
Derivative financial liabilities … … … … … …
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings
… … … …
Deferred income … … … … … … … …
Deferred tax liabilities … … … … … … …
C8
C9
C8
C10
12,442
12,699
500
72
-
9,517
3,796
500
-
871
25,713
14,684
5,687
1,145
2,408
23,496
1,206
1,704
9,240
26,406
TOTAL LIABILITIES … … … … … … … …
34,953
41,090
NET ASSETS … … … … … … … … …
66,715
71,944
EQUITY
Called up share capital … … … … … … …
C11
Share-based payments reserve
… … … … …
Profit and loss account … … … … … … …
720
1,625
720
601
64,370
70,623
TOTAL EQUITY
… … … … … … … …
66,715
71,944
(Loss) / profit after tax for the year … … … … … …
(3,204)
2,681
These financial statements were approved by the Board of Directors on 26th July, 2018, and signed on its
behalf by:
J. W. Goodwin
Director
Company Registration Number: 305907
R. S. Goodwin
Director
69
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2018
Share-
based
payments
reserve
£’000
Cash
flow
hedge
reserve
£’000
Notes
YEAR ENDED 30TH APRIL, 2018
Balance at 1st May, 2017
Total comprehensive income:
Loss … … … … … … … C2
… … … …
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Equity-settled share-based payment transactions
Dividends paid … … … … … …
Share
capital
£’000
720
-
-
-
-
601
-
-
1,024
-
BALANCE AT 30TH APRIL, 2018
720
1,625
Retained
earnings
£’000
Total
equity
£’000
70,623
71,944
(3,204)
(3,204)
(3,204)
-
(3,049)
(3,204)
1,024
(3,049)
64,370 66,715
-
-
-
-
-
-
YEAR ENDED 30TH APRIL, 2017
Balance at 1st May, 2016
Total comprehensive income:
Profit … … … … … … … C2
Other comprehensive income:
Net movements on cash flow hedges … …
… … … …
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Equity-settled share-based payment transactions
Dividends paid … … … … … …
720
-
-
-
-
-
BALANCE AT 30TH APRIL, 2017
720
-
-
-
-
601
-
601
(91)
70,991
71,620
-
91
91
-
-
2,681
2,681
-
91
2,681
-
(3,049)
2,772
601
(3,049)
-
70,623 71,944
70
C1
Accounting policies
NOTES TO THE FINANCIAL STATEMENTS
Principal accounting policies
These financial statements present information about the Company as an individual undertaking and not
about its Group. These financial statements were prepared in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework (“FRS 101”).
Basis of accounting
Goodwin PLC (the “Company”) is a company incorporated and domiciled in England and Wales.
The amendments to FRS 101 (2015/16 Cycle) issued in July 2016 and effective immediately have been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure
requirements of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but
makes amendments where necessary in order to comply with Companies Act 2006.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial
statements. The accounting policies set out below have, unless otherwise stated, been applied consistently
to all periods presented in these financial statements.
The consolidated financial statements of Goodwin PLC are prepared in accordance with International Financial
Reporting Standards and are available to the public and may be obtained from The Company Secretary,
Goodwin PLC, Ivy House Foundry, Hanley, Stoke-on-Trent, ST1 3NR.
The Company is exempt under S408 (3) Companies Act 2006 from the requirement to present its own profit
and loss account.
In these financial statements, the Company has applied the exemptions available under FRS101 in respect of
the following disclosures:
• A cash flow statement and related notes;
• Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
• Disclosures in respect of transactions with wholly-owned subsidiaries;
• Disclosures in respect of capital managements;
• The effects of new but not yet effective IFRSs;
As the consolidated financial statements of Goodwin PLC include the equivalent disclosures, the Company
has also taken the exemptions under FRS101 available in respect of certain disclosures required by IFRS 13
Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures.
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 of the Group financial statements.
Measurement convention
The financial statements have been prepared under the historical cost accounting rules and in accordance
with applicable Accounting Standards.
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 currency
Transactions in foreign currencies are translated to the respective functional currencies 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.
Financial instruments
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company
has become a party to the contractual provisions of the instrument. The principal financial assets and
liabilities of the Company 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 Company’s cash management
are included as a component of cash and cash equivalents for the purpose only of the statement of cash
flows.
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.
71
C1
Accounting policies (continued)
NOTES TO THE FINANCIAL STATEMENTS
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 Company 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. The Company
being a non-trading holding company holds any such forward exchange contracts on behalf of its subsidiaries
and as such any fair values on hand at the year end are accounted for through the respective inter company
accounts.
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 estimated useful lives. Expenditure on development activities is
capitalised if the product or process is technically and commercially feasible and the Company has sufficient
resources to complete development. The expenditure capitalised includes the cost of materials, direct
labour and an appropriate proportion of overheads. Amortisation rates are as follows:
Manufacturing rights … … … … … 15 years
Brand names … … … … … … now fully amortised
Software and licences
Intellectual property rights … … … … now fully amortised
Non-compete agreements … … … … 15 years
Capitalised development costs … … … Minimum expected order unit intake or
… … … … 4 years
minimum product life
… … … … … … over estimated production life
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 Company 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 … … … … … … Nil
Freehold buildings … … … … … 2% to 4% on reducing balance or cost
Leasehold property … … … … … over period of lease
Plant and machinery … … … … … 5% to 25% on reducing balance or cost
Motor vehicles … … … … … … 15% or 25% on reducing balance
Tooling
Fixtures and fittings … … … … … 15% to 25% on reducing balance
Assets in the course of construction are not depreciated.
Investment properties
Investment properties are properties which are held either to earn rental income or for capital appreciation
or for both. Investment properties are stated at cost less accumulated depreciation.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of
investment properties which is typically 25 years.
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.
Unamortised government grants relating to assets are recognised in the balance sheet as a deferred creditor.
Amortisation of such grants is credited to profit and loss in accordance with the useful lives of the assets to
which they relate.
Provisions
A provision is recognised in the balance sheet when the Company 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.
72
C1
Accounting policies (continued)
NOTES TO THE FINANCIAL STATEMENTS
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 Company contributes to a defined contribution pension scheme for employees under an Auto Enrolment
Pension arrangement as required by Government legislation. The assets of the scheme are held in
independently administered funds. Company 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 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.
Share-based payment transactions
Share-based payment arrangements, in which the Company receives goods or services as consideration for
its own equity instruments, are accounted for as equity-settled share-based payment transactions, regardless
of how the equity instruments are obtained by the Company.
The grant date fair value of share-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period in which the employees become
unconditionally entitled to the awards. The fair value of the awards is measured using an option valuation
model, taking into account the terms and conditions upon which the awards were granted.
C2
Result for the financial year
Included in the (loss) / profit before taxation are the following charges:
Impairment of amounts due from Group undertakings … … … …
Impairment of investments in subsidiary companies (see note C5) … …
Fees receivable by the auditors and the auditor’s associates in respect of:
Audit of these financial statements
… … … … … … …
2018
£’000
8,040
1,134
2017
£’000
-
1,147
18
16
Amounts paid to the Company’s auditor in respect of service 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).
The impairment of amounts due from Group undertakings are £4,000,000 (2017:£Nil) in respect of
Goodwin Steel Castings Limited, and £4,040,000 (2017: £Nil) in respect of Goodwin Valve and Pump Company
Limited.
73
NOTES TO THE FINANCIAL STATEMENTS
C3
Staff numbers and costs
The average number of persons employed by the Company (including Directors) during the year, analysed
by category, was as follows:
Number of employees
2018 2017
Administration staff … … … … … … … … … … 49 49
2018 2017
The aggregate payroll costs of these persons were as follows: £’000 £’000
Wages and salaries … … … … … … … … … … 3,470 3,197
Social security costs … … … … … … … … … … 373 392
Other pernsion costs … … … … … … … … … … 99 101
3,942 3,690
Details of the Directors’ remuneration can be found within the Directors Remuneration Report on page 26.
The emoluments of the highest paid Director were £385,000 (2017: £368,000). The emoluments included
Company pension contributions of £11,000 (2017: £11,000) which were made to a defined contribution scheme
on his behalf. The number of Directors, who were members of a defined contribution pension scheme,
was 8 (2017: 8).
A charge of £1,024,000 for the LTIP (2017: £601,000) has been recognised in the year, but not included in the
above table. Further information is contained in note 28 of the Group financial statements.
C4
Tangible fixed assets
Investment
properties
Property, Plant and Equipment
Cost
Balance at 1st May, 2017
… …
Additions
…
Reclassifications
Disposals
… …
Intercompany transfers
£’000
21,966
-
(39)
(35)
-
Land and
Plant and
buildings equipment
£’000
£’000
Fixtures
and
Assets in
course of
fittings construction
£’000
£’000
1,166
-
-
-
-
25,487
451
1,339
-
(42)
1,583
10
-
-
-
6,074
6,419
(1,300)
-
-
Total
£’000
34,310
6,880
39
-
(42)
Balance at 30th April, 2018
21,892
1,166
27,235
1,593
11,193 41,187
Depreciation
Balance at 1st May, 2017
Charged in year … …
…
Reclassifications
Intercompany transfers
3,344
661
43
-
603
21
-
-
9,624
1,287
(43)
(7)
883
122
-
-
-
-
-
-
11,110
1,430
(43)
(7)
Balance at 30th April, 2018
4,048
624
10,861
1,005
- 12,490
Net book value
At 30th April, 2017 …
At 30th April, 2018
18,622
17,844
563
542
15,863
16,374
700
588
6,074
23,200
11,193 28,697
The Company’s investment properties have been valued using the cost model and depreciated over their
estimated useful lives – typically 25 years. In the opinion of the Directors, the fair value of the investment
properties as at 30th April, 2018 was in the region of £38 million (2017: £36 million). Fair value for this purpose
is based on Level 3 fair value inputs and, specifically, the Directors’ opinion as to the amount for which the
property could be exchanged between knowledgeable, willing parties in an arm’s length transaction given
a reasonable timeframe in which to conclude such an exchange.
74
C5
Fixed asset investments
Cost
Balance at 1st May, 2017 … … … … …
… … … … … … …
Disposals
Balance at 30th April, 2018
Impairment
Balance at 1st May, 2017 … … … … …
Impairment during the year
… … … …
… … … … … … …
Disposals
Balance at 30th April, 2018
Net book value
At 30th April, 2017 … … … … … …
At 30th April, 2018
NOTES TO THE FINANCIAL STATEMENTS
Shares in
associated
undertakings
£’000
Shares in
Group
undertakings
£’000
Total
£’000
307
-
307
-
-
-
-
307
307
25,455
(212)
25,762
(212)
25,243
25,550
3,678
1,134
(212)
3,678
1,134
(212)
4,600
4,600
21,777
22,084
20,643
20,950
A list of principal subsidiaries and associates is given in note 10 and a list of non-principal subsidiaries and
associates is given in note 26 of the Group financial statements. The impairment is in respect of Goodwin
Valve and Pump Company Limited.
C6
Intangible fixed assets
Intellectual
Brand property
names and Manu- rights Software Develop-
ment
Customer facturing and Non-
costs Total
list rights compete
£’000 £’000
£’000 £’000 £’000
and
Licences
£’000
Cost
Balance at 1st May, 2017 880 827 1,118
Additions - - -
Intercompany transfers - - -
114
6
-
300 3,239
89 95
1,741 1,741
Balance at 30th April, 2018 880 827 1,118
120
2,130 5,075
Amortisation
Balance at 1st May, 2017 880 534 639
Amortisation for the year - 54 34
Balance at 30th April, 2018 880 588 673
Net book value
At 30th April, 2017 - 293 479
At 30th April, 2018 - 239 445
C7
Debtors
Amounts owed by Group undertakings – due within one year … … …
Amounts owed by Group undertakings – due after more than one year
…
Other debtors … … … … … … … … … … …
… … … … … … …
Prepayments and accrued income
46
29
75
68
45
- 2,099
- 117
- 2,216
300 1,140
2,130 2,859
2018
£’000
23,928
6,505
410
419
2017
£’000
43,080
2,726
484
458
31,262
46,748
75
NOTES TO THE FINANCIAL STATEMENTS
C8
Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Company’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 of the Group financial statements.
Non-current liabilities
Finance lease liabilities … … … … … … … … … …
Bank loans and committed facilities … … … … … … … …
Current liabilities
Finance lease liabilities … … … … … … … … … …
Bank loans and committed facilities … … … … … … … …
Bank overdrafts … … … … … … … … … … …
2018
£’000
1,687
4,000
5,687
812
7,000
4,630
12,442
2017
£’000
2,496
21,000
23,496
789
2,000
6,728
9,517
Finance lease liabilities
Finance lease liabilities are payable as follows:
Less than one year
Between one and five years
2018
2018
Minimum
lease
payments
£’000
872
1,737
Interest Principal
£’000
812
1,687
£’000
60
50
Minimum
lease
payments
£’000
872
2,607
Interest Principal
£’000
789
2,496
£’000
83
111
2,609
110
2,499
3,479
194
3,285
C9
Other Payables
Trade payables… … … … … … … … … … …
Amounts owed to Group undertakings … … … … … … …
… … … … … … …
Other taxation and social security
Accruals and deferred income … … … … … … … …
2018
£’000
1,024
11,095
239
341
12,699
C10 Provisions for liabilities
Deferred taxation
Balance at 1st May, 2017
… … … … … … … … … … …
Debit to the profit and loss for the year … … … … … … … … …
… … … … … … … …
Balances transferred from group companies
Balance at 30th April, 2018
… … … … … … … … … …
The elements of deferred taxation are as follows:
Difference between accumulated depreciation and
amortisation and capital allowances … … … … … … …
Other temporary differences … … … … … … … … …
2018
£’000
2,410
(2)
2,408
2017
£’000
1,053
2,252
201
290
3,796
2018
£’000
1,704
408
296
2,408
2017
£’000
1,706
(2)
1,704
Within the current and previous year, the Company has no unrelieved tax losses.
The Finance Act 2016, which included legislation, reducing the main rate of corporation tax from 20%
to 19% from 1st April, 2017 and to 17% from 1st April, 2020, was fully enacted on 15th September, 2016.
The deferred tax liability at 30th April 2017 and 2018 has been calculated based on these rates.
76
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
… … … … … … …
2018
£’000
720
2017
£’000
720
C12 Contingent liabilities
The Company is jointly and severally liable for value added tax due by other members of the Group
amounting to £Nil (2017: £Nil).
C13 Related Party Transactions
Transactions and balances with Group undertakings are summarised below:
2018
£’000
Amounts due from Group undertakings … … … … … … … 30,433
… … … … … … … (11,095)
Amounts due to Group undertakings
2017
£’000
45,806
(2,252)
Transactions with Group undertakings comprise loan movements, management charges and dividend receipts.
Compensation of key management personnel
Key management personnel are defined in the Directors’ Remuneration Report on page 25, and their
remuneration is disclosed on pages 25 and 26 of the Group Financial Statements. All the Executive Directors
are party to a long-term incentive plan (LTIP). Further details of the LTIP can be found in note 28 of the
Group Financial Statements.
C14 Commitments
Contracted capital commitments at 30th April, 2018 for which no provision has been made in these financial
statements were £1,484,000 (2017: £1,733,000).
C15 Subsequent events
Apart from the dividends declared of £6,010,056 which have not been provided for within these financial
statements, no significant events have occurred after the balance sheet date.
C16 Dividends
Paid ordinary dividends during the year in respect of prior years
42.348p (2017: 42.348p) per qualifying ordinary share … … … …
2018
£’000
3,049
2017
£’000
3,049
After the balance sheet date an ordinary dividend of 83.473p per qualifying ordinary share was proposed by
the Directors (2017: Ordinary dividend of 42.348p).
The proposed current year ordinary dividend of £6,010,056 has not been provided for within these financial
statements (2017: Proposed ordinary dividend of £3,049,000 was not provided for).
C17 Accounting estimates and judgements
The material accounting estimates and judgements for the Company follow that of the Group which have
been considered in note 25 on page 65 of the Group financial statements.
C18 Share-based payment transactions
Details of the equity-settled share-based payment transactions are disclosed in note 28 on page 67 of the
Group Financial Statements.
77
FIVE YEAR FINANCIAL SUMMARY
Continuing operations
2014
£’000
2015
£’000
2016
£’000
2017
£’000
2018
£’000
Revenue… … … … … … … …
… … … … …
Profit before taxation
Tax on profit … … … … … … …
Profit after taxation … … … … … …
130,828
24,095
(4,448)
19,647
127,049
20,053
(4,601)
15,452
123,539
12,314
(3,376)
8,938
131,587
9,244
(2,487)
6,757
124,811
13,300
(3,865)
9,435
Basic and diluted earnings per ordinary share
…
264.38p
208.68p
122.75p
84.47p
118.11p
Total equity … … … … … … …
77,570
86,522
90,117
93,661
104,827
78