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 O th A P R I L 2 O 2 3
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
7
Objectives, Strategy and Business Model
8
Principal Risks and Uncertainties
13
Corporate Social Responsibility
15
DIRECTORS’ REPORTS
22
25
28
32
39
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
40
Independent Auditor’s Report to the Members of Goodwin PLC
FINANCIAL STATEMENTS
48
49
50
52
53
54
92
93
94
104 Alternative Performance Measures
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 Changs in Equity
Notes to the Company Financial Statements
105 FIVE YEAR FINANCIAL SUMMARY
FINANCIAL HIGHLIGHTS
Accounting policies 54
Estimates and judgements 61
Revenue 65
Alternative performance measures 104
Finance costs (net) 68
Right-of-use assets 71
Borrowings 77
Financial risk management 81
Subsequent events 90
Capital and reserves 81
Guarantees and contingencies 90
Segmental information 63
Capital commitments 90
Intangible assets 75
Staff numbers and costs 67
Cash and cash equivalents 77
Interest rate swap 86
Taxation 68
Company statements 92
Investments in subsidiaries 72
Deferred tax 80
Inventories 76
Dividend and capital
expenditure policy 12
Earnings per share 69
Property, plant and equipment 70
Provisions 79
Related parties 90
Trade and other
receivables 77
Trade and other
liabilities 79
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
N. Brown
B. R. E. Goodwin
S. R. Goodwin
(Managing Director)
Refractory
Engineering Division
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-EIGHTH ANNUAL GENERAL MEETING of the
Company will be held at 10.30am on Friday, 29th September, 2023 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.
To receive the Directors’ Reports and the audited financial statements for the year
ended 30th April, 2023.
To approve the payment of the proposed ordinary dividend on the ordinary shares.
To approve the Directors' Remuneration Report (excluding the Directors’ Remuneration
Policy) for the year ended 30th April, 2023, as stated on pages 34 to 38 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
Registered Office:
Ivy House Foundry,
Hanley, Stoke-on-Trent
7th August, 2023
J. L. Martin
Secretary
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 27th September, 2023.
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 27th September, 2023 (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 4th August, 2023 (being the last business day prior to the publication of this Notice) the Company’s issued
share capital consists of 7,509,600 ordinary shares, carrying one vote each. Therefore, the total voting rights in
the Company as at 4th August, 2023 are 7,509,600.
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 29th September, 2023, the ordinary dividends of
115p per share will be payable in equal instalments of 57.5p per share on 6th October, 2023 and on or around
12th April, 2024 to shareholders on the register on 15th September, 2023 and on or around 22nd March, 2024
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,
2023, was £18.9 million (2022: £17.2 million) an increase of 10% on revenue of £186 million
(2022: £144 million). Trading profit for this purpose is defined as the Group pre-tax
reported profit of £22.1 million less the positive impact of our interest rate swap, having
increased in value by a further £3.2 million. The £3.2 million movement relates to the
30th April, 2023 valuation of our £30 million interest rate swap derivative that expires in
August 2031, whereby we have fixed our interest rate on £30 million of debt for ten years
at less than 1% for a ten year term. We described in the Chairman’s statement within last
years Annual Report why the movements in valuation of the interest rate swap shall be
excluded, as well as being excluded for dividend purposes.
The Directors propose an increased dividend of 115p (2022: 107.80p) per share.
For the financial year ending on 30th April 2023, the Group has demonstrated substantial
progression in its transformation, particularly noted in the handling of increased workload.
There was a significant 68% increase in order intake compared to the last year, predominantly
at Goodwin Steel Castings Limited and Goodwin International Limited, contributing to the
start of the rebound of our Mechanical Engineering Division, which had experienced
challenges in recent years. As of the date of the current report, the Group’s cumulative
future orders stand at record £271 million.
Mechanical Engineering Division
Whilst there has been some resurgence for petrochemical valves for new LNG projects
around the world, due to energy uncertainty from current world events, assisting our valve
manufacturing companies, it is the combined package that our foundry, Goodwin Steel
Castings and the precision project engineering facility Goodwin International offers,
which has led to the largest part of new orders shown in the Group workload, with them
being primarily for the nuclear decommissioning and naval markets.
Due to the work that these two businesses have excelled at, whilst diversifying away from
their mainstay of petrochemical-based work a decade ago, be it discrete orders or orders
that combine the skillset of the organisations, the future looks bright. The programmes of
work, that are actively ramping up now, are being exploited to win more and more of
the same, supporting projects that will still be ongoing in a decade's time.
A lot of this work has only been possible as a result of the significant investment into
Goodwin Steel Castings over recent years. We focused on what needed to be done to
become one of the West’s large casting suppliers of choice for large technically advanced
castings that we are manufacturing now. These investments look set to repay the faith
the Board had in the company and after a long drought, they should now meaningfully
contribute to the Group’s performance going forward.
The supply of heavy duty submersible pumps, primarily to the mining industry, is 19% up
on last year. The pump companies in India, Brazil, Australia and South Africa continue to
convert customers from competitors’ pumps that are not as reliable and robust as the
Goodwin pump, which is specifically designed for the most demanding applications. In the
year, a new hydraulically powered variant of our submersible slurry pump that can be
mounted directly on 10 – 30 tonne excavators, driven by the excavator’s hydraulics,
was launched. The addition of this hydraulic pump opens up a new market area (Heavy
Construction) in terms of customers and applications that will complement the natural
growth that is expected for the electrically driven pumps. It will be a distributor-based
market with the pump being marketed as an excavator accessory, thus allowing all the
3
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
existing pump companies, that are profitable, to bolt on a complementary product with
minimal increases in overheads, all for applications that do not compete with our existing
pump business.
Duvelco, the Group’s latest and largest investment into a new business area, which will
facilitate the production of high operational temperature polyimide polymer resins,
is on course to be completed in line with our previously disclosed timeline. Commercial
operation of our initial plant is expected to occur prior to June 2024. As soon as production
material is available, the team will look to commence gaining sales traction and break
into this new market sector for the Group.
It has been a good year with real progress being made. The Division has adeptly navigated
contract and customer management challenges across all sectors, with the overall
divisional profitability up 33% on an increased turnover of 41%.
Refractory Engineering Division
In the year there have been two major notable successes. The first major achievement has
occurred at Brassington in Derbyshire, where the team at Hoben International Limited
(Hoben) has successfully installed and commissioned a second calciner. The calciner
supplies one of the key raw materials for the investment casting powder, and as such,
the installation not only enables the Division to continue to grow, but has provided the
Division with a level of business continuity that we never had the benefit of before.
In order to increase capacity to accommodate continued growth in ground silica sales,
a third ball mill is in the process of being installed and is planned to be commissioned
before the end of the calendar year.
The second success relates to Dupré Minerals Limited (Dupré), which supplies a range of
refractory products that typically contain vermiculite. During the year the Company has
achieved record trading profits by increasing its profitability by over 50%. The Company
has maximised its position through the supply of its traditional products as well as
growing its newer products. The energy crisis brought on by the Ukraine conflict has led
to a surge in the number of wood stoves being installed, for which Dupré supplies the
internal vermiculite insulation boards.
In addition to the supply of boards, Dupré’s internally developed product, known as AVD
that addresses the burning issues surrounding lithium-ion battery fires has taken a step
forward. The momentum in sales is starting to provide a respectable contribution to the
Group’s profits. AVD extinguishing agent and fire extinguishers are now being sold in
over forty five countries with additional distributors being appointed in new territories
on a regular basis. In recent weeks Underwriters Laboratory (UL) certification for
component recognition of AVD as an extinguishing agent and certification of a six litre
fire extinguisher containing AVD to UL8 has now been obtained. This is a significant
milestone for opening up sales into the USA and other global markets that require UL
Certification and it has been pleasing to see that the order input via multiple sources for
AVD in the first two months of this financial year was equal to more than the last half of
2023. Expansion of the AVD manufacturing capacity is planned in the coming year.
Sales of jewellery investment powder, moulding rubber and injection waxes have
remained strong within the year. Final customer approvals for X-Sil respirable silica free
investment powder are in their final stages at key reference customers in the USA and
Europe. This has been a long process which should start to generate sales in the coming
year. India remains the key growth country for jewellery production around the world and
in order to increase production capacity for both investment powder and injection wax
production in India a newly constructed larger production facility will be completed and
commissioned within the current financial year.
4
GROUP STRATEGIC REPORT
Carbon Reduction Activities
CHAIRMAN’S STATEMENT (continued)
Over the course of the year, the Group has continued working on its carbon neutral
programme and has spent a further £2 million on renewables, specifically solar panels
where the power generated will be utilised on site. In total, the Group has now completed
sixteen of the twenty two individual electricity projects that were initially targeted,
which includes the installation of 5.7 MWp of solar panels. The results of this will
reduce the Group's electricity purchased from the national grid by over 24.7% per year,
amounting to savings of over £1 million per year, providing a reduction of 1,365 tonnes
equivalent of carbon dioxide (CO2) per year. As noted in last year’s Annual Report, the
remaining projects are being held up by the District Network Operator. Once this
permission, along with planning permission where required, has been obtained there is
potential to install a further 10MW of solar panels across our sites. Over half of this will
be based at Hoben in Derbyshire where we intend to also apply for planning for two
2.5MW wind turbines. The power generated from these installations will be fully utilised
by the Group and will not be exported back to the grid.
Two other major components of the carbon neutral programme are the conversion of our
4MW/hr natural gas burners on both calciners at Hoben to hydrogen and offsetting our
CO2 footprint, that cannot be eliminated in its entirety without ceasing operation. Despite
two unsuccessful grant applications to BEIS to mitigate the very high cost of the
electrolysis machine required to make onsite green hydrogen, we are continuing to
pursue government support, as the Group’s carbon neutral target heavily depends on
finding an alternative to burning natural gas. However, for all other gas processes that
cannot be converted, the company has purchased a new 1,180 acre plot of land that is
ideally suited for planting 560,000 broad leaf trees. The planting scheme will be one
of the largest in the UK and over the next fifty five years will offset an average of 2,168
tonnes of CO2 per year, which for example, covers 100% of the CO2 emissions that are
generated at the foundry from burning natural gas, as well as being able to offset other
subsidiary gas burning processes.
Cashflow
The significant increase in order input and the downpayments associated with these
orders, coupled with the not insignificant levels of non-cash depreciation charges
(£8 million) that occur annually, provided the Group with a very strong cash generation
in the year ended 30th April, 2023. Notwithstanding the £23 million of capital expenditure
that has occurred in the year, the Group's net debt reduced to finish at £33 million
which equates to a modest gearing of 26.3%. The major areas of expenditure relate to
the second calciner, Duvelco polymer production plant and extending the melt shop at
the foundry to enable a greater level of production capacity. Furthermore, the initial costs
in relation to a new 7,690sqm building in India, for which the Board had approved the
investment, due to both the refractory and pump businesses reaching capacity within the
existing facility, were also incurred in the year ending 30th April, 2023.
With the growth that is expected in the years to come, the Group has recently renewed
a £10 million revolving credit facility. This is as well as securing an additional £25 million
of committed banking facilities on effectively a four year term, as a prudent policy to
ensure that guaranteed facilities and the appropriate level of headroom is available to
the Group, should it ever be required. The total value of our facilities now available to
fund the Group is £75.5 million, of which at the year end we were only utilising 48%.
In line with the activity, the Group’s employee numbers are starting to increase. Our
apprenticeship programme continues to insulate the Group from the skills shortages that
exists in the local area. To date, a total of three hundred apprentices have completed
5
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
the course at the Training Centre, with the vast majority of them now working within the
subsidiaries and the Group’s twelfth cohort of thirty apprentices will be starting in
September 2023.
In March 2023, John Connolly, who had been the Group Chief Accountant and a Director of
Goodwin PLC for sixteen years, retired. He had worked for the Goodwin Group for over
twenty seven years and the Board takes the opportunity of thanking him for his hard
work and loyalty over the years, which helped move the Group forward. We wish him
much happiness in his retirement. We are also pleased to report that Adam Deeth has been
brought on board as a highly capable replacement for the Group Chief Accountant role.
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.
7th August, 2023
T. J. W. Goodwin
Chairman
Alternative performance measures mentioned above are defined on page 104.
6
GROUP STRATEGIC REPORT
GOODWIN PLC
SUMMARY OF CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2023
Notes
2023
£’000
2022
£’000
CONTINUING OPERATIONS
Revenue … … … … … … … … … …
3, 4
185,742
Cost of sales
… … … … … … … … …
(139,521)
GROSS PROFIT… … … … … … … … … …
Distribution expenses … … … … … … … …
Administrative expenses
… … … … … … …
OPERATING PROFIT … … … … … … … … …
… … … … … … … …
Finance costs (net)
Share of profit of associate company
… … … … …
7
14
46,221
(3,741)
(22,167)
20,313
(1,438)
65
144,108
(101,404)
42,704
(3,743)
(20,654)
18,307
(1,169)
63
TRADING PROFIT … … … … … … … … …
18,940
17,201
Additional year on year unrealised gain on
10 year interest rate swap derivative… … … … … …
3,189
2,740
PROFIT BEFORE TAXATION
… … … … … … …
Tax on profit* … … … … … … … … …
5
8
22,129
(5,616)
19,941
(6,321)
PROFIT AFTER TAXATION… … … … … … … …
16,513
13,620
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
Non-controlling interests
… … … … … … …
15,904
609
12,980
640
PROFIT FOR THE YEAR … … … … … … … …
16,513
13,620
BASIC EARNINGS PER ORDINARY SHARE (in pence)** … …
DILUTED EARNINGS PER ORDINARY SHARE (in pence) … …
9
9
206.81p
169.14p
206.81p
169.14p
* The Group has received significant benefit from the UK superdeduction capital allowances programme, that
has substantially reduced the corporation tax payable in the UK. For further details, see the additonal commentary
in note 8.
The full financial statements and accompanying notes are on pages 48 to 104.
7
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL
The Group’s main OBJECTIVE and PURPOSE 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 VALUES of engineering excellence, quality, efficiency, reliability, competitive price
and delivery contribute to the delivery of its strategy.
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 skill set 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
8
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
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
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. 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.
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.
9
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
GROUP STRATEGIC REPORT
BUSINESS DIVERSITY AND PERFORMANCE
As can be seen in note 3 to these financial
statements, in the year to 30th April, 2023 the
operating profits of the Group increased 11%
year on year. With the Mechanical Engineering
Division having generated 49% of the Group’s
operating profit and the Refractory Engineering
Division having generated 51%. The split between
the divisions remains largely unchanged due to
the ongoing success of the Refractory Engineering
Division as sales of its core products continued
to be buoyant throughout the year, especially
within the Indian investment casting powder
market which is supplied by our factory in
Chennai.
Furthermore, whilst the Mechanical Engineering
Division revenue has increased by 41% in the
year, its operating profit has increased by 33%,
which is a feature of the work starting to actively
ramp up coupled with the initial lower levels of
factory throughput that occurs at the beginning
of certain long-term programmes whilst the
level of
customer confirms
assurance, which may result
in contractual
change orders being necessary. Looking forward,
the Board continues to expect the split in
operating profits to swing back to a 60:40 split
in favour of the Mechanical Engineering Division
once the profits within these programmes starts
to flow through. This is despite the Refractory
Engineering Division continuing to grow, as its
newer product such as the AVD fire extinguishing
agents start to become a material contributor.
their desired
The Group's diversification is one of its key
strengths that over the years has insulated it
from the various negative events that have
unfolded and impacted specific industries as
well as specific geographical markets. The Group
consists of 21 operating entities that are based
in 13 different counties, that in the year supplied
52 technically sophisticated Mechanical and
Refractory products to more than 100 countries.
Due to this the geographical segmentation report
of the Group, as is reported on pages 64, remains
relatively unchanged from the prior year with a
fairly even spread. Whilst the turnover to the
USA only represents 11% of the Group’s turnover,
it has increased by over 41% versus last year,
which principally relates to the increased supply
of machined castings to the naval market, which
will continue to grow over the next six years.
10
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
KEY PERFORMANCE INDICATORS
The key performance indicators for the business are listed below:
The alternative performance measures
referred to above are defined on page 104.
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.
11
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
DIVIDEND AND CAPITAL EXPENDITURE POLICY
The Board proposes to pay a dividend of 115 pence per share, up 7% on the previous year
(2022: 107.80p). The proposed dividend has been calculated using the Group’s profit after
taxation figure, plus depreciation and amortisation for the year ending 30th April, 2023, after
having excluded the non-cash £3.2 million mark to market unrealised gain relating to the
ten year interest rate swap.
In line with expectations, following the Group's green investments, the Group finished the
year with a gearing of 26.3% (2022: 25.8%). Due to the ongoing capital investment programme,
the Board proposes to continue to smooth the Group’s cash flow by splitting the payment
of the proposed ordinary dividends of 115 pence per share into equal instalments of 57.5 pence
per share on 6th October, 2023 and on or around 12th April, 2024 to shareholders on the
register on 15th September, 2023 and on or around 22nd March, 2024 respectively.
*Further details are included in the Alternative Performance Measures on page 104.
12
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 from nuclear new build and
decommissioning, naval propulsion marine applications and ship hull components as well as from valves
it supplies to LNG, oil, chemical and water markets. The Mechanical Engineering Division also sells
submersible pumps that are supplied to the mining industries and radar systems that are used 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 times of high inflation associated
with the conflict in the Ukraine. 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 28 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. The Group ensures that high ethical standards and
values are adopted, specifically with regards to anti-corruption, anti-bribery and human rights. During the year, the
Group has carried out enhanced sanctions training and updated internal policies to reflect the associated risks.
13
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.
Energy and Climate Change: 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.
Furthermore, the Group has successfully completed sixteen of the twenty two individual electricity projects
that were initially targeted, which include the installation of 5.7 MW of solar panels. The results of this will
reduce the Group's electricity purchased from the national grid by over 24.7% per year, amounting to savings
of over £1 million per year as compared to buying electricity from the grid.
14
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 8 to 14.
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.
During the year, unless otherwise stated, the principal decision made in the year, impacting its stakeholders,
other than routine decisions that are made on a year-on-year basis as part of running the business, was the
renewal and increase of its banking facilities, as well as approval to proceed with a tender offer. For further details,
see page 90.
Non-Financial and Sustainability Information Statement
As per the latest disclosure requirement, under the Companies Regulations 2022, that came into effect this year,
disclosures on Climate related financial disclosures, Company’s employees, community issues, social matters,
human rights and anti-corruption and bribery can be found on pages 15 to 17 of the Annual Report.
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 involvement of 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, and the Company encourages its employees through its salary and bonus arrangements. 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, including training,
development and promotion, 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 promoting diversity of gender, social and ethnic backgrounds and
personal strengths, in addition to ensuring that everyone has 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 promoting diversity through training and development,
recruitment, our business culture and the Board’s Strategy. Whilst the senior independent directorship is held
by Jennifer Kelly, following the assessment that was carried out on 30th April, 2023 the Board does not comply
fully with the latest listing requirements that have come into effect in the year, which require 40% of the Board
to be female and for at least one Board member to be from an ethnic minority background. Whilst we fully
acknowledge the necessity and benefits of a diversified leadership, we are unable to currently meet these
specific targets due to the Board consisting of primarily executive Directors because of its size and complexity,
as set out on page 22. This coupled with the fact that the appointments of the Board are made with the utmost
consideration for the individual's qualifications, experience, and ability to contribute to the strategic direction of
the Company, we have found ourselves at present, based on these criteria, unable to make the necessary
adjustments without compromising the integrity and efficiency of our Board. Nonetheless, we are examining
ways of meeting these requirements over the long-term by continuing to promote diversity at all levels of
the Company, whilst also maintaining the Board’s dynamism and the required level of experience, ability and
qualifications.
15
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Diversity Policy: (continued)
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, 2023
Company Secretary Management
Main Board and
Senior
Employees
Total
Number of female employees
Number of male employees
Total number of employees
% of female employees
% of male employees
Breakdown by age
2
5
7
29%
71%
14
69
83
17%
83%
190
864
1,054
18%
82%
206
938
1,144
18%
82%
Year ended 30th April, 2023
Company Secretary Management
Main Board and
Senior
Employees
Total
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
3
-
7
-
57%
43%
-
-
11
65
7
83
-
13%
79%
8%
81
496
456
21
81
511
524
28
1,054
1,144
8%
47%
43%
2%
7%
45%
46%
2%
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 five 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, which is rountinely reviewed and independently
investigated if required.
Shareholders: Shareholder engagement occurs through the Annual Report, regulatory disclosures, our website, site
visits and the Annual General Meeting, coupled by supplementary RNS announcements made during the course
of the year. Throughout the year, the Chairman, on behalf of the Group, maintains an active dialogue with its
shareholders, in order to understand their views on governance and performance against the strategy, as well
as providing its investors, including institutional investors, an opportunity to ask questions, discuss the
performance of the Group and make suggestions. Further engagement is obtained through shareholder site
visits, which are hosted directly by the Chairman and the other members of the main Board. The Board aims to
accommodate such requests as and when they are appropriate to do so. The Group’s Non-Executive Director
is also available before and after at the Annual General Meeting to discuss any matters shareholders might wish
to raise. Such regular first-hand engagement with shareholders enables the Chairman to provide the Board
with updates so the views of shareholders are taken into consideration.
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 52.74%
(2022: 52.48%) of the register. In accordance with LR6.5, there is a controlling shareholder agreement in place.
Executive directors M.S. Goodwin, S.R. Goodwin, B.R. Goodwin and T.J.W. Goodwin are party to the controlling
shareholders agreement, as well as Audit Committee members, J.W. Goodwin and R.S. Goodwin. On this basis
the Board feels that the Executive Directors are fully aligned with shareholders.
16
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
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 (2022: £nil). Donations by the Group for charitable
purposes amounted to £91,000 (2022: £71,000). 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 following report includes nthe climate-related financial disclosures that are consistent with the eleven
TCFD recommendations Climate change is a core challenge for the Group, as we transition and work towards
becoming a carbon neutral Group, whereby the carbon emitted from our activities are balanced by absorbing
carbon emissions. As an engineering Group, that includes a heavy goods steel foundry and high temperature
refractory processing business, the consumption of energy is an integral feature in the manufacture of the
complex products that are manufactured by the business. Over the past few years the Group has been actively
developing and implementing our carbon neutral plan and following a group wide assessment, we have set a
target of becoming carbon neutral by 2035.
The initiative consists of five mechanisms to achieve our carbon neutral target:
Description
Achievements to date
Future Plans
Initiative
Mechanism
Reduce
Consumption
(Scope 1 & 2
emissions)
Renewables
Taking engineering steps
to reduce our consumption
of gas and electricity in our
companies by investing in
more efficient plant and /
or changing our working
practices.
Utilisation of self-generated
power through the use of
solar panels and wind
turbines.
Hydrogen
Finding and investing in a
hydrogen generation power
plant solution that can
replace the natural gas
utilised in our more energy
intensive processing
activities.
Offsetting
Investing in land suitable for
planting trees to offset the
CO2 that is generated from
activities that cannot be
removed by the above three
mechanisms.
3rd Party
Emissions
(Scope 3
emissions)
Take strategic steps to
reduce Scope 3 emissions
that are produced not by the
Company itself but by those
indirectly responsible within
its value chain.
An 11% reduction in electricity has
been achieved over the last two years.
Modifications range from electric
company cars, lighting, automatic
switching off programming, base load
monitoring and replacement of heavy
duty fans, use of inverters and pumps
that offer a greater power efficiency.
14 of the originally planned 22
projects have been completed,
providing the Group with 5.7MWp
of solar power, and significantly
contributing to reducing the Groups
electricity purchased by 24.7%, over
the last two years.
This alone will save the Group in
excess of £1 million per year by
utilising self-generated solar at 4.5p
versus electricity from the grid at
18p per kwh.
Following extensive research with
the use of a wind and solar powered
electrolysis machine, hydrogen was
identified as a carbon free alternative
for our continuous gas burning
process. A bespoke first of class
solution was designed but following
two unsuccessful grant applications
the project is on hold due to it not
being commercially viable without
the support of government.
With the knowledge that the Group
would not be able to naturally reduce
its carbon footprint to zero, it has
purchased a 1,180 acre site in Wales
to plant 560,000 trees that will
generate in the region of 120,000
tonnes of CO2 offset credits over the
next 55 years. This will offset more
than 100% of our steel foundry’s gas
consumption, the largest gas
consumer within the Mechanical
Engineering Division of the Group.
The Group has developed a draft
Scope 3 emissions policy and plan.
17
Ongoing monitoring, review of
plant and modifications to our
manufacturing processes to
reduce our overall consumption
of gas and electricity.
Over the short to medium term,
a further 10MWp of solar power
is planned and ready to be
installed but is pending
permissions from the Distribution
Network Operator.
Installation of two wind turbines
at Hoben International has been
investigated and we have
commenced the planning
process with the local council.
Continue to seek alternatives to
operating a 1580 degree Celsius
process without the use of natural
gas and / or obtain Government
support for a green hydrogen
plant.
Our specialist contractor,
Scottish Woodlands, who have
advised throughout the process
will commence Stage 1 planting
over the next eighteen months.
The Group endeavours to analyse
and set specific Scope 3 medium
term KPI’s to reduce them in the
coming years.
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Environment – Task Force on Climate-related Financial Disclosures (TCFD) (continued)
A £13 million additional banking facility, specifically for the funding of “Green Projects”, to accelerate the
Group’s implementation of Green initiatives and projects, was put in place in January 2022. As at 30th April, 2023,
the Group had utilised £8.2 million of the £13 million facility on the above initiatives, with many of the
initiatives having paybacks that are less than four years.
The reason why we are only taking a fifty five year view on the offsetting produced by the woodland project,
despite the fact that it will generate credits for one hundred years, is that by 2073 all electricity, used by the
Group, will be generated by Green methods and all hydro carbon needed for very high temperature processing
applications is expected to have been converted to hydrogen, which will be generated using green electricity.
Governance
The Board has overall accountability for the management of all climate change related risks and opportunities,
as well as being responsible for the day to day implementation, monitoring and management of our climate
goals. Climate-related risk is considered by the Board as a standalone agenda item and accordingly receives
regular updates on its environmental assessments, commitments and performance from the respective
individuals around the group that have been tasked with a climate-related job to carry out. The updates are
obtained as and when matters and opportunities arise, at which point they are then relayed on to the rest of
the Board. The Group’s Audit Committee supports the Board in ensuring climate-related issues are integrated
into the Group’s activities and risk management processes, in addition to reviewing and recommending policy
proposals to the Board.
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 13 to 14.
Furthermore the Board is directly able to determine which risks and opportunities could have a material impact
on the Group, as well as how to prioritise them, by having a flat management structure and taking a hands-on
approach so that they are actively immersed within all aspects of the business and each subsidiary.
It is the opinion of the Board that, with the Group's activities on Green projects, climate change will have no
significant effect on the Group's financials, including:
1. Contract profitability. Whilst there will be fewer contracts for the oil and gas markets, we have already
substituted a significant proportion of these contracts with new naval component supply and nuclear
decommissioning activity. Whilst cost increases can be expected, the Company has the ability to pass these
costs on to the customers through the use of short validity periods on quotes as well as building in
escalation clauses within its longer term contracts. The fact that it is Group policy to manufacture and sell
products with high technology and high gross margins assists in insulating the Group from high energy costs.
2. Going Concern of any Group company, as bank facilities will continue to be available and with the Group’s
strong cash generation, it has the ability to reduce its debts at a faster rate, should it so wish.
3. Cash flow, generating our own green electricity is a much lower cost than buying electricity from the grid and
our investments are self-financing and will ultimately save the Group money over the life of those assets
and projects.
4. Carrying value and useful economic life of the Group's plant and equipment, investment and intangibles.
Had we still been heavily dependent on oil and gas project contracts and had done nothing on green power
investments the stated situation above would be different.
18
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Environment – Task Force on Climate-related Financial Disclosures (TCFD) (continued)
Metrics and Targets
Given the nature of our business and the diversification of our products and markets, the Board has determined
that the total of Scope 1 and Scope 2 emissions is the most appropriate metric to use to assess climate-related
risks and opportunities in line with its strategy and risk management process. The Group's key performance
business metric is tonnes of CO2 emitted per £ million pounds of turnover of the Group. See below for a
graphical disclosure of our historic emissions, achieved reduction and forecast target of being carbon neutral
by 2035.
Scope 1 and 2 Emissions Data
Carbon Neutral target, whilst possible, is heavily dependent on our gas usage and the government providing
support to industry to bridge the cost gap that will enable companies to invest in alternatives such as green
hydrogen. Until this occurs, the Group will not be able to reach its carbon neutral target as incurring the full
cost that would be involved would be unviable and not possible.
We calculate our GHG emissions using the GHG Protocol Corporate Accounting and Reporting Standard (revised
edition).
19
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Strategy
In line with the Task Force on Climate-related Financial Disclosures (TCFD) reporting requirements and in
conjunction with our detailed assessment that has been carried out against the TCFD guidance, the following
table sets out the impact of the short, medium and long-term risks and opportunities that the Group has
identified in relation to climate change.
As reported above, within the TCFD Risk Management section, the Boards hand on approach enables it to
immediately evaluate as and when climate-related risks and opportunities change and whether its strategy
needs to be amended.
TCFD
Category
Description
Potential Impact
Scenario
**
Time
Frame*
Risk: Direct requirement to pay carbon taxes per
tonne emitted.
>3°C
Medium
Financial
Magnitude
Business
Resilience /
Readiness
Medium but
reducing
with carbon
neutral
activity
Ongoing
Offsetting &
Reduction
steps
Risk: Increasing building, operation and transport
standards leading to increased investment into
equipment and higher supply chain and material
costs.
2-3°C
Short
Medium
Manage
emissions
l Pricing of GHG
a
g
e
L
&
y
c
i
l
o
P
Higher
environmental
standards
s
t
f
i
h
s
y
g
o
l
o
n
h
c
e
T
Electrification
– growth in EV
transport
Opportunity: Increased sales of AVD for use on
lithium ion battery fires.
2-3°C
Short to
Medium
Positively –
High
Monitor
Contractual
Projects
Opportunity: Progressive transfer to higher value
added products.
2-3°C
Medium
Positively –
Medium
Manage
Substitution of
technology
Opportunity: Transition to high temperature gas
powered manufacturing processes onto a green
alternative.
2-3°C
Medium
Medium
Monitor
d Transition away
n
a
from fossil fuels
m
e
D
d
n
E
Increased cost of
raw materials
Risk: Reduced gross margin from sales of valves to
the oil and gas industry.
>3°C
Medium
Medium
Manage –
O&G exposure
reduced from
60% to 23%,
over the last
ten years.
Risk: Impact on the availability and pricing of key
raw materials due to transitional and physical risks.
2-3°C
Medium
Low
Manage
Cost of Capital
Risk: Access to the financial industry and credit
becomes tied to high levels of sustainability
performance.
>3°C
Medium
High
Employee Risk
Risk: Attracting the highest level of talent should
become easier as potential employees see the Groups
prospects to becoming carbon neutral by 2035.
>3°C
Long
Low
Natural /
Extreme Climate
Events
Risk: Damage to physical assets and loss of revenue.
Medium /
Long
High
>3°C
l
a
n
o
i
t
a
t
u
p
e
R
l
a
c
i
s
y
h
P
Balance
and Reduce
Initiative
Balance
and Reduce
Initiative
Geographical
diversification
Insurance
Business
Continuity
plans
Opportunity: Increased demand for submersible
pumps for disaster relief.
Medium
Low
Monitor
20
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Strategy (continued)
* Short < 3 years Medium 3-5 years Long > 5 years
**Worst Case scenario (>3ºC)
Our Worst Case Scenario sees a world where climate action is delayed by world governments failing to act on
climate change. This delay would result in a world where physical climate change risks are the greatest across
our three scenarios.
Paris Alignment Scenario (2-3ºC)
This scenario sees a market-led transition to a lower carbon future through global government commitments to
the Paris Agreement. This would result in increased regulation of climate action and a reduction of the physical
impacts of climate change compared with our Worst Case scenario, where governments fail to legislate in
accordance with the Paris Agreement.
Transformation Scenario (<2ºC)
This scenario sees a rapid decarbonisation pathway, where global emissions are close to zero in 2040, driven by
society. The speed of change required to limit global warming to 1.5 degrees is likely to create stability in our
supply chain as suppliers try to keep pace with decarbonisation demands and shifting preferences towards
localisation.
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 7th August, 2023 and is signed on its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
21
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS
The Director’s have pleasure in presenting their reports and audited financial statements for the year ended
30th April, 2023.
The Directors’ have presented their Group Strategic Report on pages 3 to 21. 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 8, Principal Risks
and Uncertainties on pages 13 and 14, and the Corporate Social Responsibility Report on pages 15 to 21.
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 115p per share (2022: 107.80p) be paid in equal instalments
of 57.5p per share on 6th October, 2023 and on or around 12th April, 2024 to shareholders on the register on
15th September, 2023 and on or around 22nd March, 2024 respectively. The ordinary dividend is subject to the
approval of the shareholders at the Annual General Meeting on 29th September, 2023.
See comments on page 12 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 (retired 31st March, 2023)
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 3rd August, 2023, the following had an interest in 3% or more of the
issued share capital of the Company:
J. W. and R. S. Goodwin 2,178,133 shares (29%), J. W. and R. S. Goodwin 1,509,084 shares (20.10%). 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 (6.68%), Rulegale Nominees Limited (JAMSCLT) 394,064 shares (5.25%).
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.
The percentages above take into consideration the 180,000 reduction in shares, with the total number of shares
in issue being 7,509,600 at the date of signing the financial statements.
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 27 to the financial
statements on page 81.
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. The Directors of the Company do not have any
on-going powers in relation to the purchase of its own shares and 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, and further details on the recent tender offer
can be found within note 31 on page 90.
22
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Research and development
The Group invests significantly in research and development, and for the year ending 30th April, 2023 the
majority of development occurred within Dupré Minerals. In addition to ongoing development of the
revolutionary fire extinguishing agent for lithium-ion battery fires, known as AVD, Dupré has also been working
on a new high performance fire blanket, specifically designed for fires involving devices incorporating lithium-ion
batteries. Other development projects in the Group include enhancing our submersible slurry pump range to
include a hydraulically driven variant, as well as the ongoing advancement of casting methodologies to obtain
improved mechanical properties at the same time as maintaining efficiency in terms of manufacturability.
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. With the exception of
the General Meeting on 30th May, 2023, in respect of the tender offer, 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 15 to 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, 2023, the Group’s gearing ratio stood at 26.3% (2022: 25.8%) against a substantial shareholders’
net worth of £125 million (2022: £115 million). The retained reserves of the Group put it in a strong position to
deal with unforeseen material adverse issues.
The Group has continued to incur high energy costs throughout the financial year, but it has been able to manage
the increases in costs. With the measures already put in place, together with the continued monitoring of
the energy costs incurred, we do not see the impact of energy costs giving rise to a going concern issue.
Furthermore, the fact that it is Group policy to manufacture and sell products with high technology and high
gross margins assists in insulating the Group from high energy costs.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds, after the
share buy-back transaction, 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 by reducing revenues by 18%
without adjusting downwards the capital expenditure programme, maintaining the overheads at their current
expected levels and keeping the financing facilities at the same amounts that were in place at year end.
The results of the stress test modelling did not highlight any going concern issues, breaches of covenants or
requirements for any further financing facilities.
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.
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.
23
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
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, 2026.
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, 2026), where it predicted a severe
but plausible reduction in the pre-tax profit forecasts for each year. 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 by reducing revenues by 18% each year from the base case forecast without adjusting downwards the
capital expenditure programme, maintaining the overheads at their current expected levels and keeping the
financing facilities at the same amounts that were in place at year end. The results demonstrated that the Group
did not breach any of its covenants and has sufficient financing facilities in place to deal with these adverse
events and given that a large proportion of the future capital expenditure is by definition discretionary, and that
overheads could be reviewed and changed accordingly, 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 its operations and remain financially viable over this extended period
to 30th April 2026.
Corporate governance statement
The Company’s Corporate Governance Statement is set out on pages 25 to 27 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 28 on page 81.
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
7th August, 2023
24
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT
Introduction
The Board comprises five 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 revised Code given
that the Board’s current corporate governance strategy has been accepted by a large majority of its shareholders.
The Group's governance structure, as set out below, is a structured system of rules and practices that shapes
how the Company operates, whilst also remaining dynamic, in addition to providing the Board and Directors
the necessary oversight to review its progress against its strategic plan.
For the past eight 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 year.
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, 36 and 41. Contrary to provision 36, the company does not have a formal policy for post-employment
shareholding requirements as it does not have any unvested or un-exercised vested share options in existence.
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.
In the best interests of the Company it has been concluded that an independent Chairman is not necessary when
considered with the Company’s investor profile, thereby the company does not comply with Provision 9 of the Code.
The Chairman and Managing Directors do not retire by rotation, which is contrary to provision 18 of the Code and
as required by Provision 7, the Board has a conflicts of interest policy which includes a procedure for disclosure
and review of any potential conflicts and, if appropriate, approval by the Board. The shareholding of the executive
directors is not considered a conflict in interests due to their contribution to the long-term sustainable success
of the Group being aligned with its other shareholders.
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 nine times, and details of attendees at these meetings are set out below:
M. S. Goodwin … … … … …
S. R. Goodwin … … … … …
T. J. W. Goodwin … … … … …
J. Connolly (retired 31st March, 2023) …
B. R. E. Goodwin … … … … …
N. Brown … … … … … …
J. E. Kelly … … … … … …
9 out of 9 attended
9 out of 9 attended
9 out of 9 attended
7 out of 9 attended
9 out of 9 attended
9 out of 9 attended
8 out of 9 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 continually monitors and assesses
the culture to ensure that it is aligned with the Group's purpose, values and strategy. With the culture of the Group
being well established there have not been any specific actions taken in the year other than continuing to lead by
example and encouraging open communication, transparency and respect. 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 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
25
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
The Board) (continued)
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. This is in addition to the flat structure in place and the hands-on approach of the
Directors, which is how the Board continually assesses emerging risks. Following the identification of an
emerging risk the Board dynamically sets out a plan and typically appoints an individual with the necessary
skill set, whether they be internal or external, to either manage or mitigate the risk.
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, 2022, with all members attending each meeting.
The responsibility of the Audit Committee is explained in the Audit Committee Report on pages 28 to 31.
The Audit Committee takes into account the Company’s corporate Mission Statement, Objectives and Strategy,
and reviews investor correspondence and comments, regulatory changes, current issues and market trends.
The Audit Committee uses expert opinion where considered appropriate.
Board evaluation
The Managing Directors, Chairman and Audit Committee address the development, composition, diversity 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. As the Managing Directors and the
Chairman are executive Directors, which in addition to there not being defined performance obligations that
individuals are assessed against, the Group does not comply with provision 13 of the UK Corporate Governance
Code. Furthermore, as the Chair does not individually assess and or act on the results of the evaluation, the
Group does not comply with provision 22. The Board recognises the importance of its composition and diversity
and remains committed to suitable corporate governance and believes that a wide range of knowledge, skills
and experience are among the essential drivers to long-term success. We continue to evaluate the composition
of the Board and recognise the value that non-executives typically offer, by ensuring that the Board is acting
in the best interests of the Company. The Board considers the value offered in this circumstance is significantly
less as the Executive Directors, who form part of the controlling concert party, are, in essence, custodians of
the business, resulting in their interests being the long-term growth and success of the business. Furthermore,
the Board would lose its dynamic management of the business that over the history of the Group has enabled
it to vastly outperform the FTSE 100 and FTSE 250, see page 33 for details. Additionally, when consideration
is also given to the recommended tenure of non-executives, the benefit of any new non-executives is limited
by the fact that it would take a significant amount of time to understand the vastly diverse and extremely
technical products that the Group supplies.
The structure of the Board and its Audit Committee brings balance, astute guidance and deep understanding of
the business at both operational and Board level.
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 and objectivity of the external auditor. The auditor's independence
is safeguarded by the Group following its policy and procedure on non-audit services. The policy recognises
that certain material or highly sensitive non-audit services may not be carried out by the external auditor, such
as valuations or advisory services. In addition to the auditor having their own policies and checks, 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.
The effectiveness of the external audit is assessed annually, following completion of the audit. Following
discussions with all parties involved in the audit on an operational level, the Board discusses on the efficiency
and performance of the overall audit. This is then discussed with the Audit Committee which evaluates the
effectiveness of the audit process. Any suggested improvements in audit processes from the prior year are
reported back to the Board and the auditor partner so that they can be taken into account when planning the
audit for following year.
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.
26
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
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 reviewing
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 28 to 31. 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. This is contrary to provision 29 of the UK Corporate Governance Code.
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's internal auditor continues to make good progress
reviewing internal controls, procedures and accounting systems, though it is planned that the activity of the
Group internal auditor is expanded, going forward, by the addition of an experienced assistant. During Covid-19,
many more Group directors, management accountants and employees became much more proficient in using
Zoom. This has, to some extent, improved the level of coverage but it is a fact of life that the best results of
internal audit are achieved by site visits. 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
7th August, 2023
27
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 and objectivity of the auditor; the effectiveness of the audit
process; and that the Group receives value for money from the audit and that no non-audit services are
carried out by the auditor.
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, and providing advice on whether the Annual Report and accounts
as a whole are fair, balanced and understandable.
i) Reviewing and recommending climate-related policies.
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 applied to some of our overseas
subsidiaries during the year and use of Zoom has enabled regular meetings with them to continue. Where
possible, travel to and from some of those areas has recommenced. Any areas where the Audit Committee
feels that the positions taken within any particular subsidiary are either inappropriate or merit further review
are discussed with 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 discusses with 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 fair, balanced, relevant, understandable,
appropriately compliant with relevant accounting standards / legislation and 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, 2023 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.
28
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
2023 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. This framework continues to be followed by Directors and general managers, and, when appropriate,
the Audit Committee reviews the status.
Having focused initially on overseas companies, all subsidiaries in the Group are now included in the risk
analysis 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 and banking arrangements.
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.
h) review of progress on environmental (TCFD) and social matters.
As reported last year, our internal Group General Counsel 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. A start has now been made on rolling this training out to overseas subsidiaries.
In addition, training has been given to both UK and overseas subsidiary Directors and senior managers on
sanctions and export controls.
Training has also been provided to UK and overseas subsidiary Directors on Scope 1, Scope 2 and Scope 3
carbon emissions.
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 10.
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 reviewed the accounting treatment of the ten year
interest rate hedge that was taken out last year to protect the Group against the interest rate increases that
have occured to date, in addition to the anticipated increases expected over the coming years.
The Audit Committee has in conjunction with the Board reviewed the Group’s guaranteed banking facilities
in terms of quantum and tenure.
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. Focus has been to ensure that the Group has sufficient accounting capacity
and also on the recruitment of quality and project managers in the light of the on-going business changes.
29
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
2. Helping to ensure the Group carries effective and relevant financial and non-financial internal
controls and financial risk management systems: (continued)
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.
3. The Group’s external auditor
Following the last audit tender process RSM UK Audit LLP (“RSM”) was appointed as the Group’s Auditor at the
Company’s AGM in October 2020. Following shareholder approval at the Annual General Meeting in October
2022, RSM was re-appointed as the Group’s Auditor for the year ended 30th April, 2023. In line with regulation,
the audit will be put out to tender at least every ten years. Subject to not bringing the tender forward, the
Group will be required to re-tender the audit in financial year 2029.
In addition to the auditor having their own policies and checks, to preserve objectivity and independence,
the Audit Committee has a policy that restricts the external auditor from carrying out any non-audit services
during the year. Throughout the year the Audit Committee monitors the level of non-audit services provided
by RSM to the Group and confirms that 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. To further assess both objectivity and independence, the Audit Committee
also takes into consideration any relationships between the Group and the audit firm, the audit fee as a
proportion of the overall fee income of the audit firm and whether the Group has employed any former
members of the external audit team.
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 appraises the auditor’s effectiveness on an annual basis, through regular engagement with
RSM during the audit process, in addition to taking into account:
(cid:129) feedback from directors, senior managers and the Group Chief Accountant
(cid:129) the quality and scope of all key external auditor plans and reports
(cid:129) the delivery and performance against this plan
(cid:129) the behaviour, qualifications and performance of their audit team
(cid:129) RSM’s understanding of the Group’s business and industry sector
The Audit Committee was satisfied with the external auditor’s independence of the audit process.
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. Where possible
travel to overseas subsidiaries has now commenced through remote desk-top internal audits of our overseas
subsidiaries have continued, where the Covid-19 restrictions still applied during the year just completed.
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.
30
DIRECTORS’ REPORTS
7. Accounting estimates and judgements relating to the Financial Statements
AUDIT COMMITTEE REPORT (continued)
The Audit Committee again reviewed what it considered to be the accounting estimates and judgement areas
within the Group Annual Report for the year ended 30th April, 2023.
Consideration of the key and other estimates and judgements as disclosed in note 2 of the financial statements,
as well as:
(cid:129) Review of Group inter-company late payments;
(cid:129) Review of the Group’s gearing, control of capital investment and the financing of further green investment;
(cid:129) Review of overseas subsidiary company risk mitigation;
(cid:129) Review and management of the age profile across the Group;
(cid:129) Assessment of the banks’ credit ratings;
(cid:129) Review of Duvelco’s market potential and future profitability.
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
7th August, 2023
31
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. The policy is designed to be simple and naturally aligned with the performance of
the Group and its overall strategic objective of growing the long-term profitability of the Group in a sustainable
manner whilst delivering a fair return to its shareholders. Consideration is given to the financial and non financial
performance of the individual and how they have performed on delivering against each of the Group’s
strategy points, and the Group’s culture, purpose and values.
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
2022 / 2023
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
are entitled to 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 2022
to April 2023 the
increase was
generally 8.5%.
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 36.
We believe the above meets the requirement of Schedule 8, Companies Act 2006, regarding the changes in 2022 /
2023. The Policy and Report is signed by the Chairman and the Managing Directors.
32
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
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.
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
155%
131%
5,376%
FTSE 100
27%
79%
320%
FTSE 350
24%
80%
354%
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 who carries out
75% of the duties of a Financial Director, 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.
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.
Approval of the Company’s Directors’ Remuneration Policy
The Company put the Remuneration Policy to the vote at the Annual General Meeting on 5th October, 2022,
when it was passed by 99.94% of those who voted. The Company will be putting the Remuneration Policy to
the vote again in 2026, which is three years from the last vote, as is required by the Listing Rules.
33
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, including remuneration of its non-executive, is set by the
Board as a whole and is described in pages 32 to 33 therein. The Policy has been followed in the financial year
to 30th April, 2023 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:
2023
£’000
8,636
Ordinary dividends proposed in respect of the year (£’000) … … … …
Total employee costs (£’000) … … … … … … … … … 50,075
1,144
Average employee numbers … … … … … … … … …
2022
£’000
8,289
44,745
1,112
%
4.2
11.9
2.9
Approval of the Company’s Annual Directors’ Remuneration Report
An ordinary resolution for the approval of the Annual Directors’ Remuneration Report will be put to shareholders
at the forthcoming Annual General Meeting. The Annual Directors’ Remuneration Report presented in the accounts
to 30th April, 2022 was put to the shareholders at last year’s Annual General Meeting on 5th October, 2022.
The Annual Directors’ Remuneration Report was accepted with 99.94% 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, 2023 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.
2019
£’000
2020
£’000
2021
£’000
2022
£’000
2023
£’000
397
310
355
374
406
Total payroll costs, excluding the Managing Director’s salaries, have decreased by 12.0%. During the year, the initial
base increase awarded to employees in the UK companies was 5.3% followed by a further 3.2% being awarded
later on in the year. The following graphs have not been audited.
34
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
DIRECTORS’ REPORTS
The increase in the Goodwin PLC share price since 2003 plus dividends re-invested would mean that £1.00 invested
in 2003 by 30th April, 2023 would be worth £54.76. The increase in the share price since 2013 plus dividends
re-invested would mean that £1.00 invested in 2013 would at 30th April, 2023 be worth £2.31.
35
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
DIRECTORS’ REPORTS
The auditor 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
2023
30th April
2022
Beneficial
M. S. Goodwin … … … … …
S. R. Goodwin … … … … …
T. J . W. Goodwin… … … … …
J. Connolly (retired 31st March, 2023) …
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*
…
…
…
…
…
…
…
…
…
…
69,054
78,786
118,926
28,802
54,536
445
52,041
21,670
2,154,009
1,492,036
69,265
78,978
122,334
28,802
59,189
445
71,866
33,236
2,129,153
1,457,358
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
Salary
Year ended
M. S. Goodwin … … … … … … …
S. R. Goodwin … … … … … … …
T. J. W. Goodwin … … … … … … …
J. Connolly… … … … … … … …
B. R. E. Goodwin … … … … … … …
N. Brown … … … … … … … …
J. E. Kelly … … … … … … … …
2023
£’000
399
399
280
238
256
184
-
Benefits
Non-Exec
in kind Director’s
fees
2023
£‘000
-
-
-
-
-
-
78
2023
£’000
5
5
5
1
5
11
-
Pension
contrib-
utions
2023
£’000
2
2
8
7
8
6
-
Total
2023
£’000
406
406
293
246
269
201
78
Total … … … … … … … … 1,756
32
78
33
1,899
Salary
Benefits
in kind
Single Total Figure Table
Year ended
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
-
Total
… … … … … … … …
1,649
Non-Exec
Director’s
fees
2022
£’000
-
-
-
-
-
-
72
Pension
contrib-
utions
2022
£’000
11
11
8
8
7
5
-
Total
total
2022
£’000
374
374
270
280
243
183
72
72
50
1,796
2022
£’000
3
3
3
2
3
11
-
25
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 £250,000 (2022: £222,000).
36
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Comparison – audited
In accordance with the remuneration regulations, 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 (retired 31st March, 2023) … … … …
B. R. E. Goodwin … … … … … … … …
N. Brown (appointed 11th December, 2020) … … …
J. E. Kelly … … … … … … … … …
… … …
UK Base Increase Awarded to Employees
2022 / 2023
%
8.5**
8.5**
8.5
0
10.4
10
8.5
8.5
2021 / 2022
%
5
5
5
0
10
N/A
6
2020 / 2021
%
15*
15*
32*
16
42
N/A
9
Any 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. It should be noted in 2023, M. S. Goodwin and
S. R. Goodwin total remuneration has increased inline with the UK base increase but the reallocation of pension
contribution has resulted in the average % increase of their salary and benefits in kind increasing by 11.2%
compared to last year.
* 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.
** It should be noted in 2023, that the percentage for M. S. Goodwin and S. R. Goodwin is higher due to the
changes in their pension contributions which affect these figures.
Average % Increase of the UK Workforce
As required to be disclosed by the remuneration regulations, the average ‘mean’ pay of the UK workforce has
increased by 9.6%, which takes into account salary, bonuses and benefits in kind and is based on all individuals
employed by Goodwin PLC and its UK subsidiaries. The increase is a factor of the pay increases awarded in the
year, as well as the business needing to employ individuals with a greater and wider skillset as the Group takes
on more technical work.
2022 / 2023
%
9.6
2021 / 2022
%
5
2020 / 2021
%
3
UK workforce average % Increase … … … … …
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, 2023 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, 2023:
Financial
Year
Method
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
2023 FTSE 350
-
44:1
2023 ratios
2022 ratios
2021 ratios
2020 ratios
Option A
Option A
Option A
Option A
14:1
14:1
14:1
12:1
37
11:1
11:1
11:1
10:1
-
8:1
8:1
8:1
7:1
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Ratio of Managing Directors (continued)
DIRECTORS’ REPORTS
Financial
Year
2023 Total Pay
2022 Total Pay
2021 Total Pay
2020 Total Pay
Managing
Directors
£’000
25th
percentile
pay
£’000
Median
pay
£’000
75th
percentile
pay
£’000
406
374
355
333
29
27
26
26
38
34
33
33
52
48
45
45
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.
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, 2023.
Equity Long Term Incentive Plan (LTIP) – Vested Share Options – audited
All share options under the Equity Long-Term Incentive plan (LTIP) for the Executive Directors, that was approved
at the Annual General Meeting on 5th October, 2016, have now been exercised and the Company has no follow-on
LTIP incentive plans in place or proposed. The Company does not have a formal policy for post-employment
shareholding requirements, and contrary to provision 37 of the UK Corporate Governance Code, the Company
does not have the ability to recover and / or withhold sums or share awards in relation to the vested share
options. 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 is entitled to have 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 their 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 7th August, 2023 and is signed on
its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
38
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 22, 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
7th August, 2023
39
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 2023 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 Group financial statements is applicable law and UK-
adopted International Accounting Standards. 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 2023 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
Materiality
Scope
Group
Revenue recognition – revenue recognised over time
Intangible assets – capitalisation and impairment
Parent Company
No key audit matters noted
Group
Overall materiality: £778,000 (2022: £715,000)
Performance materiality: £583,000 (2022: £536,000)
Parent Company
Overall materiality: £430,000 (2022: £425,000)
Performance materiality: £322,500 (2022: £318,000)
Our audit procedures covered 80% of revenue, 92% of total assets and 74%
of absolute profit before tax.
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
40
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 £79,998,000.
Estimates are made by management based on work completed for each
contract and costs to complete.
Revenue is recognised 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 percentage 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 tests 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 and
reviewed historical budgeting accuracy.
For all contracts selected we tested the associated contract assets and
contract liabilities.
The Group reached a settlement for additional revenue on a contract
during the year. 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.
In concluding our audit, we identified misstatements in excess of the
trivial threshold relating to revenue contracts. Where misstatements
were identified, we reported these to those charged with governance and
certain adjustments were recorded by the management. The remaining
unadjusted misstatements relating to revenue contracts were below
overall materiality.
The combination of revenue contract adjustments with other
accumulated unadjusted misstatements resulting from the group audit
was a large proportion of, albeit below, our overall materiality. These
adjustments, if corrected would serve to increase reported profit for the
period.
41
Intangible assets – capitalisation and impairment
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 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. As certain projects have moved towards production, there has
also been capital expenditure on plant and equipment. Amounts are
capitalised if criteria are met in accordance with IAS 38 'Intangible assets'
and IAS 16 ‘Property, plant and equipment’
The viability of and market for new products is not guaranteed.
Judgement is required in considering this and appropriate disclosures
should be made in the financial statements.
We assessed the appropriateness of capitalisation of development costs
and capital expenditure in a new CGU due to the impact on reported
earnings. We challenged the judgements made in assessing whether the
IAS 38 criteria for capitalisation had been met.
We obtained management’s impairment model for their CGUs, including
Goodwill and undertook audit procedures including:
• Assessing whether management's calculations comply with the
requirements of IAS 36 ‘Impairment of assets’;
• Analysing the structure and integrity of the model and the
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
impairment;
in assessing the risks of
Corroborating assumptions through discussions with operational
management; and
• Review of the disclosures in the financial statements.
We considered the amortisation accounting policy for each category of
intangible asset.
Based on our procedures, we concluded that the carrying value and
disclosures in the financial statements were appropriate.
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:
Overall materiality
Basis for determining overall
materiality
Group
£778,000 (2022: £715,000)
Parent Company
£430,000 (2022: £425,000)
4.5% of two year average adjusted
profit before tax.
Profit before tax has been adjusted
for material non-recurring items.
0.3% of Total Assets
42
Rationale for benchmark applied
Performance materiality
Basis for determining
performance materiality
Reporting of misstatements to
the Audit Committee
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.
£583,000 (2022: £536,000)
Total assets is considered the key
benchmark of the parent Company
its
as
investments as a non-revenue
generating entity.
the entity
relies on
£322,500 (2022: £318,000)
75% of overall materiality
75% of overall materiality
in
excess
Misstatements
of
£38,900 and misstatements below
that threshold that, in our view,
warranted reporting on qualitative
grounds.
in
excess
Misstatements
of
£21,500 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:
Full scope audit
Specific
procedures *
Total
audit
Number of
components
10
1
11
Revenue
Total assets
78%
2%
80%
92%
-
92%
Absolute Profit
before tax
74%
-
74%
*While the specific scope % represents the component's total portion; our procedures consisted of specific audit
procedures over the cut-off of revenue of the component only.
Procedures were performed 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.
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:
• Review of 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;
43
• 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.
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:
44
• Directors’ statement with regards the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on pages 23 to 24;
• 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 24;
• Director’s statement on whether it has a reasonable expectation that the Group will be able to
continue in operation and meets its liabilities set out on page 24;
• Directors’ statement on fair, balanced and understandable set out on page 22;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks
set out on page 13;
•
•
Section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on page 27; and,
Section describing the work of the Audit Committee set out on page 29.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 39, 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 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;
45
•
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, 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
IFRS/FRS101 and Companies Act
2006 / Listing Rules
Tax compliance regulations
Manufacturing and operational
regulations
Additional audit procedures performed by the Group audit
engagement team and component auditors included:
Review of the financial statement disclosures and testing to supporting
documentation.
Review of correspondence with regulators and action taken by the Group
as a result of this correspondence.
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.
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
Revenue recognition – over time
sales
Revenue recognition – point in
time sales
Management override of
controls
Audit procedures performed by the audit engagement team:
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.
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.
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 three years, covering the years ended 30 April
2021 and 30 April 2023.
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.
46
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
47
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2023
Notes
2023
£’000
2022
£’000
CONTINUING OPERATIONS
Revenue … … … … … … … … … …
3, 4
185,742
Cost of sales
… … … … … … … … …
(139,521)
GROSS PROFIT… … … … … … … … … …
Distribution expenses … … … … … … … …
Administrative expenses
… … … … … … …
OPERATING PROFIT … … … … … … … … …
… … … … … … … …
Finance costs (net)
Share of profit of associate company
… … … … …
7
14
46,221
(3,741)
(22,167)
20,313
(1,438)
65
144,108
(101,404)
42,704
(3,743)
(20,654)
18,307
(1,169)
63
PROFIT BEFORE TAXATION AND MOVEMENT IN FAIR VALUE
OF INTEREST RATE SWAP*
… … … … … … …
Additonal year-on-year unrealised gain on
10 year interest rate swap derivative… … … … … …
18,940
17,201
3,189
2,740
PROFIT BEFORE TAXATION
… … … … … … …
Tax on profit** … … … … … … … … …
5
8
22,129
(5,616)
19,941
(6,321)
PROFIT AFTER TAXATION… … … … … … … …
16,513
13,620
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … …
Non-controlling interests
… … … … … … …
15,904
609
12,980
640
PROFIT FOR THE YEAR … … … … … … … …
16,513
13,620
BASIC EARNINGS PER ORDINARY SHARE (in pence) … … …
DILUTED EARNINGS PER ORDINARY SHARE (in pence) … …
9
9
206.81p
169.14p
206.81p
169.14p
* The Chairman’s Statement refers to trading profit, which is the profit before taxation less the further positive
movement in fair value of interest rate swap as trading profit.
** The Group has received significant benefit from the UK superdeduction capital allowances programme,
that has substantially reduced the corporation tax payable in the UK. For further details, see the additonal
commentary in note 8.
The notes on pages 54 to 104 form part of these financial statements.
48
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2023
PROFIT FOR THE YEAR … … … … … … … … …
OTHER COMPREHENSIVE INCOME / (EXPENSE)
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 (charge) / credit on items that may be reclassified subsequently
to profit or loss … … … … … … … … … …
2023
£’000
16,513
2022
£’000
13,620
(1,412)
3,741
518
1,308
(1,447)
(76)
33
1,493
(3,834)
(339)
(1,432)
275
(23)
(75)
(919)
1,114
OTHER COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR,
NET OF INCOME TAX… … … … … … … … … …
1,746
(2,821)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR … … … …
18,259
10,799
ATTRIBUTABLE TO:
Equity holders of the parent … … … … … … … …
Non-controlling interests
… … … … … … … …
17,726
533
18,259
10,089
710
10,799
The notes on pages 54 to 104 form part of these financial statements.
49
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2023
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, 2023
Balance at 1st May, 2022 …
769
463
5,244
(2,746)
140 111,440
115,310
4,433 119,743
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:
Dividends paid … … …
BALANCE AT
30TH APRIL, 2023
-
-
-
-
-
-
-
-
-
(1,312)
-
-
-
-
(1,312)
-
-
-
-
-
-
-
-
-
-
-
-
-
3,741
(1,447)
518
(76)
1,274
(1,283)
40
367
15,904
15,904
609
16,513
-
-
-
-
-
(1,312)
(100)
(1,412)
2,294
442
1,314
(916)
-
-
2,294
442
27
(3)
1,341
(919)
4,250
(1,116) 15,904
17,726
533
18,259
-
-
(8,289)
(8,289)
(556)
(8,845)
769
(849) 5,244
1,504
(976) 119,055
124,747
4,410 129,157
The notes on pages 54 to 104 form part of these financial statements.
50
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
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
Non-
holders of controlling
interests
the parent
£’000
£’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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(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
-
1,315
-
(4,347)
141
12,980
10,089
710
10,799
Issue of shares … … …
16
Acquisition of NCI without a
change in control … …
Dividends paid … … …
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(74)
16
(74)
(7,862)
(7,862)
-
16
(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 54 to 104 form part of these financial statements.
51
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2023
Notes
2023
£’000
NON-CURRENT ASSETS
… … … … … … …
Property, plant and equipment
… … … … … … … …
Right-of-use assets
Investment in associate
… … … … … … … …
Intangible assets… … … … … … … … … …
Long-term trade receivables … … … … … … … …
Derivative financial assets … … … … … … … … 16, 28
11
12
14
15
18
101,243
6,763
964
25,448
-
5,932
2022
£’000
87,594
6,191
896
24,817
1,191
2,741
CURRENT ASSETS
Inventories… … … … … … … … … … …
Contract assets … … … … … … … … … …
Trade and other receivables … … … … … … … …
Corporation tax receivable … … … … … … … …
Derivative financial assets … … … … … … … … 19, 28
Cash and cash equivalents … … … … … … … …
17
4
18
20
140,350
123,430
47,955
16,257
34,589
1,337
2,684
19,661
122,483
40,364
12,331
28,647
1,347
1,211
11,651
95,551
TOTAL ASSETS … … … … … … … … … …
262,833
218,981
CURRENT LIABILITIES
… … … … … … … … … …
Borrowings
Contract liabilities
… … … … … … … … …
Trade and other payables … … … … … … … …
Derivative financial liabilities … … … … … … … … 23, 28
Liabilities for current tax
Provisions for liabilities and charges
… … … … … … … …
… … … … … …
21
4
22
24
NON-CURRENT LIABILITIES
… … … … … … … … … …
Borrowings
Derivative financial liabilities … … … … … … … … 25,28
… … … … … …
Provisions for liabilities and charges
Deferred tax liabilities … … … … … … … … …
24
26
21
6,729
32,747
31,765
2,383
921
266
74,811
47,256
-
246
11,363
58,865
TOTAL LIABILITIES… … … … … … … … … …
133,676
2,764
14,749
27,260
2,393
1,886
205
49,257
40,376
1,643
251
7,711
49,981
99,238
NET ASSETS … … … … … … … … … … …
129,157
119,743
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
27
27
27
28
28
769
(849)
5,244
1,504
(976)
119,055
769
463
5,244
(2,746)
140
111,440
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
124,747
115,310
NON-CONTROLLING INTERESTS … … … … … … …
13
4,410
4,433
TOTAL EQUITY
… … … … … … … … … …
129,157
119,743
These financial statements were approved by the Board of Directors on 7th August, 2023, 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 54 to 104 form part of these financial statements.
52
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2023
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations after tax … … … … … …
16,513
13,620
Notes
2023
£’000
2022
£’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 … …
Loss / (profit) on sale of property, plant and equipment
… … …
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) in inventories… … … … … … … … …
(Increase) / decrease in contract assets … … … … … …
(Increase) in trade and other receivables … … … … … …
Increase in contract liabilities… … … … … … … …
… … … … … …
Increase in trade and other payables
*
6,272
1,198
1,257
1,438
1,213
134
(3,189)
(65)
(610)
5,616
29,777
(8,377)
(3,804)
(5,304)
17,954
4,072
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
CASH GENERATED FROM OPERATIONS
… … … … … … … … …
Interest received
Interest paid
… … … … … … … … … …
Corporation tax paid … … … … … … … … …
34,318
75
(2,015)
(3,251)
21,303
157
(1,415)
(2,051)
NET CASH INFLOW FROM OPERATING ACTIVITIES … … … …
29,127
17,994
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 … … … … … …
**
218
(18,871)
-
(675)
(1,196)
341
(16,215)
(430)
(282)
(1,505)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
… … …
(20,524)
(18,091)
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 … … … … …
Change in bank overdrafts … … … … … … … …
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS …
Cash and cash equivalents at beginning of year… … … … …
… … … …
Effect of exchange rate fluctuations on cash held
-
(1,874)
(8,289)
(556)
11,500
(1,181)
119
(281)
8,322
11,651
(312)
16
(1,153)
(7,862)
(808)
6,702
(683)
-
(3,788)
(3,885)
15,160
376
CASH AND CASH EQUIVALENTS AT END OF YEAR … … … …
20
19,661
11,651
* The majority of contract liabilities are advance payments from customers.
** The cash flow impact of the additional investment in existing subsidiaries should have been reported within
cash flows from financing activities. This has not been amended in the prior year comparative, as the value is not
material to the Group.
The notes on pages 54 to 104 form part of these financial statements.
53
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 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 92 to 103.
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 possible 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 2023, the Group’s gearing ratio stood at 26.3% (2022: 25.8%) against a substantial shareholders
net worth of £125 million (2022: £115 million). The retained reserves of the Group put it in a strong position to
deal with unforeseen material adverse issues.
The Group has continued to incur high energy costs throughout the financial year, but it has been able to
manage the increases in costs. With the measures already put in place by the Group and the continued
monitoring of the energy costs incurred, we do not see the impact of energy costs giving rise to a going
concern issue. Furthermore, the fact that it is Group policy to manufacture and sell products with high
technology and high gross margins assists in insulating the Group from high energy costs.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds, after
the share buy-back transaction, 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
by reducing revenues by 18% without adjusting downwards the capital expenditure programme, maintaining
the overheads at their current expected levels and keeping the financing facilities at the same amounts that
were in place at year end. The results of the stress test modelling did not highlight any going concern issues,
breaches of covenants or requirements for any further financing facilities.
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.
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
54
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Basis of consolidation (continued)
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 (£). Where foreign currency
transactions are hedged, the transactions are recorded at their hedged rate. All other 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
movements associated with hedged transactions are recognised in the cash flow hedge reserve, whilst
non-hedged foreign exchange differences arising on translation are recognised in the statement of profit or
loss within operating profit.
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 2022 / 2023
The IASB and IFRIC issued the following amendments:
(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).
The implementation of these amendments has not had a material impact on the Group’s financial statements.
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 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ‘Definition of
Accounting Estimates’ – (effective for periods commencing on or after 1st January, 2023).
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).
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).
Amendments to IAS 1 Non-current liabilities with covenants - (effective for periods on our after 1 January
2024).
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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.
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.
Standard inventory product lines and consumables
Typically applies to the sale of slurry pumps within the Mechanical Engineering Division and to the whole of the
Group’s Refractory Engineering Division. 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. There are also
bill and hold arrangements, where control passes to the customer once the customer confirms that the job
has been completed, but where the goods are yet to be collected and remain at the Company premises.
55
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Revenue (continued)
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 Division and covers sales orders which are customer
bespoke, and have a cancel for convenience clause. This clause then permits the Group subsidiary to claim
profit as the project progresses over time to completion and if the customer were to trigger the cancel for
convenience clause within the contract, claim profit from the customer to that point in time. 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 of costs to complete, which contain allowances for
technical risks and inherent uncertainties. The input method is considered to be the most appropriate, because
costs are the significant indicator of the job performance and expected contract profitability. Using the input
method, costs to date are factual and based on job cost records. As jobs progress through the factories, the
cost estimate sheets, generated at order placement, are adjusted for known time-based or commodity-based
variances. The cost estimate sheets are the source for the calculation of the total estimated costs on a job.
At both senior and middle management level, there is a high level of continuity and expertise to interrogate
the costings and so arrive at an appropriate assessment of the total costs on a job, and to then determine the
percentage of completion for each contract. The contracts within the Group do not include variable consideration.
Contract modifications
Where the Group has modifications or variations to a contract, then these are included in the contract
calculations only when there is a high probability that they are certain to occur, which the Group considers
to be when there is a signed agreement in place.
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 profit only on completion of the project or only the costs
incurred to date 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 customer confirms that the job has been completed, but where the goods are yet to
be collected, and remain at the Company premises.
Where the contract period is less that one year, the incremental costs of winning a contract are recognised as
an expense as they are incurred.
Contract assets / contract liabilities
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.
56
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Financial income and costs
Financial expenses comprise interest payable (together with the amortisation of any facility arrangement
fees) and interest on lease liabilities using the effective interest method. 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.
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 and other 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 balances, which include sales taxes repayable to
the Group. 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.
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.
57
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued)
Financial instruments (continued)
Principal non-derivative financial liabilities (continued)
Trade and other payables
Trade and other payables are recognised initially at fair value, and are subsequently reported at amortised cost.
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, 2023 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
58
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 is recognised as
the difference between the consideration transferred and the fair value of identifiable assets, liabilities and
contingent liabilities assumed in a business combination. 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
reported as an equity transaction with owners.
Expenditure on research activities is recognised in the statement of profit or loss as an expense as incurred.
59
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 CGU 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 of CGU’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.
60
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. If the costs to complete contracts, that had not been completed as at the year end, were 1% higher
than estimated at the year-end, for which this increase in costs could not be passed on to the customer, then
the impact to the current year’s revenue would be £328,000.
Where there are claims which are subject to commercial negotiation, these are recognised only when there
is a high level of certainty, which the Group considers this to be when there is a signed agreement in place.
Consideration is given to the requirements of IFRS15 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 £488,000 (2022: £471,000). 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.
Duvelco viability
The Company has invested circa £14 million in the area of high performance polymer resins. The Company
will commence a period of testing and commissioning of the plant in Q2 and Q3 of financial year 2024
before any commercial activity takes place. The judgement of the Board is that the market potential here is
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.
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.
61
NOTES TO THE FINANCIAL STATEMENTS
2. Accounting estimates and judgements (continued)
Other estimates and judgements (continued)
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 28 (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.
62
NOTES TO THE FINANCIAL STATEMENTS
3. Segmental information
Products and services from which reportable segments derive their revenues
For reporting to the chief operating decision maker, the Board of Directors, and as outlined in the Business
Model section of the Strategic Report on page 8, the Group is organised into two reportable operating
segments according to the different products and services provided by the Mechanical Engineering and
Refractory Engineering Divisions. Segment assets and liabilities include items directly attributable to segments
as well as group centre balances which 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.
In previous years the segmental analysis of net assets, capital expenditure and depreciation was based on
the legal structure of the Group. This year, the analysis represents the operational structure of the Group
and the prior year comparatives have been updated accordingly. There are no other reportable segments
apart from those identified.
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
Revenue
External sales … …
123,767
61,975
185,742
Inter-segment sales …
23,771
18,365
42,136
87,605
17,784
56,503
15,523
144,108
33,307
Total revenue … …
147,538
80,340
227,878
105,389
72,026
177,415
Reconciliation to consolidated revenue:
Inter-segment sales …
Consolidated revenue for the year
(42,136)
185,742
(33,307)
144,108
Profits
Mechanical Engineering …
Refractory Engineering …
…
…
Year ended 30th April, 2023
Year ended 30th April, 2022
£’000
£’000
49
51
12,171
12,772
£’000
42
58
£’000
9,139
12,657
Segment operating profit
100
24,943
100
21,796
Group centre … … …
…
Group operating profit
Finance costs (net) … …
Share of profit of Refractory
associate company … …
…
…
Profit before taxation and
movement in fair value of
interest rate swap
Unrealised gain on 10 year
interest rate swap derivative
…
Profit before tax
Tax on profit … … …
…
Profit after tax
(3,489)
18,307
(1,169)
63
17,201
2,740
19,941
(6,321)
13,620
(4,630)
20,313
(1,438)
65
18,940
3,189
22,129
(5,616)
16,513
63
NOTES TO THE FINANCIAL STATEMENTS
3. Segmental information (continued)
Products and services from which reportable segments derive their revenues (continued)
Year ended 30th April, 2023
Year ended 30th April, 2022
Group Mechanical Refractory
centre Engineering Engineering
£’000
£’000
£’000
Total
£’000
Group Mechanical Refractory
centre Engineering Engineering
£’000
£’000
£’000
Total
£’000
Net assets
Total assets
Total liabilities
18,644
(2,821)
175,023
(103,234)
262,833
69,166
(27,621) (133,676)
18,493
(2,595)
141,995
(77,211)
58,493 218,981
(99,238)
(19,432)
Total
15,823
71,789
41,545
129,157
15,898
64,784
39,061 119,743
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 some of those held by the parent
Company, Goodwin PLC.
Year ended 30th April, 2023
Year ended 30th April, 2022
Group Mechanical Refractory
centre Engineering Engineering
£’000
£’000
£’000
Total
£’000
Group Mechanical
Refractory
centre Engineering Engineering
£’000
£’000
£’000
Total
£’000
Segmental capital expenditure
Property,
plant and
equipment
Right-of-use
assets
Intangible
assets
630
220
11
15,623
4,928 21,181
1,868
9,596
4,889
16,353
1,233
66
1,519
508
1,305
1,824
419
64
2,423
1,121
881
3,723
602
1,787
Total
861
17,364
6,299 24,524
2,351
13,140
6,372
21,863
Segmental depreciation, amortisation and impairment
Depreciation
1,070
4,872
1,528
7,470
1,046
4,643
1,705
7,394
Amortisation
and impairment
64
446
747
1,257
123
668
781
1,572
Total
1,134
5,318
2,275
8,727
1,169
5,311
2,486
8,966
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, 2023
Year ended 30th April, 2022
Revenue
£’000
55,867
28,367
19,854
34,725
46,929
UK*
Rest of Europe
USA
Pacific Basin
Rest of World
Net
assets
£’000
Non-
Capital
current expendi-
ture
£’000
assets
£’000
82,669
114,235
21,533
10,636
4,224
-
15,982
19,870
-
7,029
8,930
790
-
330
1,871
Net
assets
£’000
Non-
current
assets
£’000
77,447
102,254
8,648
3,728
-
15,867
17,781
-
6,703
8,004
Capital
expendi-
ture
£’000
19,670
1,009
-
278
906
Revenue
£’000
38,599
21,388
14,046
31,085
38,990
Total
185,742
129,157
134,418
24,524
144,108
119,743
120,689
21,863
* The prior year comparative for non-current assets has been adjusted to remove £2,741,000 of derivative assets.
64
NOTES TO THE FINANCIAL STATEMENTS
4. Revenue
The following tables provide an analysis of revenue by geographical market and by product line.
Geographical market
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Refractory
Engineering Engineering
£’000
£’000
Mechanical
Refractory
Total Engineering Engineering
£’000
£’000
£’000
UK
Rest of Europe
USA
Pacific Basin
Rest of World
Total
Product lines
41,112
21,269
19,141
12,253
29,992
14,755
55,867
7,098
28,367
713
19,854
22,472
34,725
16,937
46,929
123,767
61,975 185,742
25,261
13,304
13,398
9,457
26,185
87,605
Total
£’000
38,599
21,388
14,046
31,085
38,990
13,338
8,084
648
21,628
12,805
56,503
144,108
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Refractory
Engineering Engineering
£’000
£’000
Mechanical
Refractory
Total Engineering Engineering
£’000
£’000
£’000
Total
£’000
Standard products and
consumables
Bespoke products – point in time
13,767
30,002
61,975
75,742
-
30,002
12,155
9,992
56,503
68,658
-
9,992
Point in time revenue
43,769
61,975 105,744
22,147
56,503
78,650
Minimum period contracts
Bespoke products – over time
Over time revenue
4,335
75,663
79,998
-
-
-
4,335
75,663
3,804
61,654
79,998
65,458
-
-
-
3,804
61,654
65,458
Total revenue
123,767
61,975 185,742
87,605
56,503
144,108
The following table present information about receivables, work in progress, contract assets and liabilities
from contracts with customers.
2022
£’000
22,529
1,191
10,161
12,331
(14,749)
Trade receivables due within one year (note 18) … … … … … …
Trade receivables due after more than one year (note 18) … … … … …
Work in progress (note 17) … … … … … … … … … …
Contract assets
… … … … … … … … … … …
Contract liabilities … … … … … … … … … … …
28,094
-
13,001
16,257
(32,747)
2023
£’000
24,605
31,463
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 each year end.
Work in progress balances relate to point in time contracts with contract assets relating to over time contracts.
In the early of stages of a contract, there are often significant contract liabilities due to milestone payments
received from customers. As contracts progress, work in progress and contract asset balances increase and
contract liabilities decrease. The large increase in the contract liabilities during the year is due to the Group
receiving £13.1 million of down payments close to the year end for two contracts, on which the Group has
not yet commenced work.
65
NOTES TO THE FINANCIAL STATEMENTS
4. Revenue (continued)
Product lines (continued)
Revenue recognised in the year, which was included in the contract liability
balance at the beginning of the period … … … … … … … …
2023
£’000
2022
£’000
7,711
7,182
Revenue recognised from performance obligations, which were satisfied
(or partially satisfied) in previous periods* … … … … … … …
5,259
3,794
Increased costs on contracts** … … … … … … … … …
(995)
(1,145)
Release of increased cost of contracts**…
… … … … … …
-
1,284
* These figures relate to contract modifications, which are recognised only when there is a high level of certainty.
** During the year the Group recognised additional costs on contracts that were over and above the forecasted
costs for those contracts, which reduces revenue in the year. These contracts still remain profitable.
The Group reviewed the contract assets at year end and for all contracts did not have to make any impairment
provision.
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.
Performance obligations
A performance obligation is the value of work still to complete on a contract.
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 between 2-3 years … … … …
Performance obligations due to be satisfied between 4-5 years … … … …
Performance obligations due to be satisfied after more than 5 years … … …
2023
£’000
42,316
59,575
33,494
10,644
2022
£’000
40,114
17,746
19,959
-
146,029
77,819
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.
66
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
Depreciation:
Owned assets … … … … … … … … … … …
Right-of-use assets … … … … … … … … … …
… … … … …
Amortisation and impairment of intangible assets
… … … … …
Loss / (profit) on sale of other tangible fixed assets
Research expenditure … … … … … … … … … …
(Reversal) / impairment of trade receivables
charged to the statement of profit or loss … … … … … … …
Realised currency gains … … … … … … … … … …
Unrealised currency losses / (gains) … … … … … … … …
Mark to market currency derivative losses …
… … … … …
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 … … … … … … … … …
2023
£’000
6,272
1,198
1,257
134
3,783
(237)
(678)
615
156
442
80
344
300
188
11
(331)
2022
£’000
6,202
1,192
1,572
(18)
4,507
188
(202)
(2,385)
1,212
(362)
66
282
304
130
12
(397)
The analysis of the mark to market currency derivative losses and hedge ineffectiveness has been corrected for
the previous year. The mark to market 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:
2023
Number
2022
Number
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 … … … … … … … … …
1,093
51
1,144
2023
£’000
44,125
4,489
1,461
50,075
2023
£’000
36,783
13,292
50,075
1,062
50
1,112
2022
£’000
38,894
4,513
1,338
44,745
2022
£’000
31,707
13,038
44,745
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on pages 34 to 36.
The emoluments of the highest paid Director were £406,000 (2022: £374,000). The number of Directors, who
were members of a defined contribution pension scheme on 30th April, 2023 was 3 (2022: 6).
67
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 assets in the course of construction … … … …
2023
£’000
93
266
1,756
(491)
Interest expense … … … … … … … … … … …
1,531
Finance costs (net) … … … … … … … … … …
1,438
2022
£’000
157
121
1,292
(87)
1,326
1,169
The average interest rate used to calculate capitalised interest was 3.13% (2022: 2.57%). This takes into account
the benefit of the interest rate swap.
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
– current year rate differences … … … … … … … …
Origination and reversal of temporary differences
– under / (over) provision in prior years … … … … … …
Origination and reversal of temporary differences
– rate change to prior year (see below) … … … … … …
Total tax expense … … … … … … … … … … …
2023
£’000
2,678
191
2,869
2022
£’000
2,820
193
3,013
1926
1,381
596
225
-
2,747
5,616
-
(85)
2,012
3,308
6,321
UK corporation tax
The tax charge on the face of the profit and loss is the tax applicable to the profits of each Group company
calculated at their country tax rate. Due to the high capital expenditure of the UK element of the Group,
where there are, in the UK, 100% first year allowances and the Super Deduction tax scheme that the UK Group
companies could utilise in the year, this has meant for certain assets there was a combined 130% deduction
against taxable profits. This has resulted in a lower amount of tax paid in the UK for both financial year 2022
and financial year 2023 and a significant deferred tax charge of 50% of the calculated tax, which will not be
paid until some time in the future.
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
With the change in UK tax rate to 25%, all the provisions have been calculated at the new rate in line with
legislation.
68
NOTES TO THE FINANCIAL STATEMENTS
8. Taxation (continued)
Reconciliation of effective tax rate
Profit before taxation … … … … … … … … … …
Tax using the UK corporation tax rate of 19.49% (2022: 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 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
… … … … … … … … …
Rate differences … … … … … … … … … … …
Withholding tax unrelieved … … … … … … … … …
… … … … … … … …
Difference in overseas tax rates
Effect of equity accounting for associate … … … … … … …
2023
£’000
22,129
4,313
(337)
(17)
59
(20)
416
160
-
-
-
596
261
199
(14)
Total tax expense … … … … … … … … … … …
5,616
2022
£’000
19,941
3,789
(506)
(27)
30
295
108
171
(40)
(151)
2,012
-
355
297
(12)
6,321
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 (charge) / credit on the cash flow hedge included
in the consolidated statement of comprehensive income
… … … …
9. Earnings per share
2023
£’000
2022
£’000
(919)
1,114
Number of
ordinary shares
2023
2022
Ordinary shares in issue
Opening shares in issue … … … … … … … … … … 7,689,600
-
Shares issued in the year (note 27) … … … … … … … …
7,526,400
163,200
Total ordinary shares (issued and options) … … … … … … 7,689,600
7,689,600
Weighted average number of ordinary shares in issue … … … … … 7,689,600
7,673,951
Relevant profits attributable to ordinary shareholders … … … … …
Basic earnings per share … … … … … … … … … …
Diluted earnings per share
… … … … … … … … …
10. Dividends
Paid ordinary dividends during the year in respect of prior years
107.80p (2022: 102.24p) per qualifying ordinary share … … … … …
2023
£’000
15,904
2023
pence
206.81
206.81
2023
£’000
8,289
2022
£’000
12,980
2022
pence
169.14
169.14
2022
£’000
7,862
After the balance sheet date an ordinary dividend of 115p per qualifying ordinary share was proposed by the
Directors (2022: Ordinary dividend of 107.80p).
The proposed current year ordinary dividend of £8,636,000 has not been provided for within these financial
statements (2022: Proposed ordinary dividend of £8,289,000 was not provided for within the comparative
figures).
69
NOTES TO THE FINANCIAL STATEMENTS
11. Property, plant and equipment
Cost
Balance at 1st May, 2021 … … …
Additions … … … … … …
Reclassification … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
41,998
5,814
3,737
(6)
661
81,579
2,653
1,721
(1,205)
245
Other
Plant and equipment
Land and
buildings machinery
£’000
£’000
Assets in
course of
construc-
tion
£’000
7,779
7,371
(5,338)
-
53
Total
£’000
138,311
16,353
-
(1,873)
1,042
£’000
6,955
515
(120)
(662)
83
Balance at 30th April, 2022 … …
52,204
84,993
6,771
9,865
153,833
Depreciation
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
-
-
-
-
-
61,248
6,202
(1,550)
339
66,239
Net book value
At 1st May, 2021
… … … …
32,772
34,722
1,790
7,779
77,063
At 30th April, 2022 … … … …
41,494
34,521
1,714
9,865
87,594
Cost
Balance at 1st May, 2022 … … …
Additions … … … … … …
Reclassification – others … … …
… … …
Transfer to / from ROU*
Disposals … … … … … …
Exchange adjustment … … … …
52,204
633
-
-
-
(461)
84,993
3,692
3,612
(336)
(1,935)
(228)
6,771
364
37
191
(719)
(68)
9,865
16,492
(3,649)
-
-
(71)
153,833
21,181
-
(145)
(2,654)
(828)
Balance at 30th April, 2023 … …
52,376
89,798
6,576
22,637
171,387
Depreciation
Balance at 1st May, 2022 … … …
Charged in year … … … … …
Transfer to / from ROU*
… … …
Disposals … … … … … …
Exchange adjustment … … … …
10,710
1,437
-
(3)
(82)
50,472
4,335
14
(1,699)
(45)
5,057
500
94
(600)
(46)
Balance at 30th April, 2023 … …
12,062
53,077
5,005
-
-
-
-
-
-
66,239
6,272
108
(2,302)
(173)
70,144
Net book value
At 30th April, 2023
… … …
40,314
36,721
1,571
22,637
101,243
*Assets are transferred from the right-of-use assets category on the settlement of a lease purchase agreement
and payment of the option to purchase fee.
Additions
During the year the Group expended £21.18 million on property, plant and equipment. The major items
purchased during the year are expenditures on the infrastructure works for Goodwin Steel Castings; on our
new calciner plant at Hoben and plant for Duvelco.
Other equipment
Other equipment comprises motor vehicles, IT hardware and office equipment.
70
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
… … … … … … … … … … …
… … … … … … … … …
2023
£’000
4,280
18,357
22,637
2023
£’000
6,068
204
6,272
2022
£’000
1,823
8,042
9,865
2022
£’000
5,942
260
6,202
Security
Noreva GmbH's land and buildings, with a net book value of £2.9 million (2022: £2.6 million), and other land
within the Group with a net book value of £4.5 million (2022: £4.5 million) have been pledged as security for
borrowings listed in note 21. The Group has also pledged three furnaces, with a net book value of £4.8 million
(2022: £5.1 million) and a calciner with a net book value of £5.3 million (2022: £nil) as security for bank loans.
12. Right-of-use assets
Cost
Land and
buildings
£’000
Plant and
machinery
£’000
Other
equipment
£’000
Balance at 1st May, 2021
… … …
Additions … … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
2,728
123
(107)
17
721
3,215
(35)
(18)
1,459
385
-
(2)
Total
£’000
4,908
3,723
(142)
(3)
Balance at 30th April, 2022
2,761
3,883
1,842
8,486
Depreciation
Balance at 1st May, 2021… … … …
Charged in year … … … … …
Disposals … … … … … …
Exchange adjustment … … … …
Net book value
At 1st May, 2021 … … … … …
At 30th April, 2022 … … … …
Cost
Balance at 1st May, 2022
… … …
Additions … … … … … …
Transfer to / from property, plant and equipment
Disposals … … … … … …
Exchange adjustment … … … …
785
457
(107)
(1)
1,134
1,943
1,627
2,761
6
-
(79)
(42)
224
351
-
(5)
570
497
3,313
3,883
1,316
336
(107)
24
208
384
-
(1)
1,217
1,192
(107)
(7)
591
2,295
1,251
3,691
1,251
6,191
1,842
197
(191)
(24)
5
8,486
1,519
145
(210)
(13)
Balance at 30th April, 2023
2,646
5,452
1,829
9,927
Depreciation
Balance at 1st May, 2022
… … …
Charged in year … … … … …
Transfer to property, plant and equipment
Disposals … … … … … …
Exchange adjustment … … … …
Balance at 30th April, 2023
Net book value
1,134
480
-
(79)
(24)
1,511
570
289
(14)
(107)
10
748
591
429
(94)
(24)
3
2,295
1,198
(108)
(210)
(11)
905
3,164
At 30th April, 2023
1,135
4,704
924
6,763
71
NOTES TO THE FINANCIAL STATEMENTS
12. Right-of-use assets (continued)
Depreciation
Depreciation is reported as follows:
Cost of sales
Administrative expenses
… … … … … … … … … … …
… … … … … … … … …
2023
£’000
731
467
1,198
2022
£’000
735
457
1,192
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 … … … …
Goodwin Refractory Services India 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 34.
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 34.
During the previous 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 51.
72
NOTES TO THE FINANCIAL STATEMENTS
13. Investments in subsidiaries (continued)
Non-controlling interests (NCI) (continued)
The Board considers a material company to be one that has either 10% of the EBITDA or 10% of the net assets of
the Group. As such, the Board does not consider any of its subsidiary companies, which have non-controlling
interests, to be material. The financial information on all 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, to provide additional information on these companies.
Non-controlling interests (NCI) – movements in reserves by segment
Year ended 30th April, 2023
Year ended 30th April, 2022
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 … … …
(264)
873
609
(463)
1,103
640
-
(556)
(556)
-
(808)
(808)
(927)
5,337
4,410
(690)
5,123
4,433
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, 2023
Year ended 30th April, 2022
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Mechanical
Engineering
£’000
Refractory
Engineering
£’000
Total
£’000
13,273
25,908
11,148
16,882
(6,587)
(19,606)
(110)
(1,214)
Total
£’000
15,391
23,088
11,955
16,264
(6,822)
(18,473)
(305)
(744)
3,436
6,824
(11,651)
(439)
2,125
9,026
(13,019)
(1,104)
Non-current assets …
Current assets … …
Current liabilities …
Non-current liabilities
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 …
(2,972)
21,333
18,361
(1,830)
21,092
19,262
19,692
24,814
44,506
7,655
23,455
31,110
(1,191)
3,481
2,290
(2,013)
4,356
2,343
(1,240)
3,922
2,682
(1,571)
3,544
1,973
(212)
2,357
2,145
(324)
3,072
2,748
(8)
(23)
(255)
(263)
-
(181)
(181)
(3,059)
(3,082)
(32)
(3,307)
(3,339)
73
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, 2023 was £65,000
(2022: £63,000).
Summary financial information of the Group’s share of its associate company is as follows:
Balance at 1st May
… … … … … … … … … …
Profit before tax … … … … … … … … … … …
Tax … … … … … … … … … … … … …
Exchange adjustment … … … … … … … … … …
Balance at 30th April… … … … … … … … … …
Assets
… … … … … … … … … … … …
Liabilities … … … … … … … … … … … …
2023
£’000
896
79
(14)
3
964
974
(10)
964
2022
£’000
829
75
(12)
4
896
914
(18)
896
15. Intangible assets
Cost
Balance at 1st May, 2021
Additions … … …
Disposals … … …
Exchange adjustment …
Brand
names
intellectual
property
£’000
and Manufact-
uring
rights
£’000
Software
and
Licences
£’000
Develop-
ment
costs
£’000
Total
£’000
9,645
159
-
(142)
5,493
-
(594)
-
1,391
123
(3)
(11)
9,821
1,505
-
-
36,568
1,787
(597)
(361)
Goodwill
£’000
10,218
-
-
(208)
Balance at 30th April, 2022
10,010
9,662
4,899
1,500
11,326 37,397
Amortisation and impairment
Balance at 1st May, 2021
Amortisation for the year
Impairment
… …
Disposals … … …
Exchange adjustment …
339
-
-
-
-
6,463
511
-
-
(140)
2,563
324
-
(594)
1
1,046
163
-
(3)
(11)
1,344
559
15
-
-
11,755
1,557
15
(597)
(150)
Balance at 30th April, 2022
339
6,834
2,294
1,195
1,918 12,580
Net book value
At 1st May, 2021 … …
At 30th April, 2022
…
Cost
Balance at 1st May, 2022
Additions … … …
Disposals … … …
Exchange adjustment …
9,879
9,671
10,010
-
-
61
3,182
2,828
9,662
525
-
3
2,930
2,605
4,899
56
-
-
345
305
8,477
24,813
9,408
24,817
1,500
47
(121)
18
11,326
1,196
-
-
37,397
1,824
(121)
82
Balance at 30th April, 2023
10,071
10,190
4,955
1,444
12,522 39,183
Amortisation and impairment
Balance at 1st May, 2022
Amortisation for the year
Disposals … … …
Exchange adjustment
Balance at 30th April, 2023
Net book value
339
-
-
-
339
6,834
280
-
-
2,294
316
-
-
1,195
139
(120)
17
1,918
522
-
-
12,580
1,257
(120)
17
7,114
2,610
1,231
2,440 13,734
At 30th April, 2023
…
9,732
3,076
2,345
213
10,082 25,448
74
Mechanical Engineering
Duevelco
Noreva
Easat Group
Other
12,156
4,172
395
-
Refractory Engineering
Goodwin Refractory
Services Holdings Ltd 3,993
Perlite and
vermiculite
Castaldo
Other
828
217
-
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 intangible assets
The Group tests intangible assets annually for impairment or more frequently if there are indications that an
intangible asset might be impaired. For the purpose of impairment testing, an intangible asset is allocated
to the relevant subsidiary (cash generating unit (“CGU”), which is the lowest level within the Group at which
the intangible asset is monitored for internal management purposes.
2023
2022
Property
plant and
equipment Goodwill
£’000
£’000
Other
intangible
assets
(excluding
software)
£’000
Property
plant and
Total
£’000
equipment Goodwill
£’000
£’000
Other
intangible
assets
(excluding
software)
£’000
-
4,623
1,228
-
1,837 13,993
8,795
4,673
3,102
-
3,050
3,102
3,180
3,669
474
-
-
4,575
1,215
-
1,401
-
3,254
3,285
Total
£’000
4,581
8,244
4,943
3,285
3,346
23
7,362
4,340
3,346
-
7,686
-
-
535
1,801
1,739
3,951
2,629
1,956
4,486
946
298
-
-
535
2,034
1,841
3,027
2,980
2,139
3,561
Total
21,761
9,732
15,503 46,996
12,907
9,671
14,842
37,419
An impairment test is a comparison of the carrying value of the assets of a CGU to their recoverable amount,
based on a value-in-use calculation. The 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 an intangible asset was separately assessed and tested for impairment.
As part of testing intangible assets 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, such as increases in revenue and / or increases in gross margin,
whichever is relevant to that CGU, consistent with the profit forecasts of the CGU for the next five years.
The growth rates are identified by experienced managers within that CGU, who have significant experience
and knowledge of that CGU and its market place. In the current and previous financial year, a zero growth
rate has been 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 for that CGU. Further sensitivity
tests are then performed reducing the discounted cash flows by 10%, which the Group sees as being an
appropriate reduction due to the prudent forecasts that it has already used within the testing, 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.
75
NOTES TO THE FINANCIAL STATEMENTS
15. Intangible assets (continued)
Impairment testing for cash-generating units containing intangible assets (continued)
The table below shows the range of rates used in the impairment testing.
Mechanical Engineering
Growth rates
… … … … … … … … … … …
Pre-tax weighted average cost of capital … … … … … … …
Refractory Engineering
Growth rates
… … … … … … … … … … …
Pre-tax weighted average cost of capital … … … … … … …
2023
£’000
0-8%
11-13%
2022
£’000
0-15%
12-15%
0-6%
12%
0-4%
12-13%
Strategic investments in new and high growth CGUs are excluded from the growth rates above as the
percentage growth from nil is not meaningful. This predominantly relates to one CGU with an investment
of £14 million, for new products where the Group is forecasting the revenues to increase significantly.
The growth being forecasted for this CGU is significantly higher than the other more established CGUs,
whereby including them in the table would distort the growth forecast reported for the established CGUs.
This growth expectation is described as a key judgement in note 2. We have reviewed the forecasted
revenues of these sensitive CGUs and then stressed the revenues by reducing them to less than 50% of
the expected forecasted revenues and can confirm that at these dramatically reduced revenue levels none
of the three intangible assets would need to be impaired.
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.
Duvelco
The Company has invested circa £14 million in the area of high performance polymer resins. The Company will
commence a period of testing and commissioning of the plant in Q2 and Q3 of financial year 2024 before
any commercial activity takes place. The judgement of the Board is that the market potential here is 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.
16. Long-term derivative assets
Notes
Interest rate swap… … … … … … … … … … 28 (d)
Derivative assets designated as cash flow hedging instruments … … 28 (d)
17. Inventories
Net balances
Raw materials and consumables … … … … … … … …
Work in progress … … … … … … … … … … …
Finished goods … … … … … … … … … … …
Provisions held
Raw materials and consumables … … … … … … … …
Work in progress … … … … … … … … … … …
Finished goods … … … … … … … … … … …
2023
£’000
4,802
1,130
5,932
2023
£’000
23,101
13,001
11,853
47,955
(814)
(1,283)
(495)
(2,592)
2022
£’000
2,466
275
2,741
2022
£’000
19,828
10,161
10,375
40,364
(438)
(1,513)
(482)
(2,433)
Inventory impaired during the year … … … … … … … …
(1,099)
(1,390)
Release of inventory impairment … … … … … … … …
885
-
The prior year comparative for the provision against work in progress has been amended.
76
NOTES TO THE FINANCIAL STATEMENTS
18. Trade and other receivables
Balances due within one year
Trade receivables … … … … … … … … … …
Other financial assets … … … … … … … … …
Advance payments to suppliers
… … … … … … …
Prepayments and other non-financial assets … … … … …
… … … … … … …
Deferred tax asset (see note 26)
Balances due after more than one year
Trade receivables … … … … … … … … … …
Financial assets … … … … … … … … … …
Non-financial assets … … … … … … … … …
19. Derivative financial assets
…
…
…
…
…
…
…
…
Notes
Interest rate swap… … … … … … … … … … 28 (d)
Derivative assets designated as cash flow hedging instruments … … 28 (d)
Derivative assets not designated in a cash flow relationship … … … 28 (d)
2023
£’000
28,094
1,663
857
3,918
57
34,589
-
29,757
4,832
34,589
2023
£’000
1,127
1,429
128
2,684
The analysis between hedged and unhedged derivative assets in the previous year has been amended.
20. Cash and cash equivalents
Cash in hand
… … … … … … … … … … …
Bank balances … … … … … … … … … … …
2023
£’000
99
19,562
19,661
2022
£’000
22,529
1,188
1,235
3,635
60
28,647
1,191
24,908
4,930
29,838
2022
£’000
274
572
365
1,211
2022
£’000
73
11,578
11,651
21. 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, see note 28.
Year ended 30th April, 2023
Year ended 30th April, 2022
Non-current
liabilities
£’000
Current
liabilities
£’000
Total
liabilities
£’000
Non-current
liabilities
£’000
Current
liabilities
£’000
Total
liabilities
£’000
Bank overdrafts… …
-
119
119
-
-
-
6,985
1,154
8,139
8,059
1,005
9,064
Bank loans - repayable
by instalments … …
Bank loans - rolling
credit facilities … …
Other loans … …
Lease liabilities… …
4,271
47,256
36,000
3,500
39,500
-
28,000
-
4,317
40,376
-
202
1,557
2,764
28,000
202
5,874
43,140
-
1,956
6,729
-
6,227
53,985
77
NOTES TO THE FINANCIAL STATEMENTS
21. Borrowings (continued)
Reconciliation of liabilities arising from financing activities
Bank
overdrafts Bank loans - Bank loans -
used for cash repayable by rolling credit
instalments
management
£’000
£’000
£’000
facilities Other loans
£’000
5,299
-
3,817
(52)
26,000
-
2,000
-
-
-
202
-
Lease
liabilities
£’000
3,374
3,630
(1,153)
Total
£’000
34,673
3,630
4,866
23
(29)
9,064
28,000
202
5,874
43,140
9,064
28,000
202
-
-
-
-
-
-
(979)
11,500
(202)
(1,874)
5,874
2,242
43,140
2,242
-
119
8,445
Opening balance at
1st May, 2021 … …
Non-cash movements
Cash flows
… …
Foreign exchange
movement
… …
Closing balance
30th April, 2022
Opening balance at
1st May, 2022 … …
Non-cash movements
Change in bank
overdrafts
… …
Cash flows
… …
Foreign exchange
movement
… …
Closing balance
30th April, 2023
-
-
-
-
-
-
-
119
-
-
54
-
119
8,139
39,500
-
-
(15)
39
6,227
53,985
During the current year and previous year, additional leases have been taken out to fund ongoing Green
Projects.
Contractual undiscounted cash flows
Year ended 30th April, 2023
Year ended 30th April, 2022
Minimum
loan
payments
£’000
Interest
£’000
Principal
£’000
Bank loans - repayable
by instalments
Less than one year …
1,514
Between two and
three years
… …
Between four and
five years
… …
More than five years …
2,739
1,449
5,347
11,049
Lease liabilities
Less than one year …
2,231
Between two and
three years
… …
Between four and
five years
… …
More than five years …
3,160
1,182
268
6,841
1,154
2,140
986
3,859
8,139
1,956
2,871
1,138
262
6,227
360
599
463
1,488
2,910
275
289
44
6
614
78
Interest
£’000
Principal
£’000
Minimum
loan
payments
£’000
1,234
2,441
1,993
4,985
229
368
247
745
10,653
1,589
1,684
2,674
1,463
362
6,183
127
133
37
12
309
1,005
2,073
1,746
4,240
9,064
1,557
2,541
1,426
350
5,874
NOTES TO THE FINANCIAL STATEMENTS
22. Trade and other liabilities
Trade payables … … … … … … … … … … …
Other financial liabilities… … … … … … … … … …
Other taxation and social security … … … … … … … …
Accrued expenses… … … … … … … … … … …
Advance payments from customers … … … … … … … …
2023
£’000
… 22,400
988
…
1,776
…
6,062
…
539
…
2022
£’000
18,958
1,929
2,117
4,001
255
31,765
27,260
Financial liabilities… … … … … … … … … … …
Non-financial liabilities … … … … … … … … … …
… 25,164
6,601
…
23,004
4,256
31,765
27,260
23. Derivative financial liabilities
2023
Notes £’000
Derivative liabilities designated as cash flow hedging instruments … … … 28 (d) 1,773
610
Derivative liabilities not designated in a cash flow relationship … … … 28 (d)
24. Provisions
Balance at 1st May … … … … … … … … … …
Increase in provision … … … … … … … … … …
Release of provision … … … … … … … … … …
Provision utilised … … … … … … … … … … …
Exchange adjustment … … … … … … … … … …
Balance at 30th April… … … … … … … … … …
Warranty due within one year … … … … … … … … …
Warranty due after one year … … … … … … … … …
Balance at 30th April… … … … … … … … … …
2,383
2023
£’000
456
249
(216)
-
23
512
266
246
512
…
…
…
…
…
…
…
…
…
Provisions include warranties for products sold which generally cover a period of between 1 and 3 years.
25. Long-term derivative liabilities
Derivative liabilities designated as cash flow hedging instruments … … … 28 (d)
2023
Notes £’000
-
-
2022
£’000
2,144
249
2,393
2022
£’000
859
167
(408)
(144)
(18)
456
205
251
456
2022
£’000
1,643
1,643
79
NOTES TO THE FINANCIAL STATEMENTS
26. Deferred tax assets and liabilities
Deferred tax balances are attributable to the following:
Property, plant
and equipment … …
Intangible assets
…
Derivative financial
instruments … …
Tax losses
… …
Other temporary
differences
… …
Year ended 30th April, 2023
Year ended 30th April, 2022
Assets
£’000
Liabilities
£’000
Net
£’000
Assets
£’000
Liabilities
£’000
67
-
65
350
684
(10,159)
(10,092)
(2,021)
(2,021)
(144)
-
(148)
(79)
350
536
63
-
714
2,496
430
(8,344)
(2,186)
(702)
-
(122)
Net
£’000
(8,281)
(2,186)
12
2,496
308
1,166
(12,472)
(11,306)
3,703
(11,354)
(7,651)
Deferred tax balances are reported in the balance sheet as follows:
Deferred tax asset (see note 18)
… … … … … … …
Deferred tax liability … … … … … … … … …
…
…
2023
£’000
57
(11,363)
(11,306)
2022
£’000
60
(7,711)
(7,651)
Property,
plant and
equipment
£’000
Intangible
assets
£’000
Balance at
1st May, 2021
Recognised in
profit and loss
Recognised in
equity
Exchange
adjustment
(4,382)
(1,686)
(3,891)
(477)
-
(8)
-
(23)
Balance at
30th April, 2022
(8,281)
(2,186)
Balance at
1st May, 2022
Recognised in
profit and loss
Recognised in
equity
Exchange
adjustment
Balance at
30th April, 2023
(8,281)
(2,186)
(1,832)
165
-
21
-
-
Derivative
Share-
based
financial payments
reserve
£’000
instruments
£’000
Tax
Other
temporary
losses differences
£’000
£’000
Total
£’000
(436)
(666)
1,114
12
12
828
(919)
-
915
-
144
(5,445)
(915)
2,496
145
(3,308)
-
-
-
-
-
-
-
-
-
19
1,114
(12)
2,496
308
(7,651)
2,496
308
(7,651)
(2,146)
238
(2,747)
-
-
-
(919)
(10)
11
(10,092)
(2,021)
(79)
350
536 (11,306)
When share options are exercised, the Group claims a corporation tax deduction based on the notional cost
to the Group. To avoid distorting the tax charge in the statement of profit or loss, the release of the deferred
tax balance for the share based payment reserve was reported within the statement of profit or loss in the
previous year.
80
NOTES TO THE FINANCIAL STATEMENTS
26. Deferred tax assets and liabilities (continued)
Deferred tax assets not recognised on losses
Gross tax losses … … … … … … … … … …
Deferred tax assets not recognised … … … … … … …
…
…
2023
£’000
2,348
521
2022
£’000
2,364
500
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 and the assoicated
recoverability of tax losses is expected in the long-term, it is deemed prudent to not recognise a deferred tax
asset at this stage, as a result of the incertainty
27. Capital and reserves
Share capital
Authorised, allotted, called up and fully paid:
7,689,600 (2022: 7,526,400) ordinary shares of 10p each
… … … …
Issue of 163,200 ordinary shares of 10p each … … … … … …
2023 2022
£’000 £’000
769
-
769
753
16
769
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 35.
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.
Deferred tax
Aggregate deferred tax balances recognised in equity:
Derivative financial instruments
… … … … … … … …
Asset / (liability)
2023 2022
£’000 £’000
(196)
723
28. 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.
81
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
a) Credit risk (continued)
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 after more than one year …
Derivative financial assets – due within one year … … …
Notes
4
18
18
20
16
19
2023
£’000
16,257
29,757
-
19,661
5,932
2,684
2022
£’000
12,331
23,717
1,191
11,651
2,741
1,211
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 … … … … … … … … … …
2023
£’000
7,663
4,799
3,267
6,315
6,050
2022
£’000
3,603
4,053
1,506
5,080
9,478
28,094
23,720
The ageing of trade receivables and impairments at the reporting date was:
Net
£’000
Not past due … … … 18,666
4,940
Past due 1-30 days … …
2,409
Past due 31-90 days… …
2,079
Past due more than 90 days
2023
Gross
£’000
18,666
4,942
2,440
2,288
Impairment
provision
£’000
(2)
(31)
(209)
2022
Gross
£’000
13,979
4,962
2,613
2,866
Impairment
provision
£’000
(46)
(82)
(283)
(289)
Net
£’000
13,933
4,880
2,330
2,577
28,094
28,336
(242)
23,720
24,420
(700)
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 … … … … … … … …
2023
£’000
700
74
(362)
(164)
(6)
242
2022
£’000
548
470
(342)
-
24
700
82
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
At the year end the Group had the following unutilised bank facilities in respect of which all conditions
precedent had been met:
Uncommitted
£’000
2023
Committed
£’000
Total
£’000
Uncommitted
£’000
Committed
£’000
Total
£’000
2022
Unutilised bank
facilities
6,050
33,500
39,550
6,050
16,500
22,550
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.
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.
Contractual cash flows
Within
1 year 2-3 years 4-5 years 5+ years
£’000
£’000
£’000
£’000
Carrying
value
Total
£’000
Total
£’000
… … …
Non-derivative financial liabilities
Bank loans - repayable
by instalments
Bank loans - rolling
credit facilities
… … …
Other loans … … … …
Lease liabilities
… … …
Trade and other
financial liabilities … … …
1,234
-
202
1,684
2,441
1,993
4,985
10,653
9,064
9,000
-
2,673
19,000
-
1,464
-
-
362
28,000
202
6,183
28,000
202
5,874
23,004
-
-
-
23,004
23,004
At 30th April, 2022 … …
26,124
14,114
22,457
5,347
68,042
66,144
… … …
Bank loans - repayable
by instalments
Bank loans - rolling
credit facilities
Lease liabilities
Trade and other
financial liabilities … … …
… … …
… … …
1,514
3,500
2,231
2,739
1,449
5,347
11,049
8,139
27,000
3,160
9,000
1,182
-
268
39,500
6,841
39,500
6,227
25,164
-
-
-
25,164
25,164
At 30th April, 2023 … …
32,409
32,899
11,631
5,615
82,554
79,030
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 £1.3 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% (2022: 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 6.21% (2022: 2.55%), which will vary over the loan
period.
83
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
c) Market risk
Foreign exchange risk
The Group is subject to fluctuations in exchange rates on its net investments overseas and transactional
monetary assets and liabilities not denominated in the operating (or “functional”) currency of the operating
unit involved.
The Group is exposed to fluctuations in several currencies which give rise to the net currency gains and
losses recognised in the 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:
The table below does not include the exposure from hedging positions. The foreign currency balances have
been translated into Sterling using the reporting date spot rates below.
2023
US
Dollar
£’000
Euro
£’000
Other
£’000
Total
£’000
US
Dollar
£’000
2022
Euro
£’000
Other
£’000
7,615
2,807
77
10,499
6,193
2,242
1,195
3,508
350
5,053
1,388
14
51
74
Total
£’000
8,486
1,476
(823)
(808)
(72)
(1,703)
(1,121)
(965)
(24)
(2,110)
7,987
5,507
355
13,849
6,460
1,291
101
7,852
Trade and other
receivables
Cash and cash
equivalents
Trade and other
payables
The following significant exchange rates applied during the year, for reporting purposes;
US Dollar … … … … …
Euro … … … … … …
2023
2022
Average
exchange rate
1.2016
1.1520
Reporting
date spot rate
1.2566
1.1390
Average
exchange rate
1.3591
1.1791
Reporting
spot rate
1.2570
1.1920
84
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
c) Market risk (continued)
Interest rate risk
The Group is subject to fluctuations in interest rates on its borrowings and surplus cash. The Group is
aware of the financial products available to 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.
2023
Non-
Fixed Floating interest-
rate bearing
£’000
rate
£’000
£’000
Total
£’000
Fixed
rate
£’000
Floating
rate
£’000
2022
Non-
interest-
bearing
£’000
Total
£’000
Cash and cash
equivalents
Contract assets
Trade and financial
assets
Derivative assets
Contract liabilities*
Trade and other
financial liabilities
Derivative liabilities
Bank overdrafts
Bank loans -
-
-
-
-
-
-
-
-
19,661
-
-
16,257
19,661
16,257
-
-
-
29,757
8,616
(32,747)
29,757
8,616
(32,747)
-
-
(119)
(25,164)
(2,383)
-
(25,164)
(2,383)
(119)
-
-
-
-
-
-
-
-
11,651
-
-
12,331
11,651
12,331
-
-
-
-
-
-
24,908
3,952
(14,749)
(23,004)
(4,036)
-
repayable by
instalments
Bank loans -
rolling credit
facilities
Other loans
Lease liabilities
(3,920)
(4,219)
-
-
(1,880)
(39,500)
-
(4,347)
-
-
-
(8,139)
(4,564)
(4,500)
(39,500)
-
(6,227)
-
(202)
(2,280)
(28,000)
-
(3,594)
-
-
-
-
24,908
3,952
(14,749)
(23,004)
(4,036)
-
(9,064)
(28,000)
(202)
(5,874)
(5,800)
(28,524)
(5,664)
(39,988)
(7,046)
(24,443)
(598)
(32,087)
*The majority of contract liabilities are advance payments from customers.
85
NOTES TO THE FINANCIAL STATEMENTS
28. 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, 2023, the capital used was
£157.6 million, (2022: £145.1 million) as shown in the following table:
Cash and cash equivalents … … … … … …
Other loans
… … … … … … … …
Total lease liabilities … … … … … … …
Bank overdrafts … … … … … … … …
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
2023
£’000
(19,661)
-
6,227
119
8,139
39,500
2022
£’000
(11,651)
202
5,874
-
9,064
28,000
34,324
(1,502)
31,489
(1,704)
32,822
124,747
29,785
115,310
157,569
145,095
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, 2023 net
debt was £32.8 million (2022: £29.8 million). The gearing ratio is 26.3% (2022: 25.8%).
The Group manages its capital structure and makes adjustments to it with regard to the risks inherent in the
business and in light of changes to economic conditions.
Working capital is managed in order to generate maximum conversion of profits into cash and cash
equivalents. Dividends are 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 28 (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.
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. The prior year analysis of the unhedged
and hedged assets due within one year has been amended.
86
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
d) Capital management (continued)
Interest rate swaps (continued)
Expected cash flow
Within
1 year
£’000
2-3
years
£’000
4-5
years
£’000
5+
years
£’000
Carrying Nominal
Value
£’000
value
£’000
Total
£’000
Interest rate swap
Assets
Forward exchange
contracts
Not designated
in cash flow
relationship
Assets
Liabilities
Designated
in cash flow
relationship
Assets
Liabilities
Total as at
30th April, 2022
Interest rate swap
Assets
Forward exchange
contracts
Not designated
in cash flow
relationship
Assets
Liabilities
Designated
in cash flow
relationship
Assets
Liabilities
Total as at
30th April, 2023
274
858
590
1,018
2,740
2,740
30,000
365
(249)
116
-
-
-
572
(2,144)
275
(1,643)
(1,572)
(1,368)
-
-
-
-
-
-
-
-
-
-
-
-
365
(249)
116
365
(249)
2,668
12,132
116
14,800
847
(3,787)
847
(3,787)
8,012
48,475
(2,940)
(2,940)
56,487
(1,182)
(510)
590
1,018
(84)
(84)
101,287
1,127
1,707
1,312
1,783
5,929
5,929
30,000
128
(610)
(482)
-
-
-
-
-
-
1,429
(1,773)
(344)
997
-
997
133
-
133
-
-
-
-
-
-
128
(610)
128
(610)
8,044
5,369
(482)
(482)
13,413
2,559
(1,773)
2,559 107,031
35,644
(1,773)
786
786 142,675
301
2,704
1,445
1,783
6,233
6,233 186,088
87
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
d) Capital management (continued)
Cash flow hedging reserve and cost of hedging reserve
Change in value used to calculated hedge ineffectiveness
… …
Net value of derivatives designated in cash flow relationship … …
… …
Matured derivative contracts … … … … …
… …
Deferred tax balance recognised in equity … … …
Cash flow hedge reserve … … … … … …
Cost of hedging reserve … … … … … …
… …
… …
Non-controlling interests
Cash flow hedge reserve
Attributable to equity holders of the parent … … …
… … …
Attributable to non-controlling interests
… …
… …
Cost of hedging reserve
Attributable to equity holders of the parent … … …
… … …
Attributable to non-controlling interests
… …
… …
…
…
…
…
…
…
…
…
…
…
2022
£’000
… (4,077)
…
…
…
786
(72)
(196)
2021
£’000
(3,037)
(2,940)
(423)
723
518
(2,640)
… 1,492
(974)
…
(2,788)
148
518
(2,640)
… 1,504
(12)
…
(2,746)
(42)
1,492
(2,788)
…
…
(976)
2
(974)
140
8
148
The matured derivative contracts carried forward as part of the hedge reserve are those where the hedge
was still effective at maturity but the underlying transactions had not occurred.
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. As foreign exchange rates and
interest rates continue to fluctuate significantly, the Board considers it most appropriate to provide the
sensitivities for a 1% change, because 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, 2023
Year ended 30th April, 2022
(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 …
(428)
(53)
428
53
200
(597)
(37)
597
37
-
(207)
68
207
(68)
-
…
…
…
…
…
(845)
(67)
845
67
-
88
NOTES TO THE FINANCIAL STATEMENTS
28. 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, 2023 and 30th April, 2022.
Financial assets
Year ended 30th April, 2023
Year ended 30th April, 2022
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 … … … …
19,661
16,257
28,094
1,663
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
128
5,929
2,559
Total financial assets
… … …
74,291
Financial liabilities at amortised cost
Contract liabilities
… … … …
Trade payables … … … … …
Other financial liabilities
… … …
Lease liabilities … … … … …
Bank overdrafts … … … … …
Bank loans - repayable by instalments …
Bank loans - rolling credit facilities … …
… … … … …
Other loans
32,747
22,400
2,764
6,227
119
8,139
39,500
-
19,661
16,257
28,094
1,663
11,651
12,331
23,720
1,188
11,651
12,331
23,720
1,188
128
5,929
365
2,740
365
2,740
2,559
74,291
32,747
22,400
2,764
6,227
119
8,139
39,500
-
847
52,842
14,749
18,958
4,046
5,874
-
9,064
28,000
202
847
52,842
14,749
18,958
4,046
5,874
-
9,064
28,000
202
610
610
247
247
At fair value through the profit and loss
Derivative financial liabilities not designated in
a cash flow hedge relationship
… …
Fair value – hedging instrument
Derivative financial liabilities designated and
effective as cash flow hedging instruments
Total financial liabilities … … … 114,279
114,279
1,773
1,773
3,787
84,927
3,787
84,927
The analysis between hedged and unhedged derivative assets in the previous year has been amended.
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.
89
NOTES TO THE FINANCIAL STATEMENTS
29. Capital commitments
Contracted capital commitments at 30th April, 2023 for which no provision has been made in these financial
statements were £4,576,000 (2022: £8,393,000).
30. Guarantees and contingencies
The table below sets out the number and value of unexpired bank guarantee bonds as at 30th April, 2023
and 30th April, 2022. These guarantee bonds are required as part of the terms and conditions within our
Mechanical Engineering contracts.
146 guarantee and bonds contracts (2022: 148) … … … … …
31. Subsequent events
2023
£’000
9,180
2022
£’000
6,586
After the balance sheet date an ordinary dividend of 115p per qualifying ordinary share was proposed by
the Directors (2022: Ordinary dividend of 107.80p).
The current year proposed ordinary dividend of £8,636,000 has not been provided for within these financial
statements (2022: Proposed ordinary dividend of £8,289,000 was not provided for within the comparative
figures).
The company announced on 5th May, 2023 that it was proceeding with a Tender offer to tender up to 180,000 of
its ordinary shares at the tender price of £48 per ordinary share. The tender offer was subsequently approved
at a General Meeting that was held on 30th May, 2023 and the following day the offer ended. The offer was
oversubscribed by 229% and, of the total number of Ordinary Shares validly tendered, all 180,000 Ordinary
Shares have been purchased by the Company and on 7th June, 2023 were cancelled off the register.
The total cost of Ordinary Shares purchased was £8.64 million. The resulting number of shares as at the
signing date is 7,509,600.
32. Non-principal subsidiaries and associates
Company name
Non-principal Subsidiaries:
Mechanical Engineering:
Easat Radar Systems India Private Limited
4
Goodwin Submersible Pumps West Africa Limited … 18
Refractory Engineering:
Gold Star Brazil Limited
… … … … …
8
4
Gold Star Powders Private Limited … … … …
Jewelry Wax Limited … … … … … … 14
GRS Silicone Company Limited … … … … 17
16
Shenzhen King-Top Modern Hi-Tech Company Limited
… …
Non-principal holding companies:
Goodwin Refractory Services Holdings Limited… …
Ying Tai (UK) Limited … … … … … …
Non-principal Associates:
Tet Goodwin Property Company Limited … … … 11
1
1
Dormant companies:
Gold Star Powders Limited … … … … …
Net Central Limited … … … … … …
Sandersfire International Limited … … … …
Soluform Limited
… … … … … …
Specialist Refractory Services Limited … … …
1
1
1
1
1
Registered Country of
address*
Incorporation
Class of
shares held % held
India
Ghana
Brazil
India
Thailand
China
China
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
England and Wales Ordinary
100
100
100
100
75
75
75
100
75
49
100
100
100
100
100
*The registered address for each company can be found in note 34.
All of the above companies are included as part of the consolidated accounts. The trading companies are all involved
in mechanical or refractory engineering.
33. Related parties
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not
reported in this note. Year end balances and transactions during the year with the Group’s associate
company, Tet Goodwin Property Company Limited, are shown below.
2023 2022
£’000 £’000
301
… … … … …
Rental cost …
318
…
…
…
…
…
90
NOTES TO THE FINANCIAL STATEMENTS
34. Registered offices of subsidiaries and associates
The registered offices of the companies listed in notes 13 and 32 are listed below.
Ivy House Foundry, Hanley, Stoke-on-Trent ST1 3NR
1.
2. Brassington, Nr. Matlock, Derbyshire DE4 4HF
3. 13-1, Jungbong-daero, 396 Beon-Gil, Seo-gu, Incheon, South Korea
4. 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
18. 11, NII Ablade Kotey Avenue, East Legon, Accra, Ghana
35. Share-based payment transactions
The Group had one share option scheme, the LTIP, the terms of which are outlined in the Directors’ Remuneration
Policy and Report on page 37. 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 … … … … … … … … -
2023
2022
489,600
Outstanding at beginning of year … … … … … … … … -
163,200
Exercised during the year … … … … … … … … -
163,200
Exerciseable at end of year … … … … … … … … -
£
-
£
Share price at the date of exercise … … … … … … … … -
30.70
91
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY BALANCE SHEET
at 30th April, 2023
NON-CURRENT ASSETS
Property, plant and equipment … … … … … …
Investment properties … … … … … … …
Right-of-use assets… … … … … … … …
Investments … … … … … … … … …
Intangible assets … … … … … … … …
Derivative financial assets
… … … … … …
Group receivables … … … … … … … …
CURRENT ASSETS
Other receivables … … … … … … … …
Derivative financial assets
… … … … … …
Cash at bank and in hand
… … … … … …
Notes
C4
C4
C4
C5
C6
28, C7
C8
C8
28, C7
2023
£’000
42,946
30,547
4,817
25,822
16,108
4,802
31,756
2022
£’000
33,696
26,805
4,085
25,822
15,681
2,466
30,177
156,798
138,732
938
1,127
12,962
15,027
1,178
274
851
2,303
TOTAL ASSETS
… … … … … … … …
171,825
141,035
CURRENT LIABILITIES
Borrowings … … … … … … … … …
Other payables … … … … … … … …
NON-CURRENT LIABILITIES
Borrowings … … … … … … … … …
Deferred income … … … … … … … …
Deferred tax liabilities … … … … … … …
C9
C10
C9
C11
6,053
19,743
25,796
2,086
6,446
8,532
45,074
38,053
780
8,300
803
5,052
54,154
43,908
TOTAL LIABILITIES … … … … … … … …
79,950
52,440
NET ASSETS … … … … … … … … …
91,875
88,595
EQUITY
Called up share capital … … … … … … …
C12
Share-based payments reserve
… … … … …
Profit and loss account … … … … … … …
769
5,244
85,862
769
5,244
82,582
TOTAL EQUITY
… … … … … … … …
91,875
88,595
Profit after tax for the year … … … … … … …
11,569
12,443
The comparative figures have been amended to report the Group receivable balances as non-current assets.
These financial statements were approved by the Board of Directors on 7th August, 2023 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 94 to 103 form part of these financial statements.
92
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2023
YEAR ENDED 30TH APRIL, 2023
Balance at 1st May, 2022
Total comprehensive income:
Profit for the year
… … … … …
… … … …
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Dividends paid … … … … … …
Share-
based
payments
reserve
£’000
Share
capital
£’000
Retained
earnings
£’000
Total
equity
£’000
769
5,244
82,582
88,595
-
-
-
-
-
-
11,569
11,569
11,569
(8,289)
11,569
(8,289)
BALANCE AT 30TH APRIL, 2023
769
5,244
85,862
91,875
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 … … … … … …
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
93
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, with the par value of ordinary shares being reported as
share capital.
94
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.
Before being brought into use, assets are assessed individually to determine which is the most appropriate
depreciation method. At present, most assets are being depreciated on a reducing balance basis.
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 deferred income. 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:
95
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.
96
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
… … … … … … …
2023
£’000
2022
£’000
80
66
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
2023 2022
Administration staff … … … … … … … … … … 51 50
2023 2022
£’000 £’000
The aggregate payroll costs of these persons were as follows:
Wages and salaries … … … … … … … … … … 4,951 4,293
Social security costs … … … … … … … … … … 616 1,199
Other pension costs … … … … … … … … … … 99 103
5,666 5,595
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on page 35.
The emoluments of the highest paid Director were £406,000 (2022: £374,000). The number of Directors
who were members of a defined contribution pension scheme was 3 (2022: 6). The social security costs
include £nil million (2022: £0.7 million) in respect of employer’s national insurance relating to exercised
share options under the Executive Directors’ Equity Long Term Incentive Plan.
97
NOTES TO THE FINANCIAL STATEMENTS
C4
Tangible fixed assets
Investment
properties
Property, Plant and Equipment
Cost
Balance at 1st May, 2022
… …
Additions
Reclassification … …
Transfer to - ROU** …
£’000
34,575
292
4,511
-
Other
Land and Plant and equipment
buildings machinery
£’000
£’000
£’000
Assets in
course of
* construction
£’000
Total
£’000
5,753
2
(4,511)
-
40,857
1,429
178
-
1,941
76
-
-
6,951
14,791
(178)
(366)
55,502
16,298
(4,511)
(366)
Balance at 30th April, 2023 39,378
1,244
42,464
2,017
21,198 66,923
Depreciation
Balance at 1st May, 2022
Charged in the year …
7,770
1,061
702
22
19,679
2,030
1,425
119
Balance at 30th April, 2023
8,831
724
21,709
1,544
-
-
21,806
2,171
- 23,977
Net book value
At 30th April, 2022 …
26,805
5,051
21,178
At 30th April, 2023
30,547
520
20,755
516
473
6,951
33,696
21,198 42,946
* Other equipment comprises motor vehicles, IT hardware and office equipment.
** This is a transfer to the right-of-use assets category, relating to ongoing investment in Green Projects.
Land with a net book value of £4.5 million (2022: £4.5 million) and furnaces with a net book value of
£4.8 million (2022: £5.1 million) has been pledged as security for bank loans (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, 2023 was estimated to be £62 million (2022: £51 million), compared with the
net book value of £31 million (2022: £27 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.
Investment property income and operating expenses
The Company rents investment properties to its UK subsidiaries. There are no formal agreements in place
and for this reason, it is not possible to disclose a maturity analysis of lease payments.
2023 2022
£’000 £’000
1,472
Property income … … … … …
(876)
… … … …
Operating expenses
1,503
(819)
…
…
…
…
…
…
…
…
…
…
98
NOTES TO THE FINANCIAL STATEMENTS
C4
Tangible fixed assets (continued)
Right-of-use assets
Plant and
machinery
£’000
Other
equipment
£’000
Cost
Balance at 1st May, 2022 … … … … …
Additions
… … … … … … …
Transfer from property, plant and equipment… …
Balance at 30th April, 2023
Depreciation
Balance at 1st May, 2022 … … … … …
Charged in the year … … … … … …
Balance at 30th April, 2023
Net book value
At 30th April, 2022 … … … … … …
At 30th April, 2023
3,215
728
366
4,309
215
162
377
3,000
3,932
Total
£’000
4,781
926
366
1,566
198
-
1,764
6,073
481
398
696
560
879
1,256
1,085
4,085
885
4,817
C5
Fixed asset investments
Cost
Balance at 1st May, 2022 … … … … …
Balance at 30th April, 2023
Impairment
Balance at 1st May, 2022 … … … … …
Balance at 30th April, 2023
Net book value
At 30th April, 2022 … … … … … …
At 30th April, 2023
Shares in
associated
undertakings
£’000
Shares in
Group
undertakings
£’000
Total
£’000
237
237
-
-
237
237
31,498
31,735
31,498
31,735
5,913
5,913
5,913
5,913
25,585
25,822
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 32 of the Group financial statements.
99
NOTES TO THE FINANCIAL STATEMENTS
C6
Intangible assets
Brand names
and Manu-
intellectual facturing
property rights
£’000 £’000
Software
and
Licences
£’000
Develop-
ment
costs Total
£’000 £’000
Cost
Balance at 1st May, 2022 … … 8,043 1,653
Additions … … … … 525 19
Intercompany transfers … … - -
Disposals … … … … - -
495
11
-
(96)
10,725 20,916
556 1,111
370 370
(222) (318)
Balance at 30th April, 2023 8,568 1,672
410
11,429 22,079
Amortisation
Balance at 1st May, 2022 … … 1,897 1,120
Amortisation for the year … … 354 68
Disposals … … … … - -
336
61
(96)
1,882 5,235
571 1,054
(222) (318)
Balance at 30th April, 2023 2,251 1,188
301
2,231 5,971
Net book value
At 30th April, 2022 … … … 6,146 533
At 30th April, 2023 6,317 484
159
109
8,843 15,681
9,198 16,108
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 28 of
the Group financial statements.
C8
Debtors
Due after more than one year
Interest-bearing
Amounts owed by Group undertakings – repayable within five years … …
Non interest-bearing
Amounts owed by Group undertakings – repayable within five years … …
Due within one year
Other debtors … … … … … … … … … … …
Prepayments and accrued income
… … … … … … …
Corporation tax receivable… … … … … … … … …
2023
£’000
2022
£’000
8,495
7,767
23,261
22,410
31,756
30,177
166
653
119
938
383
695
100
1,178
Amounts owed by Group undertakings are considered to be repayable within five years, as the Company
supports the working capital requirements of the Group undertakings and repayment is required by the
Company only when there are excess funds within each specific Group undertaking. The comparative
figures have been adjusted to correct the analysis between interest bearing and non-interest bearing
balances owed by Group undertakings, and to show all group receivable balances as being due after
more than one year.
100
NOTES TO THE FINANCIAL STATEMENTS
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 28 (d) of
the Group financial statements.
2023
2022
Bank overdrafts … … …
Bank loans repayable
by instalments … … …
Bank loans - rolling
credit facilities … … …
Other loans
… … …
Lease liabilities … … …
Current
Non-
current
Non-
current
liabilities liabilities borrowings liabilities
£’000
-
£’000
-
£’000
119
£’000
119
Total
Current
Total
liabilities borrowings
£’000
-
£’000
-
5,906
1,026
6,932
6,988
36,000
-
3,168
3,500
-
1,408
39,500
-
4,576
28,000
-
3,065
937
-
202
947
7,925
28,000
202
4,012
45,074
6,053
51,127
38,053
2,086
40,139
Lease liabilities
Lease liabilities are payable as follows:
Less than one year … …
Between two and
three years
Between four and
five years
… … …
… … …
2023
2022
Minimum
lease
payments
£’000
1,644
Interest Principal
£’000
1,408
£’000
236
Minimum
lease
payments
£’000
1,033
Interest Principal
£’000
947
£’000
86
2,551
251
2,300
897
29
868
1,954
1,218
88
19
1,866
1,199
5,092
516
4,576
4,205
193
4,012
Bank loan repayable by instalments
The loans are secured against three furnaces and land (see note C4). Bank loans are payable as follows:
2023
2022
Minimum
loan
payments
£’000
1,362
Interest Principal
£’000
1,026
£’000
336
Minimum
loan
payments
£’000
1,145
Interest Principal
£’000
937
£’000
208
2,527
559
1,968
2,267
330
1,937
1,275
4,503
431
1,409
844
3,094
1,824
4,096
214
655
1,610
3,441
9,667
2,735
6,932
9,332
1,407
7,925
Less than one year … …
Between two and
three years
Between four and
five years
… … …
More than five years … …
… … …
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 … … … … … … … …
101
2023
£’000
852
5,200
12,622
365
12
692
19,743
2022
£’000
966
4,526
14
335
245
360
6,446
NOTES TO THE FINANCIAL STATEMENTS
C11 Provisions for deferred tax
Property,
plant and
equipment
£’000
Balance at 1st May, 2022 … … … 6,865
… … 1,785
Recognised in profit or loss
Tax
losses
£’000
(2,496)
2,146
Derivatives
£’000
685
(685)
Other
£’000
(2)
2
Total
£’000
5,052
3,248
Balance at 30th April, 2023
8,650
(350)
-
-
8,300
C12 Called up share capital
Authorised, allotted, called up and fully paid:
Balance at 1st May, 2022, 7,689,600 (2022: 7,526,400 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 35 of the Group financial statements.
2023
£’000
769
-
769
2022
£’000
753
16
769
C13 Contingent liabilities
The Company is jointly and severally liable for value added tax due by other members of the Group
amounting to £Nil (2022: £Nil).
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, 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.
2023
£’000
2022
£’000
Related party balances
Interest-bearing balances
Amounts owed by Group undertakings – repayable within five years
Non interest-bearing balances
Amounts owed by Group undertakings – repayable within five years
Non interest-bearing payable balances
Amounts owed by Group undertakings – repayable on demand … … …
Related party transactions
Dividend income
Interest income
Management fee income
Rental income
Royalty income
… … … … … … … …
… … … … … … … …
… … … … … … … …
… … … … … … … …
… … … … … … … …
… …
735
(149)
773
237
536
141
164
… … 7,998
7,767
784
-
1,260
219
536
76
116
Compensation of key management personnel
Key management personnel are defined in the Directors’ Remuneration Report on page 36, and their
remuneration is disclosed on page 36 of the Group financial statements.
C15 Commitments
Contracted capital commitments at 30th April, 2023 for which no provision has been made in these financial
statements were £1,510,000 (2022: £8,393,000).
C16 Subsequent events
After the balance sheet date, ordinary dividends were declared of £8,636,000, which have not been provided
for within these financial statements.
The company announced on 5th May, 2023 that it was proceeding with a Tender offer to tender up to 180,000
of its ordinary shares at the tender price of £48 per ordinary share. The tender offer was subsequently
approved at a General Meeting that was held on 30th May, 2023 and the following day the offer ended.
The offer was oversubscribed by 229% and, of the total number of Ordinary Shares validly tendered,
all 180,000 Ordinary Shares have been purchased by the Company and on 7th June, 2023 were cancelled
off the register. The total cost of Ordinary Shares purchased was £8.64 million. The resulting number of
shares as at the signing date is £7,509,600.
102
NOTES TO THE FINANCIAL STATEMENTS
C17 Dividends
Paid ordinary dividends during the year in respect of prior years
107.80p (2022: 102.24p) per qualifying ordinary share. … … … …
2023
£’000
8,289
2022
£’000
7,862
After the balance sheet date an ordinary dividend of 115p per qualifying ordinary share was proposed by
the Directors (2022: Ordinary dividend of 107.80p).
The proposed current year ordinary dividend of £8,636,000 has not been provided for within these financial
statements (2022: Proposed ordinary dividend of £8,289,000 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 35 of the Group financial
statements.
103
NOTES TO THE FINANCIAL STATEMENTS
Alternative performance measures
Measure
Method of calculation / reference
Page No.
2023
2022
Gross profit (£’000)
Revenue (£’000)
Consolidated statement of profit or loss
Consolidated statement of profit or loss
48
48
46,221
185,742
42,704
144,108
Gross profit as percentage of
revenue (%)
Gross profit / revenue
24.9%
29.6%
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
48
48
22,129
19,941
(3,189)
(2,740)
18,940
17,201
Operating profit (£’000)
Capital employed (£’000)
Consolidated statement of profit or loss
Note 28 (d)
48
86
20,313
157,569
18,307
145,095
Return on capital employed (%)
Operating profit / capital employed
12.9%
12.6%
Net debt (£’000)
Net assets attributable to equity
holders of the parent (£’000)
Note 28 (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
86
52
48
52
32,822
29,785
124,747
115,310
26.3%
25.8%
15,904
12,980
124,747
115,310
Return on investment (%)
Net profit / net assets
12.7%
11.3%
Revenue (£’000)
Average number of employees
Consolidated statement of profit or loss
Note 6
48
67
185,742
1,144
144,108
1,112
Sales per employee (£’000)
Group revenue / average employees
162,362
129,594
Consolidated statement of profit or loss
Annual post tax profit (£’000)
Interest rate swap mark to market
net of tax @ 19.49% (2022: 19%) (£’000) Consolidated statement of profit or loss
Note 8
Deferred tax rate change (£’000)
Note 8
Deferred tax rate difference (£’000)
Depreciation owned assets (£’000)
Note 5
Depreciation right-of-use assets (£’000) Note 5
Note 5
Amortisation and impairment (£’000)
Exclude operating
lease depreciation (£’000)
48
48
68
68
67
67
67
Annual post tax profit +
depreciation + amortisation (£’000)
16,513
13,620
(2,576)
-
596
6,272
1,198
1,257
(2,219)
2,012
-
6,202
1,192
1,572
(538)
(508)
22,731
21,871
104
FIVE YEAR FINANCIAL SUMMARY
Continuing operations
2019
£’000
2020
£’000
2021
£’000
2022
£’000
2023
£’000
Revenue… … … … … … … …
Trading profit … … … … … … …
Profit before taxation
… … … … …
Tax on profit … … … … … … …
Profit after taxation … … … … … …
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
185,742
18,940
22,129
(5,616)
16,513
Basic earnings per ordinary share (in pence) … …
…
Diluted earnings per ordinary share (in pence)
159.79p
159.79p
107.93p
103.31p
167.82p
164.23p
169.14p
169.14p
206.81p
206.81p
Total equity … … … … … … …
109,291
109,602
118,028
119,743
129,157
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 104.
105