438805~ 2019 Annual Report patch:135197 Annual Report patch 4/23/19 3:15 PM Page 1
D I R E C T O R S R E P O R T A N D A C C O U N T S
3 Oth A P R I L 2 O 1 9
INDEX
1
2
3
5
6
10
13
15
17
19
22
30
31
39
40
41
43
44
45
83
84
85
Notice of Annual General Meeting
Notes to Notice of Annual General Meeting
GROUP STRATEGIC REPORT
Chairman’s Statement
Summary of Consolidated Statement of Profit or Loss
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 Statement of Profit or Loss
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
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
93
FIVE YEAR FINANCIAL SUMMARY
GOODWIN PLC
www.goodwin.co.uk
Registered in England and Wales, Number 305907
Established 1883
T. J. W. Goodwin
(Chairman)
Directors:
M. S. Goodwin
(Managing Director)
Mechanical
Engineeering Division
S. R. Goodwin
(Managing Director)
Refractory
Engineering Division
J. Connolly S. C. Birks B. R. E. Goodwin J. E. Kelly (Non-Executive Director)
Secretary and registered office:
Mrs. J. L. Martin, L.L.B., 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-FOURTH ANNUAL GENERAL MEETING of the
Company will be held at 10.30am on Wednesday, 2nd October, 2019 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.
8.
9.
10.
11.
12.
13.
14.
15.
To receive the Directors’ Reports and the audited financial statements for the year
ended 30th April, 2019.
To approve the payment of the proposed ordinary dividend on the ordinary shares.
To re-elect Mr. J. Connolly as a Director.
To re-elect Mr. S. C. Birks as a Director.
To re-elect Mr. B. R. E. Goodwin as a Director.
To re-affirm the appointment of Mr. T. J. W. Goodwin as Chairman.
To re-affirm the appointment of Mr. M. S. Goodwin as Managing Director of the
Mechanical Engineering Division.
To re-affirm the appointment of Mr. S. R. Goodwin as Managing Director of the
Refractory Engineering Division.
To re-affirm the position of Mrs. J. E. Kelly, Non-Executive Director, as Chair of the
Audit Committee.
To re-affirm the position of Mr. J. W. Goodwin as member of the Audit Committee.
To re-affirm the position of Mr. R. S. Goodwin as member of the Audit Committee.
To re-affirm the position of Mrs. P. Ashley as member of the Audit Committee.
To approve the Directors' Remuneration Report (excluding the Directors’ Remuneration
Policy) for the year ended 30th April, 2019, as stated on pages 25 to 29 of the Directors'
Report.
To approve the Directors’ Remuneration Policy, the full text of which is set out on
pages 22 to 24 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
J. L. Martin
Secretary
Registered Office:
Ivy House Foundry,
Hanley, Stoke-on-Trent
22nd August, 2019
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 30th September, 2019.
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 30th September, 2019 (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 21st August, 2019 (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 22nd August, 2019 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 4th October, 2019.
2
GROUP STRATEGIC REPORT
GOODWIN PLC
CHAIRMAN’S STATEMENT
I am pleased to report a like-for-like 11% increase in pre tax profits to £14.7 million (2018:
£13.3 million), see note 3 for clarification. Revenue of £127 million (2018: £125 million) is
up 1.8% on the figures reported for the same period in the last financial year. The Directors
propose an increased dividend of 96.21p (2018: 83.473p), a 15.3% increase.
Furthermore, I am also delighted to confirm that we have seen a significant rise in the level
of sales order input within our Mechanical Engineering Division. Whilst some individual
elements would not be notifiable the aggregation is significant for the Group. With this
exceptional input, I am able to confirm that, at the time of writing, the Group order input
since the start of the new financial year stands at £93 million and the total forward order
book stands at a record £165 million (July 2018: £85 million), a 94% increase from this time
last year, with yet more large long-term contracts, that we have been targeting over the
past few years, still to be placed.
Due to contractual requirements the Company cannot divulge all successes in relation to
the significant increase in order intake. However, we can confirm that several orders have
multi-year delivery requirements and the Board foresees little risk in executing them,
as they utilise the respective companies’ core strengths within Goodwin Steel Castings and
Goodwin International.
Of particular note in the Mechanical Engineering Division, Goodwin Steel Castings has
undergone major change, not only in returning to profitability in the year but also
completing its extensive upgrade programme that gives it increased weight capability
(casting up to 35 tonnes net weight castings in impact-resistant carbon, stainless and
duplex stainless steels) and puts it in a unique global position. With the work that they
have gone out and won internationally to date, which is now starting to be delivered, they
will never again be as reliant on the petrochemical industry. One such multi-million dollar
order Goodwin Steel Castings has received is for cast and machined radiation shielding
containment vessels for the USA nuclear decommissioning market.
Easat Radar Systems reported a loss due to lack of throughput and excessive work in
progress (WIP) over the year, combined with contract delays whilst working to finalise an
off-the-shelf radar system for a major customer. The final documentation approvals for
this are all but complete now, which should allow for a reduction in approximately £5 million
of WIP this current year as radar systems are shipped.
Over the past decade, Goodwin International has worked closely with world leading valve
stockist, RP Valves, who have stocked and re-sold Goodwin dual plate valves. We are
pleased to announce that RP Valves has placed a multi-million pound order for axial valves
with Goodwin International. By RP Valves ordering premium specification product in bulk
at their risk, only selling single items to customers when they have a requirement, it will
increase Goodwin’s overall axial valve sales in the future as this will lead to Goodwin
product being utilised for MRO (Maintenance, Repair and Operational) work, which seldom
happens for axial valves, normally due to the project based nature of the business.
Utilising a beneficial twenty year fixed borrowing rate of 1.89%, that was available as a
result of the European economic conditions during the year, Noreva took the opportunity
to stop renting and purchased the 1.85 acre site that the company is situated on in
Mönchengladbach, Germany.
Our Refractory Engineering Division has maintained the significant increase in market
share in the investment casting powder sector that it gained last financial year when its
major competitor Kerr ceased manufacture. Whilst operating profits in April 2019 have
risen only 7.2% compared to April 2018, we will start to see sales within the new financial
3
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
year of the ‘Silica Free’ investment powder technology, for which a patent application was
filed in April 2019, with early adopters likely to be the more western countries. This new
technology will enable the division to further grow its global market share and help further
increase its gross margins in years to come.
The global awareness of the risks of lithium battery fires and requirement for a solution
continues to grow. Within the year, Dupré Minerals has put in place a manufacturing
agreement with a French company that will manufacture AVD fire extinguishers for Europe.
During the financial year, Goodwin PLC signed an agreement to purchase a 26% minority
interest in Jewelry Plaster (Thailand), converting it into a 75% owned subsidiary. We also
acquired a further 24% equity in Ultratec (China) and in SRS QD (China) making these 75%
owned subsidiaries. We would like to thank our departing Thai equity partner for his
efforts in growing these overseas subsidiaries.
Our current working capital as a percentage of revenue is the same as the Group average
has been for the last 10 years, resulting in modest gearing of 20% (2018: 11%), despite the
high work in progress values within Easat.
We continue to retain, train and develop our employees, with a new cohort of 25 apprentices
starting in the Goodwin Engineering Training Centre later this year. The Training Centre is
now on the UK register of Learning Providers as well as being approved by the necessary
exam boards. With these accreditations in place, the apprenticeship levy on the Group’s UK
wage bill can now start to be offset against its running costs. We recognise the importance
of nurturing talent and bringing highly capable people either through or into the business,
as with record low unemployment levels in the UK, we are continuing with our strategy
to ensure that we have the right people with the right skill sets to competently execute the
work as we grow.
The Board would like to thank John Goodwin and Richard Goodwin, following their
retirement from the Board, for their achievement in leading the Company over the past
twenty-seven years as Chairman and Managing Director respectively. Over this period the
Group’s annual pre tax profits increased thirty-three fold and benefitted from the addition
of seventeen new subsidiaries, fifteen of which are overseas and the majority of which are
located in high growth developing countries. Over the three year period ending 30th April,
2019, the overseas companies have contributed in excess of 50% of pre tax profits, thus
emphasising their importance to the Group, from what were small beginnings. The Board
is pleased that John and Richard’s extensive knowledge will not be lost to the Group as
they remain members of the Audit Committee.
Due to the diversity of the business and the global reach, the Board has decided to split
the role of Managing Director between Mechanical Engineering and Refractory Engineering,
such that appropriate focus and energy can be applied to continue growing these two
important but quite different divisions.
Matthew, Simon and I are pleased to have the opportunity to serve as the new Mechanical
Engineering Division Managing Director, Refractory Engineering Division Managing
Director and Chairman, working with the rest of the Board and Senior Management to
carry on driving the Company forwards, for the benefit of all stakeholders.
The Board is once again indebted to our employees and former members of the Board for
their devotion to the Group’s long-term performance. It is as a result of their outstanding
work ethic that the Group has never before been in such a favourable position.
22nd August, 2019
Alternative performance measures mentioned above are defined in note 36 on page 82.
4
T. J. W. Goodwin
Chairman
GROUP STRATEGIC REPORT
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2019
CONTINUING OPERATIONS
Revenue … … … … … … … … … …
… … … … … … … … …
Cost of sales
GROSS PROFIT… … … … … … … … … …
Other income
… … … … … … … … …
Distribution expenses … … … … … … … …
… … … … … … …
Administrative expenses
OPERATING PROFIT … … … … … … … … …
Financial expenses
… … … … … … … …
Share of profit of associate companies … … … … …
Notes
3, 4, 5
6
3
8
14
PROFIT BEFORE TAXATION
… … … … … … …
3, 6
Tax on profit
… … … … … … … … …
PROFIT AFTER TAXATION… … … … … … … …
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
… … … … … … …
Non-controlling interests
PROFIT FOR THE YEAR … … … … … … … …
BASIC EARNINGS PER ORDINARY SHARE
… … … …
DILUTED EARNINGS PER ORDINARY SHARE … … … …
9
3
3
10
10
2019
£’000
127,046
(86,414)
40,632
-
(3,016)
(21,205)
2018
£’000
124,811
(89,143)
35,668
1,602
(3,359)
(20,331)
16,411
13,580
(234)
233
16,410
(3,963)
12,447
11,505
942
12,447
(590)
310
13,300
(3,865)
9,435
8,504
931
9,435
159.79p
118.11p
149.65p
118.11p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2019
PROFIT FOR THE YEAR … … … … … … … … …
OTHER COMPREHENSIVE (EXPENSE) / INCOME ITEMS THAT MAY BE
RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS:
Foreign exchange translation differences … … … … … …
…
Goodwill arising from purchase of minority interest in subsidiaries
… …
Effective portion of changes in fair value of cash flow hedges
…
Change in fair value of cash flow hedges transferred to profit or loss
Effective portion of changes in fair value of cost of hedging
… …
Change in fair value of cost of hedging transferred to profit or loss … …
Tax credit / (charge) on items that may be reclassified subsequently to
profit or loss … … … … … … … … … …
OTHER COMPREHENSIVE (EXPENSE) / INCOME FOR THE YEAR, NET
OF INCOME TAX
… … … … … … … … … …
TOTAL COMPREHENSIVE INCOME FOR THE YEAR … … … …
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … … …
… … … … … … … …
Non-controlling interests
The full financial statements and accompanying notes are on pages 39 to 92.
5
2019
£’000
12,447
(383)
(772)
(644)
180
(489)
49
154
(1,905)
10,542
9,528
1,014
10,542
2018
£’000
9,435
(152)
-
(294)
5,108
-
-
(818)
3,844
13,279
12,245
1,034
13,279
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 safety 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/2019.
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,
liquefied natural 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 decommissioning, the oil and gas industry, as well as large, global projects requiring
high integrity machined castings.
Goodwin International, the largest company in the mechanical engineering division, not only
designs and manufactures dual plate check valves, axial nozzle check valves and axial piston
control and isolation valves but also undertakes specialised CNC machining and fabrication work
for nuclear decommissioning projects. Goodwin International also has a division that is
focussed on manufacturing / machining high precision, high integrity components for naval
marine vessels. 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 (Easat) and its subsidiary,
NRPL, design and build bespoke high-performance radar antenna systems for the global market
of major defence contractors, civil aviation authorities and border security agencies. Easat has a
sister company, Easat Radar Systems India, that also manufacturers, sells and maintains radar
systems for air traffic control. 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
value from designing, manufacturing and selling investment casting powders, waxes and silicon
rubber to the jewellery casting industry. GRS also manufactures and sells investment casting
powders to the tyre mould and aerospace industries. The refractory engineering division has six
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 seven 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 4 to these financial statements, in the year to 30th April, 2019 the refractory
engineering division generated 40% of the Group’s operating profits and the mechanical
engineering division 60%. We had predicted that the 50/50 split, that was seen last year, would
likely be maintained in the financial year we have just completed, before it reverted to 40/60.
The refractory division did increase its trading profits by 7.2%, but the significant slow down in
China associated with the USA-Chinese trade dispute prevented our normal growth of 20%.
The mechanical engineering division increased its trading profits by 44%, this being associated
with significant improvement in the performance of our Indian pump company and the foundry
achieving a profit rather than a loss, as had been seen in the prior two years.
From the geographical segmentation report on page 58 of these Accounts it can be seen that
the revenue is fairly evenly spread between the Pacific Basin Countries, UK, Rest of Europe and
Rest of 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 6% but over the next two years we expect this to grow
significantly with sales to marine and air traffic control customers, which should further
enhance the diversity of our territorial market spread.
KEY PERFORMANCE INDICATORS
The key performance indicators for the business are listed below:
Gross profit as a %
of revenue
Profit before
tax (in £ millions)
Gearing % (excluding
deferred consideration)
Sales per employee
per year (in £’000)
Dividends proposed
(in £ millions)
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 2019
28.5
29.9
27.3
28.5
31.9
34.3
32.5
27.8
25.6
28.6
32.0
13.1
13.3
8.1
12.3
20.3
24.1
20.1
12.3
9.2
13.3 14.7*
(1.5)
1.8
22.1
25.9
23.3
5.0
11.7
25.6
31.4
10.8
20.0
128.4
112.4
105.5
113.7
125.7
124.1
111.8
105.4
114.0
119.8 117.4
4.0
2.0
2.1
2.3
3.8
3.0
3.0
3.0
3.0
6.0
6.9
*See note 3.
Alternative performance measures mentioned above are defined in note 36 on page 82.
The alternative performance measures are important to management and the readers of the
Annual Report in assessing the Group’s performance and benchmarking it within its respective
industries.
7
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
KEY PERFORMANCE INDICATORS (continued)
GROUP STRATEGIC REPORT
8
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
DIVIDEND POLICY
The dividend policy to pay 38% of post tax profits plus depreciation and amortisation remains
unchanged from last year. As detailed in the 2018 Annual Report, historically only 20% of post
tax profits plus depreciation and amortisation has been paid to the shareholders of the company
over the last twenty years. The proposed 2019 dividend, that is to be voted on at the Annual
General Meeting, has been calculated using the Group’s adjusted profit after taxation figure,
excluding the £1.35 million IFRS 15 impact, as reported in note 3 to these financial statements.
The Group’s strong ability to generate cash, coupled with the Board’s policy to limit its
investments, provides it with the capability to sustainably fund future payments.
Starting from 1st May, 2019 investment decisions relating to designing and developing new
products, buying technologically advanced manufacturing plant and machinery, setting up
overseas sales organisations and companies and/or buying complementary or competitive
companies will be limited to a maximum of 55% of post tax profits plus depreciation and
amortisation on a three year rolling annual average.
9
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 4 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 three 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 naval marine applications, military ship building, vermiculite and perlite to the insulating and
fire prevention industry 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.
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.
Supply chain and equipment risk: Failure of a major supplier or essential item of equipment presents a constant
risk of disruption to the manufacturing in progress. Where reasonably possible, management mitigates and controls
the risk with the use of dual sourcing, continual maintenance programmes, and by carrying adequate levels of stocks
and spares to reduce any disruption.
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 27 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 19 to 21.
10
GROUP STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
The Board’s assessment of the impact of Brexit on the Group
Brexit is not seen as a significant issue to the Group. We envisage minimal overall effect in the long-term within
our trading companies, as the majority of our trade has little direct interaction within Europe. A significant
proportion of our reported revenue to Europe, as set out within note 4, relates to bespoke capital contracts that
typically are installed into projects not within the EU, despite the customer being resident in the EU. Our UK imports
are not required on a just in time basis nor are they reliant on EU suppliers. Raw materials are primarily sourced
from vendors outside of the EU due to cost-effectiveness, with EU suppliers being a dual source for the supply
of critical items.
Furthermore, a growing proportion of the Group’s workload consists of the supply of niche UK based capabilities
into long-term, strategically critical programmes located in the UK and the US where, regardless of the Brexit
outcome, both countries remain committed to playing a key role in domestic and global security. Nonetheless,
the Board continually monitors and assesses the potential risks of Brexit, by regularly consulting on the matter
with the Group’s management, suppliers, customers and reviewing and considering the diverse opinions, written
by many commentators, be they either for or against Brexit.
We see the impact of a no deal Brexit as a positive for the Group. In this scenario, whilst we would accept that the
reversion to default WTO tariff rates may impact negatively on our cost base, the Group is 70% an exporter to
ultimate customers outside Europe. The weakening of Sterling, that would be likely to happen as a result, would
further enhance the impact of our growing overseas companies’ profitability, and our ability to increase exports.
The below table details if and how various Brexit risks will impact the Group’s business model, performance,
solvency or liquidity.
Specific Risks
Potential Risks
Supply Chain
Friction
Explanation of the Board’s assessment
of the potential impact
Mitigation / Management
The majority of products supplied into Europe are
consumables. Whilst customs issues may cause some
delays the goods supplied are relatively low value and
customers would build up stocks. We also have the ability
to supply these products from Thailand, China, India or
Brazil should the need arise to circumnavigate any possible
issues.
For products supplied from Europe to our UK subsidiaries,
in all cases we have a viable non-EU dual source option.
The Group has built flexibility
to respond to changes in the
operating environment by
assessing supplier readiness,
investigating alternative
domestic supply, globally dual
sourcing and increasing logistics
options.
Effect of changes
in import / export
taxes
With the Group’s widespread customer base and local
manufacturing structure, if World Trade Organisation
(WTO) tariffs are imposed the impact is not anticipated to
be material to the Group’s results. We expect that any
increased costs will likely be offset by the further devaluation
of the pound Sterling (the positive impact on sales prices
would exceed the impact of adverse movements in the cost
base), where our imports generally represent 35% of our
total costs to manufacture in the UK.
Management of customers’
expectations and contract
negotiation to protect against
incremental costs and potential
contractual delays. Over the next
seven years we expect that the
UK / US trading relationship
tariffs to be a far higher agenda
item than the UK’s relationship
with Europe.
11
GROUP STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
The Board’s assessment of the impact of Brexit on the Group (continued)
General Risks
Potential Risks
Macro Economic
Explanation of the Board’s assessment
of the potential impact
Mitigation / Management
In the event of a no deal Brexit, further currency devaluation
will only aid the Group’s global competiveness and increase
the reported net worth and the Sterling value of dividend
receivables from the overseas companies.
It is the Group’s policy to hedge
material transaction based
currency exchange exposures.
Movement of
Labour
The Group is not dependent on low skilled labour and it
will not be affected by its shortage in the event that the
movement of EU citizens is restricted.
We continue with our 25 per year
apprentice hiring programme,
which has local accolade.
Regulatory and
Policy
With the Group’s product offerings and the commencement
of major UK and US programmes, the Board considers the
Group is well protected against regulatory change and the
loss of market access upon which other businesses may be
reliant.
N/A
Tax
Financing
The Group does not rely on double taxation treaties and
cash flow impacts as a result of potential changes in VAT
are insignificant.
Regular assessment and
sensitivity testing.
Liquidity risks are mitigated with the use of three
independent banks, committed facilities, and staggered
renewal dates (see note 27).
The Board has assessed the
Company’s banks’ health and
continually monitors their
Brexit exposure and strategy.
The Brexit related sensitivity or scenario testing has not indicated that there are any impairment, viability or
going concern issues.
12
GROUP STRATEGIC REPORT
Greenhouse Gas (“GHG”) emissions
CORPORATE SOCIAL RESPONSIBILITY
Environmental pollution and emissions are a major challenge across all manufacturing, specifically steel foundries.
More than 70% of Goodwin PLC’s greenhouse gas (GHG) emissions are geogenic in that they were released during
processes of melting steel.
With the foundry returning to profitability, the Group has seen a substantial increase, nearly double, in production
of advanced steels using nitrogen, the processing of which has involved higher N2O affecting our scope 1 direct
emissions. Nonetheless the direct scope 1 emissions has been limited to a 16% increase, down 28% versus four
years ago when turnover was at a similar level.
Understanding the context is essential to comprehend the impact to the wider society and the global effort to curb
climate change.
The products supplied by the foundry to the global energy generation markets are at the forefront of technology
that benefits its users via the dramatically reduced emission levels at which energy can be generated within the
modern turbines and power generation equipment that can be built with Goodwin products.
Nonetheless the company continues to seek ways in which to reduce its energy use and greenhouse gas emissions
footprint, using robotics, enhanced waste management and efficient energy production yields.
Since 2011, we have been reporting on the increase / decrease in our CO2 emissions, and this is our fifth GHG
emissions report in line with the latest UK reporting requirements.
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, 2019 and 30th April,
2018. We have used the reporting guidance set out by the BEIS and DEFRA environmental reporting guidelines for
2018 (expiry 31st July, 2019), and used the methodology set out therein, to report our Scope 1 and Scope 2 emissions.
Overseas electricity factors have been taken from IEA ©OECD/IEA 2018, 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.
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
2019
Tonnes of CO2e
2018
Tonnes of CO2e
39,351
7,144
46,495
372
33,840
7,794
41,634
334
Donations
The Company made no political donations during the year (2018: £nil).
Donations by the Group for charitable purposes amounted to £65,015 (2018: £53,079). 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
During the year a new “Safety Spectrum” initiative has successfully been rolled out across the Group. The initiative
has and will continue to drive awareness at all levels, to ensure all employees can assess situations appropriately,
are empowered to take action and can communicate to continually improve for everyone’s safety.
Following on from last year’s Annual Report, we are pleased to report that four of the subsidiaries have achieved
the new global health and safety standard, ISO45001, in addition to Goodwin International being awarded ROSPA
Gold in the year.
13
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Health and Safety (continued)
With the appointment of additional health and safety personnel throughout the group, the transition from 18001
for the remaining entities is successfully underway, alongside the continual programme of safety improvements,
maintaining a safe working environment.
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.
Ethics and Sustainability
We are committed to conducting business responsibly and ethically. We endeavour to ensure that our staff, suppliers
and business partners adopt the same or similar high ethical standards and values. This applies, but is not limited
to human rights, modern slavery, ant-bribery and corruption.
Continual training is carried out to all relevant staff and a variety of third party evaluation services are used on an
ongoing basis for agents and other business relationships. 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. This is all enhanced by an anonymous whistle-blowing system.
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, 2019
Main Board and Company Secretary
Senior Management
Employees
Total
Breakdown by age
Year ended 30th
April, 2019
Main Board and
Company Secretary
Senior Management
Employees
Total
Age
16 to
21
0
0
77
77
%
0%
0%
8%
7%
Male
8
66
825
899
%
80%
92%
82%
83%
Female
2
6
175
183
%
20%
8%
18%
17%
Total
10
72
1,000
1,082
Age
22 to
40
6
16
471
%
60%
22%
47%
Age
41 to
65
2
55
436
493
46%
493
46%
%
Age
Over 65
%
Total
20%
77%
44%
2
1
16
19
20%
1%
1%
1%
10
72
1,000
1,082
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 22nd August, 2019 and is signed on its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
14
S. R. Goodwin
Director
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS
The Directors have pleasure in presenting their reports and audited financial statements for the year ended
30th April, 2019.
The Directors have presented their Group Strategic Report on pages 3 to 14. 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 10, and the Corporate Social Responsibility Report on pages 13 and 14.
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 96.21p per share (2018: 83.473p) be paid to shareholders on
the register at the close of business on 6th September, 2019. If approved by shareholders, the ordinary dividend
will be paid to shareholders on 4th October, 2019.
Directors
The Directors of the Company who have served during the year are set out below.
(Resigned from Board 30th April, 2019)
(Resigned from Board 30th April, 2019)
J. W. Goodwin
R. S. Goodwin
M. S. Goodwin
S. R. Goodwin
T. J. W. Goodwin
J. Connolly
S. C. Birks
B. R. E. Goodwin
J. E. Kelly (Non-Executive Director)
The new Chairman and the two new Managing Directors, who were appointed to office on 1st May, 2019, are each
individually having their new appointments voted on at the Annual General Meeting by shareholders, as itemised
on the Annual General Meeting agenda. Going forward, the Chairman and the Managing Directors will not retire
by rotation.
The Directors retiring in accordance with the Articles are Mr. J Connolly, Mr. S. C. Birks and Mr. B. R. E. Goodwin
who, being eligible, offer themselves for re-election.
No Director has a service agreement with the Company, nor any beneficial interest in the share capital of any
subsidiary undertaking. The Chairman does not have any other significant external appointments.
Shareholdings
The Company has been notified that as at 15th August, 2019, the following had an interest in 3% or more of the
issued share capital of the Company:
J. W. and R. S. Goodwin 2,129,153 shares (29.57%), J. W. and R. S. Goodwin 1,361,486 shares (18.91%). These shares
are registered in the names of J. M. Securities Limited and J. M. Securities (No. 3) Limited respectively. J. H. Ridley
500,647 shares (6.95%), Rulegale Nominees (JAMSCLT) 344,984 shares (4.79%).
In line with LR 9.2.2AB R, relating to Controlling Shareholders, the Company confirms that a written and legally
binding agreement is in place, which complies with the provisions set out in LR 6.5.4 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 26 to the financial
statements on page 72.
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.
15
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Share capital (continued)
Following the passing of a Resolution at the Company’s Annual General Meeting 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. The LTIP earn-out for each of
the eight Directors, who were eligible under the scheme, when it was approved, is 61,200 shares each and these
are exercisable within five years from 1st May, 2019. As at 5th August, 2019, no Director has exercised or sold any
of the shares that he has been awarded under the LTIP scheme.
Research and development
The Group invests significantly in research and development. Announced earlier in the year, Goodwin Refractory
Services has developed the world’s first ‘respirable silica free’ investment casting powder for the global jewellery
industry.
Further investments included enhancements to our submersible slurry pumps range, 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 and the Chair of
the Audit Committee and Audit Committee members 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
The Directors, after having reviewed the projections and possible challenges that may lie ahead, believe that,
armed at the year end with £15 million of unutilised committed facility, there is a reasonable expectation that the
Group has adequate resources to continue in operational existence for at least 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
In accordance with provision C.2.2 of the Governance Code the Directors have assessed the Group’s viability over
a three year period to 30th April, 2022.
While the Board has no reason to believe that the Group will not be viable over a longer period, the Board believes
that a three year period is prudent, whilst providing the readers of the report with a sensible degree of confidence.
The assessment has taken into account the Group’s current position, committed long-term financing and its visibility
of the operational workload with the potential impact of the principal risks and uncertainties documented within
the Group Strategic Report, resulting in the Directors’ confirmation that they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities as they fall due during this period.
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:
T. J. W. Goodwin
Chairman
22nd August, 2019
16
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT
Introduction
The Board comprises six Directors and an independent Non-Executive Director; the Audit Committee comprises the
Non-Executive Director who is the Audit Committee Chair, and three other members, the previous Chairman, the
previous Managing Director and the previous Company Secretary, all of whom had held these positions for the
past twenty-seven years and have very substantial knowledge and experience of the diversified Group’s people,
product ranges and the very diversified overseas markets in which the Group operates. 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 four years the Company has had one Non-Executive Director who is also the Chair of the Audit
Committee, which has three other members as described above. 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 Chair 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 Directors 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 Directors 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 ten times, and details of attendees at these meetings are set out below:
J. W. Goodwin (Chairman) … … 9 out of 10 attended (Resigned from Board 30th April, 2019)
R. S. Goodwin (Managing Director) … 9 out of 10 attended (Resigned from Board 30th April, 2019)
M. S. Goodwin … … … … 10 out of 10 attended
S. R. Goodwin … … … … 9 out of 10 attended
T. J. W. Goodwin … … … … 9 out of 10 attended
J. Connolly … … … … … 10 out of 10 attended
S. C. Birks … … … … … 9 out of 10 attended
B. R. E. Goodwin … … … … 9 out of 10 attended
J. E. Kelly … … … … … 7 out of 10 attended
The Chairman and Managing Directors 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 (Chair), J. W. Goodwin, R. S. Goodwin and P. Ashley
and the Audit Committee reports to the Board. The Audit Committee has met formally nine times since the issue of
the Annual Report for the year ended 30th April, 2018, with all members attending each meeting. The responsibility
of the Audit Committee is explained in the Audit Committee Report on pages 19 to 21. 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.
17
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
Board evaluation
The Managing Directors, Chairman and Audit Committee 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 Directors, Chairman and Audit Committee, by way of personal
discussions and individual performance evaluation.
All Directors have reasonable access to the Company Secretary and to independent professional advice at the
Company’s expense.
External audit
The external auditor is appointed annually at the Annual General Meeting. The Board, following review and
recommendations received from the Audit Committee, considers the re-appointment of the auditor, and assesses
on an annual basis the qualification, expertise, cost, independence and objectivity of the external auditor. In addition,
the Audit Committee monitors the level of non-audit services provided to the Group by the external auditor to ensure
that their independence is not compromised.
Disclosure of information to 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 all the steps that he or she ought to have taken as a director to make himself or herself 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 19 to 21. 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, head of legal, health and safety committee 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 ongoing to endeavour 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:
T. J. W. Goodwin
Chairman
22nd August, 2019
18
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.
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 Chair 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, 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, and/or by a Main Board Director, for meetings with the General Managers and Senior
Management with reports sent back to the Audit Committee. Members of the Audit Committee are involved in
regular discussions with the Directors, 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, 2019 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
subsidiaries; reviews quarterly 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.
19
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
2019 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, Steven Birks,
a Goodwin PLC Director, continues to mentor each subsidiary in enhancing their risk analysis and controls and
reports to the Audit Committee. He spends one day per week on this task, focussing initially on overseas
companies, and areas being scrutinised 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 of the effectiveness of Know Your Customer (KYC), credit insurance, political risk insurance and contract
terms and conditions has been completed. Gallagher have recently been appointed to carry out a review of
insurance policies in place at the overseas subsidiaries and comment on any areas of concern.
Market risk
This remains as stated last year and, upon review, no customer accounts for more than 10% of the annual
Group turnover. The country and sector dependency for the year is shown by the charts on the Investor’s
section of the Company website, www.goodwin.co.uk/2019.
Technical risk
The performance of new products issued to market always has a degree of risk until a multi-year track record
has been attained. This statement relates to all Group companies in both the Mechanical and Refractory
Engineering Divisions.
Product failure/contract risk
This has been reviewed and is unchanged from that previously stated.
Acquisitions
As reported in note 13, the Group at the end of the current financial year acquired the equity interests of a minority
interest stakeholder in Ultratec, Ying Tai, Jewelry Plaster, and Asian Industrial with the latter two companies
moving from associated companies to subsidiary companies of the Group as a result of the purchase.
No further company acquisitions have been made in the year.
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
The Audit Committee continues to monitor regulatory compliance, training and competency. The Committee
is aware of the recently enacted Climate Change Act 2008 (2050 Target Amendment) Order 2019 and will be
reviewing its impact on the Group.
During the year UK Managing Directors, General Managers and accountants attended a training presentation
given by Price Waterhouse Cooper on IFRS 15, the new Revenue Recognition standard.
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 continues.
During the year the Audit Committee continued to monitor the risks posed affecting information security and
the steps taken to minimise these.
The Audit Committee also reviews and comments 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. Gross proposed
or actual capital expenditure of all Group companies is also reviewed to help ensure the Board is aware of
how such expenditure will affect the limits agreed to be in place at the time.
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.
20
DIRECTORS’ REPORTS
3. The Group’s external auditor
AUDIT COMMITTEE REPORT (continued)
KPMG LLP has been the Group’s auditor for more than twenty years and whilst, during this time, no formal
competitive tender process has taken place, the Directors (historically) and the Audit Committee have, until this
year, considered 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 has now
obtained competitive tenders for its audit services and will change within the next two 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 independence and the effectiveness
of the audit process, and has recommended to the Board to propose the re-appointment of KPMG LLP as the
external auditor at the Annual General Meeting on 2nd October, 2019.
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 of internal audit has been set by the Audit Committee and the results 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 Directors.
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, 2019.
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:
The impact of the new Accounting Standards, IFRS 9 and IFRS 15, has been considered by the Audit
Committee. The latter of these is seen as a key estimate / judgement area for the Audit Committee. Under
certain circumstances, IFRS 15 mandates that revenue and profit be recognised in the profit and loss
account before the goods are actually shipped, which may lead to corrections in subsequent periods. This
impacts on companies within our Mechanical Engineering segment where we have bespoke contracts
which carry termination for convenience clauses inclusive of profit in the event of a customer contract
cancellation. The consequence here is that the Standard mandates that we take profit on our work in
progress and show the result as revenue despite the goods not being shipped. The Audit Committee’s
key concern here is the risk that estimates and judgements made in good faith at the balance sheet
date may lead to adjustments in subsequent periods.
Having considered IFRS 9, we do not see this as a key estimate / judgement area. Given that our debts are
credit insured where possible and our historical incidence of bad debts is low we envisage little impact
from the Standard on fair valuing our trade debtors. Also the hedging mechanics within IFRS 9 are similar
to the requirements under its predecessor IAS 39 in terms of the impact on our financial statements.
J. E. Kelly
Chair of the Audit Committee
22nd August, 2019
21
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 required 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. The LTIP scheme completed on 30th April, 2019 and resulted in the Directors being
awarded 61,200 shares each out of a possible 72,000 for the three year period. No new LTIP scheme is being
considered or proposed.
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
2018/2019
The Managing
Director sets the
base increase in
salaries. For the
period May, 2018
to April, 2019,
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 and
achievement
within the Group,
their knowledge
and experience of
the Company’s
activities or similar,
the performance
of the Group
versus market
opportunity, whilst
also considering
the salary needed
to ensure continuity
of employment.
No bonus strategy
or incentive is
agreed or
contractual with
any Director.
Should any be
awarded, it is
discretionary and
generally between
0% and 25%, but
with a maximum of
60%, as determined
by the Managing
Director and audited
by the Chairman.
22
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
DIRECTORS’ REPORTS
Element of
Pay
Equity Long Term
Incentive Plan
Purpose and
Link to Strategy
Reflects the
Directors’
contribution to
achieving growth
in shareholder
value.
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.
Operation
Maximum
Performance
Targets
Changes for
2018/2019
Awards entitled
each holder to
earn up to 1% of
the share capital
of the Company
subject to the
performance
condition.
Awards have been
granted in the
form of options
with an exercise
price equal to the
nominal value of
a share. Options
vested and
became
exercisable
following 30th
April, 2019 but
only subject to
performance
measured at that
time.
An Award vested
and became
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.
Monthly
payments
Currently 3%
of gross
remuneration
N/A
N/A
N/A
N/A
The LTIP has ended
and options have
vested as outlined
on page 28.
No changes.
This policy
was adopted
in October 2013
for the Directors
and entire UK
workforce.
See details of the
Directors’
emoluments on
pages 27 and 28.
We believe the above meets the requirement of Schedule 8, Companies Act 2006, regarding the changes in 2018/19.
The Policy and Report is signed by the Chairman and the Managing Directors.
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 twenty 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
(13.8)%
336.9%
9,259.8%
FTSE 100
33.1%
154.8%
127.5%
FTSE 350
34.8%
166.1%
159.2%
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 all of
which are only just starting to recover. 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.
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 Directors and
the Chairman.
23
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 than it will be reported in the Annual Report 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, the Annual General Meeting and the votes therein.
24
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 22 to 24.
The Policy has been followed in the financial year to 30th April, 2019, 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 Directors
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 … … … … … … … … …
2019
£’000
6,927
… … … … … … … … … 41,189
1,082
2018
£’000
6,010
37,137
1,042
%
15.3%
10.9%
3.8%
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, 2018 was put to the shareholders at last year’s Annual General Meeting on 3rd October, 2018. The
Annual Directors’ Remuneration Report was accepted with 99.99% of proxy votes cast in favour.
Total shareholder return – unaudited
The following graphs compare the Group’s total shareholder return over the ten and twenty years ended 30th April,
2019 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 3.1% from the previous year.
The total earnings of the Managing Director for the last five years are:
2015
£’000
2016
£’000
2017
£’000
2018
£’000
2019
£’000
374
369
368
385
397
Total payroll costs, excluding the Managing Director’s salary, have increased by 10.9% which is a reflection of
internal promotion and the policy of hiring additional senior managers, Directors and employees to smooth the
transition to higher levels of Group activity. During the year, the base increase awarded to employees in the
UK companies was 3.1 %.
The following graphs have not been audited.
25
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Goodwin Total Shareholder Return (TSR)
10 Years Ended 30th April, 2019
e
g
n
a
h
C
%
e
v
i
t
a
l
u
m
u
C
600
500
400
300
200
100
0
A pril 2009
12,000
10,000
8,000
6,000
4,000
2,000
e
g
n
a
h
C
%
e
v
i
t
a
l
u
m
u
C
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
A pril 2019
Goodwin Total Shareholder Return (TSR)
20 Years Ended 30th April, 2019
G
G
Goodwin
FTSE 100
FTSE 350
Small Cap
Ind and Eng
MD Earnings
Goodwin
FTSE 100
G
FTSE 350
Small Cap
Ind and Eng
MD Earnings
0
A pril 1999
A pril 2001
A pril 2003
A pril 2005
A pril 2007
A pril 2009
A pril 2011
A pril 2013
A pril 2015
A pril 2017
A pril 2019
The increase in the Goodwin PLC share price since 1999 plus dividends re-invested would mean that £1.00 invested
in 1999 by the 30th April, 2019 would be worth £93.60. The increase in the share price since 2009 plus dividends
re-invested would mean that £1.00 invested in 2009 would at 30th April, 2019 be worth £4.37.
26
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 – audited
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
2018
2019
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
2,256
2,129,153
1,361,486
1,222
62,653
80,866
200
30,120
118,487
31,586
1,031
2,129,146
1,328,882
1,222
68,675
87,530
200
36,400
125,253
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, 2019 and 22nd August, 2019.
Details of individual emoluments and compensation – audited
The following parts of the Remuneration Report are subject to audit.
Single Total Figure Table Salary Benefits Non-Exec Pension
contrib-
Year ended 30th April, 2019
utions
2019
2019
£’000 £‘000
397
397
239
251
233
143
138
147
52
2019
£’000
337
J. W. Goodwin … … … …
339
R. S. Goodwin … … … …
204
J. Connolly … … … … …
219
M. S. Goodwin … … … …
210
S. R. Goodwin … … … …
116
S. C. Birks … … … … …
123
B. R. E. Goodwin … … … …
132
T. J. W. Goodwin … … … …
-
J. E. Kelly … … … … …
in kind Director’s
fees
2019
£’000
-
-
-
-
-
-
-
-
52
2019
£’000
49
47
29
25
16
23
11
11
-
11
11
6
7
7
4
4
4
-
Sub-
total
LTIP*
Total
2019
£’000
1,940
1,940
1,940
1,940
1,940
1,940
1,940
1,940
2019
£’000
2,337
2,337
2,179
2,191
2,173
2,083
2,078
2,087
- 52
Total
… … … … …
1,680
211
52
54 1,997 15,520 17,517
* The LTIP column relates to the vesting of the 2016 Equity Long Term Incentive Plan award on 1st May, 2019, based
on the ten year performance ended 30th April, 2019. As required by reporting rules, the values in the April 2019
column are calculated on the actual value of vesting of the performance award in April 2019, using the average share
price of £31.70 on the 30th April, 2019 and an opening share price on 1st May, 2019 of £32.38. The value attributed
for each Director cannot be taken all in year one, and by the rules of the LTIP scheme, any Director must take the
value over a three to five year period, with no more than one third of the value taken in any one calendar year.
27
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Details of individual emoluments and compensation – audited (continued)
Single Total Figure Table
Year ended 30th April, 2018
Salary
Benefits
in kind
2018
£’000
J. W. Goodwin … … … … … 325
R. S. Goodwin … … … … … 325
J. Connolly … … … … … … 193
M. S. Goodwin … … … … … 202
S. R. Goodwin … … … … … 209
S. C. Birks … … … … … … 110
B. R. E. Goodwin … … … … … 116
T. J. W. Goodwin … … … … … 121
-
J. E. Kelly … … … … … …
Total
… … … … … … 1,601
2018
£’000
49
49
31
26
14
22
13
15
-
219
Non-Exec
Director’s
fees
2018
£’000
-
-
-
-
-
-
-
-
51
Pension
contrib-
utions
2018
£’000
11
11
6
6
6
3
3
4
-
Sub-
total
2018
£’000
385
385
230
234
229
135
132
140
51
LTIP
Total
2018
£’000
-
-
-
-
-
-
-
-
-
2018
£’000
385
385
230
234
229
135
132
140
51
51
50
1,921
-
1,921
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) – audited
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.
Share options under the LTIP were granted on 5th October, 2016, giving each Director the ability to earn up to a
maximum of 1% of the issued share capital, subject to the Company TSR performance, as at 30th April, 2019.
The share price on 5th October, 2016 was £22.20 and, as at that date, an external valuer using computerised
statistical modelling techniques fair valued the cost to the Company of the incentive scheme at £2.66 million.
Subject to performance measured as at 30th April, 2019, options would vest and become exercisable at that time.
An award would vest at the rate of 0.05% of the share capital of the Company for every 10% increase in the TSR of
the Company, as compared with the TSR at 30th April, 2019, but excluding the growth already achieved up to
30th April, 2016.
Each 10% growth attainment would equate to 3,600 shares for each Director with no pro-rata shares granted
between one growth band and the next.
The Company has no follow-on LTIP incentive plans in place or proposed.
Performance outcomes for the financial year ended 30th April, 2019:
The TSR growth between 30th April, 2009 and 30th April, 2019 was 337% corresponding with share prices of £9.23
and £31.70 respectively. The TSR growth as at 30th April, 2016 was 166% giving an LTIP performance growth of
171%. Therefore the target for the 2016 LTIP has been partially met, vesting 85% of the awards granted, entitling
each of the eight Directors to 61,200 shares (17 x 3,600 = 61,200).
The Board is confident that the amount vested is reflective of the long-term value delivered to the business.
The depth and length of the oil and gas downturn has been greater than originally expected, nonetheless the
hard work of the leadership team has provided new products and customers to put the Company in an improved
advantageous position.
The following table sets out the awards made to each of the Executive Directors under the Company’s LTIP for
the performance period 2009-2019.
Director at 30th April,
2019
Financial measure
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
Total
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
TSR performance-based
TSR performance-based
TSR performance-based
TSR performance-based
TSR performance-based
TSR performance-based
TSR performance-based
TSR performance-based
Number Achieved Number
of share award % of share
options options
61,200
72,000
61,200
72,000
61,200
72,000
61,200
72,000
61,200
72,000
61,200
72,000
61,200
72,000
61,200
72,000
85%
85%
85%
85%
85%
85%
85%
85%
576,000
489,600
28
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Equity Long Term Incentive Plan (LTIP) – audited (continued)
Performance outcomes for the financial year ended, 30th April, 2019:
On the 30th April, 2019 there was some fluctuation in the share price impacting the LTIP performance. Consequently,
in line with the scheme rules the Board has determined it appropriate in order to moderate the volatility to grant
the 2019 LTIP award based on an average share price. Both the two week prior TSR average and the prior twenty-
four hour TSR average provide the same 85% award outcome. This outcome also matches the opening price on 1st
May, 2019 when the price was £32.38
Total pension entitlements – unaudited
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 employee also contributes a minimum of 4% of remuneration to his/her fund. 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 22nd August, 2019 and is signed on its
behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
29
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 they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic alternative but to do so.
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 Strategic Report,
Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies 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 Directors Report and Accounts
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 or loss 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 Directors 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.
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
22nd August, 2019
30
INDEPENDENT AUDITOR’S REPORT
to the members of
Goodwin PLC
31
32
33
34
35
36
37
38
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2019
CONTINUING OPERATIONS
Revenue … … … … … … … … … …
3, 4, 5
127,046
Cost of sales
… … … … … … … … …
(86,414)
Notes
2019
£’000
GROSS PROFIT… … … … … … … … … …
Other income
… … … … … … … … …
6
Distribution expenses … … … … … … … …
Administrative expenses
… … … … … … …
40,632
-
(3,016)
(21,205)
2018
£’000
124,811
(89,143)
35,668
1,602
(3,359)
(20,331)
OPERATING PROFIT … … … … … … … … …
Financial expenses
… … … … … … … …
Share of profit of associate companies … … … … …
3
8
14
16,411
13,580
(234)
233
(590)
310
PROFIT BEFORE TAXATION
… … … … … … …
3, 6
Tax on profit
… … … … … … … … …
PROFIT AFTER TAXATION… … … … … … … …
9
3
16,410
(3,963)
13,300
(3,865)
12,447
9,435
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
Non-controlling interests
… … … … … … …
11,505
942
8,504
931
PROFIT FOR THE YEAR … … … … … … … …
12,447
9,435
BASIC EARNINGS PER ORDINARY SHARE
… … … …
DILUTED EARNINGS PER ORDINARY SHARE … … … …
10
10
159.79p
118.11p
149.65p
118.11p
The notes on pages 45 to 92 form part of these financial statements.
39
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2019
PROFIT FOR THE YEAR … … … … … … … … …
OTHER COMPREHENSIVE (EXPENSE) / INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS:
Foreign exchange translation differences … … … … … …
Goodwill arising from purchase of non-controlling interest in subsidiaries
Effective portion of changes in fair value of cash flow hedges
… …
…
Change in fair value of cash flow hedges transferred to profit or loss
Effective portion of changes in fair value of cost of hedging … … …
Change in fair value of cost of hedging transferred to profit or loss … …
Tax credit / (charge) on items that may be reclassified subsequently to
2019
£’000
12,447
2018
£’000
9,435
(383)
(772)
(644)
180
(489)
49
(152)
-
(294)
5,108
-
-
profit or loss … … … … … … … … … …
154
(818)
OTHER COMPREHENSIVE (EXPENSE) / INCOME FOR THE YEAR, NET
OF INCOME TAX
… … … … … … … … … …
(1,905)
3,844
TOTAL COMPREHENSIVE INCOME FOR THE YEAR … … … …
10,542
13,279
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … … …
Non-controlling interests
… … … … … … … …
9,528
1,014
10,542
12,245
1,034
13,279
40
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2019
Share-
Trans-
based
lation payment
reserve
£’000
reserve
£’000
Share
capital
£’000
Cash
flow Cost of
hedge hedging Retained
reserve earnings
£’000
reserve
£’000
£’000
Total
attributable
to equity
Non-
holders of controlling
interests
the parent
£’000
£’000
Total
equity
£’000
YEAR ENDED
30TH APRIL, 2019
Balance at 1st May, 2018 …
720
1,879
1,625
(224)
-
95,568
99,568
5,259 104,827
Adjustment on initial application
of IFRS 9 (net of tax)
…
Adjustment on initial application
of IFRS 15 (net of tax) …
ADJUSTED BALANCE
AT 1ST MAY, 2018
Total comprehensive income:
Profit … … … …
Other comprehensive income:
Foreign exchange translation
differences … … …
Goodwill arising from purchase
of NCI interest in subsidiaries
Net movements on cash flow
hedges … … … …
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Equity-settled share-based
payment transactions …
Tax on equity-settled share-based
payment transactions …
Dividends paid … … …
Acquisition of NCI without
a change of control … …
Disposal of equity
investments
… …
Acquisition of subsidiary
with NCI
… … …
Capital contribution … …
BALANCE AT
30TH APRIL, 2019
-
-
-
-
-
-
52
-
(52)
-
-
-
-
-
(684)
(684)
(350)
(1,034)
720
1,879
1,625
(172)
(52) 94,884
98,884
4,909 103,793
-
-
-
-
-
-
-
-
-
-
-
-
-
(430)
(180)
-
(610)
-
-
-
(225)
-
-
-
-
-
-
1,220
2,146
-
-
-
-
-
11,505
11,505
942
12,447
-
-
-
-
-
-
-
(430)
(592)
(772)
47
-
25
(383)
(772)
(750)
(401)
(374)
-
(775)
(401)
(374) 10,913
9,528
1,014 10,542
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,126)
-
-
-
(262)
1,220
2,146
(6,126)
-
-
1,220
2,146
(451)
(6,577)
-
(1,750)
(1,750)
(225)
-
(262)
-
(225)
142
262
142
-
720
1,044
4,991
(573)
(426) 99,409
105,165
4,126 109,291
41
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
for the year ended 30th April, 2019
Share-
Trans-
based
lation payment
reserve
£’000
reserve
£’000
Share
capital
£’000
Cash
flow Cost of
hedge hedging Retained
reserve earnings
£’000
reserve
£’000
£’000
Total
attributable
to equity
Non-
holders of controlling
interests
the parent
£’000
£’000
Total
equity
£’000
YEAR ENDED
30TH APRIL, 2018
Balance at 1st May, 2017 …
720
2,154
601
(4,240)
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
-
-
-
-
-
-
-
(275)
-
(275)
-
-
-
-
-
-
1,024
-
-
-
4,016
4,016
-
-
-
-
-
-
-
-
-
90,201
89,436
4,225
93,661
8,504
8,504
931
9,435
-
-
(275)
123
(152)
4,016
(20)
3,996
8,504
12,245
1,034
13,279
-
(3,137)
1,024
(3,137)
-
-
1,024
(3,137)
720
1,879
1,625
(224)
- 95,568
99,568
5,259 104,827
42
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2019
NON-CURRENT ASSETS
… … … … … … …
Property, plant and equipment
Investment in associates
… … … … … … … …
Intangible assets… … … … … … … … … …
Other financial assets at amortised cost … … … … … …
CURRENT ASSETS
Inventories… … … … … … … … … … …
Contract assets … … … … … … … … … …
Trade receivables and other financial assets … … … … …
… … … … … … … … …
Other receivables
Derivative financial assets … … … … … … … …
Cash and cash equivalents … … … … … … … …
FINANCIAL STATEMENTS
Notes
12
14
15
17
16
5
17
18
27
19
2019
£’000
74,106
739
22,354
505
97,704
50,524
3,698
24,964
2,715
195
9,640
91,736
2018
£’000
69,154
1,963
21,138
728
92,983
28,850
6,046
20,053
1,861
364
7,485
64,659
TOTAL ASSETS … … … … … … … … … …
189,440
157,642
CURRENT LIABILITIES
Interest-bearing loans and borrowings … … … … … …
Contract liabilities
… … … … … … … … …
Trade payables and other financial liabilities … … … … …
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… … … … … … … … … …
20
5
21
22
23
27
24
20
24
25
10,198
18,002
20,570
4,771
204
1,693
2,356
261
58,055
20,486
232
1,376
22,094
80,149
12,468
212
17,858
8,821
500
1,535
1,174
184
42,752
5,775
329
3,959
10,063
52,815
NET ASSETS … … … … … … … … … … …
109,291
104,827
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital … … … … … … … … … …
Translation reserve … … … … … … … … …
Share-based payments reserve … … … … … … …
… … … … … … … …
Cash flow hedge reserve
… … … … … … … …
Cost of hedging reserve
… … … … … … … … …
Retained earnings
26
720
1,044
4,991
(573)
(426)
99,409
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
105,165
NON-CONTROLLING INTERESTS … … … … … … …
4,126
720
1,879
1,625
(224)
-
95,568
99,568
5,259
TOTAL EQUITY
… … … … … … … … … …
109,291
104,827
These financial statements were approved by the Board of Directors on 22nd August, 2019, and signed on its
behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
43
Company Registration Number: 305907
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2019
2019
£’000
2019
£’000
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
… … … … … …
…
Loss / (profit) 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 inventories … … … … …
Decrease / (increase) in contract assets … … … …
(Increase) / decrease in trade and other receivables … …
Increase in contract liabilities … … … … … …
Increase in trade and other payables
(excluding advance payments from customers)
… …
(Increase) / decrease in unhedged derivative balances … …
(Decrease) / increase in advance payments from customers …
CASH GENERATED FROM OPERATIONS
Interest paid
… … … … … … … …
Corporation tax paid … … … … … … …
Interest element of finance lease obligations … … …
NET CASH FROM OPERATING ACTIVITIES
… … …
12,447
5,819
1,312
234
66
13
(233)
1,220
3,963
24,841
(11,816)
1,361
(4,288)
3,452
1,965
(579)
(51)
14,885
(524)
(3,093)
(64)
11,204
2018
£’000
9,435
5,243
1,138
590
277
(1,568)
(310)
1,024
3,865
19,694
8,801
(6,046)
3,421
212
2,001
5,249
2,224
35,556
(665)
(3,703)
(89)
31,099
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
142
Acquisition of property, plant and equipment … … … (11,451)
Additional investment in existing subsidiaries … … …
(2,668)
Acquisition of controlling interest in associates net
…
of cash acquired… … … … … … … …
… … … … …
Acquisition of intangible asset
… … … …
Development expenditure capitalised
Dividends received from associate companies … … …
(425)
(315)
(1,500)
1,254
1,888
(9,010)
-
-
(378)
(3,334)
441
NET CASH OUTFLOW FROM INVESTING ACTIVITIES … …
(14,963)
(10,393)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital element of finance lease obligations
…
Proceeds from new finance leases … … … … …
Dividends paid … … … … … … … …
Dividends paid to non-controlling interests
… … …
Net proceeds from / (repayment of) loans and
(911)
424
(6,126)
(451)
committed facilities … … … … … … …
8,337
(865)
-
(3,137)
-
(12,044)
NET CASH INFLOW / (OUTFLOW) FROM FINANCING ACTIVITIES
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year … … …
… …
Effect of exchange rate fluctuations on cash held
CASH AND CASH EQUIVALENTS AT END OF YEAR (see note 19)
1,273
(2,486)
2,900
79
493
(16,046)
4,660
(1,483)
(277)
2,900
44
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 83 to 92.
The accounting policies set out below have, been applied consistently to all periods presented in these Group
financial statements, with the exception of revenue and the cost of derivatives in relation to cash flow hedges,
as outlined below.
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 2.
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 2019
In 2019 the following amendments had been endorsed by the EU, became effective and were, therefore,
mandated to be adopted by the Group:
•
•
IFRS 9 - Financial Instruments (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)
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)
Amendments to IFRS 2 – Classification and Measurement of Share-based Payment Transactions (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)
•
•
•
•
The adoption of IFRS 9 and IFRS 15 is discussed in note 3. The implementation of all the other 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.
Going concern
As outlined in the Statement of Directors’ Responsibilities on page 30, the financial statements have been
prepared on a going concern basis. The Group has performed strongly during the year, generating pre tax profits
of £14,728,000 (2018: £13,300,000), excluding the impact of IFRS 15 (see note 3). The net worth of the Group is
£109,291,000 (2018: £104,827,000). With significant unutilised bank facilities at 30th April, 2019 (see note 27), and
the trading prospects set out in the Chairman’s Statement, the Directors have no reason to believe that a
material uncertainty exists, that could cast doubt on the ability of the Company and the Group to continue
as a going concern for the foreseeable future.
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
45
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Basis of consolidation (continued)
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 statement of profit or loss within operating
profit.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling
at the dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
consolidation, are translated to Sterling at foreign exchange rates ruling at the balance sheet date. The revenues
and expenses of foreign operations are translated at an average rate for the period where this rate approximates
to the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from the translation of foreign operations are taken directly to the translation
reserve. They are released into the statement of profit or loss upon disposal of the foreign operation.
Financial instruments
Measurement
Trade receivables, which do not contain a significant financing component, are measured, initially, at the
transaction price. All other financial assets and liabilities are measured at fair value, on initial recognition.
Non-derivative financial assets are measured subsequently at amortised cost if the objective is to hold them
to collect contractual cash flows and their contractual terms include cash flows on specified dates, which are
payments of principal and interest.
Principal non-derivative financial assets and liabilities
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are recognised initially at the amount of consideration that is unconditional.
Trade receivables are held with the intention of collecting the contractual cash flows and are measured
subsequently, therefore, at amortised cost.
Other receivables
Other receivables principally comprise short-term tax balances and a loan to an associate company. Interest
is charged at commercial rates on long-term balances. After being recognised initially at fair value, other
receivables are measured, subsequently, at amortised cost. The carrying amount of other receivables is
considered to be a reasonable approximation of their fair value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, together with cash deposits with an original
maturity of three months or less. Included with cash and cash equivalents, for the cash flow statement
only, are bank overdrafts, which are repayable on demand and form an integral part of the Group’s cash
management.
Bank borrowings
Interest-bearing bank loans and overdrafts are measured initially at their fair value less attributable transaction
costs. They are carried, subsequently, at amortised cost and finance charges are recognised in the statement
of profit or loss over the contract term, using an effective rate of interest.
Trade and other payables
Trade and other payables are recognised initially at fair value, and are subsequently reported at amortised cost.
Impairment
The Group has elected to measure loss allowances for trade receivables and contract assets at an amount
equal to lifetime expected credit losses (ECLs). Specific impairments are made when there is a known
impairment need against trade receivables and contract assets. When estimating ECLs, the Group assesses
reasonable, relevant and supportable information, which does not require undue cost or effort to produce.
This includes quantitative and qualitative information and analysis, incorporating historical experience,
informed credit assessments and forward-looking information. Loss allowances are deducted from the
46
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Financial instruments (continued)
Impairment (continued)
gross carrying amount of the assets. Where material, impairment losses related to trade and other
receivables, including contract assets, are disclosed separately in the statement of profit or loss.
Derivative financial assets and liabilities
Derivative financial assets and liabilities are recognised at fair value. 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 adjusted for counterparty credit risk. The recognition
of the gain or loss on re-measuring to fair value those forward exchange contracts, which are used for hedging,
is outlined below; for other forward exchange contracts, the gain or loss is recognised in the profit or loss.
Fair value derivation
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).
The fair value of derivative financial assets and liabilities is derived using level 2 inputs.
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. Under the new general hedge accounting
model in IFRS 9, our hedge relationships are aligned with our risk management objectives and strategy, resulting
in a more qualitative and forward-looking approach in ensuring hedge effectiveness.
For cash flow hedges, the associated cumulative gain or loss is removed on the relevant derivative financial
instrument is removed from equity and recognised in the statement of profit and loss in the same period or
periods during which the hedged forecast transaction affects the statement of profit and loss. Any identified
ineffective portion of the hedge is recognised immediately in the statement of profit and loss. Only the change
in spot rate is designated as the hedging instrument, with the change in fair value relating to forward points
being reported separately as deferred costs of hedging within other comprehensive income as permitted by
IFRS 9. Given under IAS39 the cash flow hedge accounting utilised the forward point inclusive rate, there is no
significant impact on the accounts resulting from adopting the IFRS 9 general hedge accounting model.
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 cash flow hedge transaction is no longer expected to take place, the cumulative unrealised gain or loss
recognised in equity is recognised in the statement of profit or loss immediately.
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 statement of profit or loss 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 or cost
47
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
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 statement of profit or loss. 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 statement of profit or loss.
Goodwill or negative goodwill resulting from increasing the percentage ownership of an existing subsidiary is
dealt with in other comprehensive income.
Expenditure on research activities is recognised in the statement of profit or loss 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 statement of profit or loss 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.
Amortisation is charged to the statement of profit or loss 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
Impairment of intangibles
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 statement of profit or loss.
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.
48
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
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 statement of profit or loss 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 note 6.
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 statement of profit or loss.
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
statement of profit or loss.
Revenue
Revenue is recognised when a customer obtains control of the goods or services i.e. upon the satisfaction of a
performance obligation. Judgement is required to determine the timing of the transfer of control, and whether it
is at a point in time or over time. Where a contract contains several performance obligations then the contract
is unbundled and each performance obligation is dealt with separately. The details of the new significant
accounting policies and the nature of the changes to previous accounting policies in relation to the Group’s
various goods and services are set out below.
Standard inventory product lines and consumables
Typically applies to the whole of the Group’s Refractories Engineering segment and the sale of slurry pumps
within the Mechanical Engineering segment. The revenue here relates to standard products manufactured for
sale. The performance obligation is satisfied and revenue taken at the point when customers obtain control
of the goods in accordance with the International Commercial (INCO) terms agreed or via a bill and hold
arrangement. For this revenue stream the treatment under IAS 18 and IFRS 15 is essentially the same in the
profit and loss account and the balance sheet.
Minimum period contracts for the provision of goods and services
Predominantly the supply of broadband and related services under minimum term contracts. Performance
obligations are satisfied over time and revenue is recognised equally over the term of the contract. Within
these contracts it is often the case that the service contract also contains hardware / software as part of the
monthly payments. Under IAS 18, any such hardware / software was amortised over the term of the contract.
Under IFRS 15, these contracts are unbundled with the fair value of the hardware / software taken as revenue in
month 1 by the creation of a contract asset, thus leaving the true service element to be taken as revenue over
the term of the contract. Prepayments under IFRS 15 are reduced because revenue from the sale of goods has
been taken in month 1.
Engineered bespoke products – performance obligations satisfied over time
Typically applies to the Group’s Mechanical Engineering segment and covers sales orders which are customer
bespoke but permit the Group subsidiary to claim profit earned to date if the customer were to trigger the
49
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Revenue (continued)
Engineered bespoke products – performance obligations satisfied over time (continued)
cancel for convenience clause within the contract. In such cases, the performance obligations are treated as
satisfied over time (i.e. as the contract progresses) and revenue is taken based on the percentage completion
of the contract by the creation of a contract asset. Under IAS 18 revenue was not taken until the goods were
despatched and until then were accounted for as work in progress (cost and production overhead recovery
only) and so work in progress under IFRS 15 is eliminated and replaced by a contract asset which includes
profit, where applicable. Measuring progress requires judgement as to the stage of completion of each job,
and the production of forecasts, which contain allowances for technical risks and inherent uncertainties.
Engineered bespoke products – performance obligations satisfied at a point in time
Typically applies to the Group’s Mechanical Engineering segment and covers sales orders which are customer
bespoke, but permit the Group subsidiary to claim only for costs in the event the customer triggers the cancel
for convenience clause within the contract. In such cases, the performance obligation is deemed to be met and
revenue taken as order lines are shipped in accordance with the relevant shipping terms or via a bill and hold
arrangement. For this revenue stream the treatment under IAS 18 and IFRS 15 is essentially the same.
The incremental costs of obtaining a contract are recognised as an expense, as occurred, when the contract period
is less than one year.
Contract assets represent the Group’s rights to consideration for work completed but not invoiced at the
reporting date for bespoke products contracts. Contract assets are transferred to receivables when the rights
to consideration become unconditional, which is generally when the Group invoices the customer. Where
payments are received in advance and exceed the costs incurred in constructing the asset together with
forecast margin earned, the balances are disclosed as contract liabilities.
Leases
Operating lease payments
Payments made under operating leases are recognised in the statement of profit or loss on a straight-line basis
over the term of the lease. Lease incentives received are recognised in the statement of profit or loss 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 statement of profit or loss as it accrues.
Employment costs
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 statement of profit or loss 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.
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 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.
50
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of
profit or loss 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:
•
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, 2019)
Amendments to IAS 28 – Long-term Interests in Associates and Joint Ventures (effective for annual periods
beginning on or after 1st January, 2019)
Annual Improvements to IFRSs – 2015-2017 Cycle – minor amendments to IFRS 3, IFRS 11, IAS 12 and IAS
23 (effective for annual periods beginning on or after 1st January, 2019)
Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement (effective for annual periods beginning
on or after 1st January, 2019)
•
•
•
•
•
The Group has considered the impact of these new standards and interpretations in future periods on profit,
earnings per share and net assets. With the exception of IFRS 16, none of the other standards or interpretations
is expected to have a material impact.
The Group will adopt the modified retrospective approach, such that comparative information will not be restated,
but will continue to be reported under IAS 17 and IFRIC 4. The implementation of IFRS 16 is expected to increase
total assets by approximately £1.1 million for right of use assets, and to increase total liabilities by £1.1 million
in lease liabilities. The impact on profit is expected to be insignificant. In calculating the impact of IFRS 16,
judgement has been required to choose appropriate interest rates for discounting the lease payments.
The Group intends to apply the exemption for lease payments associated with short-term leases and leases
of low-value assets, to recognise these as an expense, on a straight-line basis, over the lease term, and not to
recognise right-of-use assets and lease liabilities.
2. Accounting estimates and judgements
The Group makes judgements and estimates in applying the Group’s accounting policies, to prepare the financial
statements.
Key estimate / judgement
IFRS 15 Revenue Recognition
The Directors consider that a key estimate, which may have a material impact on the financial statements, is in
relation to IFRS 15 and, in particular, where we are mandated to account on a revenue over time basis on
some of our mechanical engineering work in progress contracts. When reviewing the terms of contracts with
customers, judgement is required to assess the number of performance obligations within the contracts and
when to recognise contract provisions.
For contracts where revenue is recognised over time, there is a need to estimate the costs to complete on
these contracts. The costs to complete estimates can be complex, as they need to consider several variable
factors such as the impact of delays, cost overruns and also any variations to contract. Once complete, these
estimates then drive the amount of revenue recognised. The estimates are prepared and reviewed by
management with suitable experience and qualifications, and who endeavour to ensure the revenue
mandated to be recognised prior to the completion of the contract is not overstated, based on possible
technical risks and inherent uncertainties.
51
NOTES TO THE FINANCIAL STATEMENTS
2. Accounting estimates and judgements (continued)
Key estimate / judgement (continued)
IFRS 15 Revenue Recognition (continued)
Whilst any estimates are based on management’s best knowledge at the time, it is clear, due to the very nature of
an estimate, that the eventual outcomes may differ from the estimates, due to unforeseen events. Any revisions
arising from deviations in estimates are recognised in the period during which the revision arises or future
periods, as appropriate.
Other estimates / judgements
Other than as reported above, the Directors do not consider there to be any 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.
Inventory provisions
The Group's Directors in conjunction with senior management in the subsidiaries regularly review the
recoverability of their stated raw material and work in progress balances, paying particular attention to net
realisable value and stock obsolescence issues. The estimates are in relation to costs to complete and the
expected level of 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.
Trade receivable 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 27 (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. There is a requirement under
IFRS 9 to consider the statistical likelihood of a bad debt based off previous experience. Historically, the
Group’s bad debt write offs have been negligible and the Group results are not impacted by this requirement
for a statistically based provision.
3. Changes in significant accounting policies
IFRS 15 Revenue from contracts with customers
With effect from the 1st May, 2018, the Group, as required by law, has adopted the revised revenue accounting
standard, IFRS 15 Revenue from Contracts with Customers that has replaced IAS 18 Revenue, IAS 11 Construction
Contracts and related interpretations. IFRS 15 in certain instances, and as outlined within the revenue section of
note 1, materially departs from the way revenue and profits have previously been recognised by the Group.
In terms of the current year, the impact of the new Standard has been to increase the reported revenue by
£10.3 million and profit before taxation by £1.7 million, and therefore, if the Group were still reporting under
IAS 18 and IAS 11, the reported revenue would have been £117 million. The pre tax profits of £14.7 million
discussed in the Chairman’s Statement are on a like-for-like basis.
52
NOTES TO THE FINANCIAL STATEMENTS
3. Changes in significant accounting policies (continued)
IFRS 15 Revenue from contracts with customers (continued)
The following tables summarise the impacts of adopting IFRS 15 on the Group’s balance sheet as at 30th April,
2019, its statement of cash flows and its statement of profit or loss for the year then ended for each of the line
items affected. There was no impact on NCI.
Impact on the consolidated statement of profit or loss
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
… … … … … … … …
As reported Adjustments
£’000
£’000
Without the
adoption of
IFRS 15
£’000
127,046
(86,414)
40,632
(3,016)
(21,205)
16,411
(234)
233
16,410
(3,963)
(10,254)
8,572
(1,682)
-
-
(1,682)
-
-
(1,682)
333
116,792
(77,842)
38,950
(3,016)
(21,205)
14,729
(234)
233
14,728
(3,630)
Profit after taxation
12,447
(1,349)
11,098
Attributable to:
Equity holders of the parent … … … … … …
Non-controlling interests
… … … … … …
Profit for the period
11,505
942
12,447
(1,067)
(282)
10,438
660
(1,349)
11,098
53
NOTES TO THE FINANCIAL STATEMENTS
3. Changes in significant accounting policies (continued)
IFRS 15 Revenue from contracts with customers (continued)
Impact on the consolidated balance sheet
Non-current assets
Current assets
Inventories
… … … … … … … …
Contract assets … … … … … … … …
Trade and other financial assets … … … … …
Other receivables
… … … … … … …
Derivative financial assets … … … … … …
Cash and cash equivalents … … … … … …
As reported Adjustments
£’000
£’000
Without the
adoption of
IFRS 15
£’000
97,704
-
97,704
50,524
3,698
24,964
2,715
195
9,640
(9,500)
1,782
35
-
-
-
41,024
5,480
24,999
2,715
195
9,640
91,736
(7,683)
84,053
Total assets
… … … … … … … …
189,440
(7,683)
181,757
Current liabilities
Interest-bearing loans and borrowings … … … …
Contract liabilities
… … … … … … …
Trade and other financial liabilities… … … … …
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 … … … … … … … …
10,198
18,002
20,570
4,771
204
1,693
2,356
261
-
(12,413)
-
5,378
-
-
(333)
-
10,198
5,589
20,570
10,149
204
1,693
2,023
261
58,055
(7,368)
50,687
20,486
232
1,376
22,094
80,149
-
-
-
-
20,486
232
1,376
22,094
(7,368)
72,781
Net assets
… … … … … … … …
109,291
(315)
108,976
Equity attributable to equity holders of the parent
Share capital … … … … … … … …
Translation reserve … … … … … … …
Share-based payments reserve … … … … …
Cash flow hedge reserve … … … … … …
Cost of hedging reserve
… … … … … …
Retained earnings - opening … … … … … …
Retained earnings - current year movement … … …
Total equity attributable to equity holders of the parent
Non-controlling interests - opening
… … … …
Non-controlling interests - current year movement … …
720
1,044
4,991
(573)
(426)
94,884
4,525
105,165
4,909
(783)
-
-
-
-
-
684
(1,067)
(383)
350
(282)
720
1,044
4,991
(573)
(426)
95,568
3,458
104,782
5,259
(1,065)
Total equity
… … … … … … … …
109,291
(315)
108,976
54
NOTES TO THE FINANCIAL STATEMENTS
3. Changes in significant accounting policies (continued)
IFRS 15 Revenue from contracts with customers (continued)
Impact on the consolidated statement of cash flows
Cash flow from operating activities
Profit from continuing operations after tax
12,447
(1,349)
11,098
As reported Adjustments
£’000
£’000
Without the
adoption of
IFRS 15
£’000
Adjustments for:
Depreciation … … … … … … … …
Amortisation of intangible assets … … … … …
Financial expenses … … … … … … …
Foreign exchange losses … … … … … …
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 in inventories… … … … … … …
Decrease in contract assets … … … … … …
Increase in trade and other receivables … … … …
Increase in contract liabilities
… … … … …
Increase in trade and other payables (excluding advance
payments from customers) … … … … … …
Increase in unhedged derivative balances… … … …
… …
Decrease in advance payments from customers
Cash generated from operations
Interest paid
… … … … … … … …
Corporation tax paid … … … … … … …
Interest element of finance lease obligations … … …
Net cash from operating activities
… … … …
Cash flow from investing activities
Proceeds from sale of property, plant and equipment
…
Acquisition of property, plant and equipment … … …
Additional investment in existing subsidiary … … …
Acquisition of controlling interests in associates net of cash
Acquisition of intangible assets … … … … …
Development expenditure capitalised … … … …
Dividends received from associate companies … … …
Net cash outflow from investing activities … … …
Cash flows from financing activities
Payment of capital element of finance lease obligations …
Proceeds from new finance leases … … … … …
Dividends paid … … … … … … … …
Dividends paid to non-controlling interests … … …
Net proceeds from loans and committed facilities … …
Net cash inflow from financing activities … … …
Net 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 … … …
55
5,819
1,312
234
66
13
(233)
1,220
3,963
24,841
(11,816)
1,361
(4,288)
3,452
1,965
(579)
(51)
14,885
(524)
(3,093)
(64)
11,204
142
(11,451)
(2,668)
(425)
(315)
(1,500)
1,254
(14,963)
(911)
424
(6,126)
(451)
8,337
1,273
(2,486)
2,900
79
493
-
-
-
-
-
-
-
(333)
(1,682)
-
1,647
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,819
1,312
234
66
13
(233)
1,220
3,630
23,159
(11,816)
3,008
(4,253)
3,452
1,965
(579)
(51)
14,885
(524)
(3,093)
(64)
11,204
142
(11,451)
(2,668)
(425)
(315)
(1,500)
1,254
(14,963)
(911)
424
(6,126)
(451)
8,337
1,273
(2,486)
2,900
79
493
NOTES TO THE FINANCIAL STATEMENTS
3. Changes in significant accounting policies (continued)
IFRS 15 Revenue from contracts with customers (continued)
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is
recognised. It replaces IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations.
The main impacts of applying IFRS 15 initially vary according to the type of contract, and are the following:
- earlier recognition of revenue from some short and long-term engineered product contracts
- earlier recognition of revenue from the unbundling of minimum period contracts
- reduction in recognition of revenue from some long-term engineered product contracts
The Group has adopted IFRS 15 using the cumulative effect method with the effect of initially applying this
standard recognised at the date of initial application (i.e. 1st May, 2018). Accordingly, the information presented
for the year ended 30th April, 2018 has not been restated – i.e. it is presented, as previously reported, under IAS
18, IAS 11 and related interpretations.
The following table summarises the impact, net of tax, of the transition to IFRS 15 on retained earnings and
NCI at 1 May, 2018. The amounts shown reflect the change in the revenue streams, in which these contracts
have been reported for the year ended 30th April, 2018.
… …
Minimum period contracts for the provision of goods and services …
Engineered bespoke products – performance obligations satisfied over time … … …
…
Engineered bespoke products – performance obligations satisfied at a point in time
Less related tax … … … … … … … … … … …
Total impact on equity
Equity attributable to equity holders of the parent … … … … …
Non-controlling interests
… … … … … … … … …
…
…
…
…
…
…
…
…
…
…
£’000
76
533
(1,857)
214
(1,034)
(684)
(350)
(1,034)
IFRS 9 Financial Instruments
The adoption of IFRS 9 has not had a significant effect on the Group’s accounting policies for non-derivative
financial liabilities. The carrying values of financial assets have changed only marginally because the
impairment, calculated in accordance with the expected credit loss requirements, is insignificant.
The table below summarises the impact of the transition to IFRS 9 on reserves; there is no impact on non-
controlling interests. Since the impact is immaterial, the previous year’s balance sheet has not been re-stated.
As previously
reported Adjustments
£’000
£’000
Adjusted at
30th April
2018
£’000
Cash flow hedge reserve
… … … … … …
Cost of hedging reserve
… … … … … …
224
-
(52)
52
172
52
The classification of financial assets is shown in the following table.
Trade and other receivables … … … … …
Loans and receivables
Original classification
under IAS 39
New classification
under IFRS 9
Amortised cost
Forward exchange contracts used for hedging … …
Fair value – hedging
instrument
Fair value – hedging
instrument
Other forward exchange contracts … … … … At fair value through the
profit and loss (FVTPL)
At fair value through the
profit and loss (FVTPL)
Cash and cash equivalents
… … … … …
Loans and receivables
Amortised cost
The Group has credit insurance covering much of its trade receivables balance, and the historical experience is
that credit losses incurred have been low. For these reasons, trade receivable and contract asset balances
have not been restated.
56
NOTES TO THE FINANCIAL STATEMENTS
4. Segmental information
Products and services from which reportable segments derive their revenues
The Group has applied IFRS 15 initially at 1st May, 2018; the financial statements for the year ended 30th April,
2018 have not been restated but are presented, as previously reported, under IAS 18, IAS 11 and related
interpretations. IFRS 9 has also been applied initially at 1st May, 2018. Prior periods have not been restated
in accordance with the classification and measurement requirements of IFRS 9, because the Group has applied
the exemption outlined in paragraph 7.2.15 of IFRS 9.
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
Year Ended 30th April
Revenue
Mechanical
Engineering
Refractory
Engineering
Sub Total
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
External sales … … … …
Inter-segment sales … … …
82,375
21,714
80,661
18,839
44,671
44,150
127,046
124,811
8,726
8,354
30,440
27,193
Total revenue … … … …
104,089
99,500
53,397
52,504
157,486
152,004
Reconciliation to consolidated revenue:
Inter-segment sales … … …
Consolidated revenue for the year
Year Ended 30th April
Profits
Operating profit including share
(30,440)
(27,193)
127,406
124,811
Mechanical
Engineering
Refractory
Engineering
Sub Total
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
of associates … … … …
11,932
8,282
8,070
Other income … … … …
-
-
-
7,528
1,602
20,002
-
15,810
1,602
Total
… … … … …
11,932
8,282
8,070
9,130
20,002
17,412
% 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 … … …
60%
48%
40%
52%
100%
100%
(2,138)
(1,220)
(234)
(2,498)
(1,024)
(590)
16,410
13,300
(3,963)
(3,865)
12,447
9,435
57
NOTES TO THE FINANCIAL STATEMENTS
4. Segmental information (continued)
Year Ended 30th April
Segmental net assets
Segmental
total assets
2019
£’000
2018
£’000
Segmental
total liabilities
2019
£’000
2018
£’000
Segmental
net assets
2019
£’000
2018
£’000
Mechanical Engineering … …
Refractory Engineering
… …
97,862
43,950
79,835
39,534
72,520
25,541
50,113
19,905
25,342
18,409
29,722
19,629
Sub total reportable segment …
141,812
119,369
98,061
70,018
43,751
49,351
Goodwin PLC net asset
Elimination of Goodwin PLC investments
Goodwill
… … … …
… …
Consolidated total net assets
…
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
81,249
(25,374)
9,665
66,715
(20,950)
9,711
109,291
104,827
2019
£’000
3,602
6,461
616
2018
£’000
6,880
2,176
360
10,679
9,416
2019
£’000
2,367
3,175
1,589
2018
£’000
2,144
2,629
1,608
7,131
6,381
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, 2019
Year ended 30th April, 2018
Revenue
£’000
27,934
24,205
8,100
28,956
37,851
UK
Rest of Europe
USA
Pacific Basin
Rest of World
Opera-
tional
net
assets
£’000
Non-
PPE
Capital
current expendi-
ture
£’000
assets
£’000
74,780
80,300
7,035
3,605
-
14,779
12,697
-
6,855
6,944
6,044
2,300
-
84
2,251
Opera-
tional
net
assets
£’000
70,558
12,477
-
14,785
7,007
Non-
current
assets
£’000
76,325
3,281
-
8,003
5,374
PPE
Capital
expendi-
ture
£’000
8,301
772
-
154
189
Revenue
£’000
27,829
31,246
3,742
23,052
38,942
Total
127,046
109,291
97,704
10,679
124,811
104,827
92,983
9,416
58
NOTES TO THE FINANCIAL STATEMENTS
5. Revenue
The Group’s revenue is derived from contracts with customers. The nature and effect, on the Group’s financial
statements, of applying IFRS15 for the first time are outlined in note 3.
The following tables provide an analysis of revenue by geographical market and by product line.
Geographical market
Year ended 30th April, 2019
Year ended 30th April, 2018
Mechanical
Refractory
Engineering Engineering
£’000
£’000
Mechanical
Refractory
Total Engineering Engineering
£’000
£’000
£’000
Total
£’000
27,829
31,246
3,742
23,052
38,942
11,483
8,099
119
14,845
9,604
44,150
124,811
UK
Rest of Europe
USA
Pacific Basin
Rest of World
Total
Product lines
16,877
16,282
8,017
12,848
28,351
82,375
11,057
27,934
7,923
24,205
83
8,100
16,108
28,956
9,500
37,851
44,671 127,046
16,346
23,147
3,623
8,207
29,338
80,661
Year ended 30th April, 2019
Year ended 30th April, 2018
Mechanical
Refractory
Engineering Engineering
£’000
£’000
Mechanical
Refractory
Total Engineering Engineering
£’000
£’000
£’000
Total
£’000
Standard products and consumables 7,785
44,671
52,456
Minimum period contracts
4,996
Bespoke products –
over time
Bespoke products –
point in time
Total
34,538
35,056
82,375
4,996
5,962
6,133
34,538
21,278
-
-
-
35,056
44,671 127,046
47,288
80,661
44,150
50,112
-
-
-
6,133
21,278
47,288
44,150
124,811
Contract balances
The following table presents information about receivables, contract assets and liabilities from contracts with
customers.
30th April
1st May
Receivables – included in “Trade and other receivables” … … … … …
… … … … … … … … … … …
Contract assets
Contract liabilities … … … … … … … … … … …
2019
£’000
23,279
3,698
(18,002)
2018
£’000
18,299
5,059
(14,625)
Net book value at the end of the period … … … … … … … …
8,975
8,733
The Group has recognised the cumulative effect of applying IFRS 15 for the first time as an adjustment to the
opening balance at 1st May, 2018. Contract assets and liabilities as at 30th April, 2018 have been adjusted,
in this table only, to reflect the impact of IFRS 15.
The contract assets represent the Group’s rights to consideration for work completed but not invoiced at the
reporting date for bespoke products contracts. Contract assets are transferred to receivables when the rights
to consideration become unconditional. This is generally when the Group invoices the customer. Where
payments are received in advance and exceed the costs incurred in constructing the asset together with the
forecast margin earned, the balances are disclosed as contract liabilities.
Of the contract liabilities recognised at the beginning of the period, revenue of £4,124,000 has been recognised
in the year ended 30th April, 2019.
Revenue of £Nil has been recognised in the year ended 30th April, 2019 from performance obligations, which
were satisfied (or partially satisfied) in previous periods.
The Group has applied the practical expedient in IFRS 15, paragraph 121, and has not disclosed the remaining
performance obligations for contracts which have an original expected duration of one year or less. The
aggregate amount of the transaction price allocated to the performance obligations for longer-term contracts,
which are unsatisfied (or partially unsatisfied) as at the end of the reporting period is £72,914,000. The longest
of these contracts is due to be completed in 2023.
Incremental costs of obtaining contracts lasting less than one year, are recognised as an expense, when
incurred, in accordance with the practical expedient in IFRS 15, paragraph 94.
The Group’s revenue is not significantly impacted by seasonal or cyclical events.
59
NOTES TO THE FINANCIAL STATEMENTS
6. Expenses and auditor’s remuneration
Included in profit before taxation are the following:
Charged / (credited) to the statement of profit or loss
Depreciation:
Owned assets … … … … … … … … … … …
… … … … … … …
Assets held under finance leases
Amortisation of intangible assets … … … … … … … …
Profit on sale of land and buildings in India
… … … … … …
Loss on sale of other tangible fixed assets … … … … … … …
Operating lease rentals:
Rental of premises … … … … … … … … … …
… … … … … … … … …
Short-term plant hire
… … … … …
Research and development expensed as incurred
Impairment of trade receivables charged to the statement of profit or loss
…
Foreign exchange losses / (gains) … … … … … … … …
Fees receivable by the auditor 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 … … … … … … … … …
Share-based provisions … … … … … … … … … …
Hedge ineffectiveness transferred to the statement of profit or loss … … …
Government grants received against research and development,
2019
£’000
5,571
248
1,312
-
13
732
94
823
38
(551)
120
222
4
1,220
-
2018
£’000
5,010
233
1,138
(1,602)
34
728
89
308
64
149
56
119
76
1,024
(1,224)
infrastructure spend and training costs
… … … … … …
(1,323)
(257)
7. 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
2018
2019
Works personnel … … … … … … … … … … …
1,032
Administration staff
… … … … … … … … … …
The aggregate payroll costs of these persons were as follows:
Wages and salaries … … … … … … … … … …
Social security costs… … … … … … … … … …
Other pension costs … … … … … … … … … …
50
1,082
2019
£’000
36,008
3,711
1,470
41,189
993
49
1,042
2018
£’000
32,345
3,303
1,489
37,137
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on page 27. The
emoluments of the highest paid Director were £397,000 (2018: £385,000). The emoluments included Company
pension contributions of £11,000 (2018: £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 (2018: 8).
A charge of £1,220,000 for the LTIP (2018: £1,024,000) has been recognised in the year, but not included in the
above table. Further information is contained in note 35.
8. Financial expenses
Interest expense on finance leases … … … … … … … …
Interest expense on bank loans and overdrafts … … … … … …
Capitalised interest on fixed asset projects … … … … … … …
Gain on previously held interest in equity associates (see note 13) … … …
Financial expenses
… … … … … … … … … …
2019
£’000
64
527
(132)
(225)
234
2018
£’000
89
673
(172)
-
590
60
NOTES TO THE FINANCIAL STATEMENTS
9. Taxation
Recognised in the statement of profit or loss
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 – (over) / under provision
… …
in prior years
Origination and reversal of temporary differences – rate change to prior year
2019
£’000
4,100
(55)
4,045
186
(268)
-
(82)
Total tax expense … … … … … … … … … … …
3,963
Reconciliation of effective tax rate
2019
£’000
Profit before taxation … … … … … … … … … …
16,410
Tax using the UK corporation tax rate of 19.00% (2018: 19.00%) … … …
… … … … … … … … … …
Non-taxable income
… … … … … … … … …
Non-deductible expenses
… … … … … … … …
Overseas intercompany profits
Other permanent timing differences … … … … … … … …
(Over) / under 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 … … … … … … …
3,118
(79)
55
163
198
(323)
114
-
-
177
606
9
(75)
Total tax expense … … … … … … … … … … …
3,963
2018
£’000
3,361
(97)
3,264
482
155
(36)
601
3,865
2018
£’000
13,300
2,527
(43)
90
-
162
58
274
195
(36)
118
664
(67)
(77)
3,865
Where subsidiary companies have incurred losses in the year, which are unlikely to be relieved against future
profits in the next twelve months, deferred tax assets are not recognised.
Withholding tax unrelieved represents withholding tax deducted on dividends from overseas subsidiaries and
associates.
The Group’s total taxes payable in respect of the year ending 30th April, 2019, comprising Corporation Tax, PAYE
and National Insurance was £15.0 million (2018: £14.4 million).
Deferred tax recognised directly in equity
The following amounts are included in the consolidated statement of comprehensive income:
Cash flow hedge deferred tax (credit) / charge … … … … … …
2019
£’000
(154)
2018
£’000
818
10. Earnings per share
The earnings per ordinary share has been calculated on profit for the year attributable to ordinary shareholders
of £11,505,000 (2018: £8,504,000) 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 Equity 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. In total, 489,600 share options vested at
1st May, 2019. The effect of the potentially dilutive ordinary shares is 488,056 (2018: Nil) and the weighted
average number of ordinary shares used to calculate the diluted earnings per share is 7,688,056 (2018: 7,200,000).
61
NOTES TO THE FINANCIAL STATEMENTS
11. Dividends paid
Paid ordinary dividends during the year in respect of prior years
83.473p (2018: 42.348p) per qualifying ordinary share … … … … …
Dividends paid to minority shareholders in Noreva GmbH … … … …
Total dividends … … … … … … … … … … …
2019
£’000
6,010
116
6,126
2018
£’000
3,049
88
3,137
After the balance sheet date an ordinary dividend of 96.21p per qualifying ordinary share was proposed by
the Directors (2018: Ordinary dividend of 83.473p).
The proposed current year ordinary dividend of £6,927,000 has not been provided for within these financial
statements (2018: Proposed ordinary dividend of £6,010,000 was not provided for within the comparative figures).
As explained in note 13, Noreva has been an 87.5% owned subsidiary, which is treated as a 100% owned
subsidiary, because there were both put and call options in place for the remaining 12.5%. During the year, the
Group paid for the remaining 12.5% shareholding in Noreva.
12. 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, 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)
-
-
Total
£’000
109,507
9,416
-
(911)
(547)
Balance at 30th April, 2018 … …
30,417
71,832
3,819
11,397
117,465
Balance at 1st May, 2018 … … …
Additions … … … … … …
Additions - company acquisitions … …
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
30,417
4,467
411
6,638
(15)
(110)
71,832
3,834
285
2,223
(1,452)
(194)
3,819
213
62
(50)
(91)
(4)
11,397
2,165
-
(8,811)
-
16
117,465
10,679
758
-
(1,558)
(292)
Balance at 30th April, 2019 … …
41,808
76,528
3,949
4,767
127,052
Depreciation
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
Balance at 1st May, 2018 … … …
Charged in year … … … … …
Depreciation – company acquisitions …
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
5,821
1,088
195
(47)
-
(22)
39,956
4,410
122
76
(1,312)
(105)
2,534
321
32
(29)
(91)
(3)
Balance at 30th April, 2019 … …
7,035
43,147
2,764
-
-
-
-
-
-
-
-
-
-
-
-
-
43,768
5,243
-
(591)
(109)
48,311
48,311
5,819
349
-
(1,403)
(130)
52,946
Net book value
At 1st May, 2017… … … … …
25,752
32,388
1,525
6,074
65,739
At 30th April, 2018 and 1st May, 2018 …
24,596
31,876
1,285
11,397
69,154
At 30th April, 2019 … … … …
34,773
33,381
1,185
4,767
74,106
62
NOTES TO THE FINANCIAL STATEMENTS
12. Property, plant and equipment (continued)
Plant and machinery
During the year, £542,000 (2018: £Nil) of the property, plant and equipment additions were acquired under
finance leases.
At 30th April, 2019, the net carrying amount of leased plant and machinery was £3,946,000 (2018: £3,780,000).
The leased equipment secures lease obligations (see note 20).
Assets in the course of construction of £4,767,000 (2018: £11,397,000) comprise £181,000 (2018: £6,093,000) in
relation to land and buildings and £4,586,000 (2018: £5,304,000) for plant and machinery.
Government grants related to tangible fixed assets
Additions to fixed assets are after deducting grants receivable of £Nil (2018: £Nil).
Security
There is a charge over Noreva GmbH’s land and buildings of €1,600,000 to secure a bank loan repayable by
instalments (see note 20).
13. Investments in subsidiaries
The Group has the following principal subsidiaries. Non-principal subsidiaries are listed in note 32:
Registered Country of
address*
Incorporation
Class of
shares held
Subsidiaries:
Mechanical Engineering:
Goodwin Steel Castings Limited
… … …
Goodwin International Limited … … … …
Easat Radar Systems Limited … … … …
Goodwin Korea Company Limited … … …
Goodwin Pumps India Private Limited
… …
Goodwin Shanghai Company Limited … … …
Noreva GmbH
… … … … … …
Goodwin (Shanxi) Pump Company Limited … …
Goodwin Indústria e Comércio de Bombas
8
Submersas Ltda … … … … … …
1
Internet Central Limited … … … … …
9
Goodwin Submersible Pumps Australia Pty. Limited
1
Metal Proving Services Limited … … … …
NRPL Aero Oy
… … … … … … 10
Goodwin Submersible Pumps Africa Pty. Limited … 15
1
1
1
3
4
5
6
7
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
Ordinary
South Korea
Ordinary
India
Ordinary
China
Ordinary
Germany
Ordinary
China
Ordinary
Brazil
England and Wales Ordinary
Australia
Ordinary
England and Wales Ordinary
Ordinary
Finland
Ordinary
South Africa
% held
100
100
77
95
100
100
100**
100
100
82.5
100
100
77
100
Refractory Engineering:
1
Goodwin Refractory Services Limited … … …
1
Dupré Minerals Limited … … … … …
2
Hoben International Limited … … … …
4
Gold Star Powders Private Limited … … …
Siam Casting Powders Limited … … … … 11
Ultratec Jewelry Supplies Limited … … … 12
13
SRS (Qingdao) Casting Materials Company Limited
Gold Star Brazil Limited … … … … …
8
Jewelry Plaster Limited … … … … … 14
England and Wales Ordinary
100
England and Wales Ordinary/Preference 100
100
England and Wales Ordinary
100
Ordinary
India
57.7
Ordinary
Thailand
75.5
Ordinary
China
75.5
Ordinary
China
Ordinary
Brazil
100
Ordinary/Preference74.5
Thailand
*The registered address for each company can be found in note 34.
**In the previous year, Noreva was an 87.5% owned subsidiary. It has been treated as a 100% subsidiary by virtue
of there having been both put and call options in place for the remaining 12.5% of the share capital. During the
current financial year, the Company acquired the remaining 12.5% of Noreva.
All of the above companies are included as part of the consolidated accounts and are involved in mechanical and
refractory engineering.
Acquisition of subsidiaries
On 26th April, 2019, the Group acquired 25% of Asian Industrial Investment Casting Powders Private Limited
(Asian Industrial), increasing its interest from 50% to 75%, and increasing its control of the company. The Group
had an existing shareholding of 49% in Jewelry Plaster Limited (Jewelry Plaster), which owns 100% of Jewelry
Wax Limited, and by acquiring a further 25.5% shareholding, increased its total ownership to 74.5% and obtained
control of the company.
Consideration
The consideration for the Asian Industrial shares was £40,000 in cash. For the Jewelry Plaster shares, the Group
paid £777,000 in cash. In addition, contingent consideration will be payable, based on the pre tax profits of
Jewelry Plaster for the financial year to 30th April, 2020. The current fair value of this contingent consideration is
£204,000. This amount could increase by £6,000 if the pre tax profits of Jewelry Plaster were to be 1% higher.
63
NOTES TO THE FINANCIAL STATEMENTS
13. Investments in subsidiaries (continued)
Acquisition of subsidiaries (continued)
Acquisition-related costs
The legal fees incurred in relation to the acquisition were £10,000, and have been reported within administrative
expenses.
Identifiable assets acquired and liabilities assumed
The table below analyses the total identifiable net assets of Asian Industrial and Jewelry Plaster acquired. The net
assets of Asian Industrial are not shown separately because the value is insignificant.
… … … … … … … … … … …
Property, plant and equipment
Investments
… … … … … … … … … … … … … …
Intangibles … … … … … … … … … … … … … … …
Inventories … … … … … … … … … … … … … … …
Trade and other financial assets
… … … … … … … … … … …
Non-financial assets … … … … … … … … … … … … …
Cash and cash equivalents … … … … … … … … … … … …
Short-term interest-bearing loans and borrowings … … … … … … … …
Trade and other financial liabilities … … … … … … … … … … …
Non-financial liabilities … … … … … … … … … … … … …
… … … … … … … …
Long-term interest-bearing loans and borrowings
Total identifiable net assets acquired
Goodwill
The goodwill arising from the acquisitions has been recognised as follows:
Asian Industrial cash consideration … … … … … … … … … … …
Jewelry Plaster cash consideration … … … … … … … … … … …
Jewelry Plaster contingent consideration … … … … … … … … … …
Fair value of pre-existing interest in Asian Industrial and Jewelry Plaster (note 14) … … …
Fair value of identifiable net assets … … … … … … … … … … …
… … … … … … … … … … … …
Non-controlling interests
Goodwill
£’000
409
354
803
803
1,339
91
392
(11)
(2,623)
(159)
(31)
1,367
£’000
40
777
204
279
(1,367)
142
75
The non-controlling interests have been calculated as the proportionate share of the identifiable net assets of Asian
Industrial and Jewelry Plaster.
The pre-existing equity interest in Asian Industrial and Jewelry Plaster was stated at fair value before the acquisition
of the additional shares. No further fair value adjustments have been made to the value of identifiable net assets,
and there has been no gain or loss on re-measuring to fair value the Group’s existing associate investments,
at the date of acquisition. However, the translation reserve at the date of acquisition has been realised and an
unrealised gain previously recognised in OCI has been reported within financial expenses (see note 8).
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
England and Wales Ordinary
South Korea
Ordinary
England and Wales Ordinary
Ordinary
Finland
… … … … … … 4
Refractory Engineering:
Asian Industrial Investment Casting Powders
Private limited
Jewelry Plaster Limited … … … … … 14
Jewelry Wax Limited
… … … … … 14
Siam Casting Powders Limited … … … … 11
SRS Guangzhou Limited … … … … … 12
SRS (Qingdao) Casting Materials Company Limited 13
Shenzhen King-Top Modern Hi-Tech Company Limited 16
Ultratec Jewelry Supplies Limited … … … 12
Ying Tai (UK) Limited
… … … … … 1
64
Ordinary
India
Ordinary
Thailand
Ordinary
Thailand
Ordinary
Thailand
Ordinary
China
Ordinary
China
Ordinary
China
China
Ordinary
England and Wales Ordinary
% held
by
NCI
23
5
17.5
23
25
25.5
25.5
42.3
24.5
24.5
24.5
24.5
24.5
NOTES TO THE FINANCIAL STATEMENTS
13. Investments in subsidiaries (continued)
Acquisition of NCI
In April 2019, the Group acquired an additional 24.5% in Ultratec, which owns Shenzhen King-Top Modern
Hi-Tech Company, and a further shareholding of 24.5% in Ying Tai (UK), which owns SRS Guangzhou and SRS
(Qingdao) Casting Materials Company. Through its acquisition of additonal shares in Jewelery Plaster, the
Group acquired a further 2.3% stake in Siam Casting Powders.
Ultratec
Group
£’000
Carrying value of NCI acquired … … … … … 859
Ying Tai
(UK)
Group
£’000
800
Siam
Casting
Powders
£’000
91
Total
£’000
1,750
Consideration paid to NCI … … … … … … (1,765)
(403)
(354)
(2,522)
Goodwill arising from purchase of NCI in subsidiaries … (906)
397
(263)
(772)
The decrease in equity attributable to owners of the Company comprised a decrease in retained earnings of
£592,000 and a decrease of £180,000 in the translation reserve.
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 allocation to non-controlling
interests … … … … …
Dividends paid to non-controlling
interests … … … … …
Accumulated reserves held by
non-controlling interests … …
Mechanical
Engineering
Refractory
Engineering
Total
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
91
-
314
-
851
451
617
-
942
451
931
-
678
904
3,448
4,355
4,126
5,259
The summarised financial information below represents the amounts in the financial statements of the
subsidiaries, before any intercompany eliminations, and does not reflect the Group’s share of those amounts.
The results for the year of both Jewelry Plaster and Asian Industrial are shown within share of profit of
associate companies, on the basis that the effective acquisition date was 26th April, 2019.
Year Ended 30th April
Non-current assets … … …
Mechanical
Engineering
2019
£’000
2,291
2018
£’000
5,707
Refractory
Engineering
2019
£’000
9,554
Current assets
… … …
21,717
11,491
13,827
Current liabilities
… … …
Non-current liabilities
… …
(17,723)
(1,874)
(9,023)
(3,738)
(8,079)
(29)
2018
£’000
9,743
9,338
(3,734)
(2,142)
Total
2019
£’000
11,845
35,544
2018
£’000
15,450
20,829
(25,802)
(12,757)
(1,903)
(5,880)
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
4,411
4,437
15,273
13,205
19,684
17,642
12,294
14,887
15,796
14,521
28,090
29,408
1,333
1,518
1,844
2,064
3,177
3,582
1,475
1,916
1,933
2,409
3,408
4,325
65
NOTES TO THE FINANCIAL STATEMENTS
14. Investments in associates
The Group’s share of profit after tax in its associates for the year ended 30th April, 2019 was £233,000 (2018:
£310,000).
Summary financial information of Group’s share of associates is as follows:
Balance at 1st May
… … … … … … … … … …
Profit before tax … … … … … … … … … … …
Tax … … … … … … … … … … … … …
Dividend … … … … … … … … … … … …
Exchange adjustment … … … … … … … … … …
Disposal … … … … … … … … … … … …
2019
£’000
1,963
298
(65)
(1,254)
76
(279)
Balance at 30th April… … … … … … … … … …
739
Assets
… … … … … … … … … … … …
Liabilities … … … … … … … … … … … …
1,112
(373)
739
2018
£’000
2,045
387
(77)
(441)
49
-
1,963
2,661
(698)
1,963
On 26th April 2019, the Group increased its ownership and control of Asian Industrial and Jewelry Plaster.
The Group’s pre-existing interest in these two companies has been reported as a disposal in the year. Details
of the acquisitions are included in note 13.
Summarised financial information of the Group’s share of the individually material associate, Jewelry Plaster,
is shown below. The figures for 2019 reflect trading for the full year, before the Group increased its control
of the company.
Revenue … … … … … … … … … … … …
Profit after tax … … … … … … … … … … …
Non-current assets
… … … … … … … … … …
Current assets … … … … … … … … … … …
Current liabilities … … … … … … … … … … …
Group equity investment in associate
2019
£’000
1,406
148
-
-
-
-
2018
£’000
1,543
221
385
915
(220)
1,080
66
NOTES TO THE FINANCIAL STATEMENTS
15. Intangible assets
Cost
Balance at 1st May, 2017 …
Additions… … … …
Disposals… … … …
Exchange adjustments …
Brand
names
and
intellectual
property
£’000
Goodwill
£’000
9,872
-
(60)
238
7,026
-
(209)
157
Order
book
£’000
173
-
(17)
6
Manufact- Software Develop-
ment
costs
£’000
and
Licences
£’000
uring
rights
£’000
Total
£’000
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
Balance at 1st May, 2018 …
Additions… … … …
Additions – company acquisition
Disposals… … … …
…
Exchange adjustment
10,050
75
-
-
(117)
6,974
799
-
(19)
(80)
162
-
-
-
(3)
5,117
201
-
-
-
708
115
4
(135)
(8)
5,844
1,500
-
-
(31)
28,855
2,690
4
(154)
(239)
Balance at 30th April, 2019
10,008
7,674
159
5,318
684
7,313 31,156
Amortisation and impairment
Balance at 1st May, 2017 …
Amortisation for the year …
Disposals… … … …
…
Exchange adjustment
399
-
(60)
-
4,580
515
(209)
97
173
-
(17)
6
1,241
295
-
-
Balance at 30th April, 2018
339
4,983
162
1,536
Balance at 1st May, 2018 …
Amortisation for the year …
Disposals… … … …
…
Exchange adjustment
339
-
-
4
4,983
514
(19)
(67)
162
-
-
(3)
1,536
309
-
-
Balance at 30th April, 2019
343
5,411
159
1,845
68
215
-
(2)
281
281
219
(135)
-
365
301
113
-
2
6,762
1,138
(286)
103
416
7,717
416
270
-
(7)
7,717
1,312
(154)
(73)
679
8,802
Net book value
At 1st May, 2017… … …
9,473
2,446
At 30th April, 2018
and 1st May, 2018 … …
9,711
1,991
At 30th April, 2019
…
9,665
2,263
-
-
-
3,876
268
2,177
18,240
3,581
3,473
427
319
5,428
21,138
6,634 22,354
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 £432,000 on the
development of a new valve range by Goodwin International, £148,000 on refractory development projects in
Goodwin Refractory Services, and £920,000 on the development of radar equipment within Easat Radar
Systems and NRPL Aero. Details of the addition to goodwill and brand names are outlined in note 13.
Amortisation and impairment charges
The amortisation charge of £1,312,000 (2018: £1,138,000) is recognised in cost of sales in the statement of profit
or loss.
67
15. 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 … … … … … … … … … … … …
2019
£’000
4,688
3,346
1,245
386
2018
£’000
4,784
3,346
1,270
311
9,665
9,711
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.
The projections use various growth rates consistent with the profit forecasts of the CGU for the first three years, with
growth rates of typically 0% to 15% thereafter, extrapolated over the minimum expected life span of the unit. The
forecasts are then discounted at an appropriate pre tax weighted average cost of capital rate considering the
perceived levels of risk, ranging between 19% and 21% (2018: 16.9%) for the Mechanical Engineering Division and
14% to 22% (2018: 15.8%) for the Refractory Engineering Division. Further sensitivity tests are then performed
reducing the discounted cash flows by 10% and also increasing the discount rate by a range of up to 10% to confirm
there is no need to consider further a need for impairment.
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.
16. Inventories
Raw materials and consumables … … … … … … …
Work in progress … … … … … … … … … …
Finished goods … … … … … … … … … …
The amount of inventory impaired during the year was £377,000 (2018: £675,000).
The Group carries provisions against inventories as follows:
Raw materials and consumables … … … … … … …
Work in progress … … … … … … … … … …
Finished goods … … … … … … … … … …
2019
£’000
15,576
23,324
11,624
50,524
2019
£’000
253
829
337
1,419
2018
£’000
11,726
9,676
7,448
28,850
2018
£’000
208
1,077
456
1,741
68
NOTES TO THE FINANCIAL STATEMENTS
17. Trade and other financial assets
Balances due within one year
Trade receivables … … … … … … … … … …
Other financial assets … … … … … … … … …
2019
£’000
23,279
1,685
24,964
2018
£’000
18,375
1,678
20,053
The Group has a long-term receivable balance due from an associate company, which is repayable within five
years. The balance, which is due after more than one year is disclosed within non-current assets, with the
balance due within one year, of £240,000 (2018: £220,000) being reported within other current financial assets.
Interest is charged at a commercial rate.
Balances due after more than one year
Other receivables … … … … … … … … … …
18. Other receivables
Prepayments and other non-financial assets … … … … … …
Corporation tax receivable … … … … … … … … …
… … … … … … … …
Deferred tax asset (see note 25)
19. Cash and cash equivalents
Cash and cash equivalents per balance sheet … … … … … …
Bank overdrafts … … … … … … … … … … …
2019
£’000
505
2019
£’000
2,476
176
63
2,715
2019
£’000
9,640
(9,147)
Cash and cash equivalents per cash flow statement … … … … …
493
2018
£’000
728
2018
£’000
1,810
24
27
1,861
2018
£’000
7,485
(4,585)
2,900
20. 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 27.
Non-current liabilities
Finance lease liabilities … … … … … … … … … …
Bank loans and committed facilities … … … … … … … …
Current liabilities
Finance lease liabilities … … … … … … … … … …
Bank loans and committed facilities … … … … … … … …
Bank overdrafts … … … … … … … … … … …
2019
£’000
1,164
19,322
20,486
939
112
9,147
2018
£’000
1,687
4,088
5,775
861
7,022
4,585
10,198
12,468
69
NOTES TO THE FINANCIAL STATEMENTS
20. Interest-bearing loans and borrowings (continued)
Reconciliation of liabilities arising from financing activities
Opening
balance Change in
bank
1st May
Company
Foreign
Closing
balance
exchange 30th April
2019
£’000
2018 overdrafts acquisition Cash flows movement
£’000
£’000
£’000
£’000
£’000
Bank overdrafts used for
cash management … …
Bank loans … … …
Bank loans repayable
by instalments … …
Finance lease liabilities …
4,585
11,000
110
2,548
4,562
-
-
-
18,243
4,562
-
-
-
42
42
-
7,000
1,337
(487)
7,850
-
-
(13)
-
(13)
9,147
18,000
1,434
2,103
30,684
Opening
balance
1st May
2017
£’000
6,655
23,000
149
3,413
Bank overdrafts used for
cash management … …
Bank loans … … …
Bank loans repayable
by instalments … …
Finance lease liabilities …
Change in
bank
overdrafts
£’000
Company
acquisition
£’000
Closing
balance
30th
Cash flows movement April 2018
£’000
Foreign
exchange
£’000
£’000
(2,070)
-
-
-
-
-
-
-
-
-
(12,000)
(44)
(865)
(12,909)
-
-
5
-
5
4,585
11,000
110
2,548
18,243
33,217
(2,070)
Finance lease liabilities
Finance lease liabilities are payable as follows:
2019
2018
Less than one year … … …
…
Between one and five years
Minimum
lease
payments
£’000
980
1,184
2,164
Interest Principal
£’000
£’000
41
20
61
939
1,164
2,103
Bank loans repayable by instalments
Bank loans are payable as follows:
Less than one year … … …
Between one and five years
…
… …
More than five years
Minimum
loan
payments
£’000
138
389
1,173
1,700
2019
Interest Principal
£’000
£’000
26
91
149
266
112
298
1,024
1,434
Minimum
lease
payments
£’000
922
1,737
2,659
Minimum
loan
payments
£’000
24
96
-
120
Interest
£’000
Principal
£’000
861
1,687
2,548
61
50
111
2018
Interest
£’000
Principal
£’000
2
8
-
10
22
88
-
110
70
NOTES TO THE FINANCIAL STATEMENTS
21. Trade and other financial liabilities
Trade payables … … … … … … … … … … …
Other financial liabilities… … … … … … … … … …
Other taxation and social security costs … … … … … … …
… 17,012
1,701
…
1,857
…
2019
£’000
2018
£’000
15,324
954
1,580
22. Other payables
Accrued expenses… … … … … … … … … … …
Advance payments from customers … … … … … … … …
…
…
23. Deferred consideration
Deferred consideration on acquisitions … … … … … … …
…
20,570
17,858
2019
£’000
4,300
471
4,771
2019
£’000
204
2018
£’000
3,289
5,532
8,821
2018
£’000
500
The deferred consideration at 30th April, 2018 of £500,000 related to the acquisition of Noreva GmbH, which was
settled during this financial year. At 30th April, 2019, the balance relates to the acquisition of Jewelry Plaster
(see note 13).
24. Warranty provision
Balance at 1st May
… … … … … … … … … …
Generated … … … … … … … … … … … …
Credited to the statement of profit or loss … … … … … … …
Exchange adjustment … … … … … … … … … …
Balance at 30th April… … … … … … … … … …
Warranty due within one year … … … … … … … … …
Warranty due after one year … … … … … … … … …
Balance at 30th April… … … … … … … … … …
2019
£’000
513
166
(176)
(10)
493
261
232
493
2018
£’000
395
227
(124)
15
513
184
329
513
Provisions for warranties relate to products sold and generally cover a period of between 1 and 3 years.
25. 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 … … …
Share-based payments reserve
… … …
Other temporary differences … … … …
2019
£’000
-
-
252
2,630
125
3,007
2018
£’000
-
-
199
-
40
239
Deferred tax asset (see note 18) … … … … … … … …
Deferred tax liability … … … … … … … … … …
2019
£’000
(3,014)
(1,306)
-
-
-
(4,320)
2019
£’000
63
(1,376)
(1,313)
2018
£’000
(2,661)
(1,510)
-
-
-
(4,171)
2018
£’000
27
(3,959)
(3,932)
71
25. Deferred tax assets and liabilities (continued)
NOTES TO THE FINANCIAL STATEMENTS
Property,
plant and Intangible
Derivative
financial
assets instruments
£’000
£’000
equipment
£’000
Share-
based
payments
Other
temporary
reserve differences
£’000
£’000
Total
£’000
Balance at 1st May, 2017
(2,258)
(1,170)
778 -
116
(2,534)
Recognised in profit or loss …
…
Recognised in equity
…
Exchange adjustment
(439)
-
36
(325)
-
(15)
239 -
(818) -
- -
(76)
-
-
(601)
(818)
21
Balance at 30th April, 2018
(2,661)
(1,510)
199 -
40
(3,932)
…
Impact of IFRS 15
Recognised in profit or loss …
…
Recognised in equity
…
Exchange adjustment
-
(347)
-
(6)
-
175
-
29
- -
(101) 484
154 2,146
- -
214
(129)
-
-
214
82
2,300
23
Balance at 30th April, 2019
(3,014)
(1,306)
252 2,630
125
(1,313)
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, 2019, the Group has not recognised £690,000 of deferred tax assets in relation
to the accumulated losses (2018: £1,077,000) within overseas subsidiaries.
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, 2018 and at 30th April, 2019 has been calculated based on these rates.
26. Capital and reserves
Share capital
Authorised, allotted, called up and fully paid:
7,200,000 ordinary shares of 10p each … … … … … … … …
2019 2018
£’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 Equity Long Term Incentive Plan, which vested at 1st May, 2019. Further details are included
in note 35.
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.
Deferred tax
The aggregate deferred tax relating to items that are recognised in equity is an asset of £2,350,000 (2018: £50,000),
being £2,146,000 (2018: £Nil) in respect of the Equity Long Term Incentive Plan and £204,000 (2018: £50,000) in
respect of derivatives.
27. 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.
72
NOTES TO THE FINANCIAL STATEMENTS
27. Financial risk management (continued)
(a) Credit risk (continued)
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
Contract assets … … … … … … … …
Trade and other financial assets – due after more than one year
Trade and other financial assets – due within one year … …
Cash at bank and cash equivalents … … … … …
Derivative financial assets… … … … … … …
Notes
5
17
17
19
27(e)
2019
£’000
3,698
505
24,964
9,640
195
39,002
2018
£’000
6,046
728
20,053
7,485
364
34,676
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
2019
£’000
4,914
3,732
719
7,994
5,920
2018
£’000
3,209
4,665
441
3,517
6,543
23,279
18,375
The ageing of trade receivables and impairments at the reporting date was:
Net
2019
£’000
Not past due … … … 16,956
3,944
Past due 1-30 days … …
1,190
Past due 31-90 days… …
1,189
Past due more than 90 days
Gross
2019
£’000
16,956
3,944
1,190
1,470
Impairment
provision
2019
£’000
-
-
-
(281)
Net
2018
£’000
12,910
2,414
2,321
730
Gross
2018
£’000
12,910
2,414
2,321
1,159
Impairment
provision
2018
£’000
-
-
-
(429)
23,279
23,560
(281)
18,375
18,804
(429)
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 statement of profit or loss … … …
Impairment provision utilised during the year … … … … …
At end of year … … … … … … … … … …
73
2019
£’000
429
(1)
38
(185)
281
2018
£’000
624
2
64
(261)
429
NOTES TO THE FINANCIAL STATEMENTS
27. Financial risk management (continued)
b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
At the year end the Group had the following unutilised bank facilities in respect of which all conditions
precedent had been met:
Uncommitted
2018
2019
£’000
£’000
Committed
2019
£’000
2018
£’000
Total
2019
£’000
2018
£’000
Unutilised bank facilities
…
7,585
12,965
15,000
22,000
22,585
34,965
The Group’s principal borrowing facilities are provided by three banks in the form of borrowings and short-
term overdraft facilities. The quantum of borrowing facilities available to the Group is reviewed regularly in
light of current working capital requirements and the need for capital investment for the long-term future
for the Group.
Maturity analysis
The table below analyses the Group’s financial liabilities into maturity groupings based on the period
outstanding at the balance sheet date up to the contractual maturity date. All figures are contracted gross
cash flows that have not been discounted.
2019
Contractual cash flows
Within
1 year
£’000
1-5 years
£’000
5+ years
£’000
Non-derivative financial liabilities
138
Bank loans and committed facilities …
9,147
Overdrafts … … … … …
Finance leases
980
… … … …
Trade and other financial liabilities … 20,570
204
Deferred consideration on acquisitions
18,389
-
1,184
-
-
1,173
-
-
-
-
Total
£’000
19,700
9,147
2,164
20,570
204
2019
Carrying
value
Total
£’000
19,434
9,147
2,103
20,570
204
Total … … … … … … 31,039
19,573
1,173
51,785
51,458
The 30th April, 2019 bank loans and committed facilities are repayable as follows: bank overdraft on demand
£9 million, £10 million within year end 30th April, 2021 and £8 million within year end 30th April, 2024. 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%. There is also a bank loan of £1.4 million repayable by instalments, with the final
payment due in the year ended 30th April, 2039. Interest is charged at an effective interest rate of 1.96%,
which is fixed for the whole period.
Non-derivative financial liabilities
Bank loans and committed facilities …
Overdrafts … … … … …
Finance leases
… … … …
Trade and other financial liabilities …
Deferred considerations on acquisitions
Within
1 year
£’000
7,246
4,585
922
17,858
500
Total … … … … … …
31,111
2018
Contractual cash flows
1-5 years
£’000
5+ years
£’000
4,334
-
1,737
-
-
6,071
-
-
-
-
-
-
Total
£’000
11,580
4,585
2,659
17,858
500
37,182
2018
Carrying
value
Total
£’000
11,110
4,585
2,548
17,858
500
36,601
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 statement of profit or loss.
74
NOTES TO THE FINANCIAL STATEMENTS
27. Financial risk management (continued)
c) Market risk (continued)
Foreign exchange risk (continued)
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.
Currency profile of financial assets and liabilities:
2019
US
Dollar
£’000
2018
US
Dollar
£’000
2019
2018
2019
2018
2019
Euro
£’000
Euro
£’000
Other
£’000
Other
£’000
Total
£’000
2018
Total
£’000
Trade and other
receivables
Cash and cash
equivalents
Trade and other
payables
5,076
2,498
1,225
3,159
59
-
6,360
5,657
(2,412)
124
(7,172)
235
(35)
(1,825)
(9,619)
(1,466)
(169)
(818)
(603)
(626)
(17)
(22)
(789)
(1,466)
2,495
1,804
(6,550)
2,768
7
(1,847)
(4,048)
2,725
The following significant exchange rates applied during the year:
US Dollar … … … … …
Euro … … … … … …
Average
exchange rate
Reporting date
spot rate
2019
1.3046
1.1353
2018
1.339
1.132
2019
1.3040
1.1633
2018
1.377
1.140
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
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
2019
£’000
2018
£’000
7,485
6,046
-
-
9,640
-
7,485
-
-
3,698
-
6,046
9,640
3,698
928
-
-
-
-
-
24,723
195
19,853
364
25,469
195
20,781
364
-
-
-
-
(9,147)
-
-
-
-
(4,585)
(20,570)
(18,002)
(204)
(1,693)
-
(17,858)
(212)
(500)
(1,535)
-
(20,570)
(18,002)
(204)
(1,693)
(9,147)
(17,858)
(212)
(500)
(1,535)
(4,585)
Cash and cash
equivalents
Contract assets
Trade and
financial assets
Derivative assets
Trade and other
financial liabilities
-
-
746
-
Contract liabilities
Deferred consideration
Derivative liabilities
Bank overdrafts
Bank loans and
committed
facilities
Finance lease
liabilities
-
-
-
-
-
-
-
-
-
-
-
(1,370)
(18,064)
(11,110)
(2,103)
(2,548)
-
-
-
-
-
-
(19,434)
(11,110)
(2,103)
(2,548)
(2,727)
(1,620)
(17,571)
(8,210)
(11,853)
6,158
(32,151)
(3,672)
75
NOTES TO THE FINANCIAL STATEMENTS
27. 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, 2019, the capital
used was £126.4 million (2018: £110.8 million) as shown in the following table:
2019
£’000
Cash and cash equivalents … … … … … … (9,640)
Finance leases … … … … … … … …
2,103
… … … … 19,434
Bank loans and committed facilities
9,147
Overdrafts
204
Deferred consideration
… … … … … … … …
… … … … … …
Net debt … … … … … … … … … 21,248
Total equity attributable to equity holders of the parent … 105,165
2018
£’000
(7,485)
2,548
11,110
4,585
500
11,258
99,568
Capital
126,413
110,826
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, 2019 net
debt was £21.2 million (2018: £11.3 million). The gearing ratio, excluding deferred consideration from net
debt, is 20.0% (2018: 10.8%).
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 27(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, 2019,
in Sterling terms, was £53 million spread across USD and EUR denominated contracts. The fair value of
these at 30th April, 2019 was a liability of £1,200,000 (being assets totalling £158,000 and liabilities totalling
£1,358,000). The Group also had a number of forward contracts not designated as cash flow hedges, and
therefore recorded at fair value through the statement of profit or loss. The nominal value of these contracts
at 30th April, 2019, in Sterling terms, was £7 million spread across USD and EUR denominated contracts.
The fair value of these at 30th April, 2019 was a liability of £298,000 (being assets totalling £37,000, and lia-
bilities totalling £335,000).
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 had a number of forward contracts not designated as cash flow hedges, and
therefore recorded at fair value through the statement of profit or loss. 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).
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 statement
of profit or loss. 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.
76
NOTES TO THE FINANCIAL STATEMENTS
27. 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:
2019
Periods in which cash flows and profits are expected to occur
Carrying
amount
£’000
Expected
cash flow
£’000
Within
1 year
£’000
Between
1 and
5 years
£’000
Over
5 years
£’000
Forward exchange contracts
Assets
158
… … … …
Liabilities … … … … (1,358)
158
(1,358)
142
(1,213)
16
(145)
-
-
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)
-
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 statement of profit or loss
… … …
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
2019
£’000
(Profit)/loss
(406)
(253)
406
253
2018
£’000
(Profit)/loss
(19)
(98)
19
98
(74)
95
74
(95)
235
(131)
(207)
131
207
109
77
NOTES TO THE FINANCIAL STATEMENTS
27. 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, 2019 and 30th April, 2018.
30th April, 2019
30th April, 2018
Carrying
amount
£’000
Fair value
£’000
Carrying
amount
£’000
Fair value
£’000
9,640
3,698
23,279
2,190
9,640
3,698
23,279
2,190
7,485
6,046
18,375
2,406
7,485
6,046
18,375
2,406
37
37
364
364
Financial assets
At amortised cost
Cash and cash equivalents … … …
Contract assets … … … … …
Trade receivables … … … … …
Other receivables… … … … …
At fair value through profit and loss
Derivative financial assets not designated in
a cash flow hedge relationship … …
Fair value – hedging instrument
Derivative financial assets designated and
effective as cash flow hedging instruments
158
158
-
-
Total financial assets… … … …
39,002
39,002
34,676
34,676
30th April, 2019
30th April, 2018
Carrying
amount
£’000
Fair value
£’000
Carrying
amount
£’000
Fair value
£’000
Financial liabilities at amortised cost
Contract liabilities
… … … …
Trade payables … … … … …
… … …
Other financial liabilities
Deferred consideration … … … …
Finance lease liabilities … … … …
Bank loans and committed facilities… …
Bank overdrafts … … … … …
18,002
17,012
3,558
204
2,103
19,434
9,147
18,002
17,012
3,558
204
2,103
19,434
9,147
212
15,324
2,534
500
2,548
11,110
4,585
212
15,324
2,534
500
2,548
11,110
4,585
At fair value through the profit and loss
Derivative financial liabilities not designated in
a cash flow hedge relationship … …
335
335
1,241
1,241
Fair value – hedging instrument
Derivative financial liabilities designated and
effective as cash flow hedging instruments
1,358
Total financial liabilities … … …
71,153
1,358
71,153
294
294
38,348
38,348
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.
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).
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 financial liabilities,
fixed and floating rate borrowings, the fair values are the same as carrying value.
78
NOTES TO THE FINANCIAL STATEMENTS
28. Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
… … … …
Between one and five years … … …
More than five years … … … …
Land and
buildings
£’000
500
698
21
1,219
Other
£’000
66
84
-
150
Total
2019
£’000
566
782
21
1,369
Total
2018
£’000
579
515
-
1,094
29. Capital commitments
Contracted capital commitments at 30th April, 2019 for which no provision has been made in these financial
statements were £392,000 (2018: £1,764,000).
30. Guarantees and contingencies
The table below sets out the number and value of unexpired bank guarantee bonds as at 30th April, 2019 and
30th April, 2018. These guarantee bonds are required as part of the terms and conditions within our mechanical
engineering contracts.
265 guarantee and bonds contracts (2018: 308) … … … … …
2019
£’000
10,698
2018
£’000
11,727
31. Subsequent events
After the balance sheet date an ordinary dividend of 96.21p per qualifying ordinary share was proposed by the
Directors (2018: Ordinary dividend of 83.473p).
The current year proposed ordinary dividend of £6,927,000 has not been provided for within these financial
statements (2018: Proposed ordinary dividend of £6,010,000 was not provided for within the comparative figures)
32. Non-principal subsidiaries and associates
Registered Country of
address*
Incorporation
Class of
shares held % held
Non-principal Subsidiaries:
Asian Industrial Investment Casting
4
Powders Private Limited … … … … …
4
Easat Radar Systems India Private Limited
… …
Goodwin Engineering Training Company Limited …
1
Jewelry Wax Limited … … … … … … 14
… … … … … 12
SRS Guangzhou Limited
16
Shenzhen King-Top Modern Hi-Tech Company Limited
Ordinary
India
India
Ordinary
England and Wales Ordinary
Ordinary
Thailand
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:
Tet Goodwin Property Company Limited … … … 11
Thailand
Ordinary
Dormant companies:
Gold Star Powders Limited … … … … …
Net Central Limited … … … … … …
… … … …
Perfect Audio Visual Limited**
Sandersfire International Limited … … … …
Specialist Refractory Services Limited … … …
1
1
1
1
1
England and Wales 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 34.
**This company was dissolved during the year ended 30th April, 2019.
All of the above companies are included as part of the consolidated accounts.
75
100
100
74.5
75.5
75.5
100
75.5
49
100
100
100
100
100
79
NOTES TO THE FINANCIAL STATEMENTS
33. Related parties
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not
reported in this note. Year end balances and transactions during the year with the Group’s associate
companies are shown below.
2019 2018
£’000 £’000
Jewelry Plaster Limited
Revenue …
… … … … …
Management fee income … … … …
… … … … …
Interest income
… … … … …
Dividends …
… … … … …
Receivables …
TET Goodwin Property Company Limited
Rental cost …
Interest income
Receivables …
… … … … …
… … … … …
… … … … …
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
582
36
97
1,254
-
310
20
745
755
35
-
-
263
298
22
948
34. Registered offices of subsidiaries and associates
The registered offices of the companies listed in notes 13 and 32 are listed below.
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
35. Share-based payment transactions
The Group had one share option scheme, the LTIP, the terms of which are outlined in the Directors’ remuneration
policy and report on pages 28 and 29. The scheme has now ended.
The non cash-impacting provision for the year, recognised in the statement of profit or loss in respect of
share-based payments is £1,220,000 (2018: £1,024,000).
Grant date/ Method of Maximum Vesting Contractual life
employees settlement number of conditions of options
entitled instruments
Options granted on Equity 576,000 For every 10% Expiry date:
5th October, 2016 growth in TSR 30th April, 2019
to Executive 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 vested and became 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.
80
NOTES TO THE FINANCIAL STATEMENTS
35. Share-based payment transactions (continued)
Number of share options
Outstanding at beginning of year … … … … … … … … 576,000
576,000
2019
2018
Vested 1st May, 2019 … … … … … … … … 489,600
Exerciseable at end of year … … … … … … … … -
-
-
The fair value of employee share options was measured by a Monte Carlo model. Measurement inputs and
assumptions were 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.
81
NOTES TO THE FINANCIAL STATEMENTS
36. Alternative performance measures
Measure
Method of calculation / reference
2019
2018
Gross profit (£’000)
Revenue (£’000)
40,632
Consolidated statement of profit or loss, page 39
Consolidated statement of profit or loss, page 39 127,046
35,668
124,811
Gross profit as percentage of
revenue (%)
Gross profit / revenue
32.0
28.6
Operating profit (£’000)
Capital employed (£’000)
Consolidated statement of profit or loss, page 39
Note 27 (d), page 76
16,411
126,413
13,580
110,826
Return on capital employed (%)
Operating profit / capital employed
13.0
12.3
21,248
204
11,258
500
21,044
10,758
Net debt (£’000)
Deferred consideration (£’000)
Note 27 (d), page 76
Note 27 (d), page 76
Net debt excluding deferred
consideration (£’000)
Net assets attributable to equity
holders of the parent (£’000)
Consolidated balance sheet, page 43
105,165
99,568
Gearing (%)
Net debt (excluding deferred consideration)
/ equity, as above
20.0
10.8
Net profit attributable to equity
holders of the parent (£’000)
Net assets attributable to equity
holders of the parent (£’000)
Consolidated statement of profit or loss, page 39
11,505
8,504
Consolidated balance sheet, page 43
105,165
99,568
Return on investment (%)
Net profit / net assets
10.9
8.5
Revenue (£’000)
Average number of employees
Consolidated statement of profit or loss, page 39 127,046
1,082
Note 7, page 60
124,811
1,042
Sales per employee (£’000)
Group revenue / average employees
117
120
Annual post tax profit (£’000)
Depreciation (£’000)
Amortisation (£’000)
Consolidated statement of profit or loss, page 39
Note 12, page 62
Note 15, page 67
12,447
5,819
1,312
9,435
5,243
1,138
Annual post tax profit +
depreciation + amortisation (£’000)
19,578
15,816
Annual post tax profit (£’000)
– without the adoption of IFRS 15
Depreciation (£’000)
Amortisation (£’000)
Note 3, page 53 / Consolidated statement of
profit or loss, page 39
Note 12, page 62
Note 15, page 67
11,098
5,819
1,312
9,435
5,243
1,138
Annual post tax profit +
depreciation + amortisation
– like for like (£’000)
82
18,229
15,816
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY BALANCE SHEET
at 30th April, 2019
NON-CURRENT ASSETS
Property, plant and equipment … … … … … …
Investment properties … … … … … … …
Investments … … … … … … … … …
Intangible assets … … … … … … … …
CURRENT ASSETS
Other receivables … … … … … … … …
Deferred tax asset … … … … … … … …
Cash at bank and in hand
… … … … … …
Notes
C4
C4
C5
C6
C7
C10
2019
£’000
24,583
24,741
25,374
12,877
2018
£’000
28,697
17,844
20,950
2,859
87,575
70,350
31,092
31,262
216
87
-
56
31,395
31,318
TOTAL ASSETS
… … … … … … … …
118,970
101,668
CURRENT LIABILITIES
Interest-bearing loans and borrowings
… … … …
Other payables … … … … … … … …
Deferred consideration … … … … … … …
Corporation tax … … … … … … … …
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings
… … … …
Deferred income … … … … … … … …
Deferred tax liabilities … … … … … … …
C8
C9
C8
C10
10,750
6,696
-
332
12,442
12,699
500
72
17,778
25,713
18,856
1,087
-
19,943
5,687
1,145
2,408
9,240
TOTAL LIABILITIES … … … … … … … …
37,721
34,953
NET ASSETS … … … … … … … … …
81,249
66,715
EQUITY
Called up share capital … … … … … … …
C11
Share-based payments reserve
… … … … …
Profit and loss account … … … … … … …
720
4,991
75,538
720
1,625
64,370
TOTAL EQUITY
… … … … … … … …
81,249
66,715
Profit / (loss) after tax for the year … … … … … …
17,178
(3,204)
These financial statements were approved by the Board of Directors on 22nd August, 2019, and signed on its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
Company Registration Number: 305907
83
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2019
Notes
Share
capital
£’000
Share-
based
payments
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
YEAR ENDED 30TH APRIL, 2019
Balance at 1st May, 2018
Total comprehensive income:
Profit
… … … …
… … … … … …
C2
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Equity-settled share-based payment transactions
Tax on equity-settled share-based payment transactions
Dividends paid … … … … … …
720
1,625
64,370
66,715
-
-
-
-
-
-
17,178
17,178
-
1,220
2,146
-
17,178
-
-
(6,010)
17,178
1,220
2,146
(6,010)
BALANCE AT 30TH APRIL, 2019
720
4,991
75,538
81,249
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 … … … … … …
720
601
70,623
71,944
-
-
-
-
-
(3,204)
(3,204)
-
1,024
-
(3,204)
-
(3,049)
(3,204)
1,024
(3,049)
BALANCE AT 30TH APRIL, 2018
720
1,625
64,370
66,715
84
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.
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 management;
• 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 2 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.
Investments 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 statement of profit or loss 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 into which
the Company has entered.
85
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies (continued)
Financial instruments (continued)
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded initially at their fair value less attributable
transaction costs. They are subsequently carried at their amortised cost and finance charges and are
recognised in the statement of profit or loss over the term of the instrument using an effective rate of
interest.
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently at amortised cost using
the effective interest method where material.
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.
Amoritisation rates are as follows:
Manufacturing rights … … … … … 11-15 years
Brand names … … … … … … now fully amortised
Software and licences
Intellectual property rights … … … … 15 years
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 statement of profit or loss 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
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 statement of profit or loss 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 statement of profit or loss 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.
Leases
Operating lease payments
Payments made under operating leases are recognised in the statement of profit or loss on a straight-line
basis over the term of the lease. Lease incentives received are recognised in the statement of profit or loss
as an integral part of the total lease expense.
86
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies (continued)
Leases (continued)
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 statement of profit or loss 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 statement of profit or loss
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 statement
of profit or loss 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
Expenses and auditor’s remuneration
Included in the profit / (loss) before taxation are the following:
Depreciation
… … … … … … …
Owned assets
Assets held under finance leases
… … … … … … …
Impairment of amounts due from Group undertakings … … … …
Reversal of impairment of amounts due from Group undertakings … …
Impairment of investments in subsidiary companies (see note C5) … …
2019
£’000
2,092
202
-
(4,040)
1,385
2018
£’000
1,889
202
8,040
-
1,134
Fees receivable by the auditors and the auditor’s associates in respect of:
Audit of these financial statements
… … … … … … …
39
18
Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the
Company’s financial statements, have not been disclosed as the information is required instead to be
disclosed on a consolidated basis (see note 6 of the Group financial statements).
The impairment of amounts due from Group undertakings are £Nil (2018: £4,000,000) in respect of Goodwin
Steel Castings Limited, and £Nil (2018: £4,040,000) in respect of Goodwin Indústria e Comércio de Bombas
Submersas Ltda. During the year, the loan to Goodwin Indústria e Comércio de Bombas Submersas Ltda
was converted to equity. The previous year impairment was reversed with £1.33 million of the additional
investment being impaired (see note C5).
87
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
2019 2018
Administration staff … … … … … … … … … … 50 49
2019 2018
£’000 £’000
The aggregate payroll costs of these persons were as follows:
Wages and salaries … … … … … … … … … … 3,723 3,470
Social security costs … … … … … … … … … … 424 373
Other pension costs … … … … … … … … … … 107 99
4,254 3,942
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on page 27.
The emoluments of the highest paid Director were £397,000 (2018: £385,000). The emoluments included
Company pension contributions of £11,000 (2018: £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 (2018: 8).
A charge of £1,220,000 for the LTIP (2018: £1,024,000) has been recognised in the year, but not included in the
above table. Further information is contained in note 35 of the Group financial statements.
C4
Tangible fixed assets
Investment
properties
Property, Plant and Equipment
Cost
Balance at 1st May, 2018
… …
Additions
…
Reclassifications
Disposals
… …
Intercompany transfers
£’000
21,892
1,030
6,637
-
-
Land and
Plant and
buildings equipment
£’000
£’000
Fixtures
and
Assets in
course of
fittings construction
£’000
£’000
1,166
-
-
-
-
27,235
677
1,640
(42)
3,343
1,593
44
-
-
-
11,193
1,851
(8,277)
-
-
Total
£’000
41,187
2,572
(6,637)
(42)
3,343
Balance at 30th April, 2019
29,559
1,166
32,853
1,637
4,767 40,423
Depreciation
Balance at 1st May, 2018
Charged in year … …
…
Reclassifications
Disposals
… …
Intercompany transfers
4,048
817
(47)
-
-
624
20
-
-
-
10,861
1,356
47
(17)
1,843
1,005
101
-
-
-
-
-
-
-
-
12,490
1,477
47
(17)
1,843
Balance at 30th April, 2019
4,818
644
14,090
1,106
- 15,840
Net book value
At 30th April, 2018 …
At 30th April, 2019
17,844
24,741
542
522
16,374
18,763
588
531
11,193
28,697
4,767 24,583
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, 2019 was estimated to be £45 million (2018: £38 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. The net book value
of plant and machinery under finance leases at the year end was £3,404,623 (2018: £3,606,878). The
leased equipment secures lease obligations (see note C8).
88
NOTES TO THE FINANCIAL STATEMENTS
C5
Fixed asset investments
Shares in
associated
undertakings
£’000
Shares in
Group
undertakings
£’000
Cost
Balance at 1st May, 2018 … … … … …
… … … … … … …
Additions
Reclassification
… … … … … …
… … … … … … …
Disposals
Balance at 30th April, 2019
Impairment
Balance at 1st May, 2018 … … … … …
Impairment during the year
… … … …
… … … … … … …
Disposals
Balance at 30th April, 2019
Net book value
At 30th April, 2018 … … … … … …
At 30th April, 2019
307
-
(70)
-
237
-
-
-
-
307
237
Total
£’000
25,550
5,809
-
(25)
25,243
5,809
70
(25)
31,097
31,334
4,600
1,385
(25)
4,600
1,385
(25)
5,960
5,960
20,643
20,950
25,137
25,374
A list of principal subsidiaries and associates is given in note 13 and a list of non-principal subsidiaries and
associates is given in note 32 of the Group financial statements.
As explained in note C2, part of the increase in the investment in respect of Goodwin Indústria e Comércio
de Bombas Submersas Ltda, due to the conversion of the intercompany loan to equity, has been impaired.
During the year, the Company acquired a further 25% shareholding in Asian Industrial Investment Casting
Powders Private Limited, thereby increasing its control of the company. An additional shareholding of 24.5%
in Ultratec Jewelry Supplies Limited was acquired during the year. Details of these acquisitions are reported
in note 13 of the Group Financial Statements.
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, 2018 880 827 1,118
Additions - 200 4,800
Intercompany transfers - - -
120
22
-
2,130 5,075
- 5,022
5,628 5,628
Balance at 30th April, 2019 880 1,027 5,918
142
7,758 15,725
Amortisation
Balance at 1st May, 2018 880 588 673
Amortisation for the year - 68 35
Intercompany transfers - - -
75
34
-
- 2,216
- 137
495 495
Balance at 30th April, 2019 880 656 708
109
495 2,848
Net book value
At 30th April, 2018 - 239 445
At 30th April, 2019 - 371 5,210
45
33
2,130 2,859
7,263 12,877
During the year the Company acquired the entirety of the intellectual property rights from Goodwin
International Limited and Noreva GmbH. The intercompany transfers are the intellectual property rights
transferred from Easat Radar Systems Limited and NRPL Aero Oy.
89
NOTES TO THE FINANCIAL STATEMENTS
C7
Debtors
Interest-bearing
… …
Amounts owed by Group undertakings – repayable on demand
Amounts owed by Group undertakings – repayable within five years … …
Non interest-bearing
Amounts owed by Group undertakings – repayable on demand
… …
Amounts owed by Group undertakings – repayable within five years … …
Other debtors … … … … … … … … … … …
… … … … … … …
Prepayments and accrued income
2019
£’000
6,918
3,869
18,735
783
226
561
2018
£’000
7,059
5,746
16,869
759
410
419
31,092
31,262
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 27 of the Group financial statements.
2019
£’000
Non-current liabilities
Finance lease liabilities … … … … … … … … … …
856
Bank loans and committed facilities … … … … … … … … 18,000
Current liabilities
Finance lease liabilities … … … … … … … … … …
Bank loans and committed facilities … … … … … … … …
Bank overdrafts … … … … … … … … … … …
18,856
835
-
9,915
2018
£’000
1,687
4,000
5,687
812
7,000
4,630
10,750
12,442
Finance lease liabilities
Finance lease liabilities are payable as follows:
Less than one year
Between one and five years
2019
2018
Minimum
lease
payments
£’000
872
869
Interest Principal
£’000
835
856
£’000
37
13
Minimum
lease
payments
£’000
872
1,737
Interest Principal
£’000
812
1,687
£’000
60
50
1,741
50
1,691
2,609
110
2,499
C9
Other payables
Trade payables… … … … … … … … … … …
Amounts owed to Group undertakings … … … … … … …
Other taxation and social security
… … … … … … …
Accruals and deferred income … … … … … … … …
2019
£’000
580
4,965
273
878
6,696
C10 Provisions for liabilities
Deferred taxation
Balance at 1st May, 2018
… … … … … … … … … … …
Recognised in the statement of profit or loss … … … … … … … …
Recognised in equity … … … … … … … … … … … …
Balance at 30th April, 2019
… … … … … … … … … …
2018
£’000
1,024
11,095
239
341
12,699
2019
£’000
2,408
(478)
(2,146)
(216)
90
NOTES TO THE FINANCIAL STATEMENTS
C10 Provisions for liabilities (continued)
The elements of deferred taxation are as follows:
Difference between accumulated depreciation and
amortisation and capital allowances … … … … … … …
2,418
Share-based payment reserve … … … … … … … … … (2,630)
(4)
Other temporary differences … … … … … … … … …
2019
£’000
(216)
2018
£’000
2,410
-
(2)
2,408
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 2018 and at 30th April, 2019 has been calculated based on these rates.
C11 Called up share capital
Authorised, allotted, called up and fully paid:
7,200,000 ordinary shares of 10p each
… … … … … … …
2019
£’000
720
2018
£’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 (2018: £Nil).
C13 Related Party Transactions
The Company has applied the exemptions available under FRS 101 in respect of the disclosure of transactions
with wholly-owned subsidiary companies. The Company has transacted with Easat Radar Systems Limited,
Internet Central Limited, Jewelry Plaster Limited, NRPL Aero Oy, Siam Casting Powers Limited and Ying Tai
(UK) Limited which are not wholly-owned subsidiaries.
Transactions and balances are summarised below:
2019
£’000
418
… … … … … … … …
13
… … … … … … … …
515
… … … … … … … …
… … … … … … … …
187
… … … … … … … … 4,700
Interest receivable
Interest payable
Dividend income
Management fee income
Transfer of development costs
Interest-bearing balances
Amounts owed by Group undertakings – repayable on demand … … … 6,918
Amounts owed by Group undertakings – repayable within five years
… … 3,569
Interest-bearing balances
Amounts owed by Group undertakings – repayable on demand … … … 1,523
2018
£’000
286
8
-
170
-
7,059
5,445
874
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 27 and 29 of the Group financial statements. All the Executive Directors
are party to an Equity Long Term Incentive Plan (LTIP). Further details of the LTIP can be found in note 35
of the Group financial statements.
C14 Commitments
Contracted capital commitments at 30th April, 2019 for which no provision has been made in these financial
statements were £331,000 (2018: £1,484,000).
C15 Subsequent events
Apart from the dividends declared of £6,927,000 which have not been provided for within these financial
statements, no significant events have occurred after the balance sheet date.
91
NOTES TO THE FINANCIAL STATEMENTS
C16 Dividends
Paid ordinary dividends during the year in respect of prior years
83.473p (2018: 42.348p) per qualifying ordinary share … … … …
2019
£’000
6,010
2018
£’000
3,049
After the balance sheet date an ordinary dividend of 96.21p per qualifying ordinary share was proposed by
the Directors (2018: Ordinary dividend of 83.473p).
The proposed current year ordinary dividend of £6,927,000 has not been provided for within these financial
statements (2018: Proposed ordinary dividend of £6,010,000 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 2 of the Group financial statements.
C18 Share-based payment transactions
Details of the equity-settled share-based payment transactions are disclosed in note 35 of the Group Financial
Statements.
92
FIVE YEAR FINANCIAL SUMMARY
Continuing operations
2015
£’000
2016
£’000
2017
£’000
2018
£’000
2019
£’000
Revenue… … … … … … … …
… … … … …
Profit before taxation
Tax on profit … … … … … … …
Profit after taxation … … … … … …
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
127,046
16,410
(3,963)
12,447
Basic earnings per ordinary share
… … …
Diluted earnings per ordinary share … … …
208.68p
208.68p
122.75p
122.75p
84.47p
84.47p
118.11p
118.11p
159.79p
149.65p
Total equity … … … … … … …
86,522
90,117
93,661
104,827
109,291
93