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 2 2
INDEX
1
2
Notice of Annual General Meeting
Notes to Notice of Annual General Meeting
GROUP STRATEGIC REPORT
Chairman’s Statement
3
Summary of Consolidated Statement of Profit or Loss
8
Objectives, Strategy and Business Model
9
Principal Risks and Uncertainties
14
Corporate Social Responsibility
16
DIRECTORS’ REPORTS
19
22
24
27
34
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
35
Independent Auditor’s Report to the Members of Goodwin PLC
FINANCIAL STATEMENTS
44
45
46
48
49
50
85
86
87
96
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
Company Balance Sheet
Company Statement of Change of Equity
Notes to the Company Financial Statements
Alternative Performance Measures
97
FIVE YEAR FINANCIAL SUMMARY
FINANCIAL HIGHLIGHTS
Accounting policies 50
Estimates and judgements 57
Revenue 60
Alternative performance measures 96
Finance costs (net) 63
Right-of-use assets 66
Borrowings 71
Financial risk management 75
Subsequent events 83
Capital and reserves 74
Guarantees and contingencies 83
Segmental information 58
Capital commitments 83
Intangible assets 69
Staff numbers and costs 62
Cash and cash equivalents 71
Interest rate swap 80
Taxation 63
Company statements 85
Investments in subsidiaries 67
Deferred tax and capital
expenditure policy 74
Dividend and capital
expenditure policy 13
Earnings per share 64
Inventories 70
Property, plant and equipment 65
Provisions 73
Related parties 83
Trade and other
financial assets 71
Trade and other
financial liabilities 73
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
Engineering Division
S. R. Goodwin
(Managing Director)
Refractory
Engineering Division
J. Connolly N. Brown 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:
RSM UK Audit LLP,
Festival Way, Festival Park, Stoke-on-Trent, ST1 5BB
NOTICE IS HEREBY GIVEN that the EIGHTY-SEVENTH ANNUAL GENERAL MEETING of the
Company will be held at 10.30am on Wednesday, 5th October, 2022 at Crewe Hall, Weston
Road, Crewe, Cheshire CW1 6UZ for the purpose of considering and, if thought fit, passing
the following resolutions which are proposed as ordinary resolutions.
1.
2.
3.
4.
5.
6.
7.
To receive the Directors’ Reports and the audited financial statements for the year
ended 30th April, 2022.
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. B.R.E. Goodwin as a Director.
To approve the Directors' Remuneration Report (excluding the Directors’ Remuneration
Policy) for the year ended 30th April, 2022, as stated on pages 29 to 33 of the Directors'
Report.
To approve the Directors’ Remuneration Policy, the full text of which is set out on
pages 27 to 28 of the Directors’ Report.
To re-appoint RSM UK Audit 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
2nd August, 2022
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 3rd October, 2022.
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 3rd October, 2022 (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 1st August, 2022 (being the last business day prior to the publication of this Notice) the Company’s issued
share capital consists of 7,689,600 ordinary shares, carrying one vote each. Therefore, the total voting rights in
the Company as at 1st August, 2022 are 7,689,600.
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 Chartered Governance Institute 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 at the Annual General Meeting on 5th October, 2022, the ordinary dividends of
107.80p per share will be payable in equal instalments of 53.90p per share on 7th October, 2022 and on or
around 12th April, 2023 to shareholders on the register on 16th September, 2022 and on or around 24th March,
2023 respectively.
2
GROUP STRATEGIC REPORT
GOODWIN PLC
CHAIRMAN’S STATEMENT
The “Trading” pre-tax profit for the Group for the twelve month period ended 30th April,
2022, was £17.2 million (2021: £16.5 million) an increase of 4% despite the Group having to
contend with £3.8 million of additional energy costs versus the prior year. The revenue
was £144 million (2021: £131 million).
Trading profit for this purpose is defined as the Group pre-tax reported profit of £19.9 million
less the impact of our £2.74 million interest rate swap valuation. The £2.74 million relates to
the 30th April, 2022 valuation of our £30 million debt interest rate swap derivative that
expires in August 2031 whereby we have fixed our interest rate for ten years at less than
1% for the full term. In our view, this derivative is an effective hedge and should not go
through the profit and loss account. The Board’s view was that it was highly probable that
we would still have 25% gearing in ten years’ time, having secured the interest rate swap
to fix interest rates at less than 1% on £30 million debt for this period. Our auditor was
unconvinced that it could meet the highly probable criteria and that other requirements
under IFRS 9 for hedge accounting were not met. The reason the Board considers the level
of debt to be highly probable is due to the Board having a responsibility to invest in a
responsible manner to grow the business for all the stakeholders. The Board has, however,
complied with the auditor’s view and has shown the £2.74 million unrealised mark to
market gain within the profit before taxation figure. As the £2.74 million gain is a non-cash
item, it has been excluded for dividend purposes. The Directors propose an increased
dividend of 107.80p (2021: 102.24p) per share.
Given that we believe turnover and profitability are projected to rise in future years, the
level of dividend payments in line with the current policy is also set to rise. In view of this,
coupled with the significant capital expenditure needed to fund the Duvelco activity, the
Directors are of the opinion that it will be of long-term benefit for the Group to ease
pressures on the Group cash flows by paying the current and future dividends bi-annually.
It is proposed that dividend payments will be made in equal instalments on 7th October,
2022 and 12th April, 2023.
Refractory Engineering Division
The increase in Group profits achieved in the year having just ended can largely be attributed
to the growing Refractory Engineering Division activity, whose year-on-year operating
profits have grown a further 37% following the 40% growth that was achieved in the prior
year. The Division has continued to maximise its position with sales of jewellery casting
consumable products (investment casting powder, waxes, natural and silicone rubbers)
and to construction markets that have seen a surge in activity globally.
The Division has also benefitted from strong demand for its newer products, AVD being
Dupré Minerals' vermiculite-based solution for lithium-ion battery fires, that is still in its
product life cycle infancy, and has delivered in excess of 100% year-on-year growth, along
with Castaldo rubber, which has achieved 45% year-on-year growth.
The challenges faced by companies from the ongoing global supply chain and energy
market disruption have been well reported in the news over the past year and the
Refractory Division has acted dynamically to ensure cost increases are passed on to our
customers to ensure the impact to our margin is minimised. Whilst the success of the
Division has been seen across all companies, special mention should be made of our
jewellery investment casting powder companies in China and in India having generated
record profits in the year, even though the domestic market in China is still depressed due
to the prolonged lockdowns and travel restrictions.
3
GROUP STRATEGIC REPORT
Mechanical Engineering Division
CHAIRMAN’S STATEMENT (continued)
Whilst not always being outwardly visible, the Mechanical Engineering Division has had a
very difficult seven years. Over this period the product offerings pretty much across all
the companies have had to evolve to the changing conditions in the markets from which
the companies generate their turnover and gross margin.
The fact that the companies within the Division have managed to evolve is a credit to them
and their management teams. Contending with huge energy and commodity increases
within the year has not been straightforward. The metal pricing volatility has been extreme
at its highs with nickel trebling in price and iron more than doubling in price at times. As a
matter of course, our long term contracts have variation clauses to adjust for annual
inflationary costs. However, the volatility of metals and energy costs has been so extreme
that these clauses have proved to be totally ineffective. Therefore, across the board every
contract where this could have posed significant issues has been successfully re-negotiated
with our customers. If we were not a high quality, critical supplier to our customers, then
this could have been more problematic, but that is not the case.
Despite the decline of the workload in our traditional markets over the prior years
associated with the demise of our product sales to the non green oil and coal sectors, our
re-aligned business offerings are more in demand than they ever have been, which is seen
by the growing workload that customers are booking up to be delivered now years in
advance. With the confidence of a solid and growing forward order book the tide has
turned; all things being equal, the next few years should see the Mechanical Engineering
Division returning to its former glory with even higher levels of turnover than at the peak
of the oil and gas industry in 2014.
Notably within the year, expanding on the nuclear decommissioning front, Goodwin
International Limited has successfully tendered and been awarded 50% of the initial phase
of the multi year multi million pound Sellafield Hybrid 2, 63 Can Racks as reported on the
OJEU website in October last year. Gaining initial process and documentation approvals
to proceed with manufacture will take time, but once ramped up, the initial production rate
will be 20 racks per year, with 80 racks currently committed. Our customer has the option
within the contract to make further commitment(s) of up to an additional 160 racks,
as well as increasing the demand to 40 racks per year.
It is also pleasing to report that in addition to Goodwin Steel Castings Limited having
completed its transition away from a reliance on the oil and gas market, the company has
also managed to successfully settle the two commercial disputes that were referenced in
my Chairman’s Statement of year ending 30th April, 2020. Part of the settlement is
reflected in these results, with the balance being realised in the current financial year.
On top of its base load, with the excellent work done at getting on to new programmes,
Goodwin Steel Castings Limited will build on its workload and expect to finish the current
year with forward order levels in excess of the levels the Group experienced when it was
really busy a decade ago. However, it will not be for oil and coal industries as it was
previously; it will be for nuclear decommissioning; or nuclear power station castings;
or surface ship and aircraft carrier castings as well as submarine hull castings.
With these successes, and the hard work and perseverance of the Group in achieving a
positive conclusion to prior years' contractual claims we have been pursuing; the successful
re-negotiation of multiple contracts for unforeseeable energy and raw materials pricing
volatility whilst at the same time growing, it has resulted in an excellent Group workload
of £175 million as at the time of writing. It is pleasing to report that the bulk of the
increased workload relates to contracts to supply products that the Group has successfully
and consistently delivered before, and is a workload figure that is likely to grow over the
4
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
coming years even with the knowledge that the Group is likely to achieve record activity
levels within this current year.
What is not visible yet in the workload figure is an appropriate workload for Easat Radar
Systems Limited. Once up to speed (which still may be another year away) the Board and
I believe there will be a workload for Easat, the likes of which readers of their accounts for
the past thirty years have never seen. Easat order input has been hampered by lack of
cash generation at civilian airports globally, and military airports being starved of cash as
a result of Covid-19 over the past two years hampering their purchasing decisions.
However, it would appear that the radar market is starting to wake up again. We have
considerably more firm buy quotations due for decision in the next six months, and,
in order to give a flavour of what we are seeing, in the week following the latest ATM Madrid
exhibition in June 2022, an additional £47 million of firm buy radar systems were quoted.
Energy
As initially reported in our 31st October, 2021 Interim Statement, over the course of the
year the most significant headwind that the Group has faced has been the increased
energy costs. Nonetheless, the Group managed to deliver the more than respectable
profits reported above, after having incurred a total of £3.8 million of additional energy
costs due to price increases versus the year ended 30th April, 2021. Goodwin Steel
Castings Limited and Hoben International Limited were the most affected due to their
energy intensive operations, melting metal and high temperature treatment of refractories.
However, now armed with a multitude of short and long-term hedges in place the Group is
set to deliver substantially higher profitability in the current year, partly as a result of not
having to absorb the price volatility of the energy markets that have been seen over the
past twelve months, irrespective of the improving performance.
Green Investments
We recognise the importance of adopting a strategy to transition to lower carbon
manufacturing. We have put in place a separate £10 million finance line to fund a range
of ‘green’ investments which were approved at the beginning of the financial year ended
30th April, 2022. A total of 4.8 MWp of solar panels have been installed and commissioned
as at the time of writing. Each individual system has been designed specifically to match
the power demand at each facility, subject to available roof space. The payback of each
system varies dependent on the size and roof configuration and all were between three
and six years; however, that payback was calculated prior to energy costs more than
doubling, so at current market prices the payback time has halved from the original plan,
with all the solar systems having an insurance backed 20 year minimum lifespan. There
are other solar projects and plant control modification projects that, subject to us obtaining
the agreement from the Electricity Supplier (District Network Operator), for the former we
expect to bring on line over the next two years. This will provide a further 7.8 MWp of
green electricity generation and so further reduce our consumption. Over the course of
the year a total of £8.2 million has been invested in green projects.
We are also looking at schemes that would reduce our carbon footprint in instances
where we cannot reduce or eliminate CO2 production without ceasing the operation in
its entirety. Typically this is where we utilise natural gas in a process, and it is not
economically viable or possible to change the process. I look forward to updating you
further on this in twelve months’ time.
Capital expenditure / cash flow
With the Group's intrinsically strong cash flows, the Group’s net debt stands in line with
the Board's expectations at £29.8 million as at 30th April, 2022, which is a £2 million
5
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
improvement since the half year despite having proceeded with our substantial
investment programme. As mentioned earlier we are making full use of the ten year
duration £30 million interest swap that was executed at the height of Covid-19 in light
of our planned activities, whereby the SONIA interest chargeable to the Company is
capped at less than 1% on £30 million of borrowings.
The headline investments that the Board has authorised and the Group has been getting
on with are four fold, and whilst these activities all commenced in year ended 30th April,
2022, due to the timescales the latter three are still in the course of construction.
Firstly nearly £10 million relates to green investments, with the majority being spent on
CO2 offsetting projects.
Secondly, due to the outstanding performance of the Refractory Engineering Division in
growing sales by winning market share so impressively, for both capacity and business
continuity requirements, as we are running dangerously close to full capacity, authorisation
has been given to spend £4.5 million installing a second calciner at Hoben International
Limited, as without it, we would have two problems. We would be limiting the Refractory
Division the opportunity to grow further investment powder sales, and in the eventuality
of a breakdown we would struggle to ever catch up with the demand again, and would
lose market share to competitors who could deliver product to keep our customers
operational. This was why the Board deemed this a necessary investment as it is
underpinning substantial Group profitability.
Thirdly, for Goodwin Steel Castings Limited, despite allocating a significant amount of
Group capital expenditure on infrastructure there in recent years, to enable the foundry
to deliver what will be required of the foundry, there have been additional planning
applications approved and work commenced on additional casting pit space which will
allow further increased activity. Such modifications would likely be impossible to carry out
in a couple of years' time with the envisaged activity levels there.
Finally for Duvelco Limited, part of the Mechanical Engineering Division, which was
incorporated in January 2020. Over the Company's 139 years existence to date, as well as
designing or buying bolt on complementary products and companies, it has occasionally
branched out into totally new product lines whilst utilising skill-sets within the organisation.
After working on this idea for some time, Duvelco Limited was set up as a business to
channel the Company's ambition to become a specialist polymer manufacturer, one that
we hope will truly excel over the coming decades. We will manufacture high performance
polyimide polymer resins that can be moulded into parts and shapes for high temperature
and critical applications that very few polymers can be used for.
With the development work that was done before and since the incorporation of Duvelco
Limited, utilising a bespoke pilot scale plant the team designed, we have developed the
product and a process that will allow us to deliver a higher performing directly comparable
polyimide polymer than the market leader. With an annual addressable, and growing, market
size bigger than any product that the Group has supplied to before, the Board believes
that, with limited existing market competition, a very high technology barrier, coupled
with the fact we have a patent pending process that gives us markedly better high
temperature performance than anybody else for directly comparable chemistry product,
this should hopefully give Duvelco Limited, as a market invader, good prospects of long
term success, so that one day it should be a major contributor to Group profitability.
The initial, custom designed and bespoke plant the Group is building should be coming
into operation in the first half of the calendar year 2024, after which we will start growing
the sales internationally as we have done with our other products over the years.
Our initial investment inclusive of R&D costs and working capital for materials is forecast
6
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
to come in at £12.5 million; from this we would have an initial annual capacity in excess
of £40 million of material. The reason I have elaborated about this is because costs are
being incurred now, and it will be a long time until the plant will be in commission.
With the effort being put into this by the Group, it should deliver a new niche market,
high technology product to the Group with a long life cycle ahead of it, thus providing
the Group with long-term benefit, which the Board believes is in the best interest of
all stakeholders.
For both Hoben International Limited and Duvelco Limited, most supplier purchase orders
were placed in Q3 Financial Year 2022, giving suppliers large down payments to have
fixed price contracts. If the start of placing orders for either project had been delayed by
several months the prices would have been significantly more with labour and materials
increasing, as we ourselves have experienced and have had to mitigate and manage.
The Board estimates that by getting on with the projects and contracting when we did,
the saving versus starting either project today is in excess of 25%.
As contracts within the Mechanical Engineering Division become larger and span longer
periods, the engineering companies are being targeted to ensure contracts incorporate
down payments / stage payments to allow their execution with as neutral overall cash
flow status as can be obtained over the life of a contract, so that work in progress does
not consume a disproportionate amount of cash as we get busier.
With the profitability, positive outlook and strong understanding of the various subsidiaries'
cash flows the Board believes it is appropriate to continue to follow the Group’s investment
plans and pay the proposed dividend that is in line with the dividend policy with 50%
being paid on 7th October, 2022 and 50% on 12th April, 2023.
We are once again extremely grateful to our UK and overseas Directors, managers and
employees for their hard work in driving forward the performance of the Group, which
will likely improve again in the new financial year with the strong foundations that have
been put in place in many areas around the Group.
2nd August, 2022
T. J. W. Goodwin
Chairman
Alternative performance measures mentioned above are defined on page 96.
7
GROUP STRATEGIC REPORT
GOODWIN PLC
SUMMARY OF CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2022
Notes
2022
£’000
2021
£’000
CONTINUING OPERATIONS
Revenue … … … … … … … … … …
3, 4
144,108
Cost of sales
… … … … … … … … …
(101,404)
GROSS PROFIT… … … … … … … … … …
… … … … … … … … …
Other income
Distribution expenses … … … … … … … …
Administrative expenses
… … … … … … …
OPERATING PROFIT … … … … … … … … …
… … … … … … … …
Finance costs (net)
Share of profit of associate company
… … … … …
5
7
14
42,704
-
(3,743)
(20,654)
18,307
(1,169)
63
131,231
(92,230)
39,001
763
(2,988)
(19,682)
17,094
(640)
60
TRADING PROFIT … … … … … … … … …
… …
Unrealised gain on 10 year interest rate swap derivative
17,201
2,740
16,514
-
PROFIT BEFORE TAXATION
… … … … … … …
Tax on profit* … … … … … … … … …
5
8
19,941
(6,321)
16,514
(3,508)
PROFIT AFTER TAXATION… … … … … … … …
13,620
13,006
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
Non-controlling interests
… … … … … … …
12,980
640
12,494
512
PROFIT FOR THE YEAR … … … … … … … …
13,620
13,006
BASIC EARNINGS PER ORDINARY SHARE (in pence) … … …
DILUTED EARNINGS PER ORDINARY SHARE (in pence) … …
9
9
169.14p
167.82p
169.14p
164.23p
* The tax charge for the current year equates to 31.7% of profit before tax (2021: 21.2%). Within the current year
there is a non-recurring non-cash impacting deferred tax charge of £2 million relating to the future change in the
UK corporation tax rate from 19% to 25%. Please refer to note 8 within these accounts for a full reconciliation of
the tax charge for the year.
The full financial statements and accompanying notes are on pages 44 to 96.
8
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:
(cid:129) 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, competitive price and delivery;
(cid:129) to manufacture advanced technical products profitably, efficiently and economically;
(cid:129) 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;
(cid:129) to control our working capital and investment programme to ensure a safe level of gearing;
(cid:129) to maintain a strong capital base to retain investor, customer, creditor and market confidence
and so help sustain future development of the business;
(cid:129) to support a local presence and a local workforce in order to stay close to our customers;
(cid:129) to invest in training and development of skills for the Group’s future;
(cid:129) to manage the environmental and social impacts of our business to support its long-term
sustainability.
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, our overseas business
facilities and our global sales and marketing activities, the Group benefits from market diversity.
Further details of our business and products are shown on our website www.goodwin.co.uk.
Mechanical Engineering
The Group specialises in supplying precision engineered solutions and industrial goods into
critical applications, generally on a project basis, more often than not involving the
complementary skillset of other group companies to deliver the requirement. The projects
normally involve international procurement, high integrity castings, forgings or wrought high
alloy steels, carbon fibre composite structures, precision CNC machining, complex welding and
fabrication, and other operations as are required. In addition to specialist projects, the Group
manufactures and sells a wide range of dual plate check valves, axial nozzle check valves and
axial piston control and isolation valves. These solutions and products typically form part of
large construction projects, including the construction of naval vessels, nuclear waste
treatment, nuclear power generation, liquefied natural gas (LNG), gas, oil, petrochemical, mining,
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.
The Group through its foundry, Goodwin Steel Castings Limited, 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 Limited. 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 Limited, 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 Limited also
has a division that is focused 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 Limited and Noreva GmbH purchase
the majority of the value of their sand mould castings from Goodwin Steel Castings Limited
9
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
for their ranges of check valves and this vertical integration gives rise to competitive benefits,
increased efficiencies and timely deliveries.
At Goodwin Pumps India Private Limited we manufacture a superior range of submersible
slurry pumps for end users in India, Brazil, Australia and Africa. Easat Radar Systems Limited
and its subsidiary, NRPL Aero Oy, design and build bespoke high-performance radar surveillance
systems for the global market of major defence contractors, civil aviation authorities and coastal
border security agencies. Easat has a sister company, Easat Radar Systems India Private
Limited, that also manufactures, 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.
Refractory Engineering
Within the Refractory Engineering Division, Goodwin Refractory Services Limited (GRS) generates
value primarily from designing, manufacturing and selling investment casting powders, injection
moulding rubbers and waxes to the jewellery casting industry. GRS also manufactures and
sells these products to the tyre mould and aerospace industries. The Refractory Engineering
Division has five other investment powder manufacturing companies located in China, India
and Thailand which sell the casting powders directly and through distributors to the jewellery
casting industry and also directly to tyre mould and aerospace industries.
These companies are vertically integrated with another of our UK companies, Hoben International
Limited (Hoben), which manufactures cristobalite, which it sells to the six casting powder
manufacturing companies as well as producing ground silica that also goes into casting
powders and other UK uses of silica. Hoben now also manufactures different grades of perlite,
and a patented range of biodegradable bags, known as Soluform, for use inside traditional
hessian / jute bags for the placement of concrete in or around rivers.
The other UK refractory company is Dupré Minerals Limited (Dupré) 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-ion battery fire extinguishers. Dupré also sells consumable refractories to the shell
moulding precision casting industry. Dupré has designed, patented and is now selling a range
of fire extinguishers and an extinguishing agent for lithium-ion battery fires that utilises a
vermiculite dispersion as the fire extinguishing agent.
10
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
GROUP STRATEGIC REPORT
BUSINESS DIVERSITY AND PERFORMANCE
In the year ending 30th April, 2022, there has
been a significant shift in the divisional split of
operating profits, with the Refractory Division
generating 58% of the Group’s operating profits
and the Mechanical Division generating 42%.
to
The above change is a feature of the Refractory
Division delivering a strong performance with
its end user markets continuing to grow and its
newer products utilising the Group’s eight
companies supplying consumables
the
jewellery, fire protection and construction sectors,
that combined to form a global network that
enables the Refractory Division to efficiently and
quickly supply product that generates additional
returns without the need of putting in place
additional overheads. Whilst it has taken longer
than originally forecast, it is products like Dupré
Minerals' unique patented solution, known as
Lith-Ex, which is a vermiculite dispersion-based
fire extinguishing agent, that suppresses and
effectively provides protection against lithium-ion
battery fires that has contributed to the Refractory
Division’s notable performance in the year. In the
year the team has doubled its sales of Lith-Ex and
is expected to continue to grow the sales at a
similar rate next year.
In the year 40% of the Group’s end user market
sales related to the consumables utilised within
the manufacture of jewellery, heat resistance
applications and horticultural products. However,
moving forward we expect the proportional split
between market sectors to swing back towards
the Mechanical Division in the years to come, as
the LNG, defence, construction and surveillance
markets start to deliver the profits that are built
into the material contracts that have and are
being won, before any consideration of the high
expectation for the specialist polymer market.
As expected
the oil sector has remained
depressed and as a result of the other sectors
growing, now only represents 17% of the Group's
total revenue (2014: 50%). Conversely though, in
light of the ongoing energy crisis that specifically
has left Europe exposed, the previously seen
pressure
to green power
funds
generation projects might now be put on hold
as LNG projects are prioritised, which will
predominantly be to the benefit of our German
based subsidiary, Noreva GmbH.
to direct
11
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
KEY PERFORMANCE INDICATORS
The key performance indicators for the business are listed below:
Gross profit as a %
of turnover *
Trading profit
(£ millions)
Gearing % (excluding
deferred consideration)
Sales per employee per
year (£’000)
Dividends proposed
(in £ millions)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
31.9
34.3
32.5
27.8
25.6
28.6
32.0
24.1
29.7
29.6
20.3
24.1
20.1
12.3
9.2
13.3
14.7
12.1
16.5
17.2
23%
5%
12%
26%
31%
11%
20%
18%
15%
26%
126
124
112
105
114
120
117
121
116
130
3.8
3.0
3.0
3.0
3.0
6.0
6.9
6.0
7.9
8.3
The alternative performance measures
referred to above are defined on page 96.
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.
* The calculation of Gross Profit is after taking
into account plant depreciation, training, HR,
R&D, sales, exhibition and sales travel costs,
as well as the material and labour costs.
12
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
DIVIDEND AND CAPITAL EXPENDITURE POLICY
The Board proposes to pay a dividend of 107.80p per share, up 5% on the previous year (2021:
102.24p). The proposed dividend has been calculated using the Group’s profit after taxation
figure, plus depreciation and amortisation for the year ending 30th April, 2022, after having
excluded the non-cash £2.74 million mark to market unrealised gain relating to the ten year
interest rate swap that, in our view, is an effective hedge and should not go through the profit
and loss account. However, as our auditor was unconvinced with the Board’s view that it was
highly probable that we would still have 25% gearing in ten years' time, despite having secured
a variable interest rate of less than 1% on £30 million debt for this period and so met the
IFRS 9 requirements for hedge accounting, it has been reported as a gain within the pre-tax
profit for the year.
Excluding the Group's green investments, the Board continues to focus on limiting 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 to a maximum of 55% of post tax
profits plus depreciation and amortisation on a three year rolling annual average. In the year
the Group has slightly exceeded its 55% target by 2%. This relates primarily to the Board
making the decision to bring forward the placement of purchase orders of certain capital
projects so as to lock in the price and avoid significant material price increases, which the
Board estimates has saved the Group in excess of 25% of the cost against today's prices,
due to the inflationary price pressures that we have been informed of since.
In line with expectations, following the Group's green investments, the Group finished the
year with a gearing of 25.8% (2021: 15.4%). Whilst the gearing is expected to improve by next
year end, due to the front end loaded capital investment profile and the Board’s cautious
approach, the Board proposes to smooth the Group's cash flow by splitting the payment of
the proposed ordinary dividends of 107.80p per share into equal instalments of 53.90p per
share on 7th October, 2022 and on or around 12th April, 2023 to shareholders on the register
on 16th September, 2022 and on or around 24th March, 2023 respectively.
*Further details are included in the Alternative Performance Measures on page 96.
13
GROUP STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's operations expose it to a variety of risks and uncertainties. The Directors confirm that they have
carried out a robust assessment of the principal risks the Company faced, including those that would threaten
its business model, future performance, solvency or liquidity.
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 3 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.
Operating in many territories helps spread market risk. Similarly, the Group operates in both Mechanical Engineering
and Refractory Engineering sectors, mitigating the impact of a downturn in any one product area as has been
seen in recent 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 annual turnover.
As described in the Business Model, the Group generates significant sales not only from valves it supplies to
LNG, oil, chemical and water markets, but increasingly significant amounts from nuclear new build and
decommissioning, naval propulsion marine applications and ship hull components. The Mechanical Engineering
Division also supplies submersible pumps that are supplied to the mining industries and radar systems that are
supplied for civil and defence applications. The Refractory Engineering Division sells vermiculite and perlite to
the insulating and fire prevention industry and our investment casting powder companies indirectly sell to the
jewellery consumer market through the supply of investment casting moulding powders, waxes, silicone and
natural 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 as far as possible 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
feedback 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, especially in these post Covid-19 pandemic times.
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). As reported elsewhere within these financial statements, the
Company, on 2nd July, 2021 signed a contract to mitigate the impact of interest rate risk by taking out an
interest rate swap derivative fixing £30 million of notional debt at less than 1% versus the variable SONIA
rate for a period of ten years, commencing 1st September, 2021. Detailed information on the financial risk
management objectives and policies is set out in note 26 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.
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.
14
GROUP STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
IT security: The Group performs regular and remote off site backups of its IT systems, from time to time
engaging external companies to test and report any weaknesses and deficiencies found to enable solutions to
be put in place to mitigate and minimise the risk of an IT security breach. The Group is in the process of
re-evaluating the need to invest further in this area over the next twelve months, but for security reasons we
will not be disclosing the details of what we do.
Covid-19 risk: The Covid-19 pandemic continues to have a global impact in varying degrees that has been
seen during the year through labour shortages, supply chain disruption, shipping availability and inflationary
pressures. The impact of labour shortages has been eased by the strength of our employee retention and our
apprentice school continuing to feed the Group’s requirements with eager engineers. The supply chain issues
have been mitigated by the Group’s ability to dynamically acquire and hold appropriate levels of stock so as
to avoid disruption to the manufacturing processes. Furthermore, the continuation of the post lock down
exceptionally high activity levels within the Refractory Division, in addition to the significant workload within the
Mechanical Division have meant that the Group has continued to operate as normal across all of its 23 sites
around the world for the past twenty-four months.
Energy: The recent geopolitical tensions, with the current conflict in Ukraine, combined with the UK Government's
energy policy over the last few years to reduce carbon emissions has left the country exposed to the fragile
global energy system which has driven significant increases in the cost of power. Following the impact this has
had on the Group earlier on in the year, the Group has amended its strategy to manage the risk through hedging
strategies, incorporating price escalation clauses into the longer term contracts, aided by the coming on stream
of increasing levels of low cost solar power around the Group. We also have two significant programmes of
enhancing the control of plant and utilising more inverter drives around the Group, which within twenty-four
months should save an additional 6% of the Group's electricity and gas consumption.
15
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY
The Board as a whole is responsible for decisions relating to the long-term success of the Company and the
way in which their duties have been discharged during the year in terms of the strategic, operational and risk
management decisions and these can be found within the Strategic Report on pages 9 to 15.
As set out below and in line with Section 172 of the Companies Act 2006, through engagement the interests and
views of the Group’s employees and other stakeholders are considered by the Board within its decision-making
process as well as the impact they have on the environment, our reputation and the surrounding communities.
Unless otherwise stated, no principal decisions have been made in the year other than routine decisions that
are made on a year-on-year basis as part of running the business.
Employees
Health and Safety: The Group acknowledges that many of its manufacturing processes and some materials that
it handles and sells are hazardous and that providing a safe environment for people at all of our facilities is an
unconditional priority for all of those charged with governance, in addition to each member of the workforce.
In the year, as operations change, the Group has managed the continually evolving risks that are inherent in
manufacturing businesses by ensuring risk assessments are carried out by all departments and as soon as an
operational change is envisaged. Such assessments enable the introduction of the appropriate controls to help
ensure that the workforce is protected from foreseeable hazards. Furthermore, awareness and training to
continually reduce risk and improve safety is a mind-set that is reinforced on a daily basis through the Group’s
global “Safety Spectrum” programme.
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. The Board considers the most
effective form of engagement and communication with its employees for its size and complexity is by way of
informal daily discussions between the employees, the Senior Management and Board members who walk the
floor. Engagement in the year is further supported through workforce representative meetings, local working
groups, team meetings, training, and an honest and open culture.
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.
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. The Group continues to strive to improve the
balance of diversity by reviewing gender reporting and implementing our Diversity Policy 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, 2022
Main Board and
Senior
Employees
Total
Company Secretary Management
Number of female employees
Number of male employees
Total number of employees
% of female employees
% of male employees
Breakdown by age
2
6
8
25%
75%
12
72
84
14%
86%
185
835
1,020
18%
82%
199
913
1,112
18%
82%
Year ended 30th April, 2022
Main Board and
Senior
Employees
Total
Company Secretary Management
Number of employees aged 16-21
Number of employees aged 22-40
Number of employees aged 41-65
Number of employees aged over 65
Total employees
% aged 16-21
% aged 22-40
% aged 41-65
% aged over 65%
-
4
4
-
8
-
50%
50%
-
16
-
13
62
9
84
-
15%
74%
11%
84
472
447
17
84
489
513
26
1,020
1,112
8%
46%
44%
2%
8%
44%
46%
2%
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Suppliers, Customers and Regulatory Authorities
The Board considers market trends regularly and reviews their likely long-term implications. Our business
relationships and procedures are developed over time and are regularly reviewed to ensure as a Group we
conduct business responsibly and sustainably. The Board acquires a first-hand understanding of its business
relationships through regular dialogue and site visits where appropriate. Engagement is ensured from the initial
tender processes to embedded sales and engineering project meetings and reinforced by an open door culture,
whilst actively seeking feedback.
The six Executive Directors of the Board are actively involved with the day to day business and management of
the subsidiaries thereby allowing a good understanding of key members of the supply chain and also ensuring
a fair purchase culture.
Maintaining High Standards of Business Conduct
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, anti-bribery and corruption and is all enhanced by an anonymous
whistle-blowing system.
Shareholders
Shareholder engagement occurs through the Annual Report, regulatory disclosures, our website and the Annual
General Meeting, coupled by supplementary RNS announcements made during the course of the year. The Company
has one class of ordinary shares, which have the same rights as regards voting, distributions and on liquidation.
Management are also significant shareholders in the Company, holding approximately 52.48% of the register.
In accordance with LR6.5, there is a controlling shareholder agreement in place. On this basis the Board feels
that the Executive Directors are fully aligned with shareholders.
Communities
During the year the Group has continued to communicate to all employees our culture of responsibility and
support for local communities where possible. The Board encourages its sites to support their local communities
through charitable activities and initiatives to support the local area within which they operate. Engagement occurs
through dialogue with the local councils and charities.
Donations
The Group made no political donations during the year (2021: £nil).
Donations by the Group for charitable purposes amounted to £71,000 (2021: £78,000). The majority of these
were made to local communities within the Group’s operating environments.
Environment – Task Force on Climate-related Financial Disclosures (TCFD)
The Task force on Climate-related Financial Disclosures (TCFD) has developed a disclosure framework to help
companies improve and increase the understanding of their reporting of climate-related financial information.
In line with the new reporting requirements and in consideration of the ongoing assessments, the Group, where
possible, has aligned its reporting of climate-related matters with the TCFD recommendations. For all disclosures
that are not consistent with the recommendations the Group is actively working to a plan that will enable consistent
disclosures to be reported within next year’s annual report.
Strategy, Metrics and Targets
During the year the Board has initiated a Group-wide assessment to identify and evaluate the risks and opportunities
relating to climate change. Once completed it will enable the Board to finalise its strategy. The strategy will
describe the impacts of the identified short, medium and long-term risks and opportunities on the Group, as well
as its resilience to varying scenarios, which will all be reported in next year’s Annual Report. Within the plan,
the Board will set out its realistic and appropriate science-based targets and metrics that will be used to assess
climate-related risks and opportunities moving forward.
Similar to previous years and in line with the GHG reporting guidance set out by SECR (Streamlined Energy and
Carbon Reporting) the Group has conducted a carbon footprint analysis across the business using the latest
available emissions factors to report our Scope 1 and Scope 2 emissions.
17
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Environment – Task Force on Climate-related Financial Disclosures (TCFD) (continued)
Strategy, Metrics and Targets (continued)
The reported CO2 emissions are detailed below:
2022
2021
Tonnes of CO2e
Proportion
of emissions
arising from
UK operations
%
Tonnes of CO2e
Proportion
of emissions
arising from
UK operations
%
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
Energy Consumption (kWh)
resulting in the above reported
emissions
29,301
96%
5,214
77%
34,515
241
27,293
5,176
32,469
242
67,738,237
69,737,248
98%
83%
Governance
The Board has overall accountability for the management of all risks and opportunities, including climate change,
as well as being responsible for the day to day implementation, monitoring and management of our related
performance. Climate-related risk is considered by the Board as a stand-alone agenda item and accordingly
receives regular updates on its environmental assessments, commitments and performance. The Group’s Audit
Committee supports the Board in ensuring climate-related issues are integrated into the Group’s risk
management process.
Risk Management
Climate change related matters are monitored by the Board and Audit Committee to ensure that they are
embedded in our risk management and planning process, in addition to our long-term strategic decision-making.
The identification and management of climate change risks follow our established risk-management process,
of which the key elements are set out within the Strategic Report, on pages 14 to 15.
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 2nd August, 2022 and is signed on its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
18
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS
The Directors have pleasure in presenting their reports and audited financial statements for the year ended
30th April, 2022.
The Directors have presented their Group Strategic Report on pages 3 to 18. 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 and the
required statements under Statutory Instrument 2008/410 Schedule 7 of the Companies Act 2006. 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 9, Principal Risks
and Uncertainties on page 14, and the Corporate Social Responsibility Report on pages 16 to 18
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 107.80p per share (2021: 102.24p) be paid in equal
instalments of 53.90p per share on 7th October, 2022 and on or around 12th April, 2023 to shareholders
on the register on 16th September, 2022 and on or around 24th March, 2023 respectively. The ordinary dividend
is subject to the approval of the shareholders at the Annual General Meeting on 5th October, 2022.
See comments on page 13 regarding the Dividend Policy.
Directors
The Directors of the Company who have served during the year are set out below.
M. S. Goodwin
S. R. Goodwin
T. J. W. Goodwin
J. Connolly
B. R. E. Goodwin
N. Brown
J. E. Kelly (Non-Executive Director)
The Chairman and the Managing Directors do not retire by rotation.
No Director has a service agreement with the Company, nor any direct 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 1st August, 2022, 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 (27.69%), J. W. and R. S. Goodwin 1,457,358 shares (18.95%). These shares
are registered in the names of J. M. Securities Limited and J. M. Securities (No. 3) Limited respectively. J. H. Ridley
501,709 shares (6.52%), Rulegale Nominees Limited (JAMSCLT) 434,765 shares (5.65%) and Rulegale Nominees
Limited (IAS001) 246,129 (3.20%).
In line with LR 9.2.2AD R (1), relating to Controlling Shareholders, the Company confirms that a written and legally
binding agreement is in place, and has complied with the independence provisions set out in LR 6.5.4 R.
The Company confirms that, as far as it is aware, the controlling shareholders have complied with the agreement.
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 25 to the financial
statements on page 74.
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:
(cid:129) certain restrictions as may from time to time be imposed by laws and regulations (for example, insider trading
laws); and
(cid:129) 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.
19
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Research and development
The Group invests significantly in research and development. The main investment during the year was
concluding the production process development for polyimide polymers. As a result of the work done within
the year there is a patent pending for a novel processing step for the polyimide manufacture that was filed in
November 2021. Concluding the development process for our polyimide polymer production allowed the Board
to release the capital expenditure to develop the production facility in December 2021, which has a long lead
time as it is totally bespoke due to our novel process. It is anticipated that the polymer production facility should
be commissioned and operational by December 2023. In addition, further investment has gone into enhancing
our submersible slurry pump range to include a hydraulically driven variant.
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.
Stakeholders 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
where 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.
Engagement with the Group’s suppliers, customers and other stakeholders can be found within the Strategic Report
on pages 16 and 17.
Going concern
The Directors, after having reviewed the projections and possible challenges that may lie ahead, believe that
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.
As at 30th April, 2022, the Group’s gearing ratio stood at 25.8% (2021: 15.4%) against a substantial shareholders’
net worth of £115 million (2021: £113 million). The retained reserves of the Group put it in a strong position to
deal with unforeseen material adverse issues.
In previous years we have reported on the potential impact of Covid-19 and its limited impact on the business.
As you might expect given our previous comments, our pandemic risk profile is low and whilst there are minor
Covid-19 impacts we do not see the pandemic as a cause for concern for the Group moving forwards.
The reported results for the year are after having incurred what have been unprecedented increases in energy
costs. Whilst the Group is not complacent and there is work to be done here, we do not see the impact of
energy costs giving rise to a going concern issue.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds to cover
the Group’s and the Company’s financial commitments during the forecast period whilst remaining compliant
with its financial covenants. The stress test model starts with the forecasts generated by the subsidiary directors
and reflects their specific knowledge of the market conditions, strategy and outlook. Each of these subsidiary
level forecasts is then reviewed, challenged and approved by the relevant Group Managing Director who
themselves are immersed in each of the businesses. The stress test model then predicts the impact of a severe
but plausible reduction in the pre-tax profit forecast without pulling back on our capital expenditure forecast.
The results of the stress test modelling did not highlight any going concern issues.
Whilst our carrying values of trade debtors and contract assets are significant, we see little risk here in terms of
recovery. Where possible, we credit insure the majority of our debtors and our pre credit risk (work in
progress), and for significant contracts where credit insurance is not available, we ensure, where possible, that
these contracts are backed by letters of credit or cash positive milestone payments.
As discussed elsewhere within these accounts, the Mechanical Engineering order book remains high and the
Refractory Engineering segment continues to be buoyant.
20
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Going concern (continued)
The Directors are confident that the Group and Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least twelve months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern basis.
Viability Statement
In accordance with provision 31 of the UK Corporate Governance Code the Directors have assessed the Group’s
viability over a three year period to 30th April, 2025.
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 review period is prudent, and provides the readers of the report with a sensible degree
of confidence.
As part of the going concern review process we have considered the impact of plausible adverse events over an
extended period (two more years, taking the total review period to 30th April, 2025). The plausible adverse
event scenarios (using the same logic as outlined for the stress test model within the going concern review
section) have been modelled without adjusting downwards the capital expenditure programme. The results
demonstrate that the Group has sufficient facilities in place to deal with these adverse events and given that a
large proportion of the future capital expenditure is by definition discretionary, there is further confidence that
a downturn will not impact on the Group’s ability to deal with material adverse events.
The workload within the Mechanical Engineering segment remains high and so underpinning performance in the
short to medium term. The Directors are therefore able to confirm that they have a reasonable expectation that
the Group will be able to continue in operation and remain financially viable over this extended period to
30th April, 2025.
Corporate governance statement
The Company’s Corporate Governance Statement is set out on pages 22 to 23 and forms part of the Directors’
Report.
Financial Risk Management
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, further details can be found within note 26 on page 75.
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 RSM UK Audit LLP as
auditor of the Company.
Approved by the Board of Directors and signed on its behalf by:
T. J. W. Goodwin
Chairman
2nd August, 2022
21
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT
Introduction
The Board comprises six Executive 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 their
previous positions for twenty-seven years and so 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 Code as detailed below, we do 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 Code given that the Board’s
current corporate governance strategy has been accepted by a large majority of its shareholders.
For the past seven 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 Code,
but for a smaller 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 2018
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 11 and 13 and provision 12 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 10, 17, 23, 24, 32, 33
and 41.
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 14.
The Chairman and Managing Directors do not retire by rotation, which is contrary to provision 18 of the Code.
The Code is available to view on the website of the Financial Reporting Council at www.frc.org.uk
The Board
During the year, the Board met formally twelve times, and details of attendees at these meetings are set out below:
M. S. Goodwin … … … … … 12 out of 12 attended
S. R. Goodwin … … … … … 12 out of 12 attended
T. J. W. Goodwin … … … … … 12 out of 12 attended
J. Connolly … … … … … … 12 out of 12 attended
B. R. E. Goodwin … … … … … 12 out of 12 attended
N. Brown … … … … … … 12 out of 12 attended
J. E. Kelly … … … … … … 12 out of 12 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, which is
contrary to provision 18 of the Code.
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, but referred to the Audit Committee for
comment.
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 eight times since the
issue of the Annual Report for the year ended 30th April, 2021, with all members attending each meeting. The
responsibility of the Audit Committee is explained in the Audit Committee Report on pages 24 to 26. 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.
22
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 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
24 to 26. 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 include regular visits and discussions between Board Directors
and subsidiary management, in-house general counsel, 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 continues to make good progress
reviewing internal controls, procedures and accounting systems, though visiting the overseas sites has been
more difficult during the financial year due to the worldwide Covid-19 pandemic. The Board of 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
23
2nd August, 2022
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:
a) Reviewing and checking the Group’s full year and half year Accounts and the Annual Report, as presented to
the Audit Committee.
b) Reviewing the Group’s financial and non-financial internal controls and risk management systems and
commenting on whether they are relevant and effective.
c) 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.
d) Reviewing comments and feedback brought to its attention by Directors or other employees of the Group.
e) Reviewing and commenting to the Board on any significant investment plans of the Group.
f) Reviewing the Group’s “whistle-blowing” procedures and reviewing any significant reports.
g) Reviewing the scope of work for the internal audit function and the resultant reports.
h) 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 vast
historical knowledge of the business and activities of the Group. This, together with their regular involvement
in reviewing the Group’s financial performance and accounts, provides sufficient recent financial experience.
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. 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. Each overseas
subsidiary is normally 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. Flight and self-quarantining restrictions still apply to some of our overseas
subsidiaries and the use of Zoom has enabled regular meetings with them to continue. Where possible,
travel to and from some of those areas has also started to take place. 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, appropriately 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, appropriately 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, 2022 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; requests
and reviews reports from independent external consultants; and reviews the Group’s risk register, business
continuity programmes and levels of insurance.
24
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
2022 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 former
Goodwin PLC Director, set up a framework to mentor each subsidiary in enhancing their risk analysis and
controls, and when appropriate, he reviews this and reports to the Audit Committee on this status. Having
focused initially on overseas companies, all subsidiaries in the Group are now included in the mentoring 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.
Our Internal Group Head of Legal / General Counsel has set up and carried out a training programme for all
Directors and senior managers of the UK subsidiary companies to increase contract risk awareness, both for
sales and purchases. This training will now start to be rolled out to the overseas subsidiaries.
The Audit Committee continues to review the effectiveness of Know Your Customer (KYC), credit insurance,
political risk insurance and contract terms and conditions. Gallagher as brokers for the Group’s insurance
cover continue to review policies in place, along with Board members, and report back to the Audit Committee.
Market risk
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 page 11.
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.
Financial risk
This has been reviewed and is as stated in previous years with the perceived increased volatility in exchange
rates and the possibility of high foreign exchange hedging costs for forward long-term contracts.
The Board, with the support of the Audit Committee, has taken a ten year hedge to protect the Group against
the probable interest rate increases anticipated over the coming years.
Regulatory compliance
The Audit Committee continues to monitor regulatory compliance, training and competency. The Committee
continues to review the impact on the Group of the Climate Change Act 2008 (2050 Target Amendment)
Order 2019.
Human Resources
The age profile of Senior Managers and perceived skill gaps within each Group company continue to be reviewed
by the Audit Committee. A number of accountancy and business development roles have been filled.
Information Technology
During the year the Audit Committee continued to monitor the risks posed affecting information security and the
steps taken to minimise these. A comprehensive internal audit of the Group’s IT systems was completed during
the year. Some risks have been identified and a plan to address those risks is being devised and implemented.
Capital expenditure
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 maintains
awareness 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.
25
DIRECTORS’ REPORTS
3. The Group’s external auditor
AUDIT COMMITTEE REPORT (continued)
Following shareholder approval at the Annual General Meeting in October 2021, RSM UK Audit LLP (“RSM”)
was re-appointed as the Group’s Auditor for the year ended 30th April, 2022 and going forward.
RSM did not provide any non-audit services to the Group during the year. 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, RSM, 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.
The Audit Committee has recommended to the Board to propose a Resolution to confirm the re-appointment
of RSM UK Audit LLP, as the external auditor at the Annual General Meeting on 5th October, 2022.
4. Reviewing comments and feedback
There is regular contact with Directors and employees where open and frank discussion is encouraged.
5. Whistle-blowing Procedures
The Group has a whistle-blowing policy in place whereby employees can report any suspected misconduct or
concerns, either anonymously on a dedicated telephone line, or to the Chairman, the Company Secretary or the
Chair of the Audit Committee. 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 respective Group Managing Directors or members of the Audit Committee. Remote
desk-top internal audits of our overseas subsidiaries have continued during Covid-19 restrictions and travel
to overseas subsidiaries will now commence shortly. However, the larger profit earning overseas subsidiaries,
Noreva, Gold Star Powders India and Goodwin Pumps India have been subject to full statutory audit by
RSM Germany and India respectively.
7. Covid-19
The Audit Committee has continued to review Covid-19 along with the Board as detailed in the Principal Risks
and Uncertainties section on page 15.
8. 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, 2022.
The Audit Committee has reviewed and agreed with the Board’s opinion of how the ten year interest rate swap
should be accounted for and reported on.
The Audit Committee also took account of the findings of RSM in relation to their external audit work for
the year.
J. E. Kelly
Chair of the Audit Committee
2nd August, 2022
26
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.
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 a
Director's salary within any year as illustrated in the matrix below.
Element of
Pay
Purpose and
Link to Strategy
Operation
Maximum
Performance
Targets
Changes for
2021 / 2022
Salary
Pensions
Other benefits
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.
All Executive 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.
Reviewed
annually at the
anniversary of the
previous salary
adjustment for
the individual
Director.
Generally in line
with inflation and
the wage / salary
increase awarded
to employees, but
this is not rigid.
The Group’s
performance,
good or bad, may
result in the salary
being changed.
Directors set the
base increase in
salaries. For the
period May 2021
to April 2022 the
increase was
generally 3.2%.
Monthly
payments
Currently 3%
of gross
remuneration
N/A
N/A
N/A
N/A
No changes.
This policy
was adopted
in October 2013
for the Directors
and entire UK
workforce.
See details of the
Directors’
emoluments on
page 31.
We believe the above meets the requirement of Schedule 8, Companies Act 2006, regarding the changes in 2021 /
2022. 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.
27
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
Total shareholder return – unaudited
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
240%
218%
5,378%
FTSE 100
27%
93%
206%
FTSE 350
26%
99%
234%
As is required by the Listing Rules, we show in graph form both the salary of the Managing Director (CEO
equivalent) 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.
The Company put the Remuneration Policy to the vote of the Annual General Meeting in 2019 when it was
passed by 93.68% of those who voted. The Company will be putting the Remuneration Policy to the vote again
in 2022, which is three years from the last vote, as is required by the Listing Rules.
For confidentiality and flexibility reasons, the Board policy is not to disclose exit / termination payments to
Directors but the policy is to remain within the law, to fairly compensate good leavers and minimise payments
to bad leavers. In the last ten years, the Company has managed to avoid paying any termination payments
to bad leavers. It is, however, Board policy to limit termination payments to a maximum of 100% of gross
annual salary and should such amount be exceeded then it will be reported in the Annual 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 advisers or consultants for remuneration or incentive policy.
Shareholder engagement is by nature of the Annual Report, the Annual General Meeting and the votes therein.
28
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
27 to 28 therein. The Policy has been followed in the financial year to 30th April, 2022 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:
2022
£’000
8,289
Ordinary dividends proposed in respect of the year (£’000) … … … …
Total employee costs (£’000) … … … … … … … … … 44,745
1,112
Average employee numbers … … … … … … … … …
2021
£’000
7,862
44,873
1,129
%
5.4%
(0.4%)
(1.5%)
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, 2021 was put to the shareholders at last year’s Annual General Meeting on 6th October, 2021. The
Annual Directors’ Remuneration Report was accepted with 98.41% 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, 2022 with various FTSE indices. The graphs also show the change in the earnings of the previous
Managing Director for the periods up to 30th April, 2019.
The base earnings figure since 30th April, 2019 is the amount earned by each Managing Director.
2018
£’000
2019
£’000
2020
£’000
2021
£’000
2022
£’000
385
397
310
355
374
Total payroll costs, excluding the Managing Director’s salary, have decreased by 0.4%. During the year, the base
increase awarded to employees in the UK companies was 3.2%.
The following graphs have not been audited.
29
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
DIRECTORS’ REPORTS
The increase in the Goodwin PLC share price since 2002 plus dividends re-invested would mean that £1.00 invested
in 2002 by 30th April, 2022 would be worth £54.78. The increase in the share price since 2012 plus dividends
re-invested would mean that £1.00 invested in 2012 would at 30th April, 2022 be worth £3.18.
30
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
DIRECTORS’ REPORTS
The auditors is 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 as well as ex Directors – 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
2022
30th April
2021
Beneficial
M. S. Goodwin … … … … …
S. R. Goodwin … … … … …
T. J . W. Goodwin… … … … …
J. Connolly
… … … … …
B. R. E. Goodwin … … … … …
N. Brown …
… … … … …
J. W. Goodwin* … … … … …
R. S. Goodwin* … … … … …
J. W. Goodwin and R.S. Goodwin* … …
J. W. Goodwin and R.S. Goodwin* … …
…
…
…
…
…
…
…
…
…
…
69,265
78,978
122,334
28,802
59,189
445
71,866
33,236
2,129,153
1,457,358
67,072
76,785
120,141
18,322
55,239
445
61,386
22,756
2,129,153
1,424,210
Non-beneficial
J. W. Goodwin* and E. M. Goodwin
…
…
14,166
14,166
* Audit committee member / ex Director.
Details of individual emoluments and compensation – audited
Single Total Figure Table
Year ended 30th April, 2022
Salary
M. S. Goodwin … … … … … … …
S. R. Goodwin … … … … … … …
T. J. W. Goodwin … … … … … … …
J. Connolly… … … … … … … …
B. R. E. Goodwin … … … … … … …
N. Brown … … … … … … … …
J. E. Kelly … … … … … … … …
2022
£’000
360
360
259
270
233
167
-
Benefits
Non-Exec
in kind Director’s
fees
2022
£‘000
-
-
-
-
-
-
72
2022
£’000
3
3
3
2
3
11
-
Pension
contrib-
utions
2022
£’000
11
11
8
8
7
5
Total
2022
£’000
374
374
270
280
243
183
72
Total … … … … … … … … 1,649
25
72
50
1,796
Single Total Figure Table
Year ended 30th April, 2021
Salary
Benefits
in kind
M. S. Goodwin … … … … … … …
S. R. Goodwin … … … … … … …
T. J. W. Goodwin … … … … … … …
J. Connolly … … … … … … … …
S. C. Birks (retired 11th December , 2020)
… …
B. R. E. Goodwin … … … … … … …
N. Brown (appointed 11th December , 2020) … …
J. E. Kelly … … … … … … … …
2021
£’000
333
333
243
256
64
209
64
-
Total
… … … … … … … …
1,502
2021
£’000
12
12
6
17
13
6
4
-
70
Non-Exec
Director’s
fees
2021
£’000
-
-
-
-
-
-
-
68
Pension
contrib-
utions
2021
£’000
10
10
7
8
2
6
2
-
Total
total
2021
£’000
355
355
256
281
79
221
70
68
68
45
1,685
Benefits in kind consist of the provision of a fully expensed car, a cash alternative scheme, healthcare insurance
or other services. The employer’s national insurance costs relating to the Directors’ remuneration amounted
to £222,000 (2021: £207,000).
31
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Comparison – audited
We are including in the report a table comparing the annual change of each Director’s pay with that of the
average employee’s pay. This is required over a rolling five year period, but as the requirements came into effect
for financial years ending 2021, the table below will only show the comparison from 30th April, 2020.
Annual Percentage Change of Average Remuneration of each Director
M. S. Goodwin … … … … … … … …
S. R. Goodwin … … … … … … … …
T. J. W. Goodwin … … … … … … … …
J. Connolly … … … … … … … … …
B. R. E. Goodwin … … … … … … … …
N. Brown (appointed 11th December, 2020)** … … …
J. E. Kelly … … … … … … … … …
UK Average Employee % Change … … … … …
…
…
…
…
…
…
…
…
2021 / 2022
%
5%
5%
5%
-
10%
N/A
6%
5%
…
…
…
…
…
…
…
…
2020 / 2021
%
15%*
15%*
32%*
16%
42%
N/A
9%
3%
Notes:
The UK average employee is based on the UK workforce employed by Goodwin PLC as a company and its UK
subsidiaries. The average figure has been calculated using a mean 5% of employee pay.
* The above increases are in relation to the appointment of M.S. Goodwin, S.R. Goodwin and T.J.W. Goodwin as
Mechanical Divisional Managing Director, Refractory Divisional Managing Director and Group Chairman
respectively.
** As N. Brown was appointed in December 2020 any comparison between 2020/2021 and 2021/2022 is not
considered a fair comparison and for this reason the Directors have omitted to include this information this year
but will report on the percentage change in the year ending 2023.
The increases greater than the UK average employee % change are a reflection of the further development of
individual Directors in the areas of their new responsibilities.
Pay Ratio of Managing Directors
In accordance with the Pay Ratio Regulations we are disclosing the comparison of our Managing Directors’ pay with
that of our average UK employees. It is appropriate that the Managing Directors’ pay was used in the comparison
as we do not have what is generally known as a Chief Executive Officer.
For the year ended 30th April, 2022 the pay for both the Managing Directors in the Single Total Pay Figure table is
the same. If the figures are different in any subsequent year, the higher of the two figures will be used in the ratio
pay comparison section.
The tables below show our Managing Directors’ pay ratio at the 25th, median and 75th percentile of our UK
employees as at 30th April, 2022:
Financial
Year
Method
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
2022 FTSE Small Cap
2022 FTSE 250
2022 ratios
2021 ratios
2020 ratios
Financial
Year
15:1
20:1
14:1
14:1
12:1
20:1
30:1
11:1
11:1
10:1
31:1
46:1
8:1
8:1
7:1
Option A
Option A
Option A
Managing
Directors
£’000
25th
percentile
pay
£’000
Median
pay
£’000
75th
percentile
pay
£’000
2022 Total Pay
2021 Total Pay
2020 Total Pay
374
355
333
27
26
26
48
45
45
34
33
33
32
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Ratio of Managing Directors (continued)
Notes:
1. Total pay has been calculated for each employee and, where applicable, prorated to calculate full-time
equivalent pay. It includes payments that are taxable plus any employer pension contributions.
2. We offer competitive and fair rates of pay for all our UK employees taking into account personal circumstances
and the median pay ratio of the Managing Directors has remained the same as the prior year.
3. We have opted for Option A of the pay ratio regulations as this is the preferred option under the regulations
and also provides the most accurate data.
4. The above figures are based on the total pay as at 30th April, 2022.
Equity Long Term Incentive Plan (LTIP) – Vested Share Options – audited
Under the Equity Long Term Incentive Plan (LTIP) for the Executive Directors, that was approved at the Annual
General Meeting on 5th October, 2016, the 2016 LTIP target was partially met in 2019, resulting in 85% of the
awards granted vesting, entitling each of the sitting eight Directors to 61,200 shares (17 x 3,600 = 61,200).
Exercised
During the year ended 30th April, 2022 each Director exercised 20,400 share options, increasing the Company’s
total share capital by 163,200 to 7,689,600. All share options have now been exercised.
Whilst the Company has no follow-on LTIP incentive plans in place or proposed, the shares vested as part of the
above scheme further align the Executive Directors with the long-term interests of the shareholders, as do their
not insignificant shareholdings already held.
Total pension entitlements – unaudited
In line with the Government’s requirements the Group administers 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 2nd August, 2022 and is signed on
its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
33
DIRECTORS’ REPORTS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE
ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Strategic Report and the Report of the Directors, the Directors’
Remuneration Report, the separate Corporate Governance Statement and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year.
The Directors have elected under company law and are required under the Listing Rules of the Financial Conduct
Authority to prepare Group financial statements in accordance with UK-adopted International Accounting
Standards. The Directors have elected under company law to prepare the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law).
The Group financial statements are required by law and UK-adopted International Accounting Standards to
present fairly the financial position and performance of the Group; the Companies Act 2006 provides in relation
to such financial statements that references in the relevant part of that Act to financial statements giving a true
and fair view are references to their achieving a fair presentation.
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 the Company and of the profit or loss for that
period. In preparing each of the Group and Company financial statements, the Directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and estimates that are reasonable and prudent;
c. for the Group financial statements, state whether they have been prepared in accordance with UK-adopted
International Accounting Standards;
d. for the Company financial statements, state whether they have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
e. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group and the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Group and the Company and enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act 2006. They are responsible for safeguarding
the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Directors’ statement pursuant to the Disclosure and Transparency Rules
Each of the Directors, whose names are listed on page 19, confirm that to the best of each person’s knowledge:
a. the financial statements, prepared in accordance with the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings
included in the consolidation taken as a whole; and
b. the Strategic Report contained in the Annual Report includes a fair review of the development and performance
of the business and the position of the Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and uncertainties that they face.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Goodwin PLC website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
2nd August, 2022
34
INDEPENDENT AUDITOR’S REPORT
to the members of Goodwin PLC
Opinion
We have audited the financial statements of Goodwin PLC (the ‘parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 30 April, 2022 which comprise the 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, Company Balance Sheet,
Company Statement of Changes in Equity and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied in the preparation of the
parent Company financial statements is applicable law and United Kingdom Accounting Standards
including Financial Reporting Standard 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and of the parent
Company’s affairs as at 30 April 2022 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted
International Accounting Standards;
the parent Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Group and parent Company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
Revenue recognition – revenue recognised over time
Revenue recognition – revenue recognised at a point in time
Financial Instruments – accounting for the interest rate swap
Parent Company
Intangible assets – capitalisation and impairment
Financial Instruments – accounting for the interest rate swap
Materiality
Group
Overall materiality: £715,000 (2021: £651,000)
Performance materiality: £536,000 (2021: £456,000)
Parent Company
Overall materiality: £425,000 (2021: £500,000)
Performance materiality: £318,000 (2021: £350,000)
Scope
Our audit procedures covered 80% of revenue, 82% of total assets and
72% of absolute profit before tax.
35
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the Group and parent Company financial statements of the current period and include the
most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on the overall audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the Group and parent Company financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition – Revenue recognised over time
Key audit matter
description
How the matter was
addressed in the
audit
Key observations
Refer to accounting policies in note 1, accounting estimates and
judgements in note 2 and note 4.
Revenue underpins the key measures of performance of the Group.
As a profit-oriented business, we considered the risk of fraud in the
recognition of revenue. We identified that there was a heightened risk of
misstatement around the year end through inappropriate application of the
Group’s revenue recognition policies and revenue transactions being
recognised in the wrong period.
The Group has contracts with customers under which revenue is
recognised over time. Revenue recognised in the year on these contracts
amounted to £65,458,000.
Estimates are made by management based on work completed for each
contract and costs to complete.
Revenue is recognised based on stage of completion with an associated
adjustment made to cost of sales to adjust the level of profits recognised
on the contract to be in line with the stage of completion.
Associated contract assets, liabilities and work in progress are recognised
where applicable on these contracts.
There is a risk that revenue could be misstated through:
- inappropriate application of the Group’s revenue recognition policies;
- the high level of estimation uncertainty in recognising revenue on over
time contracts; or
- modifications in contractual arrangements, such as variations and
settlements of claims
We assessed whether revenue was recognised in line with the Group’s
revenue recognition policies and IFRS 15 ‘Revenue from contracts with
customers’.
We undertook test of details on contracts that have been completed in the
year and those open at the year end.
We considered management’s estimates of the stage of completion for
open contracts at the period end, substantively testing supporting
schedules, including verification of contractual terms. We challenged
management on the key assumptions and variances identified.
For all contracts selected we tested the associated contract assets and
contract liabilities.
A dispute on a customer contract reached settlement during the year. We
considered and challenged the proposed accounting to ensure that the
settlement was treated in accordance with IFRS 15. We checked the
associated adjustments to revenue were appropriate for the period through
our contract testing procedures.
We reviewed the disclosures associated with revenue recognition.
Our audit work in respect of revenue recognised over time concluded that
the revenue is not materially misstated and the approach is appropriately
consistent year on year.
36
Our work identified some errors that were subsequently adjusted by
management; these adjustments did not impact the profit recognised in the
financial statements.
We identified some immaterial disclosure omissions which were not
corrected.
Revenue recognition – revenue recognised at a point in time
Key audit matter
description
How the matter was
addressed in the
audit
Refer to accounting policies in note 1, accounting estimates and
judgements in note 2 and note 4.
As a profit-oriented business, we considered the risk of fraud in the
recognition of revenue. We identified that there was a heightened risk of
misstatement around the year end through inappropriate application of the
Group’s revenue recognition policies and revenue transactions being
recognised in the wrong period.
Revenue is recognised at a point in time in the Refractory division and for
certain arrangements in the Mechanical division. Revenue recognised in
the year on point in time sales amounted to £78,650,000.
Revenue is recognised when control of goods is passed onto the customer
by the Group. Judgement is involved in determining the point at which
control passes for certain mechanical engineering contracts where
revenue is recognised on delivery to the customer.
There is a risk that revenue could be misstated through:
- inappropriate application of the Group’s revenue recognition policies; or
- recognition of revenue in the wrong period.
We assessed whether revenue was recognised in line with the Group’s
revenue recognition policies and IFRS 15. This included an assessment of
management’s
judgement of when control passes on mechanical
engineering contracts accounted for at a point in time.
Our procedures included a combination of substantive analytical review
and tests of detail.
We selected a sample of items to check that revenue was recognised once
performance obligations have been met and that the cut-off of revenue
transactions around the year end was appropriate.
Key observations
The results of our procedures were satisfactory.
Intangible assets – capitalisation and impairment
Key audit matter
description
Refer to accounting policies in note 1, accounting estimates and judgements
in note 2 and note 15.
The Group has various intangible assets including goodwill, brand names,
intellectual property, manufacturing rights and development costs. These
assets form part of the Group’s cash generating units (CGUs).
The performance of each CGU varies and the actual or expected
performance of each could impact the carrying value of the Intangible assets
within the CGU.
The Group has incurred expenditure on development of new products in the
year which are capitalised if certain criteria are met in accordance with IAS
38 'Intangible assets'.
How the matter was
addressed in the
audit
We obtained management’s impairment model of Cash Generating Units,
including Goodwill and undertook audit procedures including:
Assessing whether management's calculations comply with the
requirements of IAS 36 ‘Impairment of assets’;
37
Analysing the structure and integrity of the model and
its
mathematical accuracy;
Challenging the main forecasting assumptions used in the value-in-
use calculations which included expected revenues, margin and the
discount rate;
Performing sensitivity analysis in assessing the risks of impairment;
Corroborating assumptions through discussions with operational
management; and
Review of the disclosures in the financial statements.
We also assessed the capitalisation of development costs due to the impact
on reported earnings and the judgements involved in assessing whether the
IAS 38 criteria for capitalisation have been met.
We considered the amortisation accounting policy for each category of
intangible asset.
Key observations
Based on our procedures, we concluded that the carrying value and
disclosures in the financial statements were appropriate.
Financial Instruments – accounting for the interest rate swap
Key audit matter
description
How the matter
was addressed in
the audit
Refer to accounting policies in note 1, accounting estimates and judgements
in note 2 and note 26.
The Group entered into a 10 year, £30 million interest rate swap during the
year to hedge for volatility in future interest rates on the Group’s expected core
debt. The fair value of the instrument recognised at the year end was £2.74
million.
The recognition of the financial instrument in the financial statements and the
applicability of hedge accounting is determined by the requirements of IFRS
9.
We obtained copies of the interest rate swap agreement, the bank valuation
and management’s documentation.
We utilised an external valuations expert to agree the closing valuation.
We consulted with an internal financial accounting specialist to support our
review of the accounting requirements of IFRS 9 and associated guidance.
We challenged management’s judgement in respect of the proposed
accounting for the interest rate swap. This included consideration as to
whether hedge accounting could be applied to the swap for the debt currently
held by the Group until expiry, and following that, the planned core level of
debt to 2031.
Key observations Based on our procedures and judgement we concluded that the criteria for
hedge accounting were not satisfied and recognition of the interest rate swap
at fair value in the Income Statement was required by IFRS 9. Management
accepted this conclusion and an adjustment was made to recognise the gain
in the statement of profit or loss, which is disclosed as a separate line item.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the
nature, timing and extent of our audit procedures. When evaluating whether the effects of
misstatements, both individually and on the financial statements as a whole, could reasonably influence
the economic decisions of the users we take into account the qualitative nature and the size of the
misstatements. Based on our professional judgement, we determined materiality as follows:
38
Group
Parent company
Overall materiality
£715,000 (2021: £651,000)
£425,000 (2021: £500,000)
Basis for determining
overall materiality
Rationale for
benchmark applied
4.5% of two year average adjusted
profit before tax.
Profit before tax has been adjusted
for material non-recurring items.
Profit before tax is considered the
key benchmark of the Group. We
have normalised this over a two
year period to reflect the fact that
some
revenue contracts span
multiple periods.
0.3% of Total Assets
Total assets is considered the key
benchmark
parent
of
Company as the entity relies on its
investments as a non-revenue
generating entity.
the
Performance materiality £536,000 (2021: £456,000)
£318,000 (2021: £350,000)
Basis for determining
performance materiality
Reporting of
misstatements to the
Audit Committee
75% of overall materiality
75% of overall materiality
in excess of
Misstatements
£35,700 and misstatements below
that threshold that, in our view,
warranted reporting on qualitative
grounds.
in excess of
Misstatements
£21,200
and misstatements
below that threshold that, in our
view, warranted
reporting on
qualitative grounds.
An overview of the scope of our audit
The Group consists of 35 components, located in the following countries:
United Kingdom
Germany
India
South Africa
Thailand
China
South Korea
Brazil
Australia
Finland
The coverage achieved by our audit procedures was:
Number of
components
Revenue
Total assets
Absolute Profit
before tax
Full scope audit
Specific audit
procedures *
Total
10
1
11
76%
4%
80%
82%
-
82%
68%
4%
72%
*The specific scope % represents the component’s contribution however our procedures consisted of
specific audit procedures over the revenue and direct material costs of the component only.
Analytical procedures at Group level and testing of intercompany eliminations were performed for the
remaining 24 components.
Of the above, full scope audits for three components and specific audit procedures for one component
were undertaken by component auditors.
39
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
Directors’ assessment of the Group’s and parent Company’s ability to continue to adopt the going
concern basis of accounting included:
Reviewing management’s approved board paper which set out the going concern basis, key
forecasting assumptions, sensitivities and conclusion;
Obtaining copies of management’s forecasts and sensitivity analysis for the Group and
checking the mathematical accuracy of the forecasts;
Understanding and reviewing the results of the annual budget review process, including
submissions from the UK and overseas businesses which are approved by the board;
Comparing the forecasts to historical trading results and the key assumptions for expected
growth, margin improvement and capital expenditure plans;
Undertaking our own stress test to consider circumstances under which headroom would be
eroded;
Verifying the committed funding available to the Group and parent Company for the forecast
period and the headroom this provided to the Group and parent Company.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Group’s or the
parent Company’s ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In relation to the entity reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described
in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial
statements and our auditor’s report thereon. The Directors are responsible for the other information
contained within the annual report. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared
in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic Report and the Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent Company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
Strategic Report or the Directors’ Report.
40
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent Company, or returns adequate
for our audit have not been received from branches not visited by us; or
the parent Company financial statements and the part of the Directors’ remuneration report to
be audited are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Corporate governance statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the parent Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial statements
and our knowledge obtained during the audit:
Directors’ statement with regards to the appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified set out on page 20 to 21;
Directors’ explanation as to their assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 21;
Directors’ statement on whether they have a reasonable expectation that the Group will be able
to continue in operation and meets its liabilities set out on page 21;
Directors’ statement on fair, balanced and understandable set out on page 19;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 14;
Section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on page 25; and,
4;
Section describing the work of the audit committee set out on page 25.
4
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 34, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the
parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including
fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit
are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that
have a direct effect on the determination of material amounts and disclosures in the financial
41
statements, to perform audit procedures to help identify instances of non-compliance with other laws
and regulations that may have a material effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance with laws and regulations identified during the
audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement
of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the
assessed risks of material misstatement due to fraud through designing and implementing appropriate
responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with
governance, to ensure that the entity's operations are conducted in accordance with the provisions of
laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud,
the Group audit engagement team and component auditors:
obtained an understanding of the nature of the industry and sector, including the legal and
regulatory frameworks that the Group and parent Company operates in and how the Group and
parent Company are complying with the legal and regulatory frameworks;
inquired of management, and those charged with governance, about their own identification
and assessment of the risks of irregularities, including any known actual, suspected or alleged
instances of fraud;
discussed matters about non-compliance with laws and regulations and how fraud might occur
including assessment of how and where the financial statements may be susceptible to fraud
for regulated entities, as defined in ISA 250B, having obtained an understanding of the
effectiveness of the control environment.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could
have a material effect on the financial statements were communicated to component auditors. Any
instances of non-compliance with laws and regulations identified and communicated by a component
auditor were considered in our audit approach.
The most significant laws and regulations were determined as follows:
Legislation /
Regulation
Additional audit procedures performed by the Group audit
engagement team and component auditors included:
IFRS / FRS 101
and Companies
Act 2006
Tax compliance
regulations
Review of the financial statement disclosures and testing to supporting
documentation;
Completion of disclosure checklists to identify areas of non-compliance.
Input from a tax specialist was obtained regarding the Group’s transfer
pricing arrangement.
Consideration of whether any matter identified during the audit required
reporting to an appropriate authority outside the entity.
Manufacturing
and operational
regulations
ISAs limit the required audit procedures to identify non-compliance with
these laws and regulations to inquiry of management and where appropriate,
those charged with governance (as noted above) and inspection of legal and
regulatory correspondence, if any.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue
recognition –
over time sales
Transactions posted to nominal ledger codes outside of the normal revenue
cycle were identified using a data analytic tool and investigated.
See also the key audit matters section of this report for work performed over
this risk.
Revenue
recognition –
point in time
sales
Transactions posted to nominal ledger codes outside of the normal revenue
cycle were identified using a data analytic tool and investigated.
Revenues at the period end were tested to identify revenue recognised in
the incorrect period.
42
Management
override of
controls
See also the key audit matters section of this report for work performed on
this area.
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates
are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the board of Directors on
19 March 2021 to audit the financial statements for the year ending 30 April 2021 and subsequent
financial periods.
The period of total uninterrupted consecutive appointments is two years, covering the years ended 30
April 2021 to 30 April 2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the
parent Company and we remain independent of the Group and the parent Company in conducting our
audit.
Our audit opinion is consistent with the additional report to the audit committee in accordance with ISAs
(UK).
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
In due course, as required by the Financial Conduct Authority (FCA) Disclosure Guidance and
Transparency Rule (DTR) 4.1.14R, these financial statements will form part of the European Single
Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage Mechanism
of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This
auditor’s report provides no assurance over whether the annual financial report has been prepared
using the single electronic format specified in the ESEF RTS.
Ian Wall (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Festival Way
Festival Park
Stoke-on-Trent
ST1 5BB
Date
2 August 2022
43
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2022
Notes
2022
£’000
2021
£’000
CONTINUING OPERATIONS
Revenue … … … … … … … … … …
3, 4
144,108
Cost of sales
… … … … … … … … …
(101,404)
GROSS PROFIT… … … … … … … … … …
… … … … … … … … …
Other income
Distribution expenses … … … … … … … …
Administrative expenses
… … … … … … …
OPERATING PROFIT … … … … … … … … …
… … … … … … … …
Finance costs (net)
Share of profit of associate company
… … … … …
5
7
14
42,704
-
(3,743)
(20,654)
18,307
(1,169)
63
131,231
(92,230)
39,001
763
(2,988)
(19,682)
17,094
(640)
60
PROFIT BEFORE TAXATION AND MOVEMENT IN FAIR VALUE
OF INTEREST RATE SWAP*
… … … … … … …
Unrealised gain on 10 year interest rate swap derivative
… …
17,201
2,740
16,514
-
PROFIT BEFORE TAXATION
… … … … … … …
Tax on profit** … … … … … … … … …
5
8
19,941
(6,321)
16,514
(3,508)
PROFIT AFTER TAXATION… … … … … … … …
13,620
13,006
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
Non-controlling interests
… … … … … … …
12,980
640
12,494
512
PROFIT FOR THE YEAR … … … … … … … …
13,620
13,006
BASIC EARNINGS PER ORDINARY SHARE (in pence)
… …
DILUTED EARNINGS PER ORDINARY SHARE (in pence) … …
9
9
169.14p
167.82p
169.14p
164.23p
* The Chairman’s Statement refers to profit before taxation less the movement in fair value of interest rate swap
as trading profit.
** The tax charge for the current year equates to 31.7% of profit before tax (2021: 21.2%). Within the current
year there is a non-recurring non-cash impacting deferred tax charge of £2 million relating to the future
change in the UK corporation tax rate from 19% to 25%. Please refer to note 8 within these accounts for a full
reconciliation of the tax charge for the year.
The notes on pages 50 to 96 form part of these financial statements.
44
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2022
PROFIT FOR THE YEAR … … … … … … … … …
OTHER COMPREHENSIVE (EXPENSE) / INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS:
Foreign exchange translation differences … … … … … …
Effective portion of changes in fair value of cash flow hedges
… …
Ineffectiveness in cash flow hedges transferred to profit or loss … …
Change in fair value of cash flow hedges transferred to profit or loss
…
Effective portion of changes in fair value of cost of hedging … … …
Ineffectiveness in cost of hedging transferred to profit or loss
… …
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 … … … … … … … … … …
2022
£’000
13,620
2021
£’000
13,006
1,493
(3,834)
(339)
(1,432)
275
(23)
(75)
(1,371)
1,296
(657)
1,932
(37)
631
381
1,114
(673)
OTHER COMPREHENSIVE (EXPENSE) / INCOME FOR THE YEAR,
NET OF INCOME TAX… … … … … … … … … …
(2,821)
1,502
TOTAL COMPREHENSIVE INCOME FOR THE YEAR … … … …
10,799
14,508
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … … …
Non-controlling interests
… … … … … … … …
10,089
710
10,799
14,081
427
14,508
The notes on pages 50 to 96 form part of these financial statements.
45
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2022
Share-
Trans-
based
lation payment
reserve
£’000
reserve
£’000
Share
capital
£’000
Cash
flow Cost of
hedge hedging Retained
earnings
£’000
reserve
£’000
reserve
£’000
Total
attributable
to equity
holders of
the parent
£’000
Non-
controlling
interests
£’000
Total
equity
£’000
YEAR ENDED
30TH APRIL, 2022
Balance at 1st May, 2021 …
753
(852)
5,244
1,601
(1) 106,396
113,141
4,887 118,028
Total comprehensive income:
Profit for the year … …
Other comprehensive income:
Foreign exchange translation
differences … … …
Effective portion of changes
in fair value
Ineffectiveness transferred
to profit or loss… … …
Change in fair value
transferred to profit
or loss … … … …
Tax
… … … …
TOTAL COMPREHENSIVE
INCOME / (EXPENSE)
FOR THE YEAR
Transactions with owners:
-
-
-
-
-
-
-
1,315
-
-
-
-
-
1,315
Issue of shares … … …
16
Acquisition of NCI without a
change in control … …
Dividends paid … … …
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,790)
275
(333)
(23)
(1,359)
1,135
(64)
(47)
12,980
12,980
640
13,620
-
-
-
-
-
1,315
178
1,493
(3,515)
(44)
(3,559)
(356)
(6)
(362)
(1,423)
1,088
(84)
26
(1,507)
1,114
(4,347)
141
12,980
10,089
710
10,799
-
-
-
-
-
-
-
16
-
16
(74)
(7,862)
(74)
(7,862)
(356)
(808)
(430)
(8,670)
BALANCE AT
30TH APRIL, 2022
769
463
5,244
(2,746)
140 111,440
115,310
4,433 119,743
The notes on pages 50 to 96 form part of these financial statements.
46
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
for the year ended 30th April, 2021
Share-
Trans-
based
lation payment
reserve
£’000
reserve
£’000
Share
capital
£’000
Cash
flow Cost of
hedge hedging Retained
earnings
£’000
reserve
£’000
reserve
£’000
Total
attributable
to equity
Non-
holders of controlling
interests
the parent
£’000
£’000
Total
equity
£’000
YEAR ENDED
30TH APRIL, 2021
Balance at 1st May, 2020 …
736
361
5,244
(499)
(743)
99,918
105,017
4,585 109,602
Total comprehensive income:
Profit for the year … …
Other comprehensive income:
Foreign exchange translation
differences … … …
Effective portion of changes
in fair value … … …
Ineffectiveness transferred
to profit or loss
… …
Change in fair value
transferred to profit
or loss … … … …
Tax
… … … …
TOTAL COMPREHENSIVE
INCOME / (EXPENSE)
FOR THE YEAR
Transactions with owners:
-
-
-
-
-
-
-
(1,255)
-
-
-
-
-
(1,255)
Issue of shares … … …
17
Dividends paid … … …
Recycling of translation
reserve on the disposal
of subsidiary … … …
-
-
-
-
42
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,252
(42)
(617)
596
1,957
(492)
362
(174)
12,494
12,494
512
13,006
-
-
-
-
-
(1,255)
(116)
(1,371)
1,210
(21)
2,319
(666)
49
(5)
(6)
(7)
1,259
(26)
2,313
(673)
2,100
742
12,494
14,081
427
14,508
-
-
-
-
-
-
-
17
-
17
(6,016)
(6,016)
(125)
(6,141)
-
42
-
42
BALANCE AT
30TH APRIL, 2021
753
(852)
5,244
1,601
(1) 106,396
113,141
4,887 118,028
The notes on pages 50 to 96 form part of these financial statements.
47
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2022
NON-CURRENT ASSETS
… … … … … … …
Property, plant and equipment
… … … … … … … …
Right-of-use assets
Investment in associate
… … … … … … … …
Intangible assets… … … … … … … … … …
Long-term trade receivables … … … … … … … …
Derivative financial assets … … … … … … … …
CURRENT ASSETS
Inventories… … … … … … … … … … …
Contract assets … … … … … … … … … …
Trade receivables and other financial assets … … … … …
Other receivables
… … … … … … … … …
Derivative financial assets … … … … … … … …
Cash and cash equivalents … … … … … … … …
FINANCIAL STATEMENTS
Notes
11
12
14
15
17
26
16
4
17
18
26
19
2022
£’000
87,594
6,191
896
24,817
1,191
2,741
2021
£’000
77,063
3,691
829
24,813
-
191
123,430
106,587
40,364
12,331
23,717
6,277
1,211
11,651
95,551
34,547
15,844
20,540
5,627
4,106
15,160
95,824
TOTAL ASSETS … … … … … … … … … …
218,981
202,411
CURRENT LIABILITIES
… … … … … … … … … …
Borrowings
Contract liabilities
… … … … … … … … …
Trade payables and other financial liabilities … … … … …
Other payables … … … … … … … … … …
Derivative financial liabilities … … … … … … … …
… … … … … … … …
Liabilities for current tax
… … … … … …
Provisions for liabilities and charges
NON-CURRENT LIABILITIES
Borrowings
… … … … … … … … … …
Derivative financial liabilities … … … … … … … …
Provisions for liabilities and charges
… … … … … …
Deferred tax liabilities … … … … … … … … …
TOTAL LIABILITIES… … … … … … … … … …
20
4
21
22
26
23
20
26
23
24
2,764
14,749
23,004
4,256
2,393
1,886
205
49,257
40,376
1,643
251
7,711
49,981
99,238
1,607
14,332
21,730
4,025
2,016
1,174
608
45,492
33,066
-
251
5,574
38,891
84,383
NET ASSETS … … … … … … … … … … …
119,743
118,028
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
25
25
25
769
463
5,244
(2,746)
140
111,440
753
(852)
5,244
1,601
(1)
106,396
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
115,310
113,141
NON-CONTROLLING INTERESTS … … … … … … …
13
4,433
4,887
TOTAL EQUITY
… … … … … … … … … …
119,743
118,028
These financial statements were approved by the Board of Directors on 2nd August, 2022, and signed on its
behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
Company Registration Number: 305907
The notes on pages 50 to 96 form part of these financial statements.
48
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2022
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations after tax … … … … … …
13,620
13,006
Notes
2022
£’000
2021
£’000
Adjustments for:
Depreciation of property, plant and equipment … … … … …
Depreciation of right-of-use assets … … … … … … …
Amortisation and impairment of intangible assets … … … …
Finance costs (net)
… … … … … … … … …
Currency (gains) / losses net of unhedged derivative movements … …
Profit sale of property, plant and equipment … … … … …
Profit on disposal of subsidiary … … … … … … …
Unrealised gain on 10 year interest rate swap derivative … … …
Share of profit of associate company … … … … … …
UK tax incentive credit on research and development… … … …
… … … … … … … … … …
Tax expense
OPERATING CASH FLOW BEFORE CHANGES IN WORKING
CAPITAL AND PROVISIONS
(Increase) / decrease in inventories … … … … … … …
Decrease / (increase) in contract assets … … … … … …
(Increase) / decrease in trade and other receivables … … … …
Increase / (decrease) in contract liabilities… … … … … …
Increase in trade and other payables
… … … … … …
Decrease / (increase) in unhedged derivative balances… … … …
6,202
1,192
1,572
1,169
(1,535)
(18)
-
(2,740)
(63)
(675)
6,321
25,045
(5,175)
3,498
(3,341)
472
804
-
5,696
972
1,566
640
292
(745)
(32)
-
(60)
-
3,508
24,843
10,344
(9,242)
2,885
(4,428)
1,047
(438)
CASH GENERATED FROM OPERATIONS
… … … … … … … … …
Interest received
Interest paid
… … … … … … … … … …
Corporation tax paid … … … … … … … … …
21,303
157
(1,415)
(2,051)
25,011
111
(845)
(3,068)
NET CASH INFLOW FROM OPERATING ACTIVITIES … … … …
17,994
21,209
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment… … … …
Acquisition of property, plant and equipment … … … … …
Additional investment in existing subsidiaries … … … … …
Acquisition of intangible assets … … … … … … …
Development expenditure capitalised … … … … … …
341
(16,215)
(430)
(282)
(1,505)
1,958
(11,738)
-
(719)
(1,420)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
… … …
(18,091)
(11,919)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares … … … … … … … … … …
Payment of capital element of lease liabilities … … … … …
Dividends paid … … … … … … … … … …
Dividends paid to non-controlling interests
… … … … …
Proceeds from new loans … … … … … … … …
Repayment of loans and committed facilities … … … … …
NET CASH 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
16
(1,153)
(7,862)
(808)
6,702
(683)
17
(1,635)
(6,016)
(125)
35,048
(30,772)
(3,788)
(3,483)
(3,885)
15,160
376
5,807
9,449
(96)
CASH AND CASH EQUIVALENTS AT END OF YEAR … … … …
19
11,651
15,160
The notes on pages 50 to 96 form part of these financial statements.
49
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 prepared in accordance with UK adopted International Accounting
Standards (IAS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to
companies reporting under UK adopted IFRS.
The financial statements for the year ended 30th April, 2022 were prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act 2006 and IFRS adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. There is no difference for
the Group in applying each of these accounting frameworks or on the recognition, measurement or disclosure
in the period reported as a result of the change in framework.
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 85 to 95.
The accounting policies set out below have been applied consistently to all periods presented in these Group
financial statements.
Judgements made by the Directors, in the application of these accounting policies that have significant effect
on the financial statements and estimates with a significant risk of material adjustment in the next year are
discussed in note 2.
Going concern
The Directors, after having reviewed the projections and possible challenges that may lie ahead, believe that
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.
As at 30th April 2022, the Group’s gearing ratio stood at 25.8% (2021: 15.4%) against a substantial shareholders
net worth of £115 million (2021: £113 million). The retained reserves of the Group put it in a strong position to
deal with unforeseen material adverse issues.
In previous years, we have reported on the potential impact of Covid-19 and its limited impact on the business.
As you might expect given our previous comments, our pandemic risk profile is low and whilst there are
minor Covid-19 impacts we do not see the pandemic as a cause for concern for the Group moving forwards.
The reported results for the year are after having incurred what have been unprecedented increases in energy
costs. Whilst the Group is not complacent and there is work to be done here, we do not see the impact of
energy costs giving rise to a going concern issue.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds to
cover the Group’s and the Company’s financial commitments during the forecast period whilst remaining
compliant with its financial covenants. The stress test model starts with the forecasts generated by the
subsidiary Directors and reflects their specific knowledge of the market conditions, strategy and outlook.
Each of these subsidiary level forecasts are then reviewed, challenged and approved by the relevant Group
Managing Director who themselves are immersed in each of the businesses. The stress test model then
predicts the impact of a severe but plausible reduction in the pre-tax profit forecast without pulling back on
our capital expenditure forecast. The results of the stress test modelling did not highlight any going
concern issues.
Whilst our carrying values of trade debtors and contract assets are significant, we see little risk here in terms
of recovery. We credit insure our debtors and our pre credit risk (work in progress), and for significant
contracts, where credit insurance is not available, we ensure, where possible, that these contracts are backed
by letters of credit or cash positive milestone payments.
As discussed elsewhere within these accounts, the Mechanical Engineering order book remains high and the
Refractory Engineering segment is buoyant.
The Directors are confident that the Group and Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least twelve months from the date of approval of the financial statements
and therefore have prepared the financial statements on a going concern basis.
Measurement convention
The financial statements are rounded to the nearest thousand pounds. The financial statements are based on
the historical cost basis except where the measurement of balances at fair value is required as below.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
50
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Basis of consolidation (continued)
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent
of the voting power of another entity. Associates are accounted for using the equity method and are initially
recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated
impairment losses. The consolidated financial statements include the Group's share of the total recognised
income and expense and equity movements of equity accounted investees, from the date that significant
influence commences until the date that significant influence ceases. When the Group's share of losses
exceeds its interest in an equity accounted investee, the Group's carrying amount is reduced to nil and
recognition of further losses is discontinued except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of an investee.
Foreign currency
The functional and presentational currency of the Group is Pound Sterling. Transactions in foreign currencies
are translated into 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 Pound 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.
New IFRS standards and interpretations adopted during 2021 / 2022
The IASB and IFRIC issued the following amendments:
(cid:129)
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest rate benchmark reform phase 2, which
is effective for annual periods beginning on or after 1st January, 2021.
Amendment to IFRS 16 ‘Leases’ – Covid-19 rent concession extensions, which is effective for annual
periods beginning on or after 1st June, 2020.
(cid:129)
The implementation of these amendments has not had a material impact on the Group’s financial statements.
(cid:129)
New IFRS standards and interpretations not adopted
Amendments to existing standards or new standards and interpretations that have been issued but are not
yet effective and have not been adopted by the Group are listed below:
(cid:129)
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; and Annual Improvements 2018-2020 – (effective for
periods commencing on or after 1st January, 2022).
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ‘Definition of
Accounting Estimates’ – (effective for periods commencing on or after 1st January, 2023, subject to
UK-endorsement).
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or
Non-current and Classification of Liabilities as Current or Non-current - Deferral of Effective Date –
(effective for periods commencing on or after 1st January, 2023, subject to endorsement).
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting Policies – (effective for periods commencing on or after 1st January, 2023, subject to
UK-endorsement).
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction – (effective for periods commencing on or after 1st January, 2023, subject to endorsement).
The Group does not expect that any standards, amendments or interpretations issued by the IASB, but not
yet effective, will have a material impact on the financial statements once adopted.
(cid:129)
(cid:129)
(cid:129)
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.
51
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Revenue (continued)
Standard inventory product lines and consumables
Typically applies to the whole of the Group’s Refractory 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 recognised 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.
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
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 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. Work in progress is eliminated and replaced by a contract asset.
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, whereby control passes to the customer, once the invoice has been raised.
The incremental costs of obtaining a contract are recognised as an expense, as incurred, 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 product contracts where, as part of the contract terms, there is a termination for
convenience clause which, if invoked, allows the Group company to charge for profit earned to date. 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.
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.
Financial income and costs
Financial expenses comprise interest payable, interest on lease liabilities using the effective interest method
together with the amortisation of any facility arrangement fees. 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.
52
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.
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.
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
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.
Principal non-derivative financial assets
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 financial assets
Other financial assets 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.
Principal non-derivative financial liabilities
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.
53
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Financial instruments (continued)
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 and the interest rate swap
derivative, 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. As at the year-end,
the Group held currency derivatives and an interest rate swap derivative. For the currency derivatives, the
valuations are based on the period end currency rates, as adjusted for the forward points to maturity,
the time value of money and the banks’ assessed credit risk and margin. For the interest rate swap
derivative, the valuation is arrived at by comparing the forward interest curve as at 30th April, 2022 out to
maturity against our fixed swap rate. The result is then discounted for the time value of money and
adjusted for credit risk and margin.
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. 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 on the relevant derivative financial instrument
is removed from equity and recognised in the statement of profit or loss in the same period or periods
during which the hedged forecast transaction affects the statement of profit or loss. Any identified
ineffective portion of the hedge is recognised immediately in the statement of profit or 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. Where a derivative financial instrument is not hedge accounted, all changes in fair value are
recognised in profit or loss.
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,
within cost of sales.
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.
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:
(cid:129) Freehold land
… … … …
(cid:129) Freehold buildings … … … …
(cid:129) Leasehold property
… … …
(cid:129) Plant and machinery
… … …
(cid:129) Motor vehicles
… … … …
(cid:129) Tooling
… … … … …
(cid:129) Other equipment … … … …
(cid:129) Assets in the course of construction …
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
Nil
54
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
the contract involves the use of an identified asset;
the Group has the right to obtain substantially all of the economic benefit of using the asset; and
the Group has the right to direct the use of the asset by deciding how the asset is employed.
Leases
Definition of a lease
A contract is a lease or contains a lease if it transfers the right to use an identified asset over the contract
term, in exchange for payment. In determining whether a contract gives the Group the right to use an asset,
the Group assesses whether:
(cid:129)
(cid:129)
(cid:129)
Lease term
The lease term is the non-cancellable period of a lease, and options to extend the lease or terminate it, where it
is probable that the Group will exercise the available options. At the start of a lease, the Group makes a judgement
about whether it is reasonably certain to exercise the options, and reassesses this judgement at every reporting
period. Contracts, where the original lease term has expired, with assets continuing to be leased on a short-term
rolling basis of a few months, are treated as short-term leases.
Lease balances
A right-of-use asset and a lease liability are calculated at the beginning of a lease. The right-of-use asset is
measured initially at cost, being the opening lease liability, adjusted for any lease payments made by the start
of the lease, adjusted for any initial direct costs, which have been incurred.
The lease liability is measured initially at the present value of the lease payments, which are outstanding at
the start date, discounted at either the rate implicit in the lease or the Group’s incremental borrowing rate.
With the exception of leases containing an option to purchase, the Group uses its incremental borrowing rate
as the discount rate. Lease liabilities are measured at amortised cost, using the effective rate, and adjusted
as required for any subsequent change to the lease terms.
The right-of-use asset is depreciated on a straight-line basis over the lease term, or from the start date of
the lease to the end of the useful life of the right-of-use asset as appropriate. The method of calculating the
estimated useful lives of the right-of-use assets and testing for impairment is the same as that for property,
plant and equipment.
Recognition exemptions
Payments for short-term leases, lasting twelve months or less, without a purchase option are reported as an
operating expense on a straight-line basis over the term of the lease.
The cost of leasing low-value items is reported as an operating expense over the life of the lease.
Lease portfolios
The Group has leases for the following types of assets:
Land and buildings – the Group leases a number of factory buildings, warehouses and office buildings.
Plant and equipment – a number of significant items of plant, such as CNC machines and furnaces, have
been leased under contracts with an option to buy the asset at the end of the lease term. The Group also
leases motor vehicles. For motor vehicles the Group has applied the practical expedient in paragraph 15 of
IFRS 16, whereby non-lease components have not been separated from lease components, such that lease
costs and service costs are treated as a single lease component.
Printers and photocopiers – the Group has applied the recognition exemption for low-value assets to these leases.
Government grants
Government grants relating to income are recognised in the statement of profit or loss.
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.
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 identifiable net assets 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.
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.
55
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Intangible assets and goodwill (continued)
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:
(cid:129) Capitalised development costs
Minimum expected order unit intake or minimum product life
(cid:129) Manufacturing rights
6 - 15 years
(cid:129) Brand names and intellectual property 3 - 20 years
(cid:129) Customer lists
2 - 10 years
(cid:129) Order book
1 year
(cid:129) Distribution rights
25 years
(cid:129) Software and licences
3 - 5 years
(cid:129) Non-compete agreements
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.
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.
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.
Provisions
General 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 committed 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. The warranties are generally passive in nature confirming that the goods
comply with contractual specifications and given the incidence of product failure is low, the warranties have
no tangible customer value.
56
NOTES TO THE FINANCIAL STATEMENTS
2. Accounting estimates and judgements
The Group makes judgements and estimates in applying the Group’s accounting policies, to prepare the
financial statements. The Directors do not believe there have been any key judgements exercised during the
period, but see the following as the key estimates considered.
Key estimates and judgements
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 under or overstated, based on
possible technical risks and inherent uncertainties.
Whilst cost to complete 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 due to unforeseen events. However, the
advanced stage of completion of a number of contracts reduces the risk of unforeseen events arising, and
given that the initial position taken on material contracts at the balance sheet date is revisited as part of
the post balance sheet review process prior to the financial statements being signed off, we would conclude
that the risk of a material impact on the financial statements arising from changes in estimates here is low.
Where there are claims which are subject to commercial negotiation, these are recognised only when there is
a high level of certainty. Consideration is given to the requirements of IFRS 15 in determining the appropriate
accounting for the claim settlements which takes into account the nature of the settlement and whether it
relates to a point in time or over time revenue contract.
Determination of the basis for the amortisation / impairment of intangible assets
The Group carries different classes of intangible assets on its balance sheet, which include goodwill,
manufacturing rights, brand names and development costs. Capitalised intangible costs are amortised on
a straight-line basis, which commences when the Group is expected to benefit from cash inflows. A key
estimate is required in determining the useful economic life over which each asset is to be amortised, with
current timeframes ranging from fifteen to twenty-five years. In arriving at the appropriate timeframe for
amortisation, there are essentially two key estimates, namely the product life cycle and the amount of profit
generated from the expected income streams. In terms of sensitivity, then, in regard to the intangible assets
other than goodwill, if we were to assume assets with estimated useful lives of fifteen years or more were
reduced by one third, then the pre tax profit and loss impact on the current year reported figures would be to
reduce profits by £471,000 (2021: £481,000). In accordance with IAS 38, the basis on which goodwill / intangible
assets are impaired / amortised is assessed annually. Sensitivity as regards goodwill is considered within note
15 to these financial statements.
Apart from above, the Group does not have any key assumptions concerning the future, or other key sources
of estimation uncertainty in the reporting period that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
Other estimates and 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 in note 26 (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.
Duvelco
As referred to within the Chairman’s Statement, the Company is committed to investing circa £12.5 million in the
area of high performance polymer resins. The judgement of the Board is that the market potential here is
57
NOTES TO THE FINANCIAL STATEMENTS
2. Accounting estimates and judgements (continued)
Other estimates and judgements (continued)
Duvelco (continued)
significant and that future profitability is expected to be strong. Accordingly, the Directors’ do not see a need
to impair our investment in this area.
3. Segmental information
Products and services from which reportable segments derive their revenues
For the purposes of management reporting to the chief operating decision maker, the Board of Directors,
the Group is organised into two reportable operating divisions: mechanical engineering and refractory
engineering. Segment assets and liabilities include items directly attributable to segments as well as those
that can be allocated on a reasonable basis. Associates are included in refractory engineering. In accordance
with the requirements of IFRS 8, information regarding the Group’s operating segments is reported below.
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Revenue
External sales … …
Inter-segment sales …
87,605
17,784
56,503
144,108
15,523
33,307
86,616
20,871
44,615
11,526
131,231
32,397
Total revenue … …
105,389
72,026
177,415
107,487
56,141
163,628
Reconciliation to consolidated revenue:
Inter-segment sales …
Consolidated revenue for the year
(33,307)
144,108
(32,397)
131,231
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Profits
Segment operating profit
9,139
12,657
21,796
10,823
9,280
20,103
% of operating profit …
42%
58%
100%
54%
46%
100%
Group centre … …
Group operating profit
Share of profit of
associate company …
Unrealised gain on
10 year Interest Rate
Swap Derivative
…
Group finance
expenses (net) … …
Consolidated profit before
tax for the year … …
Tax
… … …
Consolidated profit after
tax for the year … …
(3,489)
18,307
(3,009)
17,094
-
63
63
-
60
60
-
(640)
16,514
(3,508)
13,006
2,740
(1,169)
19,941
(6,321)
13,620
58
NOTES TO THE FINANCIAL STATEMENTS
3. Segmental information (continued)
Products and services from which reportable segments derive their revenues (continued)
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Net assets
Total assets … …
Total liabilities … …
93,049
(71,950)
48,843
141,892
(22,643)
(94,593)
92,929
(66,909)
44,114
137,043
(20,591)
(87,500)
Sub total … … …
21,099
26,200
47,299
26,020
23,523
49,543
Goodwin PLC net assets
Elimination of Goodwin
…
PLC investments
Goodwill … … …
Consolidated total
net assets
… …
88,595
(25,822)
9,671
119,743
83,998
(25,392)
9,879
118,028
The investment in associate of £896,000 (2021: £829,000), is reported within the Refractory Engineering total
assets. 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.
Year ended 30th April, 2022
Year ended 30th April, 2021
Goodwin Mechanical Refractory
PLC Engineering Engineering
£’000
£’000
£’000
Total
£’000
Segmental capital expenditure
Goodwin Mechanical
Refractory
PLC Engineering Engineering
£’000
£’000
£’000
Total
£’000
Property,
plant and
equipment
Right-of-use
assets
Intangible
assets
9,326
5,396
1,631 16,353
5,315
4,952
1,570
11,837
441
237
2,401
1,121
881
3,723
1,180
1,146
74
2,400
429
1,787
151
1,123
456
1,730
Total
10,004
8,918
2,941 21,863
6,646
7,221
2,100
15,967
Segmental depreciation, amortisation and impairment
Depreciation
3,808
2,200
1,386
7,394
2,970
2,346
1,352
6,668
Amortisation
and impairment 1,195
47
330
1,572
1,106
20
440
1,566
Total
5,003
2,247
1,716
8,966
4,076
2,366
1,792
8,234
59
NOTES TO THE FINANCIAL STATEMENTS
3. Segmental information (continued)
Products and services from which reportable segments derive their revenues (continued)
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, 2022
Year ended 30th April, 2021
Revenue
£’000
38,599
21,388
14,046
31,085
38,990
UK
Rest of Europe
USA
Pacific Basin
Rest of World
Net
assets
£’000
Non-
Capital
current expendi-
ture
£’000
assets
£’000
77,447
104,995
19,670
8,648
3,728
1,009
-
15,867
17,781
-
6,703
8,004
-
278
906
Net
assets
£’000
81,982
8,309
-
13,708
14,029
Non-
current
assets
£’000
89,944
3,264
-
6,499
6,880
Capital
expendi-
ture
£’000
13,634
279
-
719
1,335
Revenue
£’000
39,755
21,473
8,027
28,255
33,721
Total
144,108
119,743
123,430
21,863
131,231
118,028
106,587
15,967
4. Revenue
The following tables provide an analysis of revenue by geographical market and by product line.
Geographical market
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Engineering Engineering
£’000
£’000
Mechanical
Refractory
Total Engineering Engineering
£’000
£’000
£’000
25,261
13,304
13,398
9,457
26,185
87,605
13,338
38,599
8,084
21,388
648
14,046
21,628
31,085
12,805
38,990
56,503 144,108
28,258
15,123
7,596
10,899
24,740
86,616
Total
£’000
39,755
21,473
8,027
28,255
33,721
11,497
6,350
431
17,356
8,981
44,615
131,231
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Engineering Engineering
£’000
£’000
Mechanical
Refractory
Total Engineering Engineering
£’000
£’000
£’000
Total
£’000
UK
Rest of Europe
USA
Pacific Basin
Rest of World
Total
Product lines
Standard products and
consumables
Bespoke products – point in time
12,155
9,992
56,503
68,658
-
9,992
10,630
11,203
44,615
-
55,245
11,203
Point in time revenue
22,147
56,503
78,650
21,833
44,615
66,448
Minimum period contracts
Bespoke products – over time
Over time revenue
3,804
61,654
65,458
-
-
-
3,804
61,654
3,306
61,477
65,458
64,783
-
-
-
3,306
61,477
64,783
Total revenue
87,605
56,503 144,108
86,616
44,615
131,231
The following tables present information about receivables, work in progress, contract assets and liabilities
from contracts with customers.
2021
£’000
19,378
-
9,784
15,844
(14,332)
Trade receivables due within one year (note 17) … … … … … …
Trade receivables due after more than one year (note 17) … … … … …
Work in progress (note 16) … … … … … … … … … …
Contract assets
… … … … … … … … … … …
Contract liabilities … … … … … … … … … … …
22,529
1,191
10,161
12,331
(14,749)
2022
£’000
60
31,463
30,674
NOTES TO THE FINANCIAL STATEMENTS
4. Revenue (continued)
The Mechanical Engineering segment of the Group contains large non-seasonal contracts, and so significant
variations are to be expected in the trade receivable, contract assets, work in progress and contract liabilities
balances. These large high value contracts arrive at various points during the year and factors such as
percentage complete and the level of milestone payments received to date influence the positions shown at
the 30th April, 2022. To rationalise movements over the year is not considered to be meaningful and the Group
focus is always to manage the net investment in working capital which would be reported on if there was a
significant adverse movement.
Revenue recognised in the year, which was included in the contract liability
balance at the beginning of the period … … … … … … … …
2022
£’000
2021
£’000
7,182
9,710
Revenue recognised from performance obligations, which were satisfied
(or partially satisfied) in previous periods* … … … … … … …
3,794
387
Contract asset impairment charge
… … … … … … … …
1,145
2,235
Release of contract asset impairment provision
… … … … … …
1,284
-
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 shown below.
Performance obligations due to be satisfied within one year … … … …
Performance obligations due to be satisfied after more than one year … … …
2022
£’000
40,114
37,705
2021
£’000
33,216
14,855
77,819
48,071
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.
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. The potential risk of the loss
of any key customer is limited as, typically, no single customer accounts for more than 10% of annual turnover.
* These figures relate to contract modifications.
61
NOTES TO THE FINANCIAL STATEMENTS
5. Expenses and auditor’s remuneration
The following are included in profit before taxation:
Charged / (credited) to the statement of profit or loss
Profit on sale of property
Depreciation:
… … … … … … … … …
Owned assets … … … … … … … … … … …
Right-of-use assets (see below) … … … … … … … …
Amortisation and impairment of intangible assets
… … … … …
Loss on sale of property, plant and equipment … … … … … …
Profit on disposal of subsidiary
… … … … … … … …
Research expenditure … … … … … … … … … …
Impairment of trade receivables charged to the statement of profit or loss
…
Realised currency gains … … … … … … … … … …
Unrealised currency (gains) / losses … … … … … … … …
Mark to market currency derivative losses / (gains)
… … … … …
Hedge reserve ineffectiveness … … … … … … … … …
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 … … … … …
Expenses relating to short-term property leases … … … … … …
Expenses relating to short-term plant and equipment leases … … … …
Expenses relating to leases of low-value assets … … … … … …
Government grants received including Covid-19 support … … … …
Depreciation on right-of-use assets may be analysed as follows:
Right of use assets depreciation – finance leases (former IAS 17 definition)
…
Right of use assets depreciation – operating leases (former IAS 17 definition) …
Depreciation – right of use assets … … … … … … … …
2022
£’000
-
6,202
1,192
1,572
(18)
-
4,507
188
(202)
(2,385)
926
(76)
66
282
304
130
12
(397)
£’000
684
508
1,192
2021
£’000
(763)
5,696
972
1,566
18
(32)
4,185
319
(978)
292
(438)
-
63
188
268
142
14
(1,427)
£’000
422
550
972
The mark to market currency derivative gains / losses and ineffectiveness are reported within cost of sales.
6. Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year, analysed by
category, was as follows:
Subsidiary employees … … … … … … … … … …
Goodwin PLC Company employees … … … … … … … …
The aggregate payroll costs of these persons were as follows:
Wages and salaries … … … … … … … … … …
Social security costs… … … … … … … … … …
Other pension costs … … … … … … … … … …
Payroll costs are reported as follows:
Cost of sales … … … … … … … … … … …
Administrative expenses … … … … … … … … …
2022
Number
2021
Number
1,062
50
1,112
2022
£’000
38,894
4,513
1,338
44,745
2022
£’000
31,707
13,038
44,745
1,080
49
1,129
2021
£’000
38,577
4,976
1,320
44,873
2021
£’000
31,522
13,351
44,873
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on pages 31 to 33.
The emoluments of the highest paid Director were £374,000 (2021: £355,000). The number of Directors, who were
members of a defined contribution pension scheme, was 6 (2021: 6).
62
NOTES TO THE FINANCIAL STATEMENTS
7. Finance costs (net)
Interest income … … … … … … … … … … …
Interest expense on lease liabilities … … … … … … … …
Interest expenses on bank loans and overdrafts … … … … … …
… … …
Capitalised interest on property, plant and equipment projects
2022
£’000
157
121
1,292
(87)
Interest expense … … … … … … … … … … …
1,326
Finance costs (net) … … … … … … … … … …
1,169
2021
£’000
111
95
747
(91)
751
640
Interest on right-of-use assets may be analysed as follows:
£’000
£’000
Interest on lease liabilities – finance leases (former IAS 17 definition)
… …
Interest on lease liabilities – operating leases (former IAS 17 definition) … …
8. Taxation
Recognised in the statement of profit or loss
Current tax expense
Current year … … … … … … … … … … …
Under / (over) provision in prior years … … … … … … …
Deferred tax expense
Origination and reversal of temporary differences – current year (see below)
Origination and reversal of temporary differences – over provision in prior years
Origination and reversal of temporary differences – rate change to prior year
(see below) … … … … … … … … … … …
Total tax expense … … … … … … … … … … …
72
49
121
2022
£’000
2,820
193
3,013
1,381
(85)
2,012
3,308
6,321
44
51
95
2021
£’000
1,878
(128)
1,750
1,845
(87)
-
1,758
3,508
Origination and reversal of temporary differences – current year
The majority of the deferred tax expense shown above comes from the difference between the accounting
treatment and the tax treatment of property, plant and equipment expenditure. Under the current UK tax regime,
most of our property, plant and equipment expenditure is 100% offset against our profits in the year of expenditure
and so produces a very low or zero rate of tax actually payable. In future years, however, the tax benefit gained
in year one reverses over time as future profits are taxed without further offset from this expenditure.
Origination and reversal of temporary differences – rate change to prior year
The UK government has increased the corporation tax rate from 19% to 25% with effect from 1st April, 2023.
Historically, our deferred tax provision has been calculated assuming that the temporary timing differences
will reverse at 19%. We have now calculated these provisions at 25% in line with the legislation.
63
NOTES TO THE FINANCIAL STATEMENTS
8. Taxation (continued)
Reconciliation of effective tax rate
2022
£’000
Profit before taxation … … … … … … … … … …
19,941
Tax using the UK corporation tax rate of 19% (2021: 19%) … … … …
Tax effect of amounts which are not deductible / (taxable)
in calculating taxable income:
Impact of super-deduction on property, plant and equipment additions … …
… … … … … … … … … …
Non-taxable income
Non-deductible expenses
… … … … … … … … …
Other permanent timing differences … … … … … … … …
Under / (over) provision in prior years… … … … … … … …
Losses not recognised … … … … … … … … … …
Share-based payments … … … … … … … … … …
Losses utilised where a deferred tax asset was not recognised
… … …
Rate change to prior year
… … … … … … … … …
Withholding tax unrelieved … … … … … … … … …
Difference in overseas tax rates
… … … … … … … …
Effect of equity accounting for associate … … … … … … …
3,789
(506)
(27)
30
295
108
171
(40)
(151)
2,012
355
297
(12)
2021
£’000
16,514
3,138
-
(45)
33
309
(210)
133
59
(115)
-
108
113
(15)
Total tax expense … … … … … … … … … … …
6,321
3,508
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 and royalties from overseas
subsidiaries and associates.
Deferred tax recognised directly in equity
Deferred tax credit / (charge) on the cash flow hedge included
in the consolidated statement of comprehensive income
… … … …
9. Earnings per share
2022
£’000
1,114
2021
£’000
(673)
Number of
ordinary shares
2022
2021
Ordinary shares in issue
Opening shares in issue … … … … … … … … … … 7,526,400
163,200
Shares issued in the year (note 33) … … … … … … … …
7,363,200
163,200
7,689,600
7,526,400
Outstanding ordinary share options (note 33)
… … … … …
-
163,200
Total ordinary shares (issued and options) … … … … … … 7,689,600
7,689,600
Weighted average number of ordinary shares in issue … … … … … 7,673,951
-
Weighted average number of outstanding ordinary share options … … …
7,445,024
162,651
Denominator used for diluted earnings per share calculation
… … 7,673,951
7,607,675
Relevant profits attributable to ordinary shareholders … … … … …
2022
£’000
12,980
2021
£’000
12,494
64
NOTES TO THE FINANCIAL STATEMENTS
10. Dividends
Paid ordinary dividends during the year in respect of prior years
102.24p (2021: 81.71p) per qualifying ordinary share … … … … …
2022
£’000
7,862
2021
£’000
6,016
After the balance sheet date an ordinary dividend of 107.80p per qualifying ordinary share was proposed by the
Directors (2021: Ordinary dividend of 102.24p).
The proposed current year ordinary dividend of £8,289,000 has not been provided for within these financial
statements (2021: Proposed ordinary dividend of £7,862,000 was not provided for within the comparative
figures).
11. Property, plant and equipment
Cost
Balance at 1st May, 2020 … … …
Additions … … … … … …
Reclassification … … … … …
Reclassification – ROU*
… … …
Disposals … … … … … …
Exchange adjustment … … … …
41,671
1,397
74
-
(641)
(503)
78,959
3,906
(3,888)
4,045
(1,221)
(222)
Other
Plant and equipment
Land and
buildings machinery
£’000
£’000
Assets in
course of
construc-
tion
£’000
2,006
6,048
(188)
-
(75)
(12)
Total
£’000
125,914
11,837
-
4,045
(2,684)
(801)
£’000
3,278
486
4,002
-
(747)
(64)
Balance at 30th April, 2021 … …
41,998
81,579
6,955
7,779
138,311
Balance at 1st May, 2021 … … …
Additions … … … … … …
Reclassification – others … … …
Disposals … … … … … …
Exchange adjustment … … … …
41,998
5,814
3,737
(6)
661
81,579
2,653
1,721
(1,205)
245
6,955
515
(120)
(662)
83
7,779
7,371
(5,338)
-
53
138,311
16,353
-
(1,873)
1,042
Balance at 30th April, 2022 … …
52,204
84,993
6,771
9,865
153,833
Depreciation
Balance at 1st May, 2020 … … …
Charged in year … … … … …
Reclassification … … … … …
Reclassification – ROU*
… … …
Disposals … … … … … …
Exchange adjustment … … … …
8,150
1,195
-
-
-
(119)
45,799
4,004
(3,032)
1,045
(812)
(147)
2,339
497
3,032
-
(659)
(44)
Balance at 30th April, 2021 … …
9,226
46,857
5,165
Balance at 1st May, 2021 … … …
Charged in year … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
9,226
1,345
-
139
46,857
4,413
(903)
105
5,165
444
(647)
95
Balance at 30th April, 2022 … …
10,710
50,472
5,057
-
-
-
-
-
-
-
-
-
-
-
-
56,288
5,696
-
1,045
(1,471)
(310)
61,248
61,248
6,202
(1,550)
339
66,239
Net book value
At 1st May, 2020
… … … …
33,521
33,160
At 30th April, 2021 … … … …
32,772
34,722
939
1,790
2,006
7,779
69,626
77,063
At 30th April, 2022
… … …
41,494
34,521
1,714
9,865
87,594
*This is a transfer from the right-of-use assets category on the settlement of a lease purchase agreement and
payment of the option to purchase fee.
Plant and machinery
During the year the Group expended £16.35 million on property, plant and equipment. Headline items here are
expenditures on the infrastructure works for Goodwin Steel Castings Ltd; on our new calciner plant at Hoben
International Ltd; plant for Duvelco Ltd and land acquired for Noreva GmbH.
Other equipment
Other equipment comprises motor vehicles, IT hardware and office equipment.
65
NOTES TO THE FINANCIAL STATEMENTS
11. Property, plant and equipment (continued)
Assets in course of construction
Land and buildings
… … … … … … … … … …
Plant and machinery … … … … … … … … … …
Depreciation
Depreciation is reported as follows:
Cost of sales
Administrative expenses
… … … … … … … … … … …
… … … … … … … … …
2022
£’000
1,823
8,042
9,865
2022
£’000
5,942
260
6,202
2021
£’000
4,481
3,298
7,779
2021
£’000
5,393
303
5,696
Security
There is a charge over Noreva GmbH’s land and buildings of €1.36 million to secure a bank loan repayable by
instalments. At Goodwin PLC a bank loan of £3.4 million is secured against three furnaces located at Goodwin
Steel Castings Limited (refer to note 20), and a loan of £4.5 million is secured against the land acquired during
the year.
12. Right-of-use assets
Cost
Land and
buildings
£’000
Plant and
machinery
£’000
Other
equipment
£’000
Balance at 1st May, 2020
… … …
Additions … … … … … …
Transfer to property, plant and equipment…
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
Balance at 30th April, 2021
… … …
Balance at 1st May, 2021
Additions … … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
1,937
1,079
-
-
(285)
(3)
2,728
2,728
123
(107)
17
4,787
70
(4,045)
(86)
(6)
1
721
721
3,215
(35)
(18)
Total
£’000
6,856
2,400
(4,045)
-
(291)
(12)
132
1,251
-
86
-
(10)
1,459
4,908
1,459
385
-
(2)
4,908
3,723
(142)
(3)
Balance at 30th April, 2022
2,761
3,883
1,842
8,486
Depreciation
Balance at 1st May, 2020
… … …
Charged in year … … … … …
Transfer to property, plant and equipment
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
Balance at 30th April, 2021
… … …
Balance at 1st May, 2021
Charged in year … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
Balance at 30th April, 2022
Net book value
At 1st May, 2020 … … … … …
At 30th April, 2021
… … … …
At 30th April, 2022
500
499
-
-
(212)
(2)
785
785
457
(107)
(1)
1,134
1,437
1,943
1,627
66
982
306
(1,045)
(13)
(6)
-
224
224
351
-
(5)
570
3,805
497
3,313
31
167
-
13
-
(3)
1,513
972
(1,045)
-
(218)
(5)
208
1,217
208
384
-
(1)
1,217
1,192
(107)
(7)
591
2,295
101
1,251
5,343
3,691
1,251
6,191
NOTES TO THE FINANCIAL STATEMENTS
12. Right-of-use assets (continued)
Depreciation
Depreciation is reported as follows:
Cost of sales
Administrative expenses
… … … … … … … … … … …
… … … … … … … … …
2022
£’000
735
457
1,192
2021
£’000
473
499
972
13. Investments in subsidiaries
The Group has the following principal subsidiaries. Non-principal subsidiaries are listed in note 30:
Registered Country of
address*
Incorporation
Class of
shares held
% held
Company name
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 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
Duvelco Limited … … … … … …
1
1
1
3
4
5
6
Refractory Engineering:
1
Goodwin Refractory Services Limited … … …
1
Dupré Minerals Limited … … … … …
2
Hoben International Limited … … … …
Gold Star Powders Private Limited … … …
4
Siam Casting Powders Limited … … … … 11
Ultratec Jewelry Supplies Limited … … … 12
SRS (Qingdao) Casting Materials Company Limited
13
Jewelry Plaster Limited … … … … … 14
100
England and Wales Ordinary
100
England and Wales Ordinary
77
England and Wales Ordinary
95
Ordinary
South Korea
100
Ordinary
India
100
Ordinary
China
Ordinary 100
Germany
Brazil
Ordinary
England and Wales Ordinary
Australia
Ordinary
England and Wales Ordinary
Ordinary
Finland
South Africa
Ordinary
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
Ordinary
India
Ordinary
Thailand
Ordinary
China
Ordinary
China
Ordinary
Thailand
100
100
100
100
77
100
100
100
100
100
100
58
75.5
75.5
75
*The registered address for each company can be found in note 32.
All of the above companies are included as part of the consolidated accounts. All the companies are involved in
mechanical or refractory engineering, with the exception of Internet Central Limited, which is an internet service
provider.
Non-controlling interests (NCI)
The following subsidiaries each have non-controlling interests:
Company name
Registered Country of
address*
Incorporation
Class of
shares held
% held
Mechanical Engineering:
Easat Radar Systems Limited … … … … 1
Goodwin Korea Company Limited … … … 3
… … … … … … 10
NRPL Aero Oy
Refractory Engineering:
Jewelry Plaster Limited … … … … … 14
Jewelry Wax Limited
… … … … … 14
Siam Casting Powders Limited … … … … 11
GRS Silicone Company Limited … … … … 17
SRS (Qingdao) Casting Materials Company Limited 13
Shenzhen King-Top Modern Hi-Tech Company Limited 16
Ultratec Jewelry Supplies Limited … … … 12
… … … … … 1
Ying Tai (UK) Limited
England and Wales Ordinary
Ordinary
South Korea
Ordinary
Finland
Ordinary
Thailand
Ordinary
Thailand
Ordinary
Thailand
Ordinary
China
Ordinary
China
Ordinary
China
China
Ordinary
England and Wales Ordinary
23
5
23
25
25
42
24.5
24.5
24.5
24.5
24.5
*The registered address for each company can be found in note 32.
During the year, the Group acquired the non-controlling interests in Internet Central Limited for £430,000. For further
details, please refer to the Statement of Changes in Equity on page 46.
67
NOTES TO THE FINANCIAL STATEMENTS
13. Investments in subsidiaries (continued)
Non-controlling interests (NCI) (continued)
The financial information on subsidiaries with non-controlling interests has been aggregated, analysing the data by
segment, as the entities in each segment have similar characteristics and risk profiles.
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Profit / (loss) allocated
to non-controlling
interests … … …
Dividends paid to
non-controlling
interests … … …
Accumulated reserves
held by non-controlling
interests … … …
(463)
1,103
640
(283)
795
512
-
(808)
(808)
-
(125)
(125)
(690)
5,123
4,433
243
4,644
4,887
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.
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Non-current assets …
Current assets … …
3,436
6,824
11,955
16,264
Total
£’000
15,391
23,088
Current liabilities …
(11,651)
(6,822)
(18,473)
Non-current liabilities
(439)
(305)
(744)
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
14,991
27,954
12,037
14,529
(7,071)
(20,404)
(511)
(899)
2,954
13,425
(13,333)
(388)
Total net assets of
companies with
non-controlling interests
Revenue of companies
with non-controlling
interests … … …
Profit / (loss) for the
year of companies with
non-controlling interests
Total comprehensive
income of companies with
non-controlling interests
Net cash flow from
operating activities …
Net cash flow from
investing activities …
Net cash flow from
financing activities …
(1,830)
21,092
19,262
2,658
18,984
21,642
7,655
23,455
31,110
15,984
19,269
35,253
(2,013)
4,356
2,343
(918)
3,137
2,219
(1,571)
3,544
1,973
(769)
2,733
1,964
(324)
3,072
2,748
-
(181)
(181)
(32)
(3,307)
(3,339)
823
(320)
(146)
1,926
2,749
(992)
(1,312)
(1,037)
(1,183)
68
816
75
(15)
(47)
829
967
(138)
829
Total
£’000
NOTES TO THE FINANCIAL STATEMENTS
14. Investment in associate
The Group’s share of profit after tax in its immaterial associate for the year ended 30th April, 2022 was £63,000
(2021: £60,000).
Summary financial information of the Group’s share of its associate company is as follows:
2022
£’000
2021
£’000
Balance at 1st May
… … … … … … … … … …
Profit before tax … … … … … … … … … … …
Tax … … … … … … … … … … … … …
Exchange adjustment … … … … … … … … … …
Balance at 30th April… … … … … … … … … …
Assets
… … … … … … … … … … … …
Liabilities … … … … … … … … … … … …
829
75
(12)
4
896
914
(18)
896
15. Intangible assets
Brand
names
and
intellectual
property
£’000
Goodwill
£’000
Cost
Balance at 1st May, 2020 …
Additions… … … …
Disposals… … … …
…
Exchange adjustment
10,233
-
-
(15)
9,672
18
-
(45)
Balance at 30th April, 2021
10,218
9,645
Balance at 1st May, 2021 …
Additions… … … …
Disposals… … … …
…
Exchange adjustment
10,218
-
(208)
9,645
159
-
(142)
Balance at 30th April, 2022
10,010
9,662
Order
book
£’000
161
-
(161)
-
-
-
-
-
-
Manufact- Software Develop-
ment
costs
£’000
and
Licences
£’000
uring
rights
£’000
5,420
68
-
5
1,175
224
(11)
3
8,426
1,420
(25)
-
35,087
1,730
(197)
(52)
5,493
1,391
9,821 36,568
5,493
-
(594)
-
1,391
123
(3)
(11)
9,821
1,505
-
-
36,568
1,787
(597)
(361)
4,899
1,500
11,326 37,397
Amortisation and impairment
Balance at 1st May, 2020 …
Amortisation for the year …
Impairment … … …
Disposals… … … …
…
Exchange adjustment
343
-
-
-
(4)
5,884
591
-
-
(12)
161
-
-
(161)
-
2,227
334
-
-
2
810
240
-
(6)
2
967
381
20
(24)
-
10,392
1,546
20
(191)
(12)
Balance at 30th April, 2021
339
6,463
Balance at 1st May, 2021 …
Amortisation for the year …
Impairment … … …
Disposals… … … …
…
Exchange adjustment
339
-
-
-
-
6,463
511
-
-
(140)
Balance at 30th April, 2022
339
6,834
Net book value
At 1st May, 2020… … …
At 30th April, 2021 … …
9,890
9,879
3,788
3,182
At 30th April, 2022
…
9,671
2,828
-
-
-
-
-
-
-
-
-
-
2,563
1,046
1,344 11,755
2,563
324
-
(594)
1
1,046
163
-
(3)
(11)
1,344
559
15
-
-
11,755
1,557
15
(597)
(150)
2,294
1,195
1,918 12,580
3,193
2,930
365
345
7,459
24,695
8,477
24,813
2,605
305
9,408 24,817
69
NOTES TO THE FINANCIAL STATEMENTS
15. Intangible assets (continued)
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.
Amortisation and impairment charges are reported in cost of sales in the statement of profit or loss.
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
…
2022
£’000
4,575
3,346
1,215
535
9,671
2021
£’000
4,742
3,346
1,260
531
9,879
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 fair value less costs of disposal. 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 five years
are used, which are based on budgets and plans approved 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 five years,
(typically 0% - 15%), with a zero growth rate (2021: zero growth rate) then assumed for any terminal values.
The forecasts are then discounted at an appropriate pre-tax weighted average cost of capital rate considering
the perceived levels of risk, ranging between 11.8% and 17.8% (2021: between 9.8% and 17.8%) for the
Mechanical Engineering Division and 12.4% to 13% (2021: between 11.4% and 12%) 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, as disclosed,
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
Net balances
Raw materials and consumables … … … … … … … …
Work in progress … … … … … … … … … … …
Finished goods … … … … … … … … … … …
Provisions held
Raw materials and consumables … … … … … … … …
Work in progress … … … … … … … … … … …
Finished goods … … … … … … … … … … …
Inventory impaired during the year
70
2022
£’000
19,828
10,161
10,375
40,364
438
276
482
2021
£’000
16,572
9,784
8,191
34,547
373
493
435
1,196
1,301
1,390
1,427
NOTES TO THE FINANCIAL STATEMENTS
17. Trade and other financial assets
Balances due within one year
Trade receivables … … … … … … … … … …
Other financial assets … … … … … … … … …
…
…
2022
£’000
22,529
1,188
23,717
Balances due after more than one year
Trade receivables … … … … … … … … … …
…
1,191
18. Other receivables
… … … … … … … …
Advance payments to suppliers
Prepayments and other non-financial assets … … … … … …
Corporation tax assets … … … … … … … … … …
… … … … … … … …
Deferred tax asset (see note 24)
19. Cash and cash equivalents
2022
£’000
1,235
3,635
1,347
60
6,277
2022
£’000
Cash and cash equivalents … … … … … … … … …
11,651
2021
£’000
19,378
1,162
20,540
-
2021
£’000
2,002
2,594
902
129
5,627
2021
£’000
15,160
20. Borrowings
Information is provided below about the contractual terms of the Group’s lease liabilities, bank loans and
borrowings. The bank loans repayable by instalment are secured against a property in Germany together
with furnaces and land in the UK (refer to note 11). For more information about the Group’s exposure to
interest rate and foreign currency risk, refer to note 26.
Year ended 30th April, 2022
Year ended 30th April, 2021
Non-current
liabilities
£’000
Current
liabilities
£’000
Total
liabilities
£’000
Non-current
liabilities
£’000
Current
liabilities
£’000
Total
liabilities
£’000
8,059
1,005
9,064
4,538
761
5,299
Bank loans - repayable
by instalments … …
Bank loans - rolling
credit facilities … …
Other loans … …
28,000
-
Lease liabilities… …
4,317
40,376
-
28,000
202
1,557
2,764
202
5,874
43,140
26,000
-
2,528
33,066
-
-
846
26,000
-
3,374
1,607
34,673
71
NOTES TO THE FINANCIAL STATEMENTS
20. Borrowings (continued)
Reconciliation of liabilities arising from financing activities
Bank
overdrafts
Bank loans
used for cash repayable by rolling credit
instalments
management
£’000
£’000
facilities Other loans
£’000
£’000
Opening balance at
1st May, 2020 … …
Non-cash movements
Change in bank
overdrafts
… …
Cash flows
… …
Foreign exchange
movement
… …
Closing balance
30th April, 2021
Opening balance at
1st May, 2021 … …
Non-cash movements
Cash flows
… …
Foreign exchange
movement
… …
Closing balance
30th April, 2022
391
-
(391)
-
-
-
-
-
-
-
-
Contractual undiscounted cash flows
6,010
21,000
-
-
(724)
13
-
-
5,000
-
5,299
26,000
5,299
-
3,817
26,000
-
2,000
(52)
-
-
-
-
-
-
-
-
-
202
-
Lease
liabilities
£’000
Total
£’000
2,822
2,195
30,223
2,195
-
(391)
(1,635)
2,641
(8)
5
3,374
34,673
3,374
3,630
(1,153)
34,673
3,630
4,866
23
(29)
9,064
28,000
202
5,874
43,140
Year ended 30th April, 2022
Year ended 30th April, 2021
Minimum
loan
payments
£’000
Interest
£’000
Principal
£’000
Minimum
loan
payments
£’000
Interest
£’000
Principal
£’000
Bank loans - repayable
by instalments
Less than one year …
1,234
Between one and
five years
… …
More than five years …
4,434
4,985
229
615
745
10,653
1,589
Lease liabilities
Less than one year …
1,684
Between one and
five years
… …
More than five years …
4,137
362
6,183
127
170
12
309
Former IAS 17 analysis of lease liabilities
1,005
3,819
4,240
9,064
1,557
3,967
350
5,874
903
3,570
1,406
5,879
938
2,219
454
3,611
Finance leases … … … … … … … … … …
Operating leases … … … … … … … … … …
…
…
142
324
114
580
92
127
18
237
2022
£’000
4,170
1,704
5,874
761
3,246
1,292
5,299
846
2,092
436
3,374
2021
£’000
1,292
2,082
3,374
72
NOTES TO THE FINANCIAL STATEMENTS
21. Trade and other financial liabilities
Trade payables … … … … … … … … … … …
Other financial liabilities… … … … … … … … … …
Other taxation and social security … … … … … … … …
2022
£’000
… 18,958
1,929
…
2,117
…
2021
£’000
16,791
1,424
3,515
23,004
21,730
22. Other payables
Accrued expenses… … … … … … … … … … …
Advance payments from customers … … … … … … … …
…
…
23. Provisions
Balance at 1st May … … … … … … … … … …
Increase in provision … … … … … … … … … …
Release of provision … … … … … … … … … …
Provision utilised … … … … … … … … … … …
Exchange adjustment … … … … … … … … … …
Balance at 30th April… … … … … … … … … …
Due within one year … … … … … … … … … …
… … … … … … … … … …
Due after one year
Balance at 30th April… … … … … … … … … …
…
…
…
…
…
…
…
…
…
2022
£’000
4,001
255
4,256
2022
£’000
859
167
(408)
(144)
(18)
456
205
251
456
2021
£’000
3,543
482
4,025
2021
£’000
484
550
(164)
(11)
-
859
608
251
859
Provisions include warranties for products sold which generally cover a period of between 1 and 3 years, and
other provisions which are due within one year.
24. Deferred tax assets and liabilities
Deferred tax balances are attributable to the following:
Year ended 30th April, 2022
Year ended 30th April, 2021
Assets
£’000
Liabilities
£’000
63
-
(8,344)
(2,186)
714
(702)
Property, plant
and equipment … …
Intangible assets
Derivative financial
instruments … …
…
Share based
payments reserve …
Tax losses
… …
2,496
-
-
-
Other temporary
differences
… …
430
(122)
308
Net
£’000
(8,281)
(2,186)
12
-
2,496
Assets
£’000
Liabilities
£’000
Net
£’000
(4,382)
(1,686)
(4,509)
(1,732)
(494)
(436)
-
-
(90)
915
-
144
127
46
58
915
-
234
3,703
(11,354)
(7,651)
1,380
(6,825)
(5,445)
Deferred tax balances are reported in the balance sheet as follows:
Deferred tax asset (see note 18)
… … … … … … …
Deferred tax liability … … … … … … … … …
…
…
2022
£’000
60
(7,711)
(7,651)
2021
£’000
129
(5,574)
(5,445)
73
24. Deferred tax assets and liabilities (continued)
NOTES TO THE FINANCIAL STATEMENTS
Property,
plant and
equipment
£’000
Intangible
assets
£’000
Derivative
Share-
based
financial payments
reserve
£’000
instruments
£’000
Tax
Other
temporary
losses differences
£’000
£’000
Total
£’000
Balance at
1st May, 2020
Recognised in
profit and loss
Recognised in
equity
Exchange
adjustment
Balance at
30th April, 2021
Recognised in
profit and loss
Recognised in
equity
Exchange
adjustment
(3,544)
(1,612)
(866)
-
28
(31)
-
(43)
143
94
(673)
‒
1,888
(973)
-
-
(4,382)
(1,686)
(436)
915
-
-
-
-
-
114
(3,011)
18
(1,758)
-
12
(673)
(3)
144
(5,445)
(3,891)
(477)
(666)
(915)
2,496
145
(3,308)
-
(8)
-
(23)
1,114
-
12
-
-
-
-
-
-
19
1,114
(12)
2,496
308
(7,651)
Balance at
30th April, 2022
(8,281)
(2,186)
Deferred tax has been calculated at 19% on temporary differences due to reverse by 31st March, 2023, and at
25% for all other temporary differences.
Deferred tax assets not recognised on losses
Gross tax losses … … … … … … … … … …
Deferred tax assets not recognised … … … … … … …
…
…
2022
£’000
2,364
500
2021
£’000
2,016
436
The Group has not recognised a deferred tax asset against taxable losses incurred by some of its subsidiaries.
Typically these are subsidiaries which are still in their formative years and, whilst profitability is expected in the
long-term, it is deemed prudent to not recognise a deferred tax asset at this stage.
25. Capital and reserves
Share capital
Authorised, allotted, called up and fully paid:
7,526,400 (2021: 7,363,200) ordinary shares of 10p each
… … … …
Issue of 163,200 ordinary shares of 10p each … … … … … …
2022 2021
£’000 £’000
753
16
769
736
17
753
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 IFRS 2, relating to the
Equity Long Term Incentive Plan, which vested at 1st May, 2019. Further details are included in note 33.
Cash flow hedge reserve and cost of hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedge instruments related to hedged transactions that have not yet occurred. The cost of hedging reserve
relates to the associated costs attaching to the cash flow hedge reserve, such as counterparty risk and forward
point adjustments.
74
NOTES TO THE FINANCIAL STATEMENTS
25. Capital and reserves (continued)
Deferred tax
Aggregate deferred tax balances recognised in equity:
Derivative financial instruments
… … … … … … … …
Equity Long Term Incentive Plan … … … … … … … …
Asset / (liability)
2022 2021
£’000 £’000
723
-
723
(387)
915
528
26. 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; trade and other receivables; contract assets;
derivative financial assets; the carrying amounts of which represent the Group’s maximum exposure to
credit risk in relation to financial assets.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings
assigned by international credit rating agencies.
The Group’s credit risk is primarily attributable to its trade receivables and is managed through the
following processes:
i) The majority of orders accepted by Group companies are backed by credit insurance.
ii) Some orders are accepted with no credit insurance but with letters of credit.
iii) Some orders are accepted with no credit insurance and no letter of credit but with an internal analysis
of the customer’s size, creditworthiness, historic profitability and payment record.
iv) A few orders (less than 10%), with a material value, 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.
Whilst the theoretical credit risk would be the actual balances themselves as reported within the table
below, this assumes that the credit insurance company is also a credit risk for the invoiced trade debtors
and contract assets underwritten by them. Our insurer enjoys a strong credit rating with the likes of
Moody’s, S&P and Fitch. As a result, and after having looked back on the Group’s track record of
negligible impairment losses on these type of assets over the last 10 years, the Directors are of the
opinion that there is no cost / benefit in performing an ECL type loss analysis and so impairment
provisions are based on known issues rather than a statistical estimate.
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 within one year … …
Trade and other financial assets – due after more than one year
Cash at bank and cash equivalents … … … … …
Derivative financial assets – due within one year … … …
Derivative financial assets – due after more than one year …
Notes
4
17
17
19
26 (d)
26 (d)
2022
£’000
12,331
23,717
1,191
11,651
1,211
2,741
52,842
2021
£’000
15,844
20,540
-
15,160
4,106
191
55,841
At the reporting date, the maximum exposure to credit risk for trade receivables, before taking into account
credit insurance, by geographic region was:
Carrying amount
UK … … … … … … … … … … … …
Rest of Europe … … … … … … … … … …
USA … … … … … … … … … … … …
Pacific Basin
… … … … … … … … … …
Rest of World … … … … … … … … … …
75
2022
£’000
3,603
4,053
1,506
5,080
9,478
2021
£’000
3,874
4,102
775
5,008
5,619
23,720
19,378
NOTES TO THE FINANCIAL STATEMENTS
26. Financial risk management (continued)
a) Credit risk (continued)
Exposure to credit risk (continued)
The ageing of trade receivables and impairments at the reporting date was:
Net
2022
£’000
Not past due … … … 13,933
4,880
Past due 1-30 days … …
2,330
Past due 31-90 days… …
2,577
Past due more than 90 days
2022
Gross
2022
£’000
13,979
4,962
2,613
2,866
Impairment
provision
2022
£’000
(46)
(82)
(283)
(289)
2021
Gross
2021
£’000
13,503
3,035
1,189
2,199
Impairment
provision
2021
£’000
(57)
(2)
(14)
(475)
Net
2021
£’000
13,446
3,033
1,175
1,724
23,720
24,420
(700)
19,378
19,926
(548)
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:
Opening balance at 1st May … … … … … … … …
Increase in provision … … … … … … … … …
Release of provision … … … … … … … … …
Provision utilised during the year … … … … … … …
Exchange adjustment … … … … … … … … …
Closing balance at 30th April … … … … … … … …
2022
£’000
548
470
(342)
-
24
700
2021
£’000
316
369
(50)
(89)
2
548
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
£’000
2022
Committed
£’000
Total
£’000
Uncommitted
£’000
Committed
£’000
Total
£’000
2021
Unutilised bank
facilities
6,050
16,500
22,550
6,050
18,500
24,550
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.
76
NOTES TO THE FINANCIAL STATEMENTS
26. Financial risk management (continued)
b) Liquidity risk (continued)
Maturity analysis
The table below analyses the Group’s financial non-derivative 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.
Non-derivative financial liabilities
Bank loans - repayable by instalments…
Bank loans - rolling credit facilities …
… … … …
Lease liabilities
Trade and other financial liabilities …
Within
1 year
£’000
903
-
938
21,730
Contractual cash flows
1-5 years
£’000
5+ years
£’000
3,570
26,000
2,219
-
1,406
-
454
-
Carrying
value
Total
£’000
5,299
26,000
3,374
21,730
Total
£’000
5,880
26,000
3,157
21,730
At 30th April, 2021 … … … 23,571
31,789
1,860
57,220
56,403
Bank loans - repayable by instalments…
Bank loans - rolling credit facilities …
Other loans … … … … …
Lease liabilities
… … … …
Trade and other financial liabilities …
1,234
-
202
1,684
23,004
4,434
28,000
-
4,137
-
4,985
-
-
362
-
10,653
28,000
202
6,183
23,004
9,064
28,000
202
5,874
23,004
At 30th April, 2022 … … … 26,124
36,571
5,347
68,042
66,144
The interest rates chargeable on these loans are on a floating basis against SONIA and UK base rate, with
bank margins of less than 2.1%. With effect from 1st September, 2021, the Group entered into a ten year
derivative with HSBC to fix its variable interest rate at less than 1% against a notional £30 million of debt.
There is one bank loan of £1.2 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.
A second bank loan of £4.5 million is repayable by instalments, with the final payment due in the year
ended 30th April, 2042. The effective interest rate is 2.55%, which will vary over the loan period.
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.
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. 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:
2022
2021
US
Dollar
£’000
Euro
£’000
Other
£’000
Total
£’000
US
Dollar
£’000
Euro
£’000
Other
£’000
Total
£’000
Trade and other
receivables
Cash and cash
equivalents
Trade and other
payables
6,193
2,242
1,388
14
51
74
8,486
2,511
1,513
-
4,024
1,476
789
(40)
454
1,203
(1,121)
(965)
(24)
(2,110)
(537)
(661)
(763)
(1,961)
6,460
1,291
101
852
2,763
812
(309)
3,266
77
NOTES TO THE FINANCIAL STATEMENTS
26. Financial risk management (continued)
c) Market risk (continued)
Currency profile of financial assets and liabilities (continued)
The following significant exchange rates applied during the year, for reporting purposes;
US Dollar … … … … …
Euro … … … … … …
2022
2021
Average
exchange rate
1.3591
1.1791
Reporting
date spot rate
1.2570
1.1920
Average
exchange rate
1.3202
1.1222
Reporting
spot rate
1.3845
1.1500
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. As reported
elsewhere in these financial statements, the Company on 2nd July, 2021 signed a contract to mitigate the
impact of interest rate risk by taking out an interest rate swap derivative fixing £30 million of notional
debt at less than 1% versus the variable inter-bank lending rate (SONIA) for a period of ten years,
commencing 1st September, 2021.
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.
2022
Non-
Fixed Floating interest-
rate bearing
£’000
rate
£’000
£’000
Total
£’000
Fixed
rate
£’000
Floating
rate
£’000
2021
Non-
interest-
bearing
£’000
Total
£’000
11,651
-
-
12,331
11,651
12,331
-
-
15,160
-
-
15,844
15,160
15,844
Cash and cash
equivalents
Contract assets
Trade and financial
assets
Derivative assets
Contract liabilities
Trade and other
financial liabilities
Derivative liabilities
Bank loans -
-
-
-
-
-
-
-
-
-
-
-
-
24,908
3,952
(14,749)
24,908
3,952
(14,749)
(23,004)
(4,036)
(23,004)
(4,036)
250
-
-
-
-
repayable by
instalments
Bank loans -
rolling credit
facilities
Other loans
Lease liabilities
(4,564)
(4,500)
-
(202)
(2,280)
(28,000)
-
(3,594)
-
-
-
-
(9,064)
(5,299)
(28,000)
(202)
(5,874)
-
-
(2,945)
(26,000)
-
(429)
-
-
-
-
-
-
20,290
4,297
(14,332)
20,540
4,297
(14,332)
(21,730)
(2,016)
(21,730)
(2,016)
-
-
-
-
(5,299)
(26,000)
-
(3,374)
(7,046)
(24,443)
(598)
(32,087)
(7,994)
(11,269)
2,353
(16,910)
78
NOTES TO THE FINANCIAL STATEMENTS
26. 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, 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, 2022, the capital used was
£145.1 million, (2021: £130.6 million) as shown in the following table:
Cash and cash equivalents … … … … … …
Other loans
… … … … … … … …
Total lease liabilities … … … … … … …
Bank loans - repayable by instalments … … … …
Bank loans - rolling credit facilities… … … … …
Net debt in accordance with IFRS 16 … … … …
Operating lease debt (former IAS 17 definition)… … …
Relevant net debt for KPI purposes… … … … …
Total equity attributable to equity holders of the parent …
… …
… …
… …
… …
… …
… …
… …
… …
… …
…
…
…
…
…
…
…
…
…
Capital
2022
£’000
(11,651)
202
5,874
9,064
28,000
2021
£’000
(15,160)
-
3,374
5,299
26,000
31,489
(1,704)
19,513
(2,082)
29,785
115,310
17,431
113,141
145,095
130,572
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, 2022 net
debt was £29.8 million (2021: £17.4 million). The gearing ratio is 25.8% (2021: 15.4%).
The Group manages its capital structure and makes adjustments to it with regard to the risks inherent in the
business and in light of changes to economic conditions.
Working capital is managed in order to generate maximum conversion of profits into cash and cash
equivalents. Dividends are based on 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 26 (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. Foreign
currency forward contracts are denominated in the same currency as the highly probable future sales
and the hedged ratio is 1:1.
Forecast transactions
The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges and
states them at fair value.
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.
Forward exchange contracts designated in a cash flow hedge relationship
Year ended 30th April, 2022
Year ended 30th April, 2021
Forward exchange contracts
Forward exchange contracts
Current
£’000
56,487
Matured
£’000
7,329
Total
£’000
63,816
Current
£’000
43,945
Matured
£’000
15,852
Total
£’000
59,797
769
-
769
1,166
904
2,070
(3,787)
(423)
(4,210)
(5)
-
(5)
Nominal value …
Carrying amount of
hedged assets …
Carrying amount of
hedged liabilities …
79
NOTES TO THE FINANCIAL STATEMENTS
26. Financial risk management (continued)
d) Capital management (continued)
Accumulated amount of fair value hedge adjustments
included in the carrying amount of the hedged item:
Year ended 30th April, 2022
Year ended 30th April, 2021
Forward exchange contracts
Forward exchange contracts
Assets… … …
Liabilities … …
Change in value used
to calculate hedge
ineffectiveness …
Cash flow hedge
reserve
… …
Current
£’000
769
(3,787)
Matured
£’000
-
Total
£’000
769
(423)
(4,210)
(3,037)
(423)
(3,460)
(2,445)
(343)
(2,788)
Current
£’000
1,166
(5)
1,259
929
Matured
£’000
904
-
904
732
Cash flow hedge reserve
Attributable to equity holders of the parent
Attributable to non-controlling interests
Cash flow hedge reserve (net of tax)
Cost of hedging reserve
Attributable to equity holders of the parent
Attributable to non-controlling interests
Cost of hedging reserve (net of tax)
(2,746)
(42)
(2,788)
140
8
148
Total
£’000
2,070
(5)
2,163
1,661
1,601
60
1,661
(1)
15
14
Forward exchange contracts not designated in a cash flow hedge relationship / currency swaps
Nominal value
… … … … … … …
… …
…
Carrying value of unhedged derivative contracts
2022
£’000
… 14,800
2021
£’000
28,926
Assets
… … … … … … … …
Liabilities … … … … … … … …
… …
… …
Net
… … … … … … … …
… …
…
…
…
…
…
…
443
(251)
192
3,131
(2,011)
1,120
Interest rate swaps
The Group utilises interest rate swap derivatives to hedge against future movements in floating interest
rates against the Group's floating rate debt. Hedge accounting is not applied for these instruments and all
movements in fair value are recognised in profit or loss.
Nominal value
… … … … … … …
… …
…
Carrying value of interest rate swap
2022
£’000
… 30,000
Assets
… … … … … … … …
… …
…
… 2,740
Expected cash flow
Within one year… … … … … … … …
Between one and five years
… … … …
More than five years… … … … … … …
… …
… …
… …
…
…
…
274
…
… 1,448
… 1,018
2,740
2021
£’000
-
-
-
-
-
-
80
NOTES TO THE FINANCIAL STATEMENTS
26. Financial risk management (continued)
d) Capital management (continued)
Interest rate swaps (continued)
The following table sets out the periods when the cash flows for foreign exchange contracts are expected
to occur and when they are expected to affect profit or loss:
Year ended 30th April, 2022
Year ended 30th April, 2021
Not
designated
in a cash flow
relationship
£’000
Designated
and effective
as cash flow
hedging
instruments
£’000
Designated
Not and effective
designated as cash flow
hedging
instruments
£’000
in a cash flow
relationship
£’000
Total
£’000
Total
£’000
Assets:
Carrying amount
Expected cash flow:
Within one year …
Between one and five years
Total assets
Liabilities:
Carrying amount
Expected cash flow:
Within one year …
Between one and five years
Total liabilities
443
443
-
443
(249)
(249)
-
(249)
769
1,212
494
275
769
937
275
1,212
3,131
3,128
3
3,131
1,166
4,297
978
188
4,106
191
1,166
4,297
(3,787)
(4,036)
(2,011)
(5)
(2,016)
(2,144)
(1,643)
(2,393)
(1,643)
(3,787)
(4,036)
(2,011)
-
(2,011)
(5)
-
(5)
(2,016)
-
(2,016)
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. The Group’s
exposure to foreign currency changes for all other foreign currencies is not considered material.
Year ended 30th April, 2022
Year ended 30th April, 2021
(Profit) / loss
impact on
equity
£’000
(Profit) / loss
impact on
statement of
profit or loss
£’000
(Profit) / loss
impact on
equity
£’000
(Profit) / loss
impact on
statement of
profit or loss
£’000
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 …
(207)
68
207
(68)
-
(345)
(207)
345
207
-
(177)
(96)
177
96
(424)
…
…
…
…
…
(597)
(37)
597
37
-
81
NOTES TO THE FINANCIAL STATEMENTS
26. 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, 2022 and 30th April, 2021.
Financial assets
Year ended 30th April, 2022
Year ended 30th April, 2021
Carrying
amount
£’000
Fair value
£’000
Carrying
amount
£’000
Fair value
£’000
At amortised cost
Cash and cash equivalents … … …
Contract assets … … … … …
Trade receivables … … … … …
Other financial assets … … … …
11,651
12,331
23,720
1,188
11,651
12,331
23,720
1,188
15,160
15,844
19,378
1,162
15,160
15,844
19,378
1,162
At fair value through profit and loss
Derivative financial assets not designated in
a cash flow hedge relationship
Interest rate swap
… …
… … … …
Fair value – hedging instrument
Derivative financial assets designated and
effective as cash flow hedging instruments
443
2,740
443
2,740
3,131
-
3,131
-
769
769
Total financial assets
… … …
52,842
52,842
Financial liabilities at amortised cost
Contract liabilities
… … … …
Trade payables … … … … …
Other financial liabilities
… … …
Lease liabilities … … … … …
Bank loans - repayable by instalments …
Bank loans - rolling credit facilities … …
… … … … …
Other loans
14,749
18,958
4,046
5,874
9,064
28,000
202
14,749
18,958
4,046
5,874
9,064
28,000
202
1,166
55,841
14,332
16,791
4,939
3,374
5,299
26,000
-
1,166
55,841
14,332
16,791
4,939
3,374
5,299
26,000
-
At fair value through the profit and loss
Derivative financial liabilities not designated in
a cash flow hedge relationship
… …
249
249
2,011
2,011
Fair value – hedging instrument
Derivative financial liabilities designated and
effective as cash flow hedging instruments
3,787
Total financial liabilities … … …
84,929
3,787
84,929
5
5
72,751
72,751
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, contract assets, trade and other
financial liabilities, contract liabilities, fixed and floating rate borrowings, the fair values are the same as
carrying value.
82
NOTES TO THE FINANCIAL STATEMENTS
27. Capital commitments
Contracted capital commitments at 30th April, 2022 for which no provision has been made in these financial
statements were £8,393,000 (2021: £488,000).
28. Guarantees and contingencies
The table below sets out the number and value of unexpired bank guarantee bonds as at 30th April, 2022 and
30th April, 2021. These guarantee bonds are required as part of the terms and conditions within our mechanical
engineering contracts.
148 guarantee and bonds contracts (2021: 165) … … … … …
2022
£’000
6,586
2021
£’000
9,613
29. Subsequent events
After the balance sheet date an ordinary dividend of 107.80p per qualifying ordinary share was proposed by
the Directors (2021: Ordinary dividend of 102.24p).
The current year proposed ordinary dividend of £8,289,000 has not been provided for within these financial
statements (2021: Proposed ordinary dividend of £7,862,000 was not provided for within the comparative
figures).
Registered Country of
address*
Incorporation
Class of
shares held % held
30. Non-principal subsidiaries and associates
Company name
Non-principal Subsidiaries:
Mechanical Engineering:
Easat Radar Systems India Private Limited
… …
Goodwin (Shanxi) Pump Company Limited** … …
Refractory Engineering:
Asian Industrial Investment Casting
4
Powders Private Limited … … … … …
8
Gold Star Brazil Limited
… … … … …
Goodwin Refractory Services India Limited … …
4
Jewelry Wax Limited … … … … … … 14
GRS Silicone Company Limited … … … … 17
Shenzhen King-Top Modern Hi-Tech Company Limited
16
Non-principal holding companies:
Goodwin Refractory Services Holdings Limited… …
Ying Tai (UK) Limited … … … … … …
1
1
Non-principal Associates:
Tet Goodwin Property Company Limited … … … 11
Dormant companies:
Gold Star Powders Limited … … … … …
Net Central Limited … … … … … …
Sandersfire International Limited … … … …
Specialist Refractory Services Limited … … …
1
1
1
1
4
7
India
China
India
Brazil
India
Thailand
China
China
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
England and Wales Ordinary
England and Wales Ordinary
Thailand
Ordinary
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
England and Wales Ordinary
100
100
100
100
100
75
75
75
100
75
49
100
100
100
100
*The registered address for each company can be found in note 32.
**Goodwin (Shanxi) Pump Company Limited was dissolved in the year ended 30th April, 2021.
All of the above companies are included as part of the consolidated accounts. The trading companies are all involved
in mechanical or refractory engineering.
31. 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
company, Tet Goodwin Property Company Limited, are shown below.
2022 2021
£’000 £’000
311
7
260
… … … … …
Rental cost …
Interest income
… … … … …
Receivable balance … … … … …
301
3
19
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
83
NOTES TO THE FINANCIAL STATEMENTS
32. Registered offices of subsidiaries and associates
The registered offices of the companies listed in notes 13 and 30 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. No 39/1-5, Old Mahabalipuram Road, Kalavakkam, Thiruporur Chengalpattu District – 603110, 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, No. 70, Barrio Terra Preta - Mairipora – SP, CEP 07662-025, São Paulo, Brazil
9. Confidential Tax and Business Services, Level 1, 449 Gympie Road, Kedron Qld 4031, Australia
10. Koivupuistontie 34, 01510 Vantaa, Finland
11. 99/9 Moo5 Khlong Yong, 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. 238, 3rd Floor, OPG Tech Building Bangkhuntien-Chatalay, Samaedum Sub-district, Bangkhuntien District,
Bangkok 10150, Thailand
15. Unit 1 Bridgeway Business Park, Cnr Sam Green Road and Pinnacle Close, Tunney Extension 9, Germiston,
Gauteng, 1401, South Africa
16. No.2-1, Shanzixia Road, Dakang Community, Yuanshan Street, Longgang District, Shenzhen City,
Guangdong Province, China
17. 165 Minsheng Road, Lanhe Town, Nansha District, Guangzhou, China
33. 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 page 33. The scheme has now ended.
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.
Number of share options
Vested 1st May, 2019 … … … … … … … … 489,600
2022
2021
489,600
Outstanding at beginning of year … … … … … … … … 163,200
326,400
Exercised during the year … … … … … … … … 163,200
163,200
Exerciseable at end of year … … … … … … … … -
163,200
Share price at the date of exercise … … … … … … … … £30.70
£30.45
84
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY BALANCE SHEET
at 30th April, 2022
NON-CURRENT ASSETS
Property, plant and equipment … … … … … …
Investment properties … … … … … … …
Right-of-use assets… … … … … … … …
Investments … … … … … … … … …
Intangible assets … … … … … … … …
Notes
C4
C4
C4
C5
C6
Derivative financial assets
… … … … … …
26, C7
CURRENT ASSETS
Other receivables … … … … … … … …
Derivative financial assets
… … … … … …
Cash at bank and in hand
… … … … … …
C8
26, 27
2022
£’000
33,696
26,805
4,085
25,822
15,681
2,466
2021
£’000
27,984
23,900
1,077
25,392
15,877
-
108,555
94,230
31,355
28,609
274
851
-
3,783
32,480
32,392
TOTAL ASSETS
… … … … … … … …
141,035
126,622
CURRENT LIABILITIES
Borrowings … … … … … … … … …
Other payables … … … … … … … …
Provisions … … … … … … … … …
NON-CURRENT LIABILITIES
Borrowings … … … … … … … … …
Deferred income … … … … … … … …
Deferred tax liabilities … … … … … … …
C9
C10
C9
C11
2,086
6,446
-
8,532
920
7,570
300
8,790
38,053
30,116
803
5,052
981
2,737
43,908
33,834
TOTAL LIABILITIES … … … … … … … …
52,440
42,624
NET ASSETS … … … … … … … … …
88,595
83,998
EQUITY
Called up share capital … … … … … … …
C12
Share-based payments reserve
… … … … …
Profit and loss account … … … … … … …
769
5,244
82,582
753
5,244
78,001
TOTAL EQUITY
… … … … … … … …
88,595
83,998
Profit after tax for the year … … … … … … …
12,443
6,582
These financial statements were approved by the Board of Directors on 2nd August, 2022 and signed on its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
Company Registration Number: 305907
The notes on pages 87 to 96 form part of these financial statements.
85
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2022
YEAR ENDED 30TH APRIL, 2022
Balance at 1st May, 2021
Total comprehensive income:
Profit for the year
… … … … …
… … … …
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Issue of shares … … … … … …
Dividends paid … … … … … …
Share-
based
payments
reserve
£’000
Share
capital
£’000
Retained
earnings
£’000
Total
equity
£’000
753
-
-
16
-
5,244
78,001
83,998
-
-
-
-
12,443
12,443
12,443
-
(7,862)
12,443
16
(7,862)
BALANCE AT 30TH APRIL, 2022
769
5,244
82,582
88,595
YEAR ENDED 30TH APRIL, 2021
Balance at 1st May, 2020
Total comprehensive income:
Profit for the year
… … … … …
… … … …
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Issue of shares … … … … … …
Dividends paid … … … … … …
736
-
-
17
-
5,244
77,435
83,415
-
-
-
-
6,582
6,582
6,582
-
(6,016)
6,582
17
(6,016)
BALANCE AT 30TH APRIL, 2021
753
5,244
78,001
83,998
The notes on pages 87 to 96 form part of these financial statements.
86
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.
These financial statements have been prepared in accordance with International Accounting Standards as
adopted by the UK and in conformity with the requirements of the 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 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 FRS 101 in respect
of the following disclosures:
(cid:129) A cash flow statement and related notes;
(cid:129) Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
(cid:129) Disclosures in respect of transactions with wholly-owned subsidiaries;
(cid:129) Disclosures in respect of capital management and
(cid:129) 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 FRS 101 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 except where the
measurement of balances at fair value is required as below.
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:
Principal non-derivative financial assets
Other receivables
Other receivables principally comprise short-term tax balances and receivables from Group undertakings.
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. A provision for expected credit losses (ECL) is not seen as necessary given that the
counterparties here are Group undertakings. The Company is privy to both the accounts and future
prospects of its subsidiary and associate companies. Accordingly, impairment provisions are raised
where the carrying value of a subsidiary company / associated company cannot be fully supported.
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.
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.
87
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies (continued)
Principal non-derivative financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements into which
the Company has entered.
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 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.
Amortisation rates are as follows:
Manufacturing rights … … … … … 11 - 15 years
Brand names … … … … … … 20 years
Software and licences
Intellectual property rights … … … … 15 - 20 years
Non-compete agreements … … … … 2 - 15 years
Capitalised development costs … … … Minimum expected order unit intake or
… … … … 3 - 5 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.
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
Other equipment … … … … … 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 or reducing balance 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.
Unamortised government grants relating to property, plant and equipment 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
Definition of a lease
A contract is a lease or contains a lease if it transfers the right to use an identified asset over the contract
term, in exchange for payment. In determining whether a contract gives the Company the right to use an
asset, the Company assesses whether:
88
C1
NOTES TO THE FINANCIAL STATEMENTS
Accounting policies (continued)
Leases (continued)
Definition of a lease (continued)
(cid:129) the contract involves the use of an identified asset;
(cid:129) the Company has the right to obtain substantially all of the economic benefit of using the asset; and
(cid:129) the Company has the right to direct the use of the asset by deciding how the asset is employed.
Lease term
The lease term is the non-cancellable period of a lease, and options to extend the lease or terminate it, where
it is probable that the Company will exercise the available options. At the start of a lease, the Company makes
a judgement about whether it is reasonably certain to exercise the options, and reassesses this judgement at
every reporting period. Contracts, where the original lease term has expired, with assets continuing to be
leased on a short-term rolling basis of a few months, are treated as short-term leases.
Lease balances
A right-of-use asset and a lease liability are calculated at the beginning of a lease. The right-of-use asset is
measured initially at cost, being the opening lease liability, adjusted for any lease payments made by the start
of the lease, adjusted for any initial direct costs, which have been incurred.
The lease liability is measured initially at the present value of the lease payments, which are outstanding at
the start date, discounted at either the rate implicit in the lease or the Company’s incremental borrowing rate.
With the exception of leases containing an option to purchase, the Company uses its incremental borrowing
rate as the discount rate. Lease liabilities are measured at amortised cost, using the effective rate, and
adjusted as required for any subsequent change to the lease terms.
The right-of-use asset is depreciated on a straight-line basis over the lease term, or from the start date of
the lease to the end of the useful life of the right-of-use asset as appropriate. The method of calculating
the estimated useful lives of the right-of-use assets and testing for impairment is the same as that for
property, plant and equipment.
Recognition exemptions
Payments for short-term leases, lasting twelve months or less, without a purchase option, are reported an
as operating expense on a straight-line basis over the term of the lease.
The cost of leasing low-value items is reported as an operating expense over the life of the lease.
Finance costs (net)
Finance costs comprise interest payable and interest on finance leases using the effective interest method,
together with the amortisation of any facility arrangement fees. Borrowing costs that are directly attributable
to the acquisition, construction or production of an asset, which 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.
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.
89
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies (continued)
Interest swap derivative
The mark to market value of the Company’s interest rate swap derivative is treated as not being hedged with
the movement on the mark to market valuation being taken through the profit and loss account.
C2
Auditor’s remuneration
Included in the profit / (loss) before taxation are the following:
Fees receivable by the auditors and the auditor’s associates in respect of:
Audit of these financial statements
… … … … … … …
2022
£’000
2021
£’000
66
40
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 5 of the Group 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
2022 2021
Administration staff … … … … … … … … … … 50 49
2022 2021
£’000 £’000
The aggregate payroll costs of these persons were as follows:
Wages and salaries … … … … … … … … … … 4,293 4,055
Social security costs … … … … … … … … … … 1,199 1,902
Other pension costs … … … … … … … … … … 103 99
5,595 6,056
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on page 31.
The emoluments of the highest paid Director were £374,000 (2021: £355,000). The number of Directors
who were members of a defined contribution pension scheme was 6 (2021: 6). The social security costs
include £0.7 million (2021: £1.4 million) in respect of employer’s national insurance relating to exercised
share options under the Executive Directors’ Equity Long Term Incentive Plan.
90
NOTES TO THE FINANCIAL STATEMENTS
C4
Tangible fixed assets
Investment
properties
Property, Plant and Equipment
Cost
Balance at 1st May, 2021
… …
Additions
Reclassification … …
Disposals
… …
Intercompany transfers
£’000
30,593
197
3,780
-
5
Other
Land and Plant and equipment
buildings machinery
£’000
£’000
£’000
Assets in
course of
* construction
£’000
1,166
4,587
-
-
-
38,425
931
1,501
-
-
1,878
144
-
(81)
-
6,256
3,466
(5,281)
-
2,510
Total
£’000
47,725
9,128
(3,780)
(81)
2,510
Balance at 30th April, 2022 34,575
5,753
40,857
1,941
6,951 55,502
Depreciation
Balance at 1st May, 2021
Charged in the year …
… …
Disposals
6,693
1,077
-
683
19
-
17,680
1,999
-
1,378
121
(74)
-
-
-
19,741
2,139
(74)
Balance at 30th April, 2022
7,770
702
19,679
1,425
- 21,806
Net book value
At 30th April, 2021 …
23,900
483
20,745
At 30th April, 2022
26,805
5,051
21,178
500
516
6,256
27,984
6,951 33,696
* Other equipment comprises motor vehicles, IT hardware and office equipment.
A bank loan of £3.4 million is secured against three furnaces and a £4.5 million loan secured against
land acquired during the year (refer to note C9).
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, 2022 was estimated to be £51 million (2021: £47 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. Independent valuations
have not been performed.
Right-of-use assets
Cost
Balance at 1st May, 2021 … … … … …
Additions
… … … … … … …
Intercompany transfers … … … … …
Balance at 30th April, 2022
Depreciation
Balance at 1st May, 2021 … … … … …
Charged in the year … … … … … …
Balance at 30th April, 2022
Net book value
At 30th April, 2021 … … … … … …
Plant and
machinery
£’000
Other
equipment
£’000
Total
£’000
1,181
441
3,159
1,181
385
-
1,566
4,781
104
377
481
104
592
696
-
56
3,159
3,215
-
215
215
At 30th April, 2022
3,000
1,085
4,085
91
-
1,077
1,077
NOTES TO THE FINANCIAL STATEMENTS
C5
Fixed asset investments
Shares in
associated
undertakings
£’000
Shares in
Group
undertakings
£’000
Cost
Balance at 1st May, 2021 … … … … …
… … … … … … …
Additions
Balance at 30th April, 2022
Impairment
Balance at 1st May, 2021 … … … … …
Balance at 30th April, 2022
Net book value
At 30th April, 2021 … … … … … …
At 30th April, 2022
237
-
237
-
-
237
237
Total
£’000
31,305
430
31,068
430
31,498
31,735
5,913
5,913
5,913
5,913
25,155
25,392
25,585
25,822
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 30 of the Group financial statements.
During the year, the Company acquired the remaining shares in Internet Central Limited for a consideration
of £430,000 (refer to note 13 in the Group accounts).
C6
Intangible assets
Brand names
and Manu- Software Develop-
ment
intellectual facturing
costs Total
property rights
£’000 £’000
£’000 £’000
and
Licences
£’000
Cost
Balance at 1st May, 2021 … … … 7,884 2,247
Additions … … … … … 159 -
Intercompany transfers … … … - -
Disposals … … … … … - (594)
416
79
-
-
9,964 20,511
- 238
761 761
- (594)
Balance at 30th April, 2022 8,043 1,653
495
10,725 20,916
Amortisation
Balance at 1st May, 2021 … … … 1,542 1,597
Amortisation for the year … … … 355 117
Impairment charge … … … … - -
Disposals … … … … … - (594)
236
100
-
-
1,259 4,634
608 1,180
15 15
- (594)
Balance at 30th April, 2022 1,897 1,120
336
1,882 5,235
Net book value
At 30th April, 2021 … … … … 6,342 650
At 30th April, 2022 6,146 533
180
159
8,705 15,877
8,843 15,681
C7
Interest rate swap
The Group utilises interest rate swap derivatives to hedge against future movements in floating interest
rates against the Group's floating rate debt. Hedge accounting is not applied for these instruments and
all movements in fair value are recognised in profit or loss. Further details are contained in note 26 of
the Group financial statements.
92
NOTES TO THE FINANCIAL STATEMENTS
C8
Debtors
Interest-bearing
Amounts owed by Group undertakings – repayable on demand
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
Corporation tax receivable… … … … … … … … …
… …
2022
£’000
7,381
22,194
602
383
695
100
2021
£’000
8,038
18,759
602
240
813
157
31,355
28,609
C9
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 risk, see note 26 (d) of
the Group financial statements.
2022
2021
Non-
current
Non-
current
liabilities liabilities borrowings liabilities
£’000
Current
£’000
£’000
£’000
Total
Current
Total
liabilities borrowings
£’000
£’000
Bank loans repayable
by instalments … … …
Bank loans - rolling
credit facilities … … …
Other loans
… … …
Lease liabilities … … …
6,988
28,000
-
3,065
937
-
202
947
7,925
3,359
28,000
202
4,012
26,000
-
757
38,053
2,086
40,139
30,116
690
-
-
230
920
4,049
26,000
-
987
31,036
Lease liabilities
Lease liabilities are payable as follows:
Less than one year … …
Between one and
five years
… … …
2022
2021
Minimum
lease
payments
£’000
1,033
Interest Principal
£’000
947
£’000
86
Minimum
lease
payments
£’000
264
Interest Principal
£’000
230
£’000
34
3,172
4,205
107
193
3,065
4,012
799
1,063
42
76
757
987
Bank loan repayable by instalments
The loans are secured against three furnaces and land (see note C4). Bank loans are payable as follows:
Less than one year … …
Between one and
five years
… … …
More than five years … …
2022
2021
Minimum
loan
payments
£’000
1,145
Interest Principal
£’000
937
£’000
208
Minimum
loan
payments
£’000
807
Interest Principal
£’000
690
£’000
117
4,091
4,096
544
655
3,547
3,441
9,332
1,407
7,925
3,208
399
4,414
244
4
365
2,964
395
4,049
93
NOTES TO THE FINANCIAL STATEMENTS
C10 Other payables
Trade payables
… … … … … … … … … …
Amounts owed to Group undertakings – interest-bearing… … … …
Amounts owed to Group undertakings – non interest-bearing … … …
Other taxation and social security
… … … … … … …
Other creditors
… … … … … … … … … …
Accruals and deferred income … … … … … … … …
2022
£’000
966
4,526
14
335
245
360
6,446
2021
£’000
352
4,596
372
1,890
-
360
7,570
C11 Provisions for deferred tax
Balance at 1st May, 2021
Recognised in profit or loss
Property, Share-
plant and based
equipment payments
£’000 £’000
3,656 (915)
3,209 915
Tax
losses
£’000
-
(2,496)
Derivatives
£’000
-
685
Other
£’000
(4)
2
Total
£’000
2,737
2,315
Balance at 30th April, 2022
6,865 -
(2,496)
685
(2)
5,052
C12 Called up share capital
Authorised, allotted, called up and fully paid:
Balance at 1st May, 2021, 7,525,400 (2021: 7,362,200 ordinary shares of 10p each)
Issue of 163,200 ordinary shares of 10p each … … … … … …
Balance at 30th April
Details of the share issue are contained in note 33 of the Group financial statements.
2022
£’000
753
16
769
2021
£’000
736
17
753
C13 Contingent liabilities
The Company is jointly and severally liable for value added tax due by other members of the Group
amounting to £Nil (2021: £216,000).
C14 Related party balances and 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,
Goodwin Korea Company Limited, Internet Central Limited, Jewelry Plaster Limited, NRPL Aero Oy, Siam
Casting Powders Limited, Ultratec Jewelry Supplies Limited and Ying Tai (UK) Limited which are not
wholly-owned subsidiaries.
2022
£’000
Related party balances
Interest-bearing balances
Amounts owed by Group undertakings – repayable on demand … … … 7,767
Non interest-bearing balances
Amounts owed by Group undertakings – repayable on demand … … …
Interest-bearing balances
Amounts owed to Group undertakings – repayable on demand
Related party transactions
Dividend income
Interest expense
Interest income
Management fee income
Rental income
Royalty income
… … … … … … … … 1,260
5
… … … … … … … …
219
… … … … … … … …
536
… … … … … … … …
76
… … … … … … … …
116
… … … … … … … …
… … …
784
-
2021
£’000
8,038
1,631
2,011
389
11
239
536
213
218
Compensation of key management personnel
Key management personnel are defined in the Directors’ Remuneration Report on page 29, and their
remuneration is disclosed on page 31 of the Group financial statements. Some of the Executive Directors
are party to an Equity Long Term Incentive Plan (LTIP). Further details of the LTIP can be found in note 33
of the Group financial statements.
94
NOTES TO THE FINANCIAL STATEMENTS
C15 Commitments
Contracted capital commitments at 30th April, 2022 for which no provision has been made in these financial
statements were £8,393,000 (2021: £142,000).
C16 Subsequent events
After the balance sheet date, ordinary dividends were declared of £8,289,000, which have not been provided
for within these financial statements.
C17 Dividends
Paid ordinary dividends during the year in respect of prior years
102.24p (2021: 81.71p) per qualifying ordinary share. … … … …
2022
£’000
7,862
2021
£’000
6,016
After the balance sheet date an ordinary dividend of 107.80p per qualifying ordinary share was proposed by
the Directors (2021: Ordinary dividend of 102.24p).
The proposed current year ordinary dividend of £8,289,000 has not been provided for within these financial
statements (2021: Proposed ordinary dividend of £7,862,200 was not provided for).
C18 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.
C19 Share-based payment transactions
Details of the equity-settled share-based payment transactions are disclosed in note 33 of the Group financial
statements.
95
NOTES TO THE FINANCIAL STATEMENTS
Alternative performance measures
Measure
Method of calculation / reference
Page No.
2022
2021
Gross profit (£’000)
Revenue (£’000)
Consolidated statement of profit or loss
Consolidated statement of profit or loss
44
44
42,704
144,108
39,001
131,231
Gross profit as percentage of
revenue (%)
Gross profit / revenue
29.6
29.7
Profit before tax (£’000)
Unrealised gain on 10 year
interest rate swap derivative
Trading profit (£’000)
Consolidated statement of profit or loss
Consolidated statement of profit or loss
44
44
19,941
16,514
(2,740)
-
17,201
16,514
Operating profit (£’000)
Capital employed (£’000)
Consolidated statement of profit or loss
Note 26 (d)
44
79
18,307
145,095
17,094
130,572
Return on capital employed (%)
Operating profit / capital employed
12.6
13.1
Net debt (£’000)
Net assets attributable to equity
holders of the parent (£’000)
Note 26 (d)
Consolidated balance sheet
Gearing (%)
Net debt / equity, as above
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
Consolidated balance sheet
79
48
44
48
29,785
17,431
115,310
113,141
25.8
15.4
12,980
12,494
115,310
113,141
Return on investment (%)
Net profit / net assets
11.3
11.0
Revenue (£’000)
Average number of employees
Consolidated statement of profit or loss
Note 6
44
62
144,108
1,112
131,231
1,129
Sales per employee (£’000)
Group revenue / average employees
130
116
Consolidated statement of profit or loss
Annual post tax profit (£’000)
Interest rate swap mark to market
Consolidated statement of profit or loss
net of tax @ 19% (£’000)
Note 8
Deferred tax rate change (£’000)
Depreciation owned assets (£’000)
Note 5
Depreciation right-of-use assets (£’000) Note 5
Amortisation and impairment (£’000)
Note 5
Exclude operating
lease depreciation (£’000)
Note 5
Annual post tax profit +
depreciation + amortisation (£’000)
96
44
44
63
62
62
62
62
13,620
13,006
(2,219)
2,012
6,202
1,192
1,572
-
-
5,696
972
1,566
(508)
(550)
21,871
20,690
FIVE YEAR FINANCIAL SUMMARY
Continuing operations
2018
£’000
2019
£’000
2020
£’000
2021
£’000
2022
£’000
Revenue… … … … … … … …
Trading profit … … … … … … …
Profit before taxation
… … … … …
Tax on profit … … … … … … …
Profit after taxation … … … … … …
124,811
13,300
13,300
(3,865)
9,435
127,046
16,410
16,410
(3,963)
12,447
144,512
12,115
12,115
(3,775)
8,340
131,231
16,514
16,514
(3,508)
13,006
144,108
17,201
19,941
(6,321)
13,620
Basic earnings per ordinary share (in pence) … …
…
Diluted earnings per ordinary share (in pence)
118.11p
118.11p
159.79p
159.79p
107.93p
103.31p
167.82p
164.23p
169.14p
169.14p
Total equity … … … … … … …
104,827
109,291
109,602
118,028
119,743
Trading profit is defined as profit before tax, less the impact of the interest rate swap valuation. The calculation is reported
in the Alternative Performance Measures on page 96.
97