INDEX
1
Notice of Annual General Meeting
2
Notes to Notice of Annual General Meeting
GROUP STRATEGIC REPORT
3
Chairman’s Statement
8
Summary of Consolidated Statement of Profit or Loss
9
Objectives, Strategy and Business Model
14
Principal Risks and Uncertainties
16
Corporate Social Responsibility
DIRECTORS’ REPORTS
19Report of the Directors
22
Corporate Governance Report
24
Audit Committee Report
27
Directors’ Remuneration Policy and Report
34
Statement of Directors’ responsibilities in respect of the
Annual Report and the Financial Statements
AUDITOR’S REPORT
35Independent Auditor’s Report to the Members of Goodwin PLC
FINANCIAL STATEMENTS
44
Consolidated Statement of Profit or Loss
45
Consolidated Statement of Comprehensive Income
46
Consolidated Statement of Changes in Equity
48
Consolidated Balance Sheet
49
Consolidated Statement of Cash Flows
50
Notes to the Financial Statements
85
Company Balance Sheet
86
Company Statement of Change of Equity
87
Notes to the Company Financial Statements
96
Alternative Performance Measures
97
FIVE YEAR FINANCIAL SUMMARY
FINANCIAL HIGHLIGHTS
Accounting policies
50
Estimates and judgements
57
Revenue
60
Alternative performance measures
96
Finance costs (net)
63
Right-of-use assets
66
Borrowings
71
Financial risk management
75
Subsequent events
83
Capital and reserves
74
Guarantees and contingencies
83
Segmental information
58
Capital commitments
83
Intangible assets
69
Staff numbers and costs
62
Cash and cash equivalents
71
Interest rate swap
80
Taxation
63
Company statements
85
Investments in subsidiaries
67
Trade and other
Deferred tax and capital
Inventories
70
financial assets
71
expenditure policy
74
Property, plant and equipment
65
Trade and other
financial liabilities
73
Dividend and capital
Provisions
73
expenditure policy
13
Earnings per share
64
Related parties
83
GOODWIN PLC
www.goodwin.co.uk
Registered in England
Established 1883
Directors:
T. J. W. GoodwinM. S. GoodwinS. R. Goodwin
(Chairman)(Managing Director)(Managing Director)
MechanicalRefractory
Engineering DivisionEngineering Division
J. ConnollyN. BrownB. R. E. GoodwinJ. E. Kelly (Non-Executive Director)
Secretary and registered office:Registrar and share transfer office:
Mrs. J. L. Martin, L.L.B., A.C.I.S.Computershare Investor Services PLC,
Ivy House Foundry, Hanley,The Pavilions, Bridgwater Road,
Stoke-on-Trent, ST1 3NRBristol, BS99 6ZZ
Auditor:
RSM UK Audit LLP,
Festival Way, Festival Park, Stoke-on-Trent, ST1 5BB
NOTICE IS HEREBY GIVEN that the EIGHTY-SEVENTH ANNUAL GENERAL MEETING of the
Company will be held at 10.30am on Wednesday, 5th October, 2022 at Crewe Hall, Weston Road,
Crewe, Cheshire CW1 6UZ for the purpose of considering and, if thought fit, passing the following
resolutions which are proposed as ordinary resolutions.
1.
To receive the Directors’ Reports and the audited financial statements for the year ended
30th April, 2022.
2.
To approve the payment of the proposed ordinary dividend on the ordinary shares.
3.
To re-elect Mr. J. Connolly as a Director.
4.
To re-elect Mr. B.R.E. Goodwin as a Director.
5.
To approve the Directors' Remuneration Report (excluding the Directors’ Remuneration
Policy) for the year ended 30th April, 2022, as stated on pages 29 to 33 of the Directors'
Report.
6.
To approve the Directors’ Remuneration Policy, the full text of which is set out on pages 27
to 28 of the Directors’ Report.
7.
To re-appoint RSM UK Audit LLP as auditor and to authorise the Directors to determine
their remuneration.
By Order of the Board
J. L. Martin
Secretary
Registered Office:
Ivy House Foundry,
Hanley, Stoke-on-Trent
2nd August, 2022
1
NOTES TO NOTICE OF ANNUAL GENERAL MEETING:
1.
Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their
behalf at the meeting. A shareholder may appoint more than one proxy in relation to the Annual General Meeting
provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that
shareholder. A proxy need not be a shareholder of the Company. A proxy form which may be used to make such
appointment and give proxy instructions accompanies this notice.
2.
To be valid any proxy form or other instrument appointing a proxy must be received by post, by scanned copy sent to
proxies@goodwingroup.com or (during normal business hours only) by hand at Ivy House Foundry, Hanley, Stoke-on-
Trent, ST1 3NR no later than 10.30am on 3rd October, 2022.
3.
The return of a completed proxy form or other such instrument will not prevent a shareholder attending the Annual
General Meeting and voting in person if he/she wishes to do so.
4.
Any person, to whom this notice is sent, who is a person nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder by
whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the
Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it,
he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting
rights.
5.
The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does
not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of
the Company.
6.
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by the
Company of the votes they may cast), shareholders must be registered in the Register of Members of the Company at
10.30am on 3rd October, 2022 (or, in the event of any adjournment, 10.30am on the date which is two days before the
time of the adjourned meeting). Changes to the Register of Members after the relevant deadline shall be disregarded
in determining the rights of any person to attend and vote at the meeting.
7.
As at 1st August, 2022 (being the last business day prior to the publication of this Notice) the Company’s issued share
capital consists of 7,689,600 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company
as at 1st August, 2022 are 7,689,600.
8.
Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under
section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting out
any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the
audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the
Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in
accordance with section 437 of the Companies Act 2006. The Company may not require the shareholders requesting
any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006.
Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it
must forward the statement to the Company’s auditor not later than the time when it makes the statement available on
the website. The business which may be dealt with at the Annual General Meeting includes any statement that the
Company has been required under section 527 of the Companies Act 2006 to publish on a website.
9.
In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the
meeting so that (i) if a corporate shareholder has appointed the chairman of the meeting as its corporate
representative with instructions to vote on a poll in accordance with the directions of all of the other corporate
representatives for that shareholder at the meeting, then on a poll those corporate representatives will give voting
directions to the chairman and the chairman will vote (or withhold a vote) as corporate representative in accordance
with those directions; and (ii) if more than one corporate representative for the same corporate shareholder attends the
meeting but the corporate shareholder has not appointed the chairman of the meeting as its corporate representative,
a designated corporate representative will be nominated, from those corporate representatives who attend, who will
vote on a poll and the other corporate representatives will give voting directions to that designated corporate
representative. Corporate shareholders are referred to the guidance issued by The Chartered Governance Institute on
proxies and corporate representatives (www.icsa.org.uk) for further details of this procedure. The guidance includes a
sample form of representation letter if the chairman is being appointed as described in (i) above.
10.
None of the Directors has a service contract with the Company.
11.
If approved by shareholders at the Annual General Meeting on 5th October, 2022, the ordinary dividends of 107.80p
per share will be payable in equal instalments of 53.90p per share on 7th October, 2022 and on or around 12th April,
2023 to shareholders on the register on 16th September, 2022 and on or around 24th March, 2023 respectively.
2
GOODWIN PLC
CHAIRMAN’S STATEMENT
The “Trading” pre-tax profit for the Group for the twelve month period ended 30th April, 2022, was
£17.2 million (2021: £16.5 million) an increase of 4% despite the Group having to contend with
£3.8 million of additional energy costs versus the prior year. The revenue was £144 million (2021:
£131 million).
Trading profit for this purpose is defined as the Group pre-tax reported profit of £19.9 million less
the impact of our £2.74 million interest rate swap valuation. The £2.74 million relates to the 30th
April, 2022 valuation of our £30 million debt interest rate swap derivative that expires in August
2031 whereby we have fixed our interest rate for ten years at less than 1% for the full term. In our
view, this derivative is an effective hedge and should not go through the profit and loss account.
The Board’s view was that it was highly probable that we would still have 25% gearing in ten
years’ time, having secured the interest rate swap to fix interest rates at less than 1% on £30
million debt for this period. Our auditor was unconvinced that it could meet the highly probable
criteria and that other requirements under IFRS 9 for hedge accounting were not met. The reason
the Board considers the level of debt to be highly probable is due to the Board having a
responsibility to invest in a responsible manner to grow the business for all the stakeholders. The
Board has, however, complied with the auditor’s view and has shown the £2.74 million unrealised
mark to market gain within the profit before taxation figure. As the £2.74 million gain is a non-cash
item, it has been excluded for dividend purposes. The Directors propose an increased dividend of
107.80p (2021: 102.24p) per share.
Given that we believe turnover and profitability are projected to rise in future years, the level of
dividend payments in line with the current policy is also set to rise. In view of this, coupled with
the significant capital expenditure needed to fund the Duvelco activity, the Directors are of the
opinion that it will be of long-term benefit for the Group to ease pressures on the Group cash
flows by paying the current and future dividends bi-annually. It is proposed that dividend
payments will be made in equal instalments on 7th October, 2022 and 12th April, 2023.
Refractory Engineering Division
The increase in Group profits achieved in the year having just ended can largely be attributed to
the growing Refractory Engineering Division activity, whose year-on-year operating profits have
grown a further 37% following the 40% growth that was achieved in the prior year. The Division
has continued to maximise its position with sales of jewellery casting consumable products
(investment casting powder, waxes, natural and silicone rubbers) and to construction markets that
have seen a surge in activity globally.
The Division has also benefitted from strong demand for its newer products, AVD being Dupré
Minerals' vermiculite-based solution for lithium-ion battery fires, that is still in its product life cycle
infancy, and has delivered in excess of 100% year-on-year growth, along with Castaldo rubber,
which has achieved 45% year-on-year growth.
The challenges faced by companies from the ongoing global supply chain and energy market
disruption have been well reported in the news over the past year and the Refractory Division has
acted dynamically to ensure cost increases are passed on to our customers to ensure the impact
to our margin is minimised. Whilst the success of the Division has been seen across all
companies, special mention should be made of our jewellery investment casting powder
companies in China and in India having generated record profits in the year, even though the
domestic market in China is still depressed due to the prolonged lockdowns and travel
restrictions.
3
CHAIRMAN’S STATEMENT (continued)
Mechanical Engineering Division
Whilst not always being outwardly visible, the Mechanical Engineering Division has had a very
difficult seven years. Over this period the product offerings pretty much across all the companies
have had to evolve to the changing conditions in the markets from which the companies generate
their turnover and gross margin.
The fact that the companies within the Division have managed to evolve is a credit to them and
their management teams. Contending with huge energy and commodity increases within the year
has not been straightforward. The metal pricing volatility has been extreme at its highs with nickel
trebling in price and iron more than doubling in price at times. As a matter of course, our long
term contracts have variation clauses to adjust for annual inflationary costs. However, the volatility
of metals and energy costs has been so extreme that these clauses have proved to be totally
ineffective. Therefore, across the board every contract where this could have posed significant
issues has been successfully re-negotiated with our customers. If we were not a high quality,
critical supplier to our customers, then this could have been more problematic, but that is not the
case.
Despite the decline of the workload in our traditional markets over the prior years associated with
the demise of our product sales to the non green oil and coal sectors, our re-aligned business
offerings are more in demand than they ever have been, which is seen by the growing workload
that customers are booking up to be delivered now years in advance. With the confidence of a
solid and growing forward order book the tide has turned; all things being equal, the next few
years should see the Mechanical Engineering Division returning to its former glory with even
higher levels of turnover than at the peak of the oil and gas industry in 2014.
Notably within the year, expanding on the nuclear decommissioning front, Goodwin International
Limited has successfully tendered and been awarded 50% of the initial phase of the multi year
multi million pound Sellafield Hybrid 2, 63 Can Racks as reported on the OJEU website in
October last year. Gaining initial process and documentation approvals to proceed with
manufacture will take time, but once ramped up, the initial production rate will be 20 racks per
year, with 80 racks currently committed. Our customer has the option within the contract to make
further commitment(s) of up to an additional 160 racks, as well as increasing the demand to 40
racks per year.
It is also pleasing to report that in addition to Goodwin Steel Castings Limited having completed
its transition away from a reliance on the oil and gas market, the company has also managed to
successfully settle the two commercial disputes that were referenced in my Chairman’s Statement
of year ending 30th April, 2020. Part of the settlement is reflected in these results, with the
balance being realised in the current financial year.
On top of its base load, with the excellent work done at getting on to new programmes, Goodwin
Steel Castings Limited will build on its workload and expect to finish the current year with forward
order levels in excess of the levels the Group experienced when it was really busy a decade ago.
However, it will not be for oil and coal industries as it was previously; it will be for nuclear
decommissioning; or nuclear power station castings; or surface ship and aircraft carrier castings
as well as submarine hull castings.
With these successes, and the hard work and perseverance of the Group in achieving a positive
conclusion to prior years' contractual claims we have been pursuing; the successful re-negotiation
of multiple contracts for unforeseeable energy and raw materials pricing volatility whilst at the
same time growing, it has resulted in an excellent Group workload of £175 million as at the time
of writing. It is pleasing to report that the bulk of the increased workload relates to contracts to
supply products that the Group has successfully and consistently delivered before, and is a
workload figure that is likely to grow over the
4
CHAIRMAN’S STATEMENT (continued)
coming years even with the knowledge that the Group is likely to achieve record activity levels
within this current year.
What is not visible yet in the workload figure is an appropriate workload for Easat Radar Systems
Limited. Once up to speed (which still may be another year away) the Board and I believe there
will be a workload for Easat, the likes of which readers of their accounts for the past thirty years
have never seen. Easat order input has been hampered by lack of cash generation at civilian
airports globally, and military airports being starved of cash as a result of Covid-19 over the past
two years hampering their purchasing decisions. However, it would appear that the radar market
is starting to wake up again. We have considerably more firm buy quotations due for decision in
the next six months, and, in order to give a flavour of what we are seeing, in the week following
the latest ATM Madrid exhibition in June 2022, an additional £47 million of firm buy radar systems
were quoted.
Energy
As initially reported in our 31st October, 2021 Interim Statement, over the course of the year the
most significant headwind that the Group has faced has been the increased energy costs.
Nonetheless, the Group managed to deliver the more than respectable profits reported above,
after having incurred a total of £3.8 million of additional energy costs due to price increases
versus the year ended 30th April, 2021. Goodwin Steel Castings Limited and Hoben International
Limited were the most affected due to their energy intensive operations, melting metal and high
temperature treatment of refractories. However, now armed with a multitude of short and long-
term hedges in place the Group is set to deliver substantially higher profitability in the current
year, partly as a result of not having to absorb the price volatility of the energy markets that have
been seen over the past twelve months, irrespective of the improving performance.
Green Investments
We recognise the importance of adopting a strategy to transition to lower carbon manufacturing.
We have put in place a separate £10 million finance line to fund a range of ‘green’ investments
which were approved at the beginning of the financial year ended 30th April, 2022. A total of 4.8
MWp of solar panels have been installed and commissioned as at the time of writing. Each
individual system has been designed specifically to match the power demand at each facility,
subject to available roof space. The payback of each system varies dependent on the size and
roof configuration and all were between three and six years; however, that payback was
calculated prior to energy costs more than doubling, so at current market prices the payback time
has halved from the original plan, with all the solar systems having an insurance backed 20 year
minimum lifespan. There are other solar projects and plant control modification projects that,
subject to us obtaining the agreement from the Electricity Supplier (District Network Operator), for
the former we expect to bring on line over the next two years. This will provide a further 7.8 MWp
of green electricity generation and so further reduce our consumption. Over the course of the year
a total of £8.2 million has been invested in green projects.
We are also looking at schemes that would reduce our carbon footprint in instances where we
cannot reduce or eliminate CO2 production without ceasing the operation in its entirety. Typically
this is where we utilise natural gas in a process, and it is not economically viable or possible to
change the process. I look forward to updating you further on this in twelve months’ time.
Capital expenditure / cash flow
With the Group's intrinsically strong cash flows, the Group’s net debt stands in line with the
Board's expectations at £29.8 million as at 30th April, 2022, which is a £2 million
5
CHAIRMAN’S STATEMENT (continued)
improvement since the half year despite having proceeded with our substantial investment
programme. As mentioned earlier we are making full use of the ten year duration £30 million
interest swap that was executed at the height of Covid-19 in light of our planned activities,
whereby the SONIA interest chargeable to the Company is capped at less than 1% on £30 million
of borrowings.
The headline investments that the Board has authorised and the Group has been getting on with
are four fold, and whilst these activities all commenced in year ended 30th April, 2022, due to the
timescales the latter three are still in the course of construction.
Firstly nearly £10 million relates to green investments, with the majority being spent on CO2
offsetting projects.
Secondly, due to the outstanding performance of the Refractory Engineering Division in growing
sales by winning market share so impressively, for both capacity and business continuity
requirements, as we are running dangerously close to full capacity, authorisation has been given
to spend £4.5 million installing a second calciner at Hoben International Limited, as without it, we
would have two problems. We would be limiting the Refractory Division the opportunity to grow
further investment powder sales, and in the eventuality of a breakdown we would struggle to ever
catch up with the demand again, and would lose market share to competitors who could deliver
product to keep our customers operational. This was why the Board deemed this a necessary
investment as it is underpinning substantial Group profitability.
Thirdly, for Goodwin Steel Castings Limited, despite allocating a significant amount of Group
capital expenditure on infrastructure there in recent years, to enable the foundry to deliver what
will be required of the foundry, there have been additional planning applications approved and
work commenced on additional casting pit space which will allow further increased activity. Such
modifications would likely be impossible to carry out in a couple of years' time with the envisaged
activity levels there.
Finally for Duvelco Limited, part of the Mechanical Engineering Division, which was incorporated
in January 2020. Over the Company's 139 years existence to date, as well as designing or buying
bolt on complementary products and companies, it has occasionally branched out into totally new
product lines whilst utilising skill-sets within the organisation. After working on this idea for some
time, Duvelco Limited was set up as a business to channel the Company's ambition to become a
specialist polymer manufacturer, one that we hope will truly excel over the coming decades. We
will manufacture high performance polyimide polymer resins that can be moulded into parts and
shapes for high temperature and critical applications that very few polymers can be used for.
With the development work that was done before and since the incorporation of Duvelco Limited,
utilising a bespoke pilot scale plant the team designed, we have developed the product and a
process that will allow us to deliver a higher performing directly comparable polyimide polymer
than the market leader. With an annual addressable, and growing, market size bigger than any
product that the Group has supplied to before, the Board believes that, with limited existing
market competition, a very high technology barrier, coupled with the fact we have a patent
pending process that gives us markedly better high temperature performance than anybody else
for directly comparable chemistry product, this should hopefully give Duvelco Limited, as a market
invader, good prospects of long term success, so that one day it should be a major contributor to
Group profitability.
The initial, custom designed and bespoke plant the Group is building should be coming into
operation in the first half of the calendar year 2024, after which we will start growing the sales
internationally as we have done with our other products over the years. Our initial investment
inclusive of R&D costs and working capital for materials is forecast
6
CHAIRMAN’S STATEMENT (continued)
to come in at £12.5 million; from this we would have an initial annual capacity in excess of £40
million of material. The reason I have elaborated about this is because costs are being incurred
now, and it will be a long time until the plant will be in commission. With the effort being put into
this by the Group, it should deliver a new niche market, high technology product to the Group with
a long life cycle ahead of it, thus providing the Group with long-term benefit, which the Board
believes is in the best interest of all stakeholders.
For both Hoben International Limited and Duvelco Limited, most supplier purchase orders were
placed in Q3 Financial Year 2022, giving suppliers large down payments to have fixed price
contracts. If the start of placing orders for either project had been delayed by several months the
prices would have been significantly more with labour and materials increasing, as we ourselves
have experienced and have had to mitigate and manage. The Board estimates that by getting on
with the projects and contracting when we did, the saving versus starting either project today is in
excess of 25%.
As contracts within the Mechanical Engineering Division become larger and span longer periods,
the engineering companies are being targeted to ensure contracts incorporate down payments /
stage payments to allow their execution with as neutral overall cash flow status as can be
obtained over the life of a contract, so that work in progress does not consume a disproportionate
amount of cash as we get busier.
With the profitability, positive outlook and strong understanding of the various subsidiaries' cash
flows the Board believes it is appropriate to continue to follow the Group’s investment plans and
pay the proposed dividend that is in line with the dividend policy with 50% being paid on 7th
October, 2022 and 50% on 12th April, 2023.
We are once again extremely grateful to our UK and overseas Directors, managers and
employees for their hard work in driving forward the performance of the Group, which will likely
improve again in the new financial year with the strong foundations that have been put in place in
many areas around the Group.
T. J. W. Goodwin
2nd August, 2022Chairman
Alternative performance measures mentioned above are defined on page 96.
7
GOODWIN PLC
SUMMARY OF CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2022
2022
2021
Notes
£’000
£’000
CONTINUING OPERATIONS
Revenue …
…
…
…
…
…
…
…
…
…
3, 4
144,108
131,231
Cost of sales
…
…
…
…
…
…
…
…
…
(101,404)
(92,230)
GROSS PROFIT…
…
…
…
…
…
…
…
…
…
42,704
39,001
Other income
…
…
…
…
…
…
…
…
…
5
-
763
Distribution expenses
…
…
…
…
…
…
…
…
(3,743)
(2,988)
Administrative expenses
…
…
…
…
…
…
…
(20,654)
(19,682)
OPERATING PROFIT …
…
…
…
…
…
…
…
…
18,307
17,094
Finance costs (net)
…
…
…
…
…
…
…
…
7
(1,169)
(640)
Share of profit of associate company
…
…
…
…
…
14
63
60
TRADING PROFIT
…
…
…
…
…
…
…
…
…
17,201
16,514
Unrealised gain on 10 year interest rate swap derivative
…
…
2,740
-
PROFIT BEFORE TAXATION
…
…
…
…
…
…
…
5
19,941
16,514
Tax on profit*
…
…
…
…
…
…
…
…
…
8
(6,321)
(3,508)
PROFIT AFTER TAXATION…
…
…
…
…
…
…
…
13,620
13,006
ATTRIBUTABLE TO:
Equity holders of the parent
…
…
…
…
…
…
…
12,980
12,494
Non-controlling interests
…
…
…
…
…
…
…
640
512
PROFIT FOR THE YEAR
…
…
…
…
…
…
…
…
13,620
13,006
BASIC EARNINGS PER ORDINARY SHARE (in pence) …
…
…
9
169.14p
167.82p
DILUTED EARNINGS PER ORDINARY SHARE (in pence)
…
…
9
169.14p
164.23p
*
The tax charge for the current year equates to 31.7% of profit before tax (2021: 21.2%). Within the current year there is a
non-recurring non-cash impacting deferred tax charge of £2 million relating to the future change in the UK corporation tax
rate from 19% to 25%. Please refer to note 8 within these accounts for a full reconciliation of the tax charge for the year.
The full financial statements and accompanying notes are on pages 44 to 96.
8
OBJECTIVES, STRATEGY AND BUSINESS MODEL
The Group’s main OBJECTIVE is to have a sustainable long-term engineering based business with
good potential for profitable growth while providing a fair return to our shareholders.
The Board’s STRATEGY to achieve this is:
•
to supply a range of technically advanced products to growth markets in the Mechanical Engineering
and Refractory Engineering segments in which we have built up a global reputation for engineering
excellence, quality, efficiency, reliability, competitive price and delivery;
•
to manufacture advanced technical products profitably, efficiently and economically;
•
to maintain an ongoing programme of investment in plant, facilities, sales and marketing, research
and development with a view to increasing efficiency, reducing costs, increasing performance,
delivering better products for our customers, expanding our global customer base and keeping us at
the forefront of technology within our markets, whilst at all times taking appropriate steps to ensure
the health and safety of our employees and customers;
•
to control our working capital and investment programme to ensure a safe level of gearing;
•
to maintain a strong capital base to retain investor, customer, creditor and market confidence and so
help sustain future development of the business;
•
to support a local presence and a local workforce in order to stay close to our customers;
•
to invest in training and development of skills for the Group’s future;
•
to manage the environmental and social impacts of our business to support its long-term
sustainability.
BUSINESS MODEL
The Group’s focus is on manufacturing within two sectors, Mechanical Engineering and Refractory
Engineering, and through this division of our manufacturing activities, our overseas business facilities
and our global sales and marketing activities, the Group benefits from market diversity. Further details
of our business and products are shown on our website www.goodwin.co.uk.
Mechanical Engineering
The Group specialises in supplying precision engineered solutions and industrial goods into critical
applications, generally on a project basis, more often than not involving the complementary skillset of
other group companies to deliver the requirement. The projects normally involve international
procurement, high integrity castings, forgings or wrought high alloy steels, carbon fibre composite
structures, precision CNC machining, complex welding and fabrication, and other operations as are
required. In addition to specialist projects, the Group manufactures and sells a wide range of dual plate
check valves, axial nozzle check valves and axial piston control and isolation valves. These solutions
and products typically form part of large construction projects, including the construction of naval
vessels, nuclear waste treatment, nuclear power generation, liquefied natural gas (LNG), gas, oil,
petrochemical, mining, and water markets.
We generate value by creating leading edge technology designs, globally sourcing the best quality raw
material at good prices, manufacturing in highly efficient facilities using up to date technology to
provide very reliable products to the required specification, at competitive prices and with timely
deliveries.
The Group through its foundry, Goodwin Steel Castings Limited, has the capability to pour high
performance alloy castings up to 35 tonnes, radiograph and also finish CNC machine and fabricate
them at the foundry’s sister company, Goodwin International Limited. This capability is targeting the
defence industry and nuclear decommissioning, the oil and gas industry, as well as large, global
projects requiring high integrity machined castings.
Goodwin International Limited, the largest company in the Mechanical Engineering Division, not only
designs and manufactures dual plate check valves, axial nozzle check valves and axial piston control
and isolation valves but also undertakes specialised CNC machining and fabrication work for nuclear
decommissioning projects. Goodwin International Limited also has a division that is focused on
manufacturing / machining high precision, high integrity components for naval marine vessels. Noreva
GmbH also designs, manufactures and sells axial nozzle check valves. Both Goodwin International
Limited and Noreva GmbH purchase the majority of the value of their sand mould castings from
Goodwin Steel Castings Limited
9
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
for their ranges of check valves and this vertical integration gives rise to competitive benefits,
increased efficiencies and timely deliveries.
At Goodwin Pumps India Private Limited we manufacture a superior range of submersible slurry
pumps for end users in India, Brazil, Australia and Africa. Easat Radar Systems Limited and its
subsidiary, NRPL Aero Oy, design and build bespoke high-performance radar surveillance systems for
the global market of major defence contractors, civil aviation authorities and coastal border security
agencies. Easat has a sister company, Easat Radar Systems India Private Limited, that also
manufactures, sells and maintains radar systems for air traffic control. We create value on these by
innovative design, assembly and testing in our own facilities using bought in or engineered in-house
components.
Refractory Engineering
Within the Refractory Engineering Division, Goodwin Refractory Services Limited (GRS) generates
value primarily from designing, manufacturing and selling investment casting powders, injection
moulding rubbers and waxes to the jewellery casting industry. GRS also manufactures and sells these
products to the tyre mould and aerospace industries. The Refractory Engineering Division has five
other investment powder manufacturing companies located in China, India and Thailand which sell the
casting powders directly and through distributors to the jewellery casting industry and also directly to
tyre mould and aerospace industries.
These companies are vertically integrated with another of our UK companies, Hoben International
Limited (Hoben), which manufactures cristobalite, which it sells to the six casting powder
manufacturing companies as well as producing ground silica that also goes into casting powders and
other UK uses of silica. Hoben now also manufactures different grades of perlite, and a patented range
of biodegradable bags, known as Soluform, for use inside traditional hessian / jute bags for the
placement of concrete in or around rivers.
The other UK refractory company is Dupré Minerals Limited (Dupré) which focuses on producing
exfoliated vermiculite that is used in insulation, brake linings and fire protection products, including
technical textiles that can withstand exposure to high temperatures and for lithium-ion battery fire
extinguishers. Dupré also sells consumable refractories to the shell moulding precision casting
industry. Dupré has designed, patented and is now selling a range of fire extinguishers and an
extinguishing agent for lithium-ion battery fires that utilises a vermiculite dispersion as the fire
extinguishing agent.
10
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
BUSINESS DIVERSITY AND PERFORMANCE
In the year ending 30th April, 2022, there has
been a significant shift in the divisional split of
operating profits, with the Refractory Division
generating 58% of the Group’s operating profits
and the Mechanical Division generating 42%.
The above change is a feature of the Refractory
Division delivering a strong performance with
its end user markets continuing to grow and its
newerproductsutilisingtheGroup’seight
companiessupplyingconsumablestothe
jewellery, fire protection and construction sectors,
that combined to form a global network that
enables the Refractory Division to efficiently and
quickly supply product that generates additional
returns without the need of putting in place
additional overheads. Whilst it has taken longer
than originally forecast, it is products like Dupré
Minerals' unique patented solution, known as
Lith-Ex, which is a vermiculite dispersion-based
fire extinguishing agent, that suppresses and
effectively provides protection against lithium-ion
battery fires that has contributed to the Refractory
Division’s notable performance in the year. In the
year the team has doubled its sales of Lith-Ex and
is expected to continue to grow the sales at a
similar rate next year.
In the year 40% of the Group’s end user market
sales related to the consumables utilised within
the manufacture of jewellery, heat resistance
applications and horticultural products. However,
moving forward we expect the proportional split
between market sectors to swing back towards
the Mechanical Division in the years to come, as
the LNG, defence, construction and surveillance
markets start to deliver the profits that are built
into the material contracts that have and are
being won, before any consideration of the high
expectation for the specialist polymer market.
Asexpectedtheoilsectorhasremained
depressed and as a result of the other sectors
growing, now only represents 17% of the Group's
total revenue (2014: 50%). Conversely though, in
light of the ongoing energy crisis that specifically
has left Europe exposed, the previously seen
pressuretodirectfundstogreenpower
generation projects might now be put on hold
asLNGprojectsareprioritised,whichwill
predominantly be to the benefit of our German
based subsidiary, Noreva GmbH.
11
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
KEY PERFORMANCE INDICATORS
The key performance indicators for the business are listed below:
Gross profit as a
% of turnover *
Trading profit
(£ millions)
Gearing % (excluding
deferred consideration)
Sales per employee
per year (£’000)
Dividends proposed
(in £ millions)
2013
31.9
20.3
23%
126
3.8
2014
34.3
24.1
5%
124
3.0
2015
32.5
20.1
12%
112
3.0
2016
27.8
12.3
26%
105
3.0
2017
25.6
9.2
31%
114
3.0
2018
28.6
13.3
11%
120
6.0
2019
32.0
14.7
20%
117
6.9
2020
24.1
12.1
18%
121
6.0
2021
29.7
16.5
15%
116
7.9
2022
29.6
17.2
26%
130
8.3
Thealternativeperformancemeasures
referred to above are defined on page 96.
The alternative performance measures are
important to management and the readers of
the Annual Report in assessing the Group’s
performance and benchmarking it within its
respective industries.
*
The calculation of Gross Profit is after taking
into account plant depreciation, training, HR,
R&D, sales, exhibition and sales travel costs, as
well as the material and labour costs.
12
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
DIVIDEND AND CAPITAL EXPENDITURE POLICY
The Board proposes to pay a dividend of 107.80p per share, up 5% on the previous year (2021:
102.24p). The proposed dividend has been calculated using the Group’s profit after taxation figure,
plus depreciation and amortisation for the year ending 30th April, 2022, after having excluded the non-
cash £2.74 million mark to market unrealised gain relating to the ten year interest rate swap that, in
our view, is an effective hedge and should not go through the profit and loss account. However, as our
auditor was unconvinced with the Board’s view that it was highly probable that we would still have 25%
gearing in ten years' time, despite having secured a variable interest rate of less than 1% on £30
million debt for this period and so met the IFRS 9 requirements for hedge accounting, it has been
reported as a gain within the pre-tax profit for the year.
Excluding the Group's green investments, the Board continues to focus on limiting investment
decisions relating to designing and developing new products, buying technologically advanced
manufacturing plant and machinery, setting up overseas sales organisations and companies and / or
buying complementary or competitive companies to a maximum of 55% of post tax profits plus
depreciation and amortisation on a three year rolling annual average. In the year the Group has
slightly exceeded its 55% target by 2%. This relates primarily to the Board making the decision to bring
forward the placement of purchase orders of certain capital projects so as to lock in the price and
avoid significant material price increases, which the Board estimates has saved the Group in excess of
25% of the cost against today's prices, due to the inflationary price pressures that we have been
informed of since.
In line with expectations, following the Group's green investments, the Group finished the year with a
gearing of 25.8% (2021: 15.4%). Whilst the gearing is expected to improve by next year end, due to
the front end loaded capital investment profile and the Board’s cautious approach, the Board proposes
to smooth the Group's cash flow by splitting the payment of the proposed ordinary dividends of
107.80p per share into equal instalments of 53.90p per share on 7th October, 2022 and on or around
12th April, 2023 to shareholders on the register on 16th September, 2022 and on or around 24th
March, 2023 respectively.
*Further details are included in the Alternative Performance Measures on page 96.
13
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's operations expose it to a variety of risks and uncertainties. The Directors confirm that they have carried out a
robust assessment of the principal risks the Company faced, including those that would threaten its business model, future
performance, solvency or liquidity.
Market risk: The Group provides a range of products and services, and there is a risk that the demand for these products
and services will vary from time to time because of competitor action or economic cycles or international trade friction or
even wars. As shown in note 3 to the financial statements, the Group operates across a range of geographical regions,
and its turnover is split across the UK, Europe, USA, the Pacific Basin and the Rest of the World.
Operating in many territories helps spread market risk. Similarly, the Group operates in both Mechanical Engineering and
Refractory Engineering sectors, mitigating the impact of a downturn in any one product area as has been seen in recent
financial years.
The potential risk of the loss of any key customer is limited as, typically, no single customer accounts for more than 10% of
annual turnover.
As described in the Business Model, the Group generates significant sales not only from valves it supplies to LNG, oil,
chemical and water markets, but increasingly significant amounts from nuclear new build and decommissioning, naval
propulsion marine applications and ship hull components. The Mechanical Engineering Division also supplies submersible
pumps that are supplied to the mining industries and radar systems that are supplied for civil and defence applications.
The Refractory Engineering Division sells vermiculite and perlite to the insulating and fire prevention industry and our
investment casting powder companies indirectly sell to the jewellery consumer market through the supply of investment
casting moulding powders, waxes, silicone and natural rubber.
Technical risk: The Group develops and launches new products as part of its strategy to enhance the long-term value of
the Group. Such development projects carry business risks, including reputational risk, abortive expenditure and potential
customer claims which may have a material impact on the Group. The potential risk here is seen as manageable given the
Group is developing products in areas in which it is knowledgeable and new products are tested as far as possible prior to
their release into the market.
Product failure / contractual risk: The risks that the Group supplies products that fail or are not manufactured to
specification are risks that all manufacturing companies are exposed to but we try to minimise these risks through the use
of highly skilled personnel operating within robust quality control system environments, using third party accreditations
where appropriate. With regard to the risk of failure in relation to new products coming on line, the additional risks here are
minimised at the research and development stage, where prototype testing and the deployment of a robust closed loop
product performance quality control system provides feedback to the design department for the products we manufacture
and sell. The risk of not meeting safety expectations, or causing significant adverse impacts to customers or the
environment, is countered by the combination of the controls mentioned within this section and the purchase of product
liability insurance. The risk of product obsolescence is countered by research and development investment.
Supply chain and equipment risk: Failure of a major supplier or essential item of equipment presents a constant risk of
disruption to the manufacturing in progress, especially in these post Covid-19 pandemic times. Where reasonably
possible, management mitigates and controls the risk with the use of dual sourcing, continual maintenance programmes,
and by carrying adequate levels of stocks and spares to reduce any disruption.
Health and safety: The Group’s operations involve the typical health and safety hazards inherent in manufacturing and
business operations. The Group is subject to numerous laws and regulations relating to health and safety around the
world. Hazards are managed by carrying out risk assessments and introducing appropriate controls, as well as attending
safety training courses.
Acquisitions: The Group’s growth plan over recent years has included a number of acquisitions. There is the risk that
these, or future acquisitions, fail to provide the planned value. This risk is mitigated through financial and technical due
diligence during the acquisition process and the Group’s inherent knowledge of the markets they operate in.
Financial risk: The principal financial risks faced by the Group are changes in market prices (interest rates, foreign
exchange rates and commodity prices). As reported elsewhere within these financial statements, the Company, on 2nd
July, 2021 signed a contract to mitigate the impact of interest rate risk by taking out an interest rate swap derivative fixing
£30 million of notional debt at less than 1% versus the variable SONIA rate for a period of ten years, commencing 1st
September, 2021. Detailed information on the financial risk management objectives and policies is set out in note 26 to the
financial statements. The Group has in place risk management policies that seek to limit the adverse effects on the
financial performance of the Group by using various instruments and techniques, including credit insurance, stage
payments, forward foreign exchange contracts, secured and unsecured credit lines.
Regulatory compliance: The Group’s operations are subject to a wide range of laws and regulations. Both within
Goodwin PLC and its subsidiaries, the Directors and Senior Managers within the companies make best endeavours to
ensure we comply with the relevant laws and regulations.
14
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
IT security: The Group performs regular and remote off site backups of its IT systems, from time to time engaging
external companies to test and report any weaknesses and deficiencies found to enable solutions to be put in place to
mitigate and minimise the risk of an IT security breach. The Group is in the process of re-evaluating the need to invest
further in this area over the next twelve months, but for security reasons we will not be disclosing the details of what we
do.
Covid-19 risk: The Covid-19 pandemic continues to have a global impact in varying degrees that has been seen during
the year through labour shortages, supply chain disruption, shipping availability and inflationary pressures. The impact of
labour shortages has been eased by the strength of our employee retention and our apprentice school continuing to feed
the Group’s requirements with eager engineers. The supply chain issues have been mitigated by the Group’s ability to
dynamically acquire and hold appropriate levels of stock so as to avoid disruption to the manufacturing processes.
Furthermore, the continuation of the post lock down exceptionally high activity levels within the Refractory Division, in
addition to the significant workload within the Mechanical Division have meant that the Group has continued to operate as
normal across all of its 23 sites around the world for the past twenty-four months.
Energy: The recent geopolitical tensions, with the current conflict in Ukraine, combined with the UK Government's energy
policy over the last few years to reduce carbon emissions has left the country exposed to the fragile global energy system
which has driven significant increases in the cost of power. Following the impact this has had on the Group earlier on in
the year, the Group has amended its strategy to manage the risk through hedging strategies, incorporating price escalation
clauses into the longer term contracts, aided by the coming on stream of increasing levels of low cost solar power around
the Group. We also have two significant programmes of enhancing the control of plant and utilising more inverter drives
around the Group, which within twenty-four months should save an additional 6% of the Group's electricity and gas
consumption.
15
CORPORATE SOCIAL RESPONSIBILITY
The Board as a whole is responsible for decisions relating to the long-term success of the Company and the way in which
their duties have been discharged during the year in terms of the strategic, operational and risk management decisions
and these can be found within the Strategic Report on pages 9 to 15.
As set out below and in line with Section 172 of the Companies Act 2006, through engagement the interests and views of
the Group’s employees and other stakeholders are considered by the Board within its decision-making process as well as
the impact they have on the environment, our reputation and the surrounding communities. Unless otherwise stated, no
principal decisions have been made in the year other than routine decisions that are made on a year-on-year basis as part
of running the business.
Employees
Health and Safety: The Group acknowledges that many of its manufacturing processes and some materials that it
handles and sells are hazardous and that providing a safe environment for people at all of our facilities is an unconditional
priority for all of those charged with governance, in addition to each member of the workforce. In the year, as operations
change, the Group has managed the continually evolving risks that are inherent in manufacturing businesses by ensuring
risk assessments are carried out by all departments and as soon as an operational change is envisaged. Such
assessments enable the introduction of the appropriate controls to help ensure that the workforce is protected from
foreseeable hazards. Furthermore, awareness and training to continually reduce risk and improve safety is a mind-set that
is reinforced on a daily basis through the Group’s global “Safety Spectrum” programme.
Employee consultation: The Group takes seriously its responsibilities to employees and, as a policy, provides
employees systematically with information on matters of concern to them. It is also the policy of the Group to consult
where appropriate, on an annual basis, with employees or their representatives so that their views may be taken into
account in making decisions likely to affect their interests. The Board considers the most effective form of engagement
and communication with its employees for its size and complexity is by way of informal daily discussions between the
employees, the Senior Management and Board members who walk the floor. Engagement in the year is further supported
through workforce representative meetings, local working groups, team meetings, training, and an honest and open
culture.
Employment of disabled persons: The policy of the Group is to offer the same opportunity to disabled people, and those
who become disabled, as to all others in respect of recruitment and career advancement, provided their disability does not
prevent them from carrying out the duties required of them in accordance with the requirements of the Equality Act 2010.
Diversity Policy: The Group is committed to ensuring that everyone should have the same opportunities for employment
and promotion based on ability, qualifications and suitability for the work in question. The Group invests in training and
development of skills for the Group’s future and has a long-term aim that the composition of our workforce should reflect
that of the community it serves. The Group continues to strive to improve the balance of diversity by reviewing gender
reporting and implementing our Diversity Policy through training and development, recruitment, our business culture and
the Board’s Strategy.
The following tables set out the breakdown of our average number of employees and Board members by gender and age:
Breakdown by gender
Year ended 30th April, 2022
Main Board and
Senior
Employees
Total
Company Secretary
Management
Number of female employees
2
12
185
199
Number of male employees
6
72
835
913
Total number of employees
8
84
1,020
1,112
% of female employees
25%
14%
18%
18%
% of male employees
75%
86%
82%
82%
Breakdown by age
Year ended 30th April, 2022
Main Board and
Senior
Employees
Total
Company Secretary
Management
Number of employees aged 16-21
-
-
84
84
Number of employees aged 22-40
4
13
472
489
Number of employees aged 41-65
4
62
447
513
Number of employees aged over 65
-
9
17
26
Total employees
8
84
1,020
1,112
% aged 16-21
-
-
8%
8%
% aged 22-40
50%
15%
46%
44%
% aged 41-65
50%
74%
44%
46%
% aged over 65%
-
11%
2%
2%
16
CORPORATE SOCIAL RESPONSIBILITY (continued)
Suppliers, Customers and Regulatory Authorities
The Board considers market trends regularly and reviews their likely long-term implications. Our business relationships
and procedures are developed over time and are regularly reviewed to ensure as a Group we conduct business
responsibly and sustainably. The Board acquires a first-hand understanding of its business relationships through regular
dialogue and site visits where appropriate. Engagement is ensured from the initial tender processes to embedded sales
and engineering project meetings and reinforced by an open door culture, whilst actively seeking feedback.
The six Executive Directors of the Board are actively involved with the day to day business and management of the
subsidiaries thereby allowing a good understanding of key members of the supply chain and also ensuring a fair purchase
culture.
Maintaining High Standards of Business Conduct
Ethics and Sustainability
We are committed to conducting business responsibly and ethically. We endeavour to ensure that our staff, suppliers and
business partners adopt the same or similar high ethical standards and values. This applies, but is not limited to human
rights, modern slavery, anti-bribery and corruption and is all enhanced by an anonymous whistle-blowing system.
Shareholders
Shareholder engagement occurs through the Annual Report, regulatory disclosures, our website and the Annual General
Meeting, coupled by supplementary RNS announcements made during the course of the year. The Company has one
class of ordinary shares, which have the same rights as regards voting, distributions and on liquidation. Management are
also significant shareholders in the Company, holding approximately 52.48% of the register. In accordance with LR6.5,
there is a controlling shareholder agreement in place. On this basis the Board feels that the Executive Directors are fully
aligned with shareholders.
Communities
During the year the Group has continued to communicate to all employees our culture of responsibility and support for
local communities where possible. The Board encourages its sites to support their local communities through charitable
activities and initiatives to support the local area within which they operate. Engagement occurs through dialogue with the
local councils and charities.
Donations
The Group made no political donations during the year (2021: £nil).
Donations by the Group for charitable purposes amounted to £71,000 (2021: £78,000). The majority of these were made
to local communities within the Group’s operating environments.
Environment – Task Force on Climate-related Financial Disclosures (TCFD)
The Task force on Climate-related Financial Disclosures (TCFD) has developed a disclosure framework to help companies
improve and increase the understanding of their reporting of climate-related financial information. In line with the new
reporting requirements and in consideration of the ongoing assessments, the Group, where possible, has aligned its
reporting of climate-related matters with the TCFD recommendations. For all disclosures that are not consistent with the
recommendations the Group is actively working to a plan that will enable consistent disclosures to be reported within next
year’s annual report.
Strategy, Metrics and Targets
During the year the Board has initiated a Group-wide assessment to identify and evaluate the risks and opportunities
relating to climate change. Once completed it will enable the Board to finalise its strategy. The strategy will describe the
impacts of the identified short, medium and long-term risks and opportunities on the Group, as well as its resilience to
varying scenarios, which will all be reported in next year’s Annual Report. Within the plan, the Board will set out its realistic
and appropriate science-based targets and metrics that will be used to assess climate-related risks and opportunities
moving forward.
Similar to previous years and in line with the GHG reporting guidance set out by SECR (Streamlined Energy and Carbon
Reporting) the Group has conducted a carbon footprint analysis across the business using the latest available emissions
factors to report our Scope 1 and Scope 2 emissions.
17
CORPORATE SOCIAL RESPONSIBILITY (continued)
Environment – Task Force on Climate-related Financial Disclosures (TCFD) (continued)
Strategy, Metrics and Targets (continued)
The reported CO2 emissions are detailed below:
2022
2021
Proportion
Proportion
of emissions
of emissions
arising from
arising from
UK operations
UK operations
%
%
Scope 1 – direct emissions
27,293
(from Company facilities
29,301
96%
98%
and vehicles)
Scope 2 – indirect emissions
5,176
(from electricity purchased
5,214
77%
83%
for own use)
Total Scope 1 and
34,515
32,469
Scope 2 emissions
Intensity – emissions of total
242
CO2 equivalent reported above
241
per £1 million of Group revenue
Energy Consumption (kWh)
69,737,248
resulting in the above reported
67,738,237
emissions
Governance
The Board has overall accountability for the management of all risks and opportunities, including climate change, as well
as being responsible for the day to day implementation, monitoring and management of our related performance. Climate-
related risk is considered by the Board as a stand-alone agenda item and accordingly receives regular updates on its
environmental assessments, commitments and performance. The Group’s Audit Committee supports the Board in
ensuring climate-related issues are integrated into the Group’s risk management process.
Risk Management
Climate change related matters are monitored by the Board and Audit Committee to ensure that they are embedded in our
risk management and planning process, in addition to our long-term strategic decision-making. The identification and
management of climate change risks follow our established risk-management process, of which the key elements are set
out within the Strategic Report, on pages 14 to 15.
FORWARD-LOOKING STATEMENTS
The Group Strategic Report contains forward-looking type statements and information based on current expectations, and
assumptions and forecasts made by the Group. These expectations and assumptions are subject to various known and
unknown risks, uncertainties and other factors, which could lead to substantial differences between the actual future
results, financial performance and the estimates and historical results given in this report. Many of these factors are
outside the Group’s control. The Group accepts no liability to publicly revise or update these forward-looking statements or
adjust them for future events or developments, whether as a result of new information, future events or otherwise, except
to the extent legally required.
The Group Strategic Report was approved by the Board on 2nd August, 2022 and is signed on its behalf by:
T. J. W. GoodwinM. S. GoodwinS. R. Goodwin
DirectorDirectorDirector
18
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS
The Directors have pleasure in presenting their reports and audited financial statements for the year ended 30th April,
2022.
The Directors have presented their Group Strategic Report on pages 3 to 18. The Group Strategic Report is intended to be
an analysis of the development and performance of Goodwin PLC and contains a description of the principal risks and
uncertainties facing the Group and an indication of likely future developments and the required statements under Statutory
Instrument 2008/410 Schedule 7 of the Companies Act 2006. The Chairman’s Statement is part of the Group Strategic
Report of the Directors for the year and provides the financial review, including some of the key performance indicators
and future trends of the business. Also included in the Group Strategic Report for the year are the Group’s Objectives,
Strategy and Business Model on page 9, Principal Risks and Uncertainties on page 14, and the Corporate Social
Responsibility Report on pages 16 to 18
The Board considers that the Chairman’s Statement, the Group Strategic Report, the Directors’ Reports and the Financial
Statements, taken as a whole, are fair, balanced and understandable and that they provide the information considered
appropriate for shareholders to assess the Group’s position and performance during the financial year and at the year end,
and to assess the business model and strategy.
Proposed ordinary dividends
The Directors recommend that an ordinary dividend of 107.80p per share (2021: 102.24p) be paid in equal instalments of
53.90p per share on 7th October, 2022 and on or around 12th April, 2023 to shareholders on the register on 16th
September, 2022 and on or around 24th March, 2023 respectively. The ordinary dividend is subject to the approval of the
shareholders at the Annual General Meeting on 5th October, 2022.
See comments on page 13 regarding the Dividend Policy.
Directors
The Directors of the Company who have served during the year are set out below.
M. S. Goodwin
S. R. Goodwin
T. J. W. Goodwin
J. Connolly
B. R. E. Goodwin
N. Brown
J. E. Kelly (Non-Executive Director)
The Chairman and the Managing Directors do not retire by rotation.
No Director has a service agreement with the Company, nor any direct beneficial interest in the share capital of any
subsidiary undertaking. The Chairman does not have any other significant external appointments.
Shareholdings
The Company has been notified that as at 1st August, 2022, the following had an interest in 3% or more of the issued
share capital of the Company:
J. W. and R. S. Goodwin 2,129,153 shares (27.69%), J. W. and R. S. Goodwin 1,457,358 shares (18.95%). These shares
are registered in the names of J. M. Securities Limited and J. M. Securities (No. 3) Limited respectively. J. H. Ridley
501,709 shares (6.52%), Rulegale Nominees Limited (JAMSCLT) 434,765 shares (5.65%) and Rulegale Nominees
Limited (IAS001) 246,129 (3.20%).
In line with LR 9.2.2AD R (1), relating to Controlling Shareholders, the Company confirms that a written and legally binding
agreement is in place, and has complied with the independence provisions set out in LR 6.5.4 R. The Company confirms
that, as far as it is aware, the controlling shareholders have complied with the agreement.
Share capital
The Company’s issued share capital comprises a single class of share capital which is divided into ordinary shares of 10p
each. Information concerning the issued share capital in the Company is set out in note 25 to the financial statements on
page 74.
All of the Company’s shares are ranked equally and the rights and obligations attaching to the Company’s shares are set
out in the Company’s Articles of Association, copies of which can be obtained from Companies House in England and
Wales or by writing to the Company Secretary.
There are no restrictions on the voting rights of shares and there are no restrictions in their transfer other than:
•
certain restrictions as may from time to time be imposed by laws and regulations (for example, insider trading laws); and
•
pursuant to the Market Abuse Regulation whereby Directors of the Company require approval to deal in the Company’s
shares.
Additionally, the Company is not aware of any agreements between shareholders of the Company that may result in
restrictions on the transfer of ordinary shares or voting rights.
19
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Research and development
The Group invests significantly in research and development. The main investment during the year was concluding the
production process development for polyimide polymers. As a result of the work done within the year there is a patent
pending for a novel processing step for the polyimide manufacture that was filed in November 2021. Concluding the
development process for our polyimide polymer production allowed the Board to release the capital expenditure to develop
the production facility in December 2021, which has a long lead time as it is totally bespoke due to our novel process. It is
anticipated that the polymer production facility should be commissioned and operational by December 2023. In addition,
further investment has gone into enhancing our submersible slurry pump range to include a hydraulically driven variant.
Change in control
The Group’s committed loan facilities include a change of control clause, which states that a change of control of the
parent Company will be classed as an event of default and would enable the providers at their discretion to withdraw the
facilities.
Stakeholders relations
All shareholders are encouraged to participate in the Company’s Annual General Meeting. No shareholder meeting has
been called to discuss any business other than ordinary business at the Annual General Meeting.
The Board complies with the recommendations of the UK Corporate Governance Code that the notice of the Annual
General Meeting and related papers should be sent to shareholders at least twenty working days before the meeting.
The Directors attend the Annual General Meeting. The Chairman and other members of the Board and the Chair of the
Audit Committee and Audit Committee members will be available to answer questions at the forthcoming Annual General
Meeting. In addition, proxy votes will be counted and the results announced after any vote on a show of hands.
The Chairman ensures that the views of shareholders are communicated to the Board as a whole, ensuring that Directors
develop an understanding of the views of shareholders. Any individual requests for information from shareholders are
dealt with by the Chairman, and where any such requests are subject to restraint in that where any disclosure would give
rise to share price sensitive information, then the requests would be declined, or referred to the Board for release to all
shareholders through the Stock Exchange.
Engagement with the Group’s suppliers, customers and other stakeholders can be found within the Strategic Report on
pages 16 and 17.
Going concern
The Directors, after having reviewed the projections and possible challenges that may lie ahead, believe that there is a
reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve
months from the date of approval of these financial statements, and have continued to adopt the going concern basis in
preparing the financial statements.
As at 30th April, 2022, the Group’s gearing ratio stood at 25.8% (2021: 15.4%) against a substantial shareholders’ net
worth of £115 million (2021: £113 million). The retained reserves of the Group put it in a strong position to deal with
unforeseen material adverse issues.
In previous years we have reported on the potential impact of Covid-19 and its limited impact on the business.
As you might expect given our previous comments, our pandemic risk profile is low and whilst there are minor
Covid-19 impacts we do not see the pandemic as a cause for concern for the Group moving forwards.
The reported results for the year are after having incurred what have been unprecedented increases in energy costs.
Whilst the Group is not complacent and there is work to be done here, we do not see the impact of energy costs giving rise
to a going concern issue.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds to cover the
Group’s and the Company’s financial commitments during the forecast period whilst remaining compliant with its financial
covenants. The stress test model starts with the forecasts generated by the subsidiary directors and reflects their specific
knowledge of the market conditions, strategy and outlook. Each of these subsidiary level forecasts is then reviewed,
challenged and approved by the relevant Group Managing Director who themselves are immersed in each of the
businesses. The stress test model then predicts the impact of a severe but plausible reduction in the pre-tax profit forecast
without pulling back on our capital expenditure forecast. The results of the stress test modelling did not highlight any going
concern issues.
Whilst our carrying values of trade debtors and contract assets are significant, we see little risk here in terms of recovery.
Where possible, we credit insure the majority of our debtors and our pre credit risk (work in progress), and for significant
contracts where credit insurance is not available, we ensure, where possible, that these contracts are backed by letters of
credit or cash positive milestone payments.
As discussed elsewhere within these accounts, the Mechanical Engineering order book remains high and the Refractory
Engineering segment continues to be buoyant.
20
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Going concern (continued)
The Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as
they fall due for at least twelve months from the date of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
Viability Statement
In accordance with provision 31 of the UK Corporate Governance Code the Directors have assessed the Group’s viability
over a three year period to 30th April, 2025.
While the Board has no reason to believe that the Group will not be viable over a longer period, the Board believes that a
three year review period is prudent, and provides the readers of the report with a sensible degree of confidence.
As part of the going concern review process we have considered the impact of plausible adverse events over an extended
period (two more years, taking the total review period to 30th April, 2025). The plausible adverse event scenarios (using
the same logic as outlined for the stress test model within the going concern review section) have been modelled without
adjusting downwards the capital expenditure programme. The results demonstrate that the Group has sufficient facilities in
place to deal with these adverse events and given that a large proportion of the future capital expenditure is by definition
discretionary, there is further confidence that a downturn will not impact on the Group’s ability to deal with material adverse
events.
The workload within the Mechanical Engineering segment remains high and so underpinning performance in the short to
medium term. The Directors are therefore able to confirm that they have a reasonable expectation that the Group will be
able to continue in operation and remain financially viable over this extended period to 30th April, 2025.
Corporate governance statement
The Company’s Corporate Governance Statement is set out on pages 22 to 23 and forms part of the Directors’ Report.
Financial Risk Management
The Group has in place risk management policies that seek to limit the adverse effects on the financial performance of the
Group by using various instruments and techniques, further details can be found within note 26 on page 75.
Auditor
In accordance with Section 489 of the Companies Act 2006 and the recommendation of the Board of Directors, a
resolution is to be proposed at the Annual General Meeting for the re-appointment of RSM UK Audit LLP as auditor of the
Company.
Approved by the Board of Directors and signed on its behalf by:
T. J. W. Goodwin2nd August, 2022
Chairman
21
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT
Introduction
The Board comprises six Executive Directors and an independent Non-Executive Director; the Audit Committee comprises
the Non-Executive Director, who is the Audit Committee Chair, and three other members, the previous Chairman, the
previous Managing Director and the previous Company Secretary, all of whom had held their previous positions for twenty-
seven years and so have very substantial knowledge and experience of the diversified Group’s people, product ranges
and the very diversified overseas markets in which the Group operates. The Board and the Audit Committee fulfil the roles
required for effective corporate governance and the Board considers that it has the right governance to execute its
strategy to achieve its objectives.
The Board has always felt that it should be recognised that what may be appropriate for the larger company may not
necessarily be so for the smaller company, a point raised previously in the Cadbury Code of Best Practice. Whilst
conscious of its non-compliance with certain aspects of the Code as detailed below, we do not believe that at this stage in
the Group’s development and circumstances it is appropriate to change its own operational or governance structure with
the sole objective of achieving compliance with the Code given that the Board’s current corporate governance strategy has
been accepted by a large majority of its shareholders.
For the past seven years the Company has had one Non-Executive Director who is also the Chair of the Audit Committee,
which has three other members as described above. This is not in full compliance with the Code, but for a smaller
company, due to the limits of time, availability and cost, the Board considers this as an optimum compromise that is
beneficial to shareholders and the Group’s long-term interests. For specific independent expertise the Board engages
independent consultants.
Compliance statement under the UK Corporate Governance Code 2018
The Company is required to report on compliance throughout the year. In relation to all of the provisions except those
mentioned below, the Company complied throughout the period.
As noted in the introduction above, the Group does not comply with aspects of the Code’s requirements under provisions
11 and 13 and provision 12 in terms of having a senior independent Director. Since 14th April, 2015 a Non-Executive
Director with the role of Chair of the Audit Committee has been appointed. The Group does not have a Remuneration
Committee or a Nominations Committee as required under provisions 10, 17, 23, 24, 32, 33 and 41.
The roles of the Chairman in running the Board and the Managing Directors in running the Group’s businesses are well
understood. It is not considered necessary to have written job descriptions. This is contrary to provision 14. The Chairman
and Managing Directors do not retire by rotation, which is contrary to provision 18 of the Code.
The Code is available to view on the website of the Financial Reporting Council at www.frc.org.uk
The Board
During the year, the Board met formally twelve times, and details of attendees at these meetings are set out below:
M. S. Goodwin
…
…
…
…
… 12 out of 12 attended
S. R. Goodwin
…
…
…
…
… 12 out of 12 attended
T. J. W. Goodwin …
…
…
…
… 12 out of 12 attended
J. Connolly …
…
…
…
…
… 12 out of 12 attended
B. R. E. Goodwin …
…
…
…
… 12 out of 12 attended
N. Brown
…
…
…
…
…
… 12 out of 12 attended
J. E. Kelly
…
…
…
…
…
… 12 out of 12 attended
The Chairman and Managing Directors do not retire by rotation. With this exception, all Directors retire at the first Annual
General Meeting after their initial appointment and then by rotation at least every three years, which is contrary to
provision 18 of the Code.
The Board retains full responsibility for the direction and control of the Group and, whilst there is no formal schedule of
matters reserved for the Board, all acquisitions and disposals of assets, investments and material capital-related projects
are, as a matter of course, specifically reserved for Board decision, but referred to the Audit Committee for comment.
The Board meets regularly with an agenda to discuss corporate strategy; to formulate and monitor the progress of
business plans for all subsidiaries and to identify, evaluate and manage the business risks faced. The management
philosophy of the Group is to operate its subsidiaries on an autonomous basis, subject to overall supervision and
evaluation by the Board, with formally defined areas of responsibility and delegation of authority. The Group has formal
lines of reporting in place with subsidiary management meeting with the Board on a regular basis. Regular informal
meetings are also held to enable all members of the Board to discuss relevant issues with local management and staff at
the business units.
The Audit Committee
The Audit Committee is made up of the following: J.E. Kelly (Chair), J.W. Goodwin, R.S. Goodwin and P. Ashley and the
Audit Committee reports to the Board. The Audit Committee has met formally eight times since the issue of the Annual
Report for the year ended 30th April, 2021, with all members attending each meeting. The responsibility of the Audit
Committee is explained in the Audit Committee Report on pages 24 to 26. The Audit Committee takes into account the
Company’s corporate Mission Statement, Objectives and Strategy, and reviews investor correspondence and comments,
regulatory changes, current issues and market trends. The Audit Committee uses expert opinion where considered
appropriate.
22
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
Board evaluation
The Managing Directors, Chairman and Audit Committee address the development and training needs of the Board as a
whole. An evaluation of the effectiveness and performance of the Board and the Directors of subsidiaries has been carried
out by the Managing Directors, Chairman and Audit Committee, by way of personal discussions and individual
performance evaluation.
All Directors have reasonable access to the Company Secretary and to independent professional advice at the Company’s
expense.
External audit
The external auditor is appointed annually at the Annual General Meeting. The Board, following review and
recommendations received from the Audit Committee, considers the appointment of the auditor, and assesses on an
annual basis the qualification, expertise, cost, independence and objectivity of the external auditor. In addition, the Audit
Committee monitors the level of non-audit services provided to the Group by the external auditor to ensure that their
independence is not compromised.
Disclosure of information to auditor
The Directors who held office at the date of approval of this Corporate Governance Report confirm that, so far as they are
each aware, there is no relevant audit information of which the Company’s auditor is unaware; and each Director has
taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit
information and to establish that the Company’s auditor is aware of that information.
Internal control and risk management
The Board has overall responsibility for the Group’s systems of internal controls and risk management which are designed
to manage rather than eliminate risk and provide reasonable reassurance against material misstatement or loss.
The Board has primary responsibility for controlling: operational risks; financial risks including funding and capital spend;
compliance risks; and political risks. The Audit Committee has been delegated responsibility for corporate reporting,
financial risk management and to regularly review the effectiveness of the Group’s internal controls together with
consideration of any reports from the external auditor. The Audit Committee Report is on pages 24 to 26. Except as noted
within this Corporate Governance Report, the Board confirms that the internal control systems comply with the UK
Corporate Governance Code.
The Group’s main systems of internal controls include regular visits and discussions between Board Directors and
subsidiary management, in-house general counsel, health and safety committee and the Group Internal Auditor, on all
aspects of the business including financial reporting, risk reporting and compliance reporting. In addition, there is Board
representation with Goodwin PLC Directors on the boards of the subsidiaries. Any concerns are reported to the members
of the Audit Committee and to the Board. The Group maintains a risk register, has business continuity programmes and
has insurance programmes that are all regularly reviewed. These procedures have been in place throughout the year and
are ongoing to endeavour to ensure accordance with the FRC publication ‘Risk Management, Internal Control and Related
Financial and Business Reporting’. The Board considers that the close involvement of Board Directors in all areas of the
day to day operations of the Group’s business, including considering reports from management and discussions with
senior personnel throughout the Group, represents the most effective control over its financial and business risks system,
by providing an ongoing process for identifying, evaluating and managing the principal risks faced by the Group. In
particular, authority is limited to Board Directors in key risk areas such as treasury management, capital expenditure and
other investment decisions.
The close involvement of Board Directors in the day to day operations of the business ensures that the Board has the
financial and non-financial controls under constant review and so it is not currently considered that formal Board reviews of
these controls would provide any additional benefit in terms of the effectiveness of the Group’s internal control systems.
The Board recognises the importance of an effective internal audit function to assist with the management and review of
internal controls and business risk. The Group internal auditor continues to make good progress reviewing internal
controls, procedures and accounting systems, though visiting the overseas sites has been more difficult during the
financial year due to the worldwide Covid-19 pandemic. The Board of Directors and Senior Management will continue to
have close involvement on a day to day operational basis and the scope and results of internal audit work to be performed
will be kept under review in the coming year.
The Board considers that certain functions are best carried out by independent external bodies with specific expertise,
who then report to the Board directly or through the Audit Committee.
The Board confirms that it has not been advised of any material failures or weaknesses in the Group’s internal control
systems.
Approved by the Board of Directors and signed on its behalf by:
T. J. W. Goodwin2nd August, 2022
Chairman
23
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT
The key role of the Audit Committee is to provide confidence in the integrity of the Group’s financial risk management,
internal financial controls and corporate reporting. The Audit Committee, as empowered by the Group’s Board of Directors,
has responsibility for:
a)
Reviewing and checking the Group’s full year and half year Accounts and the Annual Report, as presented to the Audit
Committee.
b)
Reviewing the Group’s financial and non-financial internal controls and risk management systems and commenting on
whether they are relevant and effective.
c)
Making recommendations to the Group’s Board of Directors on the appointment and remuneration of the Group’s
external auditor; ensuring independence of the auditor; the effectiveness of the audit process; and that the Group
receives value for money from the audit.
d)
Reviewing comments and feedback brought to its attention by Directors or other employees of the Group.
e)
Reviewing and commenting to the Board on any significant investment plans of the Group.
f)
Reviewing the Group’s “whistle-blowing” procedures and reviewing any significant reports.
g)
Reviewing the scope of work for the internal audit function and the resultant reports.
h)
Reviewing significant accounting estimates and judgements relating to the financial statements with the external
auditor and members of the Board.
The Audit Committee discharges each of its above responsibilities as follows:
1.
Examining the integrity of the Group’s Annual Report and half year Interim Report:
The Chair of the Audit Committee is an independent Non-Executive Director. The other members of the committee
either are persons with experience in the Group’s typical products and or markets or have vast historical knowledge of
the business and activities of the Group. This, together with their regular involvement in reviewing the Group’s financial
performance and accounts, provides sufficient recent financial experience. Regular meetings are held between
members of the Audit Committee, Directors of Goodwin PLC and its subsidiaries, General Managers and Senior
Management of the UK subsidiaries. Members of the Audit Committee are involved in regular discussions with the
Directors, General Managers and Senior Management of each subsidiary where the positions taken on subjective
financial matters are discussed. Each overseas subsidiary is normally visited at least once during the year by a
member of the Audit Committee, and / or by a Main Board Director, for meetings with the General Managers and
Senior Management with reports sent back to the Audit Committee. Flight and self-quarantining restrictions still apply
to some of our overseas subsidiaries and the use of Zoom has enabled regular meetings with them to continue. Where
possible, travel to and from some of those areas has also started to take place. Any areas where the Audit Committee
feels that the positions taken within any particular subsidiary are either inappropriate or merit further discussion are
documented for further discussion by the Board of Directors of Goodwin PLC.
For the half year Interim Report, the Audit Committee reviews the financial and non-financial content, including the
Chairman’s Statement, and reviews the financial statements and qualitative notes of the financial statements, to help
ensure that they are balanced, relevant, appropriately compliant with relevant accounting standards / legislation, and
are consistent and complete. The Audit Committee reports to the Board of Directors their views as to whether the half
year Interim Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group’s half year performance. The figures in the half year Interim Report are not audited,
but the external auditor is given sight of these before publication.
For the full year Annual Report, the Audit Committee reviews the financial and non-financial content of the Group
Strategic Report, including the Chairman’s Statement; the Corporate Governance Report; the Directors’ Report; the
Directors’ Remuneration Policy and Report; and reviews the financial statements and the qualitative notes to the
financial statements to examine whether the content is balanced, relevant, appropriately compliant with relevant
accounting standards / legislation, and are consistent and complete. The Audit Committee has discussed the full year
Annual Report and their views with the Group external auditor. The Audit Committee confirmed to the Board that in its
opinion the proposed Annual Report for the year ended 30th April, 2022 appropriately represents the Group’s trading
position and, taken as a whole, is fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group’s full year performance, its position at the year end, and its objectives, strategy and
business model.
2.
Helping to ensure the Group carries effective and relevant financial and non-financial internal controls and
financial risk management systems:
To assess the effectiveness of systems for internal financial controls, financial reporting and financial risk management,
the Audit Committee reviews reports from Main Board Directors on the Group’s subsidiaries; reviews reports from the
Group Chief Accountant; reviews reports from General Managers of the Group’s subsidiaries; reviews quarterly
financial reports; reviews reports from internal and external audit; requests and reviews reports from independent
external consultants; and reviews the Group’s risk register, business continuity programmes and levels of insurance.
24
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
2022 Audit Committee Risk Programme
The terms of reference for the Audit Committee and how it discharges its duties have been presented to the Board and
ratified.
Risk Management:
As a method of adding formality to the management of risk within all Group companies, Steven Birks, a former
Goodwin PLC Director, set up a framework to mentor each subsidiary in enhancing their risk analysis and controls, and
when appropriate, he reviews this and reports to the Audit Committee on this status. Having focused initially on
overseas companies, all subsidiaries in the Group are now included in the mentoring and areas being scrutinised in
detail, other than risks individual to each company, are:
a)
having appropriate limits of contract liability
b)
having appropriate levels and types of insurance
c)
ensuring appropriate control of cash flow
d)
ensuring health and safety continues to be given priority and that there is a progressive plan for improvement
e)
ensuring product development and life cycles are managed relative to the global market
f)
ensuring that the provision of trained and skilled manpower is appropriately matched to the requirements of each
company
g)
risk analysis and preventative measures associated with the installation and commissioning of new plant, modified
plant and new processes.
Our Internal Group Head of Legal / General Counsel has set up and carried out a training programme for all Directors
and senior managers of the UK subsidiary companies to increase contract risk awareness, both for sales and
purchases. This training will now start to be rolled out to the overseas subsidiaries.
The Audit Committee continues to review the effectiveness of Know Your Customer (KYC), credit insurance, political
risk insurance and contract terms and conditions. Gallagher as brokers for the Group’s insurance cover continue to
review policies in place, along with Board members, and report back to the Audit Committee.
Market risk
No customer accounts for more than 10% of the annual Group turnover. The country and sector dependency for the
year is shown by the charts on page 11.
Technical risk
The performance of new products issued to market always has a degree of risk until a multi-year track record has been
attained. This statement relates to all Group companies in both the Mechanical and Refractory Engineering Divisions.
Product failure / contract risk
This has been reviewed and is unchanged from that previously stated.
Financial risk
This has been reviewed and is as stated in previous years with the perceived increased volatility in exchange rates and
the possibility of high foreign exchange hedging costs for forward long-term contracts.
The Board, with the support of the Audit Committee, has taken a ten year hedge to protect the Group against the
probable interest rate increases anticipated over the coming years.
Regulatory compliance
The Audit Committee continues to monitor regulatory compliance, training and competency. The Committee continues
to review the impact on the Group of the Climate Change Act 2008 (2050 Target Amendment) Order 2019.
Human Resources
The age profile of Senior Managers and perceived skill gaps within each Group company continue to be reviewed by
the Audit Committee. A number of accountancy and business development roles have been filled.
Information Technology
During the year the Audit Committee continued to monitor the risks posed affecting information security and the steps
taken to minimise these. A comprehensive internal audit of the Group’s IT systems was completed during the year.
Some risks have been identified and a plan to address those risks is being devised and implemented.
Capital expenditure
The Audit Committee also reviews and comments to the Board on major capital purchases or company acquisitions
being proposed by the Board of a unit or linked value greater than £2 million. Gross proposed or actual capital
expenditure of all Group companies is also reviewed to help ensure the Board maintains awareness of how such
expenditure will affect the limits agreed to be in place at the time.
The Audit Committee has confirmed its view to the Board that in its opinion, the Group carries relevant internal controls
and risk management systems appropriate to minimise the perceived risks of the Group’s business.
25
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
3.
The Group’s external auditor
Following shareholder approval at the Annual General Meeting in October 2021, RSM UK Audit LLP (“RSM”) was re-
appointed as the Group’s Auditor for the year ended 30th April, 2022 and going forward.
RSM did not provide any non-audit services to the Group during the year. The Company has, for many years now,
used a different accountancy practice to that of the statutory auditor for its UK tax services, which further enhances
both objectivity and independence.
The Audit Committee has met formally with the Group’s external auditor, RSM, to discuss the full year Annual Report,
and has met with and discussed matters with them as part of the audit process during the current financial year being
reported on. No material concerns were raised during these meetings or discussions. The Audit Committee was
satisfied with the external auditor’s independence and the effectiveness of the audit process.
The Audit Committee has recommended to the Board to propose a Resolution to confirm the re-appointment of RSM
UK Audit LLP, as the external auditor at the Annual General Meeting on 5th October, 2022.
4.
Reviewing comments and feedback
There is regular contact with Directors and employees where open and frank discussion is encouraged.
5.
Whistle-blowing Procedures
The Group has a whistle-blowing policy in place whereby employees can report any suspected misconduct or
concerns, either anonymously on a dedicated telephone line, or to the Chairman, the Company Secretary or the Chair
of the Audit Committee. Such calls are investigated and are reported to the Audit Committee. The Audit Committee has
confirmed to the Board that the Group’s whistle-blowing policy and procedures are appropriate.
6.
Internal Audit
The scope of internal audit has been set by the Audit Committee and the results reviewed.
The internal audit function operates a random rotation policy which prioritises based on materiality and endeavours to
cover all Group subsidiaries at least once within a three year cycle either via the Group Internal Auditor or by the
respective Group Managing Directors or members of the Audit Committee. Remote desk-top internal audits of our
overseas subsidiaries have continued during Covid-19 restrictions and travel to overseas subsidiaries will now
commence shortly. However, the larger profit earning overseas subsidiaries, Noreva, Gold Star Powders India and
Goodwin Pumps India have been subject to full statutory audit by RSM Germany and India respectively.
7.
Covid-19
The Audit Committee has continued to review Covid-19 along with the Board as detailed in the Principal Risks and
Uncertainties section on page 15.
8.
Accounting estimates and judgements relating to the Financial Statements
The Audit Committee reviewed what it considered to be the accounting estimates and judgement areas within the
Group Annual Report for the year ended 30th April, 2022.
The Audit Committee has reviewed and agreed with the Board’s opinion of how the ten year interest rate swap should
be accounted for and reported on.
The Audit Committee also took account of the findings of RSM in relation to their external audit work for the year.
J. E. Kelly2nd August, 2022
Chair of the Audit Committee
26
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT
This report includes the Group’s Remuneration Policy for Directors and sets out the Annual Directors’ Remuneration
Report.
Group’s Remuneration Policy for Directors
The Group’s policy in respect of Directors’ remuneration is to provide individual packages which are determined having
due regard to the Group’s current and projected profitability, the employee’s specific areas of responsibility and
performance, their related knowledge and experience in the Group’s specific fields of operation, the external labour market
and their personal circumstances whereby a package to remunerate and motivate the individual so as to best serve the
Group is set. Individual salaries are also indirectly linked up and down to the time allocated and perceived effort by the
Director to the Group’s business. Many Directors, as indeed employees, put in hours of work way beyond what could be
requested and such personal devotion to duty by a Director is rewarded without formulae. All Board members have access
to independent advice when considered appropriate. In forming its policy, consideration has been given to the UK
Corporate Governance Code best practice provisions on remuneration policy, service contracts and compensation and
has considered the remuneration levels of Directors of comparative companies.
The remuneration policy for other employees is broadly based on principles consistent with the policy for Directors. Salary
reviews take into account Group performance as well as subsidiary performance, local pay and market conditions.
Whilst being aware of the requirements to show in graph form the breakdown of base pay, bonus pay, pension and long-
term benefits, the Group is unable to comply with this requirement as Directors are not paid in accordance with any
specific performance criteria or KPIs. Directors are paid based on their level of activity within the Group, their knowledge
and experience of the Group’s activities or similar, the performance of the Group versus market opportunity whilst also
considering the Director’s personal circumstances and the salary needed to ensure continuity of employment. This in itself
may result in decreases or increases in a Director's salary within any year as illustrated in the matrix below.
Element of
Purpose and
Operation
Maximum
Performance
Changes for
Pay
Link to Strategy
Targets
2021 / 2022
Salary
Reflects the Directors’
Reviewed
Generally in line
The Group’s
Directors set the
level of activity and
annually at the
with inflation and
performance,
base increase in
achievement within
anniversary of the
the wage / salary
good or bad, may
salaries. For the
the Group, their
previous salary
increase awarded
result in the salary
period May 2021
knowledge and
adjustment for
to employees, but
being changed.
to April 2022 the
experience of the
the individual
this is not rigid.
increase was
Company’s activities
Director.
generally 3.2%.
or similar, the
performance of the
Group versus market
opportunity, whilst
also considering the
salary needed to
ensure continuity of
employment.
Pensions
All Executive Directors
Monthly
Currently 3%
N/A
No changes.
have 3% added to their
payments
of gross
This policy
gross remuneration
remuneration
was adopted
which, by nature of
in October 2013
salary sacrifice, is put
for the Directors
into a pension
and entire UK
scheme where they
workforce.
have direct dealings
with the selected
investment fund
provider.
Other benefits
Fully expensed car or
N/A
N/A
N/A
See details of the
cash alternative,
Directors’
health insurance or
emoluments on
other services.
page 31.
We believe the above meets the requirement of Schedule 8, Companies Act 2006, regarding the changes in 2021 / 2022.
The Policy and Report is signed by the Chairman and the Managing Directors.
In any company there are specific individual circumstances that on occasions will merit special treatment in a given year
for a Director either to keep or look after the person, indeed no different than we may do for an employee. In the matrix of
remuneration for Directors you will note the Company has given itself flexibility to deal with specific circumstances which
may not even be able to be made public for confidentiality reasons of which there are many. However, bearing in mind the
performance of the Company over the past twenty years and more and that the Directors’ salaries are anything but
excessive versus the norm of other PLCs, this is the Board’s policy.
27
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
Total shareholder return – unaudited
For reference the TSR of Goodwin PLC versus the FTSE 100 and the FTSE 350 is shown below for not only the last five
but also the last ten years and the last twenty years.
TSR for last 5 Years
TSR for last 10 Years
TSR for last 20 Years
Goodwin
FTSE 100
FTSE 350
…
…
…
240%
27%
26%
…
…
…
218%
93%
99%
…
…
…
5,378%
206%
234%
As is required by the Listing Rules, we show in graph form both the salary of the Managing Director (CEO equivalent) of
Goodwin PLC and the TSR over the past ten years. We, however, do not list out the salary of the Financial Director of
Goodwin PLC versus the TSR as in Goodwin PLC we have a Group Chief Accountant (J. Connolly) who carries out 75%
of the duties of a Financial Director and who is also a Director of Goodwin PLC, but we do not have what would generally
be known as a Financial Director. This is for the reason that certain decisions that outsiders might consider are the sole
responsibility of the Financial Director are not. In Goodwin PLC it is a team effort and such decisions are made not only by
the Group Chief Accountant but also by the Managing Directors and the Chairman.
The Company put the Remuneration Policy to the vote of the Annual General Meeting in 2019 when it was passed by
93.68% of those who voted. The Company will be putting the Remuneration Policy to the vote again in 2022, which is
three years from the last vote, as is required by the Listing Rules.
For confidentiality and flexibility reasons, the Board policy is not to disclose exit / termination payments to Directors but the
policy is to remain within the law, to fairly compensate good leavers and minimise payments to bad leavers. In the last ten
years, the Company has managed to avoid paying any termination payments to bad leavers. It is, however, Board policy to
limit termination payments to a maximum of 100% of gross annual salary and should such amount be exceeded then it will
be reported in the Annual Report giving the reason why.
The Company takes seriously its responsibility for ensuring a fair deal between employees, shareholders, customers and
the local community and maintaining an appropriate balance.
The Company does not use or pay any external advisers or consultants for remuneration or incentive policy.
Shareholder engagement is by nature of the Annual Report, the Annual General Meeting and the votes therein.
28
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report
This report is submitted in accordance with the Directors’ Remuneration Report Regulations.
Consideration by the Directors of matters relating to Directors’ remuneration
The Company’s Remuneration Policy for Directors is set by the Board as a whole and is described in pages 27 to 28
therein. The Policy has been followed in the financial year to 30th April, 2022 and will be followed in the next financial year.
The Board of Directors are also the key management personnel as defined in IAS 24.
Service contracts
None of the Directors has a service contract. A Director may resign at any time by notice in writing to the Board. There are
no set minimum notice periods but all Directors other than the Chairman and Managing Directors are subject to retirement
by rotation and as employees also have notice periods in accordance with law. No compensation as of right is payable to
Directors on leaving office.
Relative importance of spend on pay
The table below shows shareholder distributions and total employee expenditure, and the percentage change in both:
2022
2021
£’000
£’000
%
Ordinary dividends proposed in respect of the year (£’000)
…
…
…
…
8,289
7,862
5.4%
Total employee costs (£’000)
…
…
…
…
…
…
…
…
…
44,745
44,873
(0.4%)
Average employee numbers
…
…
…
…
…
…
…
…
…
1,112
1,129
(1.5%)
Approval of the Company’s Annual Directors’ Remuneration Report
An ordinary resolution for the approval of the Annual Directors’ Remuneration Report will be put to shareholders at the
forthcoming Annual General Meeting. The Annual Directors’ Remuneration Report presented in the accounts to 30th April,
2021 was put to the shareholders at last year’s Annual General Meeting on 6th October, 2021. The Annual Directors’
Remuneration Report was accepted with 98.41% of proxy votes cast in favour.
Total shareholder return – unaudited
The following graphs compare the Group’s total shareholder return over the ten and twenty years ended 30th April, 2022
with various FTSE indices. The graphs also show the change in the earnings of the previous Managing Director for the
periods up to 30th April, 2019.
The base earnings figure since 30th April, 2019 is the amount earned by each Managing Director.
2018
2019
2020
2021
2022
£’000
£’000
£’000
£’000
£’000
385
397
310
355
374
Total payroll costs, excluding the Managing Director’s salary, have decreased by 0.4%. During the year, the base increase
awarded to employees in the UK companies was 3.2%.
The following graphs have not been audited.
29
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
The increase in the Goodwin PLC share price since 2002 plus dividends re-invested would mean that £1.00 invested in
2002 by 30th April, 2022 would be worth £54.78. The increase in the share price since 2012 plus dividends re-invested
would mean that £1.00 invested in 2012 would at 30th April, 2022 be worth £3.18.
30
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
The auditors is required to report on the following information contained in this section of the Annual Directors’
Remuneration Report.
Directors’ interests in the share capital of the Company as well as ex Directors – audited
The interests of the Directors in the share capital of the Company at the beginning and end of the financial year
were as follows:
Beneficial
M. S. Goodwin
…
…
…
…
…
…
69,265
67,072
S. R. Goodwin
…
…
…
…
…
…
78,978
76,785
T. J . W. Goodwin…
…
…
…
…
…
122,334
120,141
J. Connolly
…
…
…
…
…
…
28,802
18,322
B. R. E. Goodwin …
…
…
…
…
…
59,189
55,239
N. Brown …
…
…
…
…
…
…
445
445
J. W. Goodwin*
…
…
…
…
…
…
71,866
61,386
R. S. Goodwin*
…
…
…
…
…
…
33,236
22,756
J. W. Goodwin and R.S. Goodwin* …
…
…
2,129,153
2,129,153
J. W. Goodwin and R.S. Goodwin* …
…
…
1,457,358
1,424,210
Non-beneficial
J. W. Goodwin* and E. M. Goodwin
…
…
14,166
14,166
* Audit committee member / ex Director.
Details of individual emoluments and compensation – audited
Single Total Figure Table
Salary
Benefits
Non-Exec
Pension
Total
Year ended 30th April, 2022
in kind
Director’s
contrib-
fees
utions
2022
2022
2022
2022
2022
£’000
£’000
£‘000
£’000
£’000
M. S. Goodwin
…
…
…
…
…
…
…
360
3
-
11
374
S. R. Goodwin
…
…
…
…
…
…
…
360
3
-
11
374
T. J. W. Goodwin …
…
…
…
…
…
…
259
3
-
8
270
J. Connolly…
…
…
…
…
…
…
…
270
2
-
8
280
B. R. E. Goodwin …
…
…
…
…
…
…
233
3
-
7
243
N. Brown
…
…
…
…
…
…
…
…
167
11
-
5
183
J. E. Kelly
…
…
…
…
…
…
…
…
-
-
72
72
Total
…
…
…
…
…
…
…
…
1,649
25
72
50
1,796
Single Total Figure Table
Salary
Benefits
Non-Exec
Pension
Total
Year ended 30th April, 2021
in kind
Director’s
contrib-
total
fees
utions
2021
2021
2021
2021
2021
£’000
£’000
£’000
£’000
£’000
M. S. Goodwin
…
…
…
…
…
…
…
333
12
-
10
355
S. R. Goodwin
…
…
…
…
…
…
…
333
12
-
10
355
T. J. W. Goodwin …
…
…
…
…
…
…
243
6
-
7
256
J. Connolly …
…
…
…
…
…
…
…
256
17
-
8
281
S. C. Birks (retired 11th December , 2020)
…
…
64
13
-
2
79
B. R. E. Goodwin …
…
…
…
…
…
…
209
6
-
6
221
N. Brown (appointed 11th December , 2020)
…
…
64
4
-
2
70
J. E. Kelly
…
…
…
…
…
…
…
…
-
-
68
-
68
Total
…
…
…
…
…
…
…
…
1,502
70
68
45
1,685
Benefits in kind consist of the provision of a fully expensed car, a cash alternative scheme, healthcare insurance or other
services. The employer’s national insurance costs relating to the Directors’ remuneration amounted to £222,000 (2021:
£207,000).
31
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Comparison – audited
We are including in the report a table comparing the annual change of each Director’s pay with that of the average
employee’s pay. This is required over a rolling five year period, but as the requirements came into effect for financial years
ending 2021, the table below will only show the comparison from 30th April, 2020.
Annual Percentage Change of Average Remuneration of each Director
2021 / 2022
2020 / 2021
%
%
M. S. Goodwin
…
…
…
…
…
…
…
…
…
…
5%
15%*
S. R. Goodwin
…
…
…
…
…
…
…
…
…
…
5%
15%*
T. J. W. Goodwin …
…
…
…
…
…
…
…
…
…
5%
32%*
J. Connolly …
…
…
…
…
…
…
…
…
…
…
-
16%
B. R. E. Goodwin …
…
…
…
…
…
…
…
…
…
10%
42%
N. Brown (appointed 11th December, 2020)** …
…
…
…
…
N/A
N/A
J. E. Kelly …
…
…
…
…
…
…
…
…
…
…
6%
9%
UK Average Employee % Change …
…
…
…
…
…
…
5%
3%
Notes:
The UK average employee is based on the UK workforce employed by Goodwin PLC as a company and its UK
subsidiaries. The average figure has been calculated using a mean 5% of employee pay.
*
The above increases are in relation to the appointment of M.S. Goodwin, S.R. Goodwin and T.J.W. Goodwin as
Mechanical Divisional Managing Director, Refractory Divisional Managing Director and Group Chairman respectively.
**
As N. Brown was appointed in December 2020 any comparison between 2020/2021 and 2021/2022 is not considered
a fair comparison and for this reason the Directors have omitted to include this information this year but will report on the
percentage change in the year ending 2023.
The increases greater than the UK average employee % change are a reflection of the further development of individual
Directors in the areas of their new responsibilities.
Pay Ratio of Managing Directors
In accordance with the Pay Ratio Regulations we are disclosing the comparison of our Managing Directors’ pay with that
of our average UK employees. It is appropriate that the Managing Directors’ pay was used in the comparison as we do not
have what is generally known as a Chief Executive Officer.
For the year ended 30th April, 2022 the pay for both the Managing Directors in the Single Total Pay Figure table is the
same. If the figures are different in any subsequent year, the higher of the two figures will be used in the ratio pay
comparison section.
The tables below show our Managing Directors’ pay ratio at the 25th, median and 75th percentile of our UK employees as
at 30th April, 2022:
Financial
Method
25th
Median
75th
Year
percentile
pay ratio
percentile
pay ratio
pay ratio
2022
FTSE Small Cap
15:1
20:1
31:1
2022 FTSE 250
20:1
30:1
46:1
2022 ratios
Option A
14:1
11:1
8:1
2021 ratios
Option A
14:1
11:1
8:1
2020 ratios
Option A
12:1
10:1
7:1
Financial
Managing
25th
Median
75th
Year
Directors
percentile
pay
percentile
£’000
pay
£’000
pay
£’000
£’000
2022
Total Pay
374
27
34
48
2021
Total Pay
355
26
33
45
2020
Total Pay
333
26
33
45
32
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Ratio of Managing Directors (continued)
Notes:
1.
Total pay has been calculated for each employee and, where applicable, prorated to calculate full-time equivalent pay.
It includes payments that are taxable plus any employer pension contributions.
2.
We offer competitive and fair rates of pay for all our UK employees taking into account personal circumstances and the
median pay ratio of the Managing Directors has remained the same as the prior year.
3.
We have opted for Option A of the pay ratio regulations as this is the preferred option under the regulations and also
provides the most accurate data.
4.
The above figures are based on the total pay as at 30th April, 2022.
Equity Long Term Incentive Plan (LTIP) – Vested Share Options – audited
Under the Equity Long Term Incentive Plan (LTIP) for the Executive Directors, that was approved at the Annual General
Meeting on 5th October, 2016, the 2016 LTIP target was partially met in 2019, resulting in 85% of the awards granted
vesting, entitling each of the sitting eight Directors to 61,200 shares (17 x 3,600 = 61,200).
Exercised
During the year ended 30th April, 2022 each Director exercised 20,400 share options, increasing the Company’s total
share capital by 163,200 to 7,689,600. All share options have now been exercised.
Whilst the Company has no follow-on LTIP incentive plans in place or proposed, the shares vested as part of the above
scheme further align the Executive Directors with the long-term interests of the shareholders, as do their not insignificant
shareholdings already held.
Total pension entitlements – unaudited
In line with the Government’s requirements the Group administers a pension scheme for all UK employees including
Directors. Under this Auto Enrolment Pension arrangement each Director has an amount of 3% of gross remuneration
paid into a pension scheme where they have direct dealings with the selected investment fund provider. The employee
also contributes a minimum of 4% of remuneration to his / her fund. The pension contributions are to defined contribution
pension schemes which are independent of the Company.
The Company has no obligations to make any payments in relation to pensions when a Director leaves service by nature
of removal from office, resignation or retirement.
The Annual Directors’ Remuneration Report was approved by the Board on 2nd August, 2022 and is signed on its behalf
by:
T. J. W. GoodwinM. S. GoodwinS. R. Goodwin
DirectorDirectorDirector
33
DIRECTORS’ REPORTS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL
REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Strategic Report and the Report of the Directors, the Directors’
Remuneration Report, the separate Corporate Governance Statement and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. The
Directors have elected under company law and are required under the Listing Rules of the Financial Conduct Authority to
prepare Group financial statements in accordance with UK-adopted International Accounting Standards. The Directors
have elected under company law to prepare the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
The Group financial statements are required by law and UK-adopted International Accounting Standards to present fairly
the financial position and performance of the Group; the Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial statements giving a true and fair view are references
to their achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and the Company and of the profit or loss for that period. In preparing each
of the Group and Company financial statements, the Directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b.
make judgements and estimates that are reasonable and prudent;
c.
for the Group financial statements, state whether they have been prepared in accordance with UK-adopted
International Accounting Standards;
d.
for the Company financial statements, state whether they have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
e.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group
and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply
with the Companies Act 2006. They are responsible for safeguarding the assets of the Group and the Company and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Directors’ statement pursuant to the Disclosure and Transparency Rules
Each of the Directors, whose names are listed on page 19, confirm that to the best of each person’s knowledge:
a.
the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the
consolidation taken as a whole; and
b.
the Strategic Report contained in the Annual Report includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Goodwin PLC website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
T. J. W. GoodwinM. S. GoodwinS. R. Goodwin
DirectorDirectorDirector
2nd August, 2022
34
INDEPENDENT AUDITOR’S REPORT
to the members of Goodwin PLC
Opinion
We have audited the financial statements of Goodwin PLC (the ‘parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 30 April, 2022 which comprise the Consolidated Statement of Profit or
Loss, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in
Equity, Consolidated Balance Sheet, Consolidated Statement of Cash Flows, Company Balance Sheet,
Company Statement of Changes in Equity and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied in the preparation of the
parent Company financial statements is applicable law and United Kingdom Accounting Standards
including Financial Reporting Standard 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and of the parent
Company’s affairs as at 30 April 2022 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted
International Accounting Standards;
the parent Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Group and parent Company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
Revenue recognition – revenue recognised over time
Revenue recognition – revenue recognised at a point in time
Intangible assets – capitalisation and impairment
Financial Instruments – accounting for the interest rate swap
Parent Company
Financial Instruments – accounting for the interest rate swap
Materiality
Group
Overall materiality: £715,000 (2021: £651,000)
Performance materiality: £536,000 (2021: £456,000)
Parent Company
Overall materiality: £425,000 (2021: £500,000)
Performance materiality: £318,000 (2021: £350,000)
Scope
Our audit procedures covered 80% of revenue, 82% of total assets and
72% of absolute profit before tax.
35
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the Group and parent Company financial statements of the current period and include the
most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on the overall audit strategy, the allocation of resources in
the audit and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the Group and parent Company financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition – Revenue recognised over time
Key audit matter
Refer to accounting policies in note 1, accounting estimates and
description
judgements in note 2 and note 4.
Revenue underpins the key measures of performance of the Group.
As a profit-oriented business, we considered the risk of fraud in the
recognition of revenue. We identified that there was a heightened risk of
misstatement around the year end through inappropriate application of the
Group’s revenue recognition policies and revenue transactions being
recognised in the wrong period.
The Group has contracts with customers under which revenue is
recognised over time. Revenue recognised in the year on these contracts
amounted to £65,458,000.
Estimates are made by management based on work completed for each
contract and costs to complete.
Revenue is recognised based on stage of completion with an associated
adjustment made to cost of sales to adjust the level of profits recognised
on the contract to be in line with the stage of completion.
Associated contract assets, liabilities and work in progress are recognised
where applicable on these contracts.
There is a risk that revenue could be misstated through:
- inappropriate application of the Group’s revenue recognition policies;
- the high level of estimation uncertainty in recognising revenue on over
time contracts; or
- modifications in contractual arrangements, such as variations and
settlements of claims
How the matter was
We assessed whether revenue was recognised in line with the Group’s
addressed in the
revenue recognition policies and IFRS 15 ‘Revenue from contracts with
audit
customers’.
We undertook test of details on contracts that have been completed in the
year and those open at the year end.
We considered management’s estimates of the stage of completion for
open contracts at the period end, substantively testing supporting
schedules, including verification of contractual terms. We challenged
management on the key assumptions and variances identified.
For all contracts selected we tested the associated contract assets and
contract liabilities.
A dispute on a customer contract reached settlement during the year. We
considered and challenged the proposed accounting to ensure that the
settlement was treated in accordance with IFRS 15. We checked the
associated adjustments to revenue were appropriate for the period through
our contract testing procedures.
We reviewed the disclosures associated with revenue recognition.
Key observations
Our audit work in respect of revenue recognised over time concluded that
the revenue is not materially misstated and the approach is appropriately
consistent year on year.
36
Our work identified some errors that were subsequently adjusted by
management; these adjustments did not impact the profit recognised in the
financial statements.
We identified some immaterial disclosure omissions which were not
corrected.
Revenue recognition – revenue recognised at a point in time
Key audit matter
Refer to accounting policies in note 1, accounting estimates and
description
judgements in note 2 and note 4.
As a profit-oriented business, we considered the risk of fraud in the
recognition of revenue. We identified that there was a heightened risk of
misstatement around the year end through inappropriate application of the
Group’s revenue recognition policies and revenue transactions being
recognised in the wrong period.
Revenue is recognised at a point in time in the Refractory division and for
certain arrangements in the Mechanical division. Revenue recognised in
the year on point in time sales amounted to £78,650,000.
Revenue is recognised when control of goods is passed onto the customer
by the Group. Judgement is involved in determining the point at which
control passes for certain mechanical engineering contracts where
revenue is recognised on delivery to the customer.
There is a risk that revenue could be misstated through:
- inappropriate application of the Group’s revenue recognition policies; or
- recognition of revenue in the wrong period.
How the matter was
We assessed whether revenue was recognised in line with the Group’s
addressed in the
revenue recognition policies and IFRS 15. This included an assessment of
audit
management’s judgement of when control passes on mechanical
engineering contracts accounted for at a point in time.
Our procedures included a combination of substantive analytical review
and tests of detail.
We selected a sample of items to check that revenue was recognised once
performance obligations have been met and that the cut-off of revenue
transactions around the year end was appropriate.
Key observations
The results of our procedures were satisfactory.
Intangible assets – capitalisation and impairment
Key audit matter
Refer to accounting policies in note 1, accounting estimates and judgements
description
in note 2 and note 15.
The Group has various intangible assets including goodwill, brand names,
intellectual property, manufacturing rights and development costs. These
assets form part of the Group’s cash generating units (CGUs).
The performance of each CGU varies and the actual or expected
performance of each could impact the carrying value of the Intangible assets
within the CGU.
The Group has incurred expenditure on development of new products in the
year which are capitalised if certain criteria are met in accordance with IAS
38 'Intangible assets'.
How the matter was
We obtained management’s impairment model of Cash Generating Units,
including Goodwill and undertook audit procedures including:
addressed in the
Assessing whether management's calculations comply with the
audit
requirements of IAS 36 ‘Impairment of assets’;
37
Analysing the structure and integrity of the model and its
mathematical accuracy;
Challenging the main forecasting assumptions used in the value -in-
use calculations which included expected revenues, margin and the
discount rate;
Performing sensitivity analysis in assessing the risks of impairment;
Corroborating assumptions through discussions with operational
management; and
Review of the disclosures in the financial statements.
We also assessed the capitalisation of development costs due to the impact
on reported earnings and the judgements involved in assessing whether the
IAS 38 criteria for capitalisation have been met.
We considered the amortisation accounting policy for each category of
intangible asset.
Key observations
Based on our procedures, we concluded that the carrying value and
disclosures in the financial statements were appropriate.
Financial Instruments – accounting for the interest rate swap
Key audit matter
Refer to accounting policies in note 1, accounting estimates and judgements
description
in note 2 and note 26.
The Group entered into a 10 year, £30 million interest rate swap during the
year to hedge for volatility in future interest rates on the Group’s expected core
debt. The fair value of the instrument recognised at the year end was £2.74
million.
The recognition of the financial instrument in the financial statements and the
applicability of hedge accounting is determined by the requirements of IFRS
9.
How the matter
We obtained copies of the interest rate swap agreement, the bank valuation
was addressed in
and management’s documentation.
the audit
We utilised an external valuations expert to agree the closing valuation.
We consulted with an internal financial accounting specialist to support our
review of the accounting requirements of IFRS 9 and associated guidance.
We challenged management’s judgement in respect of the proposed
accounting for the interest rate swap. This included consideration as to
whether hedge accounting could be applied to the swap for the debt currently
held by the Group until expiry, and following that, the planned core level of
debt to 2031.
Key observations
Based on our procedures and judgement we concluded that the criteria for
hedge accounting were not satisfied and recognition of the interest rate swap
at fair value in the Income Statement was required by IFRS 9. Management
accepted this conclusion and an adjustment was made to recognise the gain
in the statement of profit or loss, which is disclosed as a separate line item.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the
nature, timing and extent of our audit procedures. When evaluating whether the effects of
misstatements, both individually and on the financial statements as a whole, could reasonably
influence the economic decisions of the users we take into account the qualitative nature and the size
of the misstatements. Based on our professional judgement, we determined materiality as follows:
38
Group
Parent company
Overall materiality
£715,000 (2021: £651,000)
£425,000 (2021: £500,000)
Basis for determining
4.5% of two year average adjusted
0.3% of Total Assets
overall materiality
profit before tax.
Profit before tax has been adjusted
for material non-recurring items.
Rationale for
Profit before tax is considered the
Total assets is considered the key
benchmark applied
key benchmark of the Group. We
benchmark of the parent
have normalised this over a two
Company as the entity relies on its
year period to reflect the fact that
investments as a non-revenue
some revenue contracts span
generating entity.
multiple periods.
Performance materiality
£536,000 (2021: £456,000)
£318,000 (2021: £350,000)
Basis for determining
75% of overall materiality
75% of overall materiality
performance materiality
Reporting ofMisstatementsinexcessof
misstatements to the£35,700 and misstatements below
Audit Committeethat threshold that, in our view,
warranted reporting on qualitative
grounds.
Misstatements in excess of
£21,200 and misstatements
below that threshold that, in our
view, warranted reporting on
qualitative grounds.
An overview of the scope of our audit
The Group consists of 35 components, located in the following countries:
United Kingdom
China
Germany
South Korea
India
Brazil
South Africa
Australia
Thailand
Finland
The coverage achieved by our audit procedures was:
Number of
Revenue
Total assets
Absolute Profit
components
before tax
Full scope audit
10
76%
82%
68%
Specific audit
1
4%
-
4%
procedures *
Total
11
80%
82%
72%
*The specific scope % represents the component’s contribution however our procedures consisted of
specific audit procedures over the revenue and direct material costs of the component only.
Analytical procedures at Group level and testing of intercompany eliminations were performed for the
remaining 24 components.
Of the above, full scope audits for three components and specific audit procedures for one component
were undertaken by component auditors.
39
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the D irectors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
Directors’ assessment of the Group’s and parent Company’s ability to continue to adopt the going
concern basis of accounting included:
Reviewing management’s approved board paper which set out the going concern basis, key
forecasting assumptions, sensitivities and conclusion;
Obtaining copies of management’s forecasts and sensitivity analysis for the Group and
checking the mathematical accuracy of the forecasts;
Understanding and reviewing the results of the annual budget review process, including
submissions from the UK and overseas businesses which are approved by the board;
Comparing the forecasts to historical trading results and the key assumptions for expected
growth, margin improvement and capital expenditure plans;
Undertaking our own stress test to consider circumstances under which headroom would be
eroded;
Verifying the committed funding available to the Group and parent Company for the forecast
period and the headroom this provided to the Group and parent Company.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Group’s or the
parent Company’s ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In relation to the entity reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the D irectors’ statement in the financial
statements about whether the Directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial
statements and our auditor’s report thereon. The Directors are responsible for the other information
contained within the annual report. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared
in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic Report and the Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent Company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
Strategic Report or the Directors’ Report.
40
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent Company, or returns adequate
for our audit have not been received from branches not visited by us; or
the parent Company financial statements and the part of the Directors’ remuneration report to
be audited are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Corporate governance statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the parent Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial statements
and our knowledge obtained during the audit:
Directors’ statement with regards to the appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified set out on page 20 to 21;
Directors’ explanation as to their assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 21;
Directors’ statement on whether they have a reasonable expectation that the Group will be
able to continue in operation and meets its liabilities set out on page 21;
Directors’ statement on fair, balanced and understandable set out on page 19;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 14;
Section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on page 25;4 and,
Section describing the work of the audit committee set out on page 254;.
Responsibilities of Directors
As explained more fully in the D irectors’ responsibilities statement set out on page 34, the Directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the
parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including
fraud
Irregularities are instances of non- compliance with laws and regulations. The objectives of our audit
are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that
have a direct effect on the determination of material amounts and disclosures in the financial
41
statements, to perform audit procedures to help identify instances of non-compliance with other laws
and regulations that may have a material effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance with laws and regulations identified during the
audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of
the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed
risks of material misstatement due to fraud through designing and implementing appropriate responses and to
respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with
governance, to ensure that the entity's operations are conducted in accordance with the provisions of
laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud,
the Group audit engagement team and component auditors:
obtained an understanding of the nature of the industry and sector, including the legal and
regulatory frameworks that the Group and parent Company operates in and how the Group
and parent Company are complying with the legal and regulatory frameworks;
inquired of management, and those charged with governance, about their own identification
and assessment of the risks of irregularities, including any known actual, suspected or alleged
instances of fraud;
discussed matters about non-compliance with laws and regulations and how fraud might occur
including assessment of how and where the financial statements may be susceptible to fraud
for regulated entities, as defined in ISA 250B, having obtained an understanding of the
effectiveness of the control environment.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could
have a material effect on the financial statements were communicated to component auditors. Any
instances of non-compliance with laws and regulations identified and communicated by a component
auditor were considered in our audit approach.
The most significant laws and regulations were determined as follows:
Legislation /
Additional audit procedures performed by the Group audit
Regulation
engagement team and component auditors included:
IFRS / FRS 101
Review of the financial statement disclosures and testing to supporting
and Companies
documentation;
Act 2006
Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance
Input from a tax specialist was obtained regarding the Group’s transfer
regulations
pricing arrangement.
Consideration of whether any matter identified during the audit required
reporting to an appropriate authority outside the entity.
Manufacturing
ISAs limit the required audit procedures to identify non-compliance with
and operational
these laws and regulations to inquiry of management and where appropriate,
regulations
those charged with governance (as noted above) and inspection of legal and
regulatory correspondence, if any.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue
Transactions posted to nominal ledger codes outside of the normal revenue
recognition –
cycle were identified using a data analytic tool and investigated.
over time sales
See also the key audit matters section of this report for work performed over
this risk.
Revenue
recognition –
point in time
sales
Transactions posted to nominal ledger codes outside of the normal revenue
cycle were identified using a data analytic tool and investigated.
Revenues at the period end were tested to identify revenue recognised in
the incorrect period.
42
See also the key audit matters section of this report for work performed on
this area.
Management
Testing the appropriateness of journal entries and other adjustments;
override of
Assessing whether the judgements made in making accounting estimates
controls
are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the board of Directors on
19 March 2021 to audit the financial statements for the year ending 30 April 2021 and subsequent
financial periods.
The period of total uninterrupted consecutive appointments is two years, covering the years ended 30
April 2021 to 30 April 2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the
parent Company and we remain independent of the Group and the parent Company in conducting our
audit.
Our audit opinion is consistent with the additional report to the audit committee in accordance with
ISAs (UK).
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
In due course, as required by the Financial Conduct Authority (FCA) Disclosure Guidance and
Transparency Rule (DTR) 4.1.14R, these financial statements will form part of the European Single
Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage Mechanism
of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This
auditor’s report provides no assurance over whether the annual financial report has been prepared
using the single electronic format specified in the ESEF RTS.
Ian Wall (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Festival Way
Festival Park
Stoke-on-Trent
ST1 5BB
Date2 August 2022
43
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2022
2022
2021
Notes
£’000
£’000
CONTINUING OPERATIONS
Revenue …
…
…
…
…
…
…
…
…
…
3, 4
Cost of sales
…
…
…
…
…
…
…
…
…
(101,404 )
(92,230 )
GROSS PROFIT…
…
…
…
…
…
…
…
…
…
Other income
…
…
…
…
…
…
…
…
…
5
Distribution expenses
…
…
…
…
…
…
…
…
(3,743 )
(2,988 )
Administrative expenses
…
…
…
…
…
…
…
(20,654 )
(19,682 )
OPERATING PROFIT …
…
…
…
…
…
…
…
…
Finance costs (net)
…
…
…
…
…
…
…
…
7
(1,169 )
(640 )
Share of profit of associate company
…
…
…
…
…
14
PROFIT BEFORE TAXATION AND MOVEMENT IN FAIR VALUE
OF INTEREST RATE SWAP*
…
…
…
…
…
…
…
Unrealised gain on 10 year interest rate swap derivative
…
…
PROFIT BEFORE TAXATION
…
…
…
…
…
…
…
5
Tax on profit**
…
…
…
…
…
…
…
…
…
8
(6,321 )
(3,508 )
PROFIT AFTER TAXATION…
…
…
…
…
…
…
…
ATTRIBUTABLE TO:
Equity holders of the parent
…
…
…
…
…
…
…
Non-controlling interests
…
…
…
…
…
…
…
PROFIT FOR THE YEAR
…
…
…
…
…
…
…
…
BASIC EARNINGS PER ORDINARY SHARE (in pence)
…
…
9
DILUTED EARNINGS PER ORDINARY SHARE (in pence)
…
…
9
*
The Chairman’s Statement refers to profit before taxation less the movement in fair value of interest rate swap as
trading profit.
**
The tax charge for the current year equates to 31.7% of profit before tax (2021: 21.2%). Within the current year there is
a non-recurring non-cash impacting deferred tax charge of £2 million relating to the future change in the UK
corporation tax rate from 19% to 25%. Please refer to note 8 within these accounts for a full reconciliation of the tax
charge for the year.
The notes on pages 50 to 96 form part of these financial statements.
44
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2022
2022
2021
£’000
£’000
PROFIT FOR THE YEAR
…
…
…
…
…
…
…
…
…
OTHER COMPREHENSIVE (EXPENSE) / INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS:
Foreign exchange translation differences
…
…
…
…
…
…
(1,371 )
Effective portion of changes in fair value of cash flow hedges
…
…
(3,834 )
Ineffectiveness in cash flow hedges transferred to profit or loss
…
…
(339 )
(657 )
Change in fair value of cash flow hedges transferred to profit or loss
…
(1,432 )
Effective portion of changes in fair value of cost of hedging
…
…
…
(37 )
Ineffectiveness in cost of hedging transferred to profit or loss
…
…
(23 )
Change in fair value of cost of hedging transferred to profit or loss …
…
(75 )
Tax credit / (charge) on items that may be reclassified subsequently
to profit or loss …
…
…
…
…
…
…
…
…
…
(673 )
OTHER COMPREHENSIVE (EXPENSE) / INCOME FOR THE YEAR,
NET OF INCOME TAX…
…
…
…
…
…
…
…
…
…
(2,821 )
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
…
…
…
…
ATTRIBUTABLE TO:
Equity holders of the parent
…
…
…
…
…
…
…
…
Non-controlling interests
…
…
…
…
…
…
…
…
The notes on pages 50 to 96 form part of these financial statements.
45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2022
Total
Share-
Cash
attributable
Trans-
based
flow
Cost of
to equity
Non-
Share
lation
payment
hedge
hedging
Retained
holders of
controlling
Total
capital
reserve
reserve
reserve
reserve
earnings
the parent
interests
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
YEAR ENDED
30TH APRIL, 2022
Balance at 1st May, 2021
…
(852 )
(1 )
Total comprehensive income:
Profit for the year
…
…
Other comprehensive income:
Foreign exchange translation
differences
…
…
…
Effective portion of changes
in fair value
(3,790 )
(3,515 )
(44 )
(3,559 )
Ineffectiveness transferred
to profit or loss…
…
…
(333 )
(23 )
(356 )
(6 )
(362 )
Change in fair value
transferred to profit
or loss
…
…
…
…
(1,359 )
(64 )
(1,423 )
(84 )
(1,507 )
Tax
…
…
…
…
(47 )
TOTAL COMPREHENSIVE
INCOME / (EXPENSE)
FOR THE YEAR
(4,347 )
Transactions with owners:
Issue of shares …
…
…
Acquisition of NCI without a
change in control
…
…
(74 )
(74 )
(356 )
(430 )
Dividends paid …
…
…
(7,862 )
(7,862 )
(808 )
(8,670 )
BALANCE AT
30TH APRIL, 2022
(2,746 )
The notes on pages 50 to 96 form part of these financial statements.
46
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
for the year ended 30th April, 2021
Total
Share-
Cash
attributable
Trans-
based
flow
Cost of
to equity
Non-
Share
lation
payment
hedge
hedging
Retained
holders of
controlling
Total
capital
reserve
reserve
reserve
reserve
earnings
the parent
interests
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
YEAR ENDED
30TH APRIL, 2021
Balance at 1st May, 2020
…
(499 )
(743 )
Total comprehensive income:
Profit for the year
…
…
Other comprehensive income:
Foreign exchange translation
differences
…
…
…
(1,255 )
(1,255 )
(116 )
(1,371 )
Effective portion of changes
in fair value
…
…
…
(42 )
Ineffectiveness transferred
to profit or loss
…
…
(617 )
(21 )
(5 )
(26 )
Change in fair value
transferred to profit
or loss
…
…
…
…
(6 )
Tax
…
…
…
…
(492 )
(174 )
(666 )
(7 )
(673 )
TOTAL COMPREHENSIVE
INCOME / (EXPENSE)
FOR THE YEAR
(1,255 )
Transactions with owners:
Issue of shares …
…
…
Dividends paid …
…
…
(6,016 )
(6,016 )
(125 )
(6,141 )
Recycling of translation
reserve on the disposal
of subsidiary
…
…
…
BALANCE AT
30TH APRIL, 2021
(852 )
(1 )
The notes on pages 50 to 96 form part of these financial statements.
47
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2022
2022
2021
Notes
£’000
£’000
NON-CURRENT ASSETS
11
Property, plant and equipment
…
…
…
…
…
…
…
Right-of-use assets
…
…
…
…
…
…
…
…
12
Investment in associate
…
…
…
…
…
…
…
…
14
Intangible assets…
…
…
…
…
…
…
…
…
…
15
Long-term trade receivables …
…
…
…
…
…
…
…
17
Derivative financial assets
…
…
…
…
…
…
…
…
26
CURRENT ASSETS
Inventories…
…
…
…
…
…
…
…
…
…
…
16
Contract assets
…
…
…
…
…
…
…
…
…
…
4
Trade receivables and other financial assets
…
…
…
…
…
17
Other receivables
…
…
…
…
…
…
…
…
…
18
Derivative financial assets
…
…
…
…
…
…
…
…
26
Cash and cash equivalents
…
…
…
…
…
…
…
…
19
TOTAL ASSETS
…
…
…
…
…
…
…
…
…
…
CURRENT LIABILITIES
Borrowings
…
…
…
…
…
…
…
…
…
…
20
Contract liabilities
…
…
…
…
…
…
…
…
…
4
Trade payables and other financial liabilities
…
…
…
…
…
21
Other payables
…
…
…
…
…
…
…
…
…
…
22
Derivative financial liabilities …
…
…
…
…
…
…
…
26
Liabilities for current tax
…
…
…
…
…
…
…
…
Provisions for liabilities and charges
…
…
…
…
…
…
23
NON-CURRENT LIABILITIES
Borrowings
…
…
…
…
…
…
…
…
…
…
20
Derivative financial liabilities …
…
…
…
…
…
…
…
26
Provisions for liabilities and charges
…
…
…
…
…
…
23
Deferred tax liabilities …
…
…
…
…
…
…
…
…
24
TOTAL LIABILITIES…
…
…
…
…
…
…
…
…
…
NET ASSETS …
…
…
…
…
…
…
…
…
…
…
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital
…
…
…
…
…
…
…
…
…
…
25
Translation reserve
…
…
…
…
…
…
…
…
…
25
(852 )
Share-based payments reserve
…
…
…
…
…
…
…
25
Cash flow hedge reserve
…
…
…
…
…
…
…
…
(2,746 )
Cost of hedging reserve
…
…
…
…
…
…
…
…
(1 )
Retained earnings
…
…
…
…
…
…
…
…
…
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
NON-CONTROLLING INTERESTS
…
…
…
…
…
…
…
13
TOTAL EQUITY
…
…
…
…
…
…
…
…
…
…
These financial statements were approved by the Board of Directors on 2nd August, 2022, and signed on its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
Company Registration Number: 305907
The notes on pages 50 to 96 form part of these financial statements.
48
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2022
2022
2021
Notes
£’000
£’000
CASH FLOW FROM OPERATING ACTIVITIES
Profit from continuing operations after tax
…
…
…
…
…
…
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 …
…
(1,535 )
Profit sale of property, plant and equipment
…
…
…
…
…
(18 )
(745 )
Profit on disposal of subsidiary
…
…
…
…
…
…
…
(32 )
Unrealised gain on 10 year interest rate swap derivative
…
…
…
(2,740 )
Share of profit of associate company
…
…
…
…
…
…
(63 )
(60 )
UK tax incentive credit on research and development…
…
…
…
(675 )
Tax expense
…
…
…
…
…
…
…
…
…
…
OPERATING CASH FLOW BEFORE CHANGES IN WORKING
CAPITAL AND PROVISIONS
(Increase) / decrease in inventories …
…
…
…
…
…
…
(5,175 )
Decrease / (increase) in contract assets
…
…
…
…
…
…
(9,242 )
(Increase) / decrease in trade and other receivables
…
…
…
…
(3,341 )
Increase / (decrease) in contract liabilities…
…
…
…
…
…
(4,428 )
Increase in trade and other payables
…
…
…
…
…
…
Decrease / (increase) in unhedged derivative balances…
…
…
…
(438 )
CASH GENERATED FROM OPERATIONS
Interest received
…
…
…
…
…
…
…
…
…
Interest paid
…
…
…
…
…
…
…
…
…
…
(1,415 )
(845 )
Corporation tax paid
…
…
…
…
…
…
…
…
…
(2,051 )
(3,068 )
NET CASH INFLOW FROM OPERATING ACTIVITIES …
…
…
…
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment…
…
…
…
Acquisition of property, plant and equipment
…
…
…
…
…
(16,215 )
(11,738 )
Additional investment in existing subsidiaries
…
…
…
…
…
(430 )
Acquisition of intangible assets
…
…
…
…
…
…
…
(282 )
(719 )
Development expenditure capitalised
…
…
…
…
…
…
(1,505 )
(1,420 )
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
…
…
…
(18,091 )
(11,919 )
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares
…
…
…
…
…
…
…
…
…
…
Payment of capital element of lease liabilities
…
…
…
…
…
(1,153 )
(1,635 )
Dividends paid
…
…
…
…
…
…
…
…
…
…
(7,862 )
(6,016 )
Dividends paid to non-controlling interests
…
…
…
…
…
(808 )
(125 )
Proceeds from new loans
…
…
…
…
…
…
…
…
Repayment of loans and committed facilities
…
…
…
…
…
(683 )
(30,772 )
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(3,788 )
(3,483 )
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS
…
(3,885 )
Cash and cash equivalents at beginning of year…
…
…
…
…
Effect of exchange rate fluctuations on cash held
…
…
…
…
(96 )
CASH AND CASH EQUIVALENTS AT END OF YEAR …
…
…
…
19
The notes on pages 50 to 96 form part of these financial statements.
49
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies
Goodwin PLC (the “Company”) is incorporated in England and Wales.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the
“Group”) and equity account the Group’s interest in associates. The parent Company financial statements present
information about the Company as a separate entity and not about its Group.
The Group’s financial statements have been prepared in accordance with UK adopted International Accounting
Standards (IAS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies
reporting under UK adopted IFRS.
The financial statements for the year ended 30th April, 2022 were prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act 2006 and IFRS adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union. There is no difference for the Group in applying
each of these accounting frameworks or on the recognition, measurement or disclosure in the period reported as a
result of the change in framework.
The Company has elected to prepare its financial statements in accordance with Financial Reporting Standard (FRS)
101 issued in the UK. These are presented on pages 85 to 95.
The accounting policies set out below have been applied consistently to all periods presented in these Group financial
statements.
Judgements made by the Directors, in the application of these accounting policies that have significant effect on the
financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note
2.
Going concern
The Directors, after having reviewed the projections and possible challenges that may lie ahead, believe that there is a
reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve
months from the date of approval of these financial statements, and have continued to adopt the going concern basis in
preparing the financial statements.
As at 30th April 2022, the Group’s gearing ratio stood at 25.8% (2021: 15.4%) against a substantial shareholders
net worth of £115 million (2021: £113 million). The retained reserves of the Group put it in a strong position to deal with
unforeseen material adverse issues.
In previous years, we have reported on the potential impact of Covid-19 and its limited impact on the business. As you
might expect given our previous comments, our pandemic risk profile is low and whilst there are minor Covid-19
impacts we do not see the pandemic as a cause for concern for the Group moving forwards.
The reported results for the year are after having incurred what have been unprecedented increases in energy costs.
Whilst the Group is not complacent and there is work to be done here, we do not see the impact of energy costs giving
rise to a going concern issue.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds to cover the
Group’s and the Company’s financial commitments during the forecast period whilst remaining compliant with its
financial covenants. The stress test model starts with the forecasts generated by the subsidiary Directors and reflects
their specific knowledge of the market conditions, strategy and outlook. Each of these subsidiary level forecasts are
then reviewed, challenged and approved by the relevant Group Managing Director who themselves are immersed in
each of the businesses. The stress test model then predicts the impact of a severe but plausible reduction in the pre-
tax profit forecast without pulling back on our capital expenditure forecast. The results of the stress test modelling did
not highlight any going concern issues.
Whilst our carrying values of trade debtors and contract assets are significant, we see little risk here in terms of
recovery. We credit insure our debtors and our pre credit risk (work in progress), and for significant contracts, where
credit insurance is not available, we ensure, where possible, that these contracts are backed by letters of credit or cash
positive milestone payments.
As discussed elsewhere within these accounts, the Mechanical Engineering order book remains high and the
Refractory Engineering segment is buoyant.
The Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as
they fall due for at least twelve months from the date of approval of the financial statements and therefore have
prepared the financial statements on a going concern basis.
Measurement convention
The financial statements are rounded to the nearest thousand pounds. The financial statements are based on the
historical cost basis except where the measurement of balances at fair value is required as below.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to
govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
50
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Basis of consolidation (continued)
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the
voting power of another entity. Associates are accounted for using the equity method and are initially recognised at
cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses.
The consolidated financial statements include the Group's share of the total recognised income and expense and
equity movements of equity accounted investees, from the date that significant influence commences until the date that
significant influence ceases. When the Group's share of losses exceeds its interest in an equity accounted investee,
the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that
the Group has incurred legal or constructive obligations or made payments on behalf of an investee.
Foreign currency
The functional and presentational currency of the Group is Pound Sterling. Transactions in foreign currencies are
translated into the respective functional currencies of the Group entities at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in the statement of profit or loss within operating profit.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the
dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation,
are translated to Pound Sterling at foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of foreign operations are translated at an average rate for the period where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from the translation of foreign operations are taken directly to the translation reserve.
They are released into the statement of profit or loss upon disposal of the foreign operation.
New IFRS standards and interpretations adopted during 2021 / 2022 The
IASB and IFRIC issued the following amendments:
•
•
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest rate benchmark reform phase 2, which is
effective for annual periods beginning on or after 1st January, 2021.
Amendment to IFRS 16 ‘Leases’ – Covid-19 rent concession extensions, which is effective for annual periods
beginning on or after 1st June, 2020.
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:
•
•
•
•
•
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; and Annual Improvements 2018-2020 – (effective for periods
commencing on or after 1st January, 2022).
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ‘Definition of Accounting
Estimates’ – (effective for periods commencing on or after 1st January, 2023, subject to UK-endorsement).
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
and Classification of Liabilities as Current or Non-current - Deferral of Effective Date – (effective for periods
commencing on or after 1st January, 2023, subject to endorsement).
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting Policies – (effective for periods commencing on or after 1st January, 2023, subject to UK-
endorsement).
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction – (effective for periods commencing on or after 1st January, 2023, subject to endorsement).
The Group does not expect that any standards, amendments or interpretations issued by the IASB, but not yet
effective, will have a material impact on the financial statements once adopted.
Revenue
Revenue is recognised when a customer obtains control of the goods or services i.e. upon the satisfaction of a
performance obligation. Judgement is required to determine the timing of the transfer of control, and whether it is at a
point in time or over time. Where a contract contains several performance obligations then the contract is unbundled
and each performance obligation is dealt with separately.
51
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Revenue (continued)
Standard inventory product lines and consumables
Typically applies to the whole of the Group’s Refractory Engineering segment and the sale of slurry pumps within the
Mechanical Engineering segment. The revenue here relates to standard products manufactured for sale. The
performance obligation is satisfied and revenue recognised at the point when customers obtain control of the goods in
accordance with the International Commercial (INCO) terms agreed or via a bill and hold arrangement.
Minimum period contracts for the provision of goods and services
Predominantly the supply of broadband and related services under minimum term contracts. Performance obligations
are satisfied over time and revenue is recognised equally over the term of the contract Engineered bespoke products –
performance obligations satisfied over time
Typically applies to the Group’s Mechanical Engineering segment and covers sales orders which are customer
bespoke, but permit the Group subsidiary to claim profit earned to date if the customer were to trigger the cancel for
convenience clause within the contract. In such cases, the performance obligations are treated as satisfied over time
(i.e. as the contract progresses) and revenue is taken based on the percentage completion of the contract by the
creation of a contract asset. Work in progress is eliminated and replaced by a contract asset. Measuring progress
requires judgement as to the stage of completion of each job, and the production of forecasts, which contain
allowances for technical risks and inherent uncertainties.
Engineered bespoke products – performance obligations satisfied at a point in time
Typically applies to the Group’s Mechanical Engineering segment and covers sales orders which are customer
bespoke, but permit the Group subsidiary to claim only for costs in the event the customer triggers the cancel for
convenience clause within the contract. In such cases, the performance obligation is deemed to be met and revenue
taken as order lines are shipped in accordance with the relevant shipping terms or via a bill and hold arrangement,
whereby control passes to the customer, once the invoice has been raised.
The incremental costs of obtaining a contract are recognised as an expense, as incurred, when the contract period is
less than one year.
Contract assets represent the Group’s rights to consideration for work completed but not invoiced at the reporting date
for bespoke product contracts where, as part of the contract terms, there is a termination for convenience clause which,
if invoked, allows the Group company to charge for profit earned to date. Contract assets are transferred to receivables
when the rights to consideration become unconditional, which is generally when the Group invoices the customer.
Where payments are received in advance and exceed the costs incurred in constructing the asset together with
forecast margin earned, the balances are disclosed as contract liabilities.
Employment costs
Pension costs
The Group contributes to a defined contribution pension scheme for UK employees under an Auto Enrolment Pension
arrangement as required by Government legislation. The assets of the scheme are held in independently administered
funds. Group pension costs are charged to the statement of profit or loss in the year for which contributions are
payable.
Contributions to the schemes are made on a monthly basis and at the end of the financial year there were one month’s
contributions outstanding, which were paid in the following month.
Termination costs
Employee termination costs are expended in the profit and loss figures in a year as soon as the expense is known and
is certain.
Share-based payment transactions
Share-based payments arrangements, in which the Group receives goods or services as consideration for its own
equity instruments, are accounted for as equity-settled share-based payment transactions, regardless of how the equity
instruments are obtained by the Group.
The grant date fair value of share-based payment awards granted to employees is recognised as an expense, with a
corresponding increase in equity, over the period in which the employees become unconditionally entitled to the
awards. The fair value of the awards is measured using an option valuation model, taking into account the terms and
conditions upon which the awards were granted.
Financial income and costs
Financial expenses comprise interest payable, interest on lease liabilities using the effective interest method together
with the amortisation of any facility arrangement fees. Borrowing costs that are directly attributable to the acquisition,
construction or production of an asset that takes a substantial time to be prepared for use are capitalised as part of the
cost of that asset. Interest income and interest payable is recognised in the statement of profit or loss as it accrues.
52
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of profit or
loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided
for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor
taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
Financial instruments
Measurement
Trade receivables, which do not contain a significant financing component, are measured, initially, at the transaction
price. All other financial assets and liabilities are measured at fair value, on initial recognition.
Non-derivative financial assets are measured subsequently at amortised cost if the objective is to hold them to
collect contractual cash flows and their contractual terms include cash flows on specified dates, which are payments
of principal and interest.
Impairment
The Group has elected to measure loss allowances for trade receivables and contract assets at an amount equal to
lifetime expected credit losses (ECLs). Specific impairments are made when there is a known impairment need
against trade receivables and contract assets. When estimating ECLs, the Group assesses reasonable, relevant
and supportable information, which does not require undue cost or effort to produce. This includes quantitative and
qualitative information and analysis, incorporating historical experience, informed credit assessments and forward-
looking information. Loss allowances are deducted from the gross carrying amount of the assets. Where material,
impairment losses related to trade and other receivables, including contract assets, are disclosed separately in the
statement of profit or loss.
Principal non-derivative financial assets
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. They are recognised initially at the amount of consideration that is unconditional. Trade receivables are
held with the intention of collecting the contractual cash flows and are measured subsequently, therefore, at
amortised cost.
Other financial assets
Other financial assets principally comprise short-term tax balances and a loan to an associate company. Interest is
charged at commercial rates on long-term balances. After being recognised initially at fair value, other receivables
are measured, subsequently, at amortised cost. The carrying amount of other receivables is considered to be a
reasonable approximation of their fair value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, together with cash deposits with an original maturity
of three months or less. Included with cash and cash equivalents, for the cash flow statement only, are bank
overdrafts, which are repayable on demand and form an integral part of the Group’s cash management.
Principal non-derivative financial liabilities
Bank borrowings
Interest-bearing bank loans and overdrafts are measured initially at their fair value less attributable transaction
costs. They are carried, subsequently, at amortised cost and finance charges are recognised in the statement of
profit or loss over the contract term, using an effective rate of interest.
Trade and other payables
Trade and other payables are recognised initially at fair value, and are subsequently reported at amortised cost.
53
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Financial instruments (continued)
Derivative financial assets and liabilities
Derivative financial assets and liabilities are recognised at fair value. The fair value of forward exchange contracts is
equal to the present value of the difference between the contractual forward price and the current forward price for
the residual maturity of the contract adjusted for counterparty credit risk. The recognition of the gain or loss on re-
measuring to fair value those forward exchange contracts, which are used for hedging, is outlined below; for other
forward exchange contracts and the interest rate swap derivative, the gain or loss is recognised in the profit or loss.
Fair value derivation
IFRS 7 requires that the classification of financial instruments at fair value be determined by reference to the source
of inputs used to derive the fair value. This classification uses the following three-level hierarchy:
Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3 — inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of derivative financial assets and liabilities is derived using level 2 inputs. As at the year-end, the
Group held currency derivatives and an interest rate swap derivative. For the currency derivatives, the valuations
are based on the period end currency rates, as adjusted for the forward points to maturity, the time value of money
and the banks’ assessed credit risk and margin. For the interest rate swap derivative, the valuation is arrived at by
comparing the forward interest curve as at 30th April, 2022 out to maturity against our fixed swap rate. The result is
then discounted for the time value of money and adjusted for credit risk and margin.
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset
or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial
instrument is recognised directly in the hedging reserve. Our hedge relationships are aligned with our risk management
objectives and strategy, resulting in a more qualitative and forward-looking approach in ensuring hedge effectiveness.
For cash flow hedges, the associated cumulative gain or loss on the relevant derivative financial instrument is removed
from equity and recognised in the statement of profit or loss in the same period or periods during which the hedged
forecast transaction affects the statement of profit or loss. Any identified ineffective portion of the hedge is recognised
immediately in the statement of profit or loss. Only the change in spot rate is designated as the hedging instrument,
with the change in fair value relating to forward points being reported separately as deferred costs of hedging within
other comprehensive income as permitted by IFRS 9. Where a derivative financial instrument is not hedge accounted,
all changes in fair value are recognised in profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge
relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point
remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the cash flow
hedge transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is
recognised in the statement of profit or loss immediately, within cost of sales.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.
Depreciation is charged to the statement of profit or loss over the estimated useful lives of each part of an item of
property, plant and equipment on the following bases:
• Freehold land
…
…
…
…
Nil
• Freehold buildings …
…
…
…
2% to 4% on reducing balance or cost
• Leasehold property
…
…
…
over period of lease
• Plant and machinery
…
…
…
5% to 25% on reducing balance or cost
• Motor vehicles
…
…
…
…
15% or 25% on reducing balance
• Tooling
…
…
…
…
…
over estimated production life
• Other equipment
…
…
…
…
15% to 25% on reducing balance or cost
…
Nil
54
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
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:
•
•
•
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.
Lease term
The lease term is the non-cancellable period of a lease, and options to extend the lease or terminate it, where it is
probable that the Group will exercise the available options. At the start of a lease, the Group makes a judgement about
whether it is reasonably certain to exercise the options, and reassesses this judgement at every reporting period.
Contracts, where the original lease term has expired, with assets continuing to be leased on a short-term rolling basis
of a few months, are treated as short-term leases.
Lease balances
A
right-of-use asset and a lease liability are calculated at the beginning of a lease. The right-of-use asset is measured
initially at cost, being the opening lease liability, adjusted for any lease payments made by the start of the lease,
adjusted for any initial direct costs, which have been incurred.
The lease liability is measured initially at the present value of the lease payments, which are outstanding at the start
date, discounted at either the rate implicit in the lease or the Group’s incremental borrowing rate. With the exception of
leases containing an option to purchase, the Group uses its incremental borrowing rate as the discount rate. Lease
liabilities are measured at amortised cost, using the effective rate, and adjusted as required for any subsequent change
to the lease terms.
The right-of-use asset is depreciated on a straight-line basis over the lease term, or from the start date of the lease to
the end of the useful life of the right-of-use asset as appropriate. The method of calculating the estimated useful lives of
the right-of-use assets and testing for impairment is the same as that for property, plant and equipment.
Recognition exemptions
Payments for short-term leases, lasting twelve months or less, without a purchase option are reported as an operating
expense on a straight-line basis over the term of the lease.
The cost of leasing low-value items is reported as an operating expense over the life of the lease.
Lease portfolios
The Group has leases for the following types of assets:
Land and buildings – the Group leases a number of factory buildings, warehouses and office buildings.
Plant and equipment – a number of significant items of plant, such as CNC machines and furnaces, have been leased
under contracts with an option to buy the asset at the end of the lease term. The Group also leases motor vehicles. For
motor vehicles the Group has applied the practical expedient in paragraph 15 of IFRS 16, whereby non-lease
components have not been separated from lease components, such that lease costs and service costs are treated as a
single lease component.
Printers and photocopiers – the Group has applied the recognition exemption for low-value assets to these leases.
Government grants
Government grants relating to income are recognised in the statement of profit or loss.
Government grants relating to assets are recognised in the balance sheet as a deduction in the carrying amount of the
asset. Depreciation is charged on the value of the asset less the associated grant.
Intangible assets and goodwill
All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising
on acquisition of businesses. In respect of business acquisitions that have occurred since 1st May, 2006, goodwill
represents the difference between the cost of the acquisition and the fair value of the identifiable net assets acquired.
For acquisitions prior to the adoption of Revised IFRS 3 “Business Combinations” (1st May, 2010), cost includes
directly attributable acquisition costs. For acquisitions after this date, such costs are charged to the statement of profit
or loss. Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of
whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and
is not amortised but is tested annually for impairment.
Negative goodwill arising on an acquisition is recognised immediately in the statement of profit or loss.
Goodwill or negative goodwill resulting from increasing the percentage ownership of an existing subsidiary is dealt with
in other comprehensive income.
Expenditure on research activities is recognised in the statement of profit or loss as an expense as incurred.
55
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Intangible assets and goodwill (continued)
Expenditure on development activities is capitalised if the product or process is technically and commercially feasible
and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of
materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in
the statement of profit or loss as an expense as incurred. Capitalised development expenditure is stated at cost less
accumulated amortisation and impairment losses.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and
impairment losses.
Amortisation is charged to the statement of profit or loss on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date
they are available for use. The estimated useful lives are as follows:
• Capitalised development costsMinimum expected order unit intake or minimum product life
• Manufacturing rights6 - 15 years
•
Brand names and intellectual property 3 - 20 years
•
Customer lists
2
- 10 years
•
Order book
1 year
•
Distribution rights
25 years
•
Software and licences
3
- 5 years
Non-compete agreements
15 years
Impairment of intangibles
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is
any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Recoverable
amount is the greater of an asset’s or cash-generating unit’s fair value less costs to sell or value in use.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the
recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the statement of profit or loss.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no
longer exist and there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in, first-out principle and
includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In
the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on
normal operating capacity.
Provisions
General provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If
the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to the
liability.
Warranty provisions
The Group carries a warranty provision where applicable. The warranties are committed at contract placement stage
and typically, where given to a customer, the warranty has a duration of between 1 and 3 years. At the expiry of the
warranty period, to the extent not utilised, the warranty provision is then released back into the statement of profit or
loss. The warranties are generally passive in nature confirming that the goods comply with contractual specifications
and given the incidence of product failure is low, the warranties have no tangible customer value.
56
NOTES TO THE FINANCIAL STATEMENTS
2.
Accounting estimates and judgements
The Group makes judgements and estimates in applying the Group’s accounting policies, to prepare the financial
statements. The Directors do not believe there have been any key judgements exercised during the period, but see the
following as the key estimates considered.
Key estimates and judgements
IFRS 15 Revenue Recognition
The Directors consider that a key estimate, which may have a material impact on the financial statements, is in relation
to IFRS 15 and, in particular, where we are mandated to account on a revenue over time basis on some of our
mechanical engineering work in progress contracts. When reviewing the terms of contracts with customers, judgement
is required to assess the number of performance obligations within the contracts and when to recognise contract
provisions.
For contracts where revenue is recognised over time, there is a need to estimate the costs to complete on these
contracts. The costs to complete estimates can be complex, as they need to consider several variable factors such as
the impact of delays, cost overruns and also any variations to contract. Once complete, these estimates then drive the
amount of revenue recognised. The estimates are prepared and reviewed by management with suitable experience
and qualifications, and who endeavour to ensure the revenue mandated to be recognised prior to the completion of the
contract is not under or overstated, based on possible technical risks and inherent uncertainties.
Whilst cost to complete estimates are based on management’s best knowledge at the time, it is clear, due to the very
nature of an estimate that the eventual outcomes may differ due to unforeseen events. However, the advanced stage
of completion of a number of contracts reduces the risk of unforeseen events arising, and given that the initial position
taken on material contracts at the balance sheet date is revisited as part of the post balance sheet review process prior
to the financial statements being signed off, we would conclude that the risk of a material impact on the financial
statements arising from changes in estimates here is low.
Where there are claims which are subject to commercial negotiation, these are recognised only when there is a high
level of certainty. Consideration is given to the requirements of IFRS 15 in determining the appropriate accounting for
the claim settlements which takes into account the nature of the settlement and whether it relates to a point in time or
over time revenue contract.
Determination of the basis for the amortisation / impairment of intangible assets
The Group carries different classes of intangible assets on its balance sheet, which include goodwill, manufacturing
rights, brand names and development costs. Capitalised intangible costs are amortised on a straight-line basis, which
commences when the Group is expected to benefit from cash inflows. A key estimate is required in determining the
useful economic life over which each asset is to be amortised, with current timeframes ranging from fifteen to twenty-
five years. In arriving at the appropriate timeframe for amortisation, there are essentially two key estimates, namely the
product life cycle and the amount of profit generated from the expected income streams. In terms of sensitivity, then, in
regard to the intangible assets other than goodwill, if we were to assume assets with estimated useful lives of fifteen
years or more were reduced by one third, then the pre tax profit and loss impact on the current year reported figures
would be to reduce profits by £471,000 (2021: £481,000). In accordance with IAS 38, the basis on which goodwill /
intangible assets are impaired / amortised is assessed annually. Sensitivity as regards goodwill is considered within
note 15 to these financial statements.
Apart from above, the Group does not have any key assumptions concerning the future, or other key sources of
estimation uncertainty in the reporting period that may have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
Other estimates and judgements
Other than as reported above, the Directors do not consider there to be any key estimates or judgements in preparing
the financial statements. The estimates and judgements outlined below formed the main areas of focus for the
Directors throughout the year.
Inventory provisions
The Group's Directors in conjunction with senior management in the subsidiaries regularly review the recoverability of
their stated raw material and work in progress balances, paying particular attention to net realisable value and stock
obsolescence issues. The estimates are in relation to costs to complete and the expected level of future sales orders
for slow moving stocks. Where it is judged that a provision is deemed necessary, the appropriate adjustments are
made in the relevant subsidiary's books at the time a shortfall is identified.
Trade receivable provisions
Whilst trade debtors are insured wherever possible, the Directors are able to exercise judgement in relation to non-
credit insured contracts as set out in note 26 (a). The Group Directors, in conjunction with the subsidiary credit
controllers, closely monitor the adherence to payment terms across all accounts (whether insured or not) and make
provision for any losses that are likely to materialise. There is a requirement under IFRS 9 to consider the statistical
likelihood of a bad debt based off previous experience. Historically, the Group’s bad debt write offs have been
negligible and the Group results are not impacted by this requirement for a statistically based provision.
Duvelco
As referred to within the Chairman’s Statement, the Company is committed to investing circa £12.5 million in the area
of high performance polymer resins. The judgement of the Board is that the market potential here is
57
NOTES TO THE FINANCIAL STATEMENTS
2.
Accounting estimates and judgements (continued)
Other estimates and judgements (continued)
Duvelco (continued)
significant and that future profitability is expected to be strong. Accordingly, the Directors’ do not see a need to impair
our investment in this area.
3.
Segmental information
Products and services from which reportable segments derive their revenues
For the purposes of management reporting to the chief operating decision maker, the Board of Directors, the Group is
organised into two reportable operating divisions: mechanical engineering and refractory engineering. Segment assets
and liabilities include items directly attributable to segments as well as those that can be allocated on a reasonable
basis. Associates are included in refractory engineering. In accordance with the requirements of IFRS 8, information
regarding the Group’s operating segments is reported below.
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Revenue
External sales
…
…
87,605
56,503
144,108
86,616
44,615
131,231
Inter-segment sales
…
17,784
15,523
33,307
20,871
11,526
32,397
Total revenue
…
…
105,389
72,026
177,415
107,487
56,141
163,628
Reconciliation to consolidated revenue:
Inter-segment sales
…
(33,307)
(32,397)
Consolidated revenue for the year
144,108
131,231
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Profits
Segment operating profit
9,139
12,657
21,796
10,823
9,280
20,103
% of operating profit …
42%
58%
100%
54%
46%
100%
Group centre
…
…
(3,489)
(3,009)
Group operating profit
18,307
17,094
Share of profit of
-
63
63
-
associate company
…
60
60
Unrealised gain on
10 year Interest Rate
2,740
Swap Derivative
…
-
Group finance
(1,169)
expenses (net) …
…
(640)
Consolidated profit before
19,941
tax for the year …
…
16,514
Tax
…
…
…
(6,321)
(3,508)
Consolidated profit after
13,620
tax for the year …
…
13,006
58
NOTES TO THE FINANCIAL STATEMENTS
3.
Segmental information (continued)
Products and services from which reportable segments derive their revenues (continued)
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Net assets
Total assets
…
…
93,049
48,843
141,892
92,929
44,114
137,043
Total liabilities
…
…
(71,950)
(22,643)
(94,593)
(66,909)
(20,591)
(87,500)
Sub total …
…
…
21,099
26,200
47,299
26,020
23,523
49,543
Goodwin PLC net assets
88,595
83,998
Elimination of Goodwin
(25,822)
PLC investments
…
(25,392)
Goodwill …
…
…
9,671
9,879
Consolidated total
119,743
net assets
…
…
118,028
The investment in associate of £896,000 (2021: £829,000), is reported within the Refractory Engineering total assets.
For the purposes of monitoring segment performance and allocating resources between segments, the Group’s Board
of Directors monitors the tangible and financial assets attributable to each segment. All assets and liabilities are
allocated to reportable segments with the exception of those held by the parent Company, Goodwin PLC, and those
held as consolidation adjustments.
Year ended 30th April, 2022
Year ended 30th April, 2021
Goodwin
Mechanical
Refractory
Goodwin
Mechanical
Refractory
PLC
Engineering Engineering
Total
PLC Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Segmental capital expenditure
Property,
plant and
9,326
5,396
1,631
16,353
equipment
5,315
4,952
1,570
11,837
Right-of-use
441
2,401
881
3,723
assets
1,180
1,146
74
2,400
Intangible
237
1,121
429
1,787
assets
151
1,123
456
1,730
Total
10,004
8,918
2,941
21,863
6,646
7,221
2,100
15,967
Segmental depreciation, amortisation and impairment
Depreciation
3,808
2,200
1,386
7,394
2,970
2,346
1,352
6,668
Amortisation
1,195
47
330
1,572
and impairment
1,106
20
440
1,566
Total
5,003
2,247
1,716
8,966
4,076
2,366
1,792
8,234
59
NOTES TO THE FINANCIAL STATEMENTS
3.
Segmental information (continued)
Products and services from which reportable segments derive their revenues (continued)
Geographical segments
The Group operates in the following principal locations. In presenting the information on geographical segments,
revenue is based on the location of its customers and assets on the location of the assets.
Year ended 30th April, 2022
Year ended 30th April, 2021
Non-
Capital
Non-
Capital
Net
current
expendi-
Net
current
expendi-
Revenue
assets
assets
ture
Revenue
assets
assets
ture
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
UK
38,599
77,447
104,995
19,670
39,755
81,982
89,944
13,634
Rest of Europe
21,388
8,648
3,728
1,009
21,473
8,309
3,264
279
USA
14,046
-
-
-
8,027
-
-
-
Pacific Basin
31,085
15,867
6,703
278
28,255
13,708
6,499
719
Rest of World
38,990
17,781
8,004
906
33,721
14,029
6,880
1,335
Total
144,108
119,743
123,430
21,863
131,231
118,028
106,587
15,967
4.
Revenue
The following tables provide an analysis of revenue by geographical market and by product line.
Geographical market
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
UK
25,261
13,338
38,599
28,258
11,497
39,755
Rest of Europe
13,304
8,084
21,388
15,123
6,350
21,473
USA
13,398
648
14,046
7,596
431
8,027
Pacific Basin
9,457
21,628
31,085
10,899
17,356
28,255
Rest of World
26,185
12,805
38,990
24,740
8,981
33,721
Total
87,605
56,503
144,108
86,616
44,615
131,231
Product lines
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Standard products and
12,155
56,503
68,658
consumables
10,630
44,615
55,245
Bespoke products – point in time
9,992
-
9,992
11,203
-
11,203
Point in time revenue
22,147
56,503
78,650
21,833
44,615
66,448
Minimum period contracts
3,804
-
3,804
3,306
-
3,306
Bespoke products – over time
61,654
-
61,654
61,477
-
61,477
Over time revenue
65,458
-
65,458
64,783
-
64,783
Total revenue
87,605
56,503
144,108
86,616
44,615
131,231
The following tables present information about receivables, work in progress, contract assets and liabilities
from contracts with customers.
2022
2021
£’000
£’000
Trade receivables due within one year (note 17)
…
…
…
…
…
…
22,529
19,378
Trade receivables due after more than one year (note 17) …
…
…
…
…
1,191
-
Work in progress (note 16) …
…
…
…
…
…
…
…
…
…
10,161
9,784
Contract assets
…
…
…
…
…
…
…
…
…
…
…
12,331
15,844
Contract liabilities
…
…
…
…
…
…
…
…
…
…
…
(14,749)
(14,332)
31,463
30,674
60
NOTES TO THE FINANCIAL STATEMENTS
4.
Revenue (continued)
The Mechanical Engineering segment of the Group contains large non-seasonal contracts, and so significant variations
are to be expected in the trade receivable, contract assets, work in progress and contract liabilities balances. These
large high value contracts arrive at various points during the year and factors such as percentage complete and the
level of milestone payments received to date influence the positions shown at the 30th April, 2022. To rationalise
movements over the year is not considered to be meaningful and the Group focus is always to manage the net
investment in working capital which would be reported on if there was a significant adverse movement.
2022
2021
£’000
£’000
Revenue recognised in the year, which was included in the contract liability
balance at the beginning of the period …
…
…
…
…
…
…
…
7,182
9,710
Revenue recognised from performance obligations, which were satisfied
(or partially satisfied) in previous periods*
…
…
…
…
…
…
…
3,794
387
Contract asset impairment charge
…
…
…
…
…
…
…
…
1,145
2,235
Release of contract asset impairment provision
…
…
…
…
…
…
1,284
-
The aggregate amount of the transaction price allocated to the performance obligations for longer-term contracts, which
are unsatisfied (or partially unsatisfied) as at the end of the reporting period is shown below.
2022
2021
£’000
£’000
Performance obligations due to be satisfied within one year …
…
…
…
40,114
33,216
Performance obligations due to be satisfied after more than one year …
…
…
37,705
14,855
77,819
48,071
The Group has applied the practical expedient in IFRS 15, paragraph 121, and has not disclosed the remaining
performance obligations for contracts which have an original expected duration of one year or less.
Incremental costs of obtaining contracts lasting less than one year, are recognised as an expense, when incurred, in
accordance with the practical expedient in IFRS 15, paragraph 94.
The Group’s revenue is not significantly impacted by seasonal or cyclical events. The potential risk of the loss of any
key customer is limited as, typically, no single customer accounts for more than 10% of annual turnover.
* These figures relate to contract modifications.
61
NOTES TO THE FINANCIAL STATEMENTS
5.
Expenses and auditor’s remuneration
The following are included in profit before taxation:
Charged / (credited) to the statement of profit or loss
Profit on sale of property………………………
Depreciation:
20222021
£’000£’000
-
(763)
Owned assets …
…
…
…
…
…
…
…
…
…
…
6,202
5,696
Right-of-use assets (see below) …
…
…
…
…
…
…
…
1,192
972
Amortisation and impairment of intangible assets
…
…
…
…
…
1,572
1,566
Loss on sale of property, plant and equipment
…
…
…
…
…
…
(18)
18
Profit on disposal of subsidiary
…
…
…
…
…
…
…
…
-
(32)
Research expenditure
…
…
…
…
…
…
…
…
…
…
4,507
4,185
Impairment of trade receivables charged to the statement of profit or loss
…
188
319
Realised currency gains …
…
…
…
…
…
…
…
…
…
(202)
(978)
Unrealised currency (gains) / losses …
…
…
…
…
…
…
…
(2,385)
292
Mark to market currency derivative losses / (gains)
…
…
…
…
…
926
(438)
Hedge reserve ineffectiveness …
…
…
…
…
…
…
…
…
(76)
-
Fees receivable by the auditor and the auditor’s associates in respect of:
66
Audit of these financial statements
…
…
…
…
…
…
…
63
Audit of the financial statements of subsidiaries
…
…
…
…
…
282
188
Expenses relating to short-term property leases …
…
…
…
…
…
304
268
Expenses relating to short-term plant and equipment leases …
…
…
…
130
142
Expenses relating to leases of low-value assets
…
…
…
…
…
…
12
14
Government grants received including Covid-19 support
…
…
…
…
(397)
(1,427)
Depreciation on right-of-use assets may be analysed as follows:
£’000
£’000
Right of use assets depreciation – finance leases (former IAS 17 definition)
…
684
422
Right of use assets depreciation – operating leases (former IAS 17 definition)
…
508
550
Depreciation – right of use assets …
…
…
…
…
…
…
…
1,192
972
The mark to market currency derivative gains / losses and ineffectiveness are reported within cost of sales.
6.
Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year, analysed by category,
was as follows:
2022
2021
Number
Number
Subsidiary employees
…
…
…
…
…
…
…
…
…
…
1,062
1,080
Goodwin PLC Company employees …
…
…
…
…
…
…
…
50
49
1,112
1,129
2022
2021
The aggregate payroll costs of these persons were as follows:
£’000
£’000
Wages and salaries …
…
…
…
…
…
…
…
…
…
38,894
38,577
Social security costs…
…
…
…
…
…
…
…
…
…
4,513
4,976
Other pension costs …
…
…
…
…
…
…
…
…
…
1,338
1,320
44,745
44,873
2022
2021
Payroll costs are reported as follows:
£’000
£’000
Cost of sales …
…
…
…
…
…
…
…
…
…
…
31,707
31,522
Administrative expenses
…
…
…
…
…
…
…
…
…
13,038
13,351
44,745
44,873
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on pages 31 to 33. The
emoluments of the highest paid Director were £374,000 (2021: £355,000). The number of Directors, who were members
of a defined contribution pension scheme, was 6 (2021: 6).
62
NOTES TO THE FINANCIAL STATEMENTS
7. Finance costs (net)
2022
2021
£’000
£’000
Interest income
…
…
…
…
…
…
…
…
…
…
…
157
111
Interest expense on lease liabilities
…
…
…
…
…
…
…
…
121
95
Interest expenses on bank loans and overdrafts …
…
…
…
…
…
1,292
747
Capitalised interest on property, plant and equipment projects
…
…
…
(87)
(91)
Interest expense
…
…
…
…
…
…
…
…
…
…
…
1,326
751
Finance costs (net)
…
…
…
…
…
…
…
…
…
…
1,169
640
Interest on right-of-use assets may be analysed as follows:
Interest on lease liabilities – finance leases (former IAS 17 definition)
Interest on lease liabilities – operating leases (former IAS 17 definition)
£’000
£’000
…
…
72
44
…
…
49
51
121
95
8. Taxation
Recognised in the statement of profit or loss
2022
2021
Current tax expense
£’000
£’000
2,820
Current year
…
…
…
…
…
…
…
…
…
…
…
1,878
Under / (over) provision in prior years …
…
…
…
…
…
…
193
(128)
Deferred tax expense
3,013
1,750
1,381
Origination and reversal of temporary differences – current year (see below)
1,845
Origination and reversal of temporary differences – over provision in prior years
(85)
(87)
Origination and reversal of temporary differences – rate change to prior year
2,012
(see below)
…
…
…
…
…
…
…
…
…
…
…
-
3,308
1,758
Total tax expense …
…
…
…
…
…
…
…
…
…
…
6,321
3,508
Origination and reversal of temporary differences – current year
The majority of the deferred tax expense shown above comes from the difference between the accounting treatment
and the tax treatment of property, plant and equipment expenditure. Under the current UK tax regime, most of our
property, plant and equipment expenditure is 100% offset against our profits in the year of expenditure and so produces
a very low or zero rate of tax actually payable. In future years, however, the tax benefit gained in year one reverses over
time as future profits are taxed without further offset from this expenditure.
Origination and reversal of temporary differences – rate change to prior year
The UK government has increased the corporation tax rate from 19% to 25% with effect from 1st April, 2023.
Historically, our deferred tax provision has been calculated assuming that the temporary timing differences will reverse
at 19%. We have now calculated these provisions at 25% in line with the legislation.
63
NOTES TO THE FINANCIAL STATEMENTS
8. Taxation (continued)
Reconciliation of effective tax rate
2022
2021
£’000
£’000
Profit before taxation
…
…
…
…
…
…
…
…
…
…
19,941
16,514
Tax using the UK corporation tax rate of 19% (2021: 19%)
…
…
…
…
3,789
3,138
Tax effect of amounts which are not deductible / (taxable)
in calculating taxable income:
(506)
Impact of super-deduction on property, plant and equipment additions
…
…
-
Non-taxable income
…
…
…
…
…
…
…
…
…
…
(27)
(45)
Non-deductible expenses
…
…
…
…
…
…
…
…
…
30
33
Other permanent timing differences …
…
…
…
…
…
…
…
295
309
Under / (over) provision in prior years…
…
…
…
…
…
…
…
108
(210)
Losses not recognised
…
…
…
…
…
…
…
…
…
…
171
133
Share-based payments
…
…
…
…
…
…
…
…
…
…
(40)
59
Losses utilised where a deferred tax asset was not recognised
…
…
…
(151)
(115)
Rate change to prior year
…
…
…
…
…
…
…
…
…
2,012
-
Withholding tax unrelieved
…
…
…
…
…
…
…
…
…
355
108
Difference in overseas tax rates
…
…
…
…
…
…
…
…
297
113
Effect of equity accounting for associate
…
…
…
…
…
…
…
(12)
(15)
Total tax expense …
…
…
…
…
…
…
…
…
…
…
6,321
3,508
Where subsidiary companies have incurred losses in the year, which are unlikely to be relieved against future profits in
the next twelve months, deferred tax assets are not recognised.
Withholding tax unrelieved represents withholding tax deducted on dividends and royalties from overseas subsidiaries
and associates.
Deferred tax recognised directly in equity
2022
2021
£’000
£’000
Deferred tax credit / (charge) on the cash flow hedge included
1,114
in the consolidated statement of comprehensive income
…
…
…
…
(673)
9. Earnings per share
Number of
ordinary shares
Ordinary shares in issue
2022
2021
Opening shares in issue ……
…
…
…
…
…
…
…
…
7,526,400
7,363,200
Shares issued in the year (note 33)
…
…
…
…
…
…
…
…
163,200
163,200
7,689,600
7,526,400
Outstanding ordinary share options (note 33)
…
…
…
…
…
-
163,200
Total ordinary shares (issued and options)
…
…
…
…
…
…
7,689,600
7,689,600
Weighted average number of ordinary shares in issue …
…
…
…
…
7,673,951
7,445,024
Weighted average number of outstanding ordinary share options
…
…
…
-
162,651
Denominator used for diluted earnings per share calculation
…
…
7,673,951
7,607,675
2022
2021
£’000
£’000
Relevant profits attributable to ordinary shareholders
…
…
…
…
…
12,980
12,494
64
NOTES TO THE FINANCIAL STATEMENTS
10.Dividends
2022
2021
Paid ordinary dividends during the year in respect of prior years
£’000
£’000
7,862
102.24p (2021: 81.71p) per qualifying ordinary share …
…
…
…
…
6,016
After the balance sheet date an ordinary dividend of 107.80p per qualifying ordinary share was proposed by the
Directors (2021: Ordinary dividend of 102.24p).
The proposed current year ordinary dividend of £8,289,000 has not been provided for within these financial
statements (2021: Proposed ordinary dividend of £7,862,000 was not provided for within the comparative figures).
11.Property, plant and equipment
Assets in
Other
course of
Land and
Plant and
equipment
construc-
buildings
machinery
tion
Total
Cost
£’000
£’000
£’000
£’000
£’000
Balance at 1st May, 2020
…
…
…
41,671
78,959
3,278
2,006
125,914
Additions …
…
…
…
…
…
1,397
3,906
486
6,048
11,837
Reclassification …
…
…
…
…
74
(3,888)
4,002
(188)
-
Reclassification – ROU*
…
…
…
-
4,045
-
-
4,045
Disposals …
…
…
…
…
…
(641)
(1,221)
(747)
(75)
(2,684)
Exchange adjustment …
…
…
…
(503)
(222)
(64)
(12)
(801)
Balance at 30th April, 2021
…
…
41,998
81,579
6,955
7,779
138,311
Balance at 1st May, 2021
…
…
…
41,998
81,579
6,955
7,779
138,311
Additions …
…
…
…
…
…
5,814
2,653
515
7,371
16,353
Reclassification – others
…
…
…
3,737
1,721
(120)
(5,338)
-
Disposals …
…
…
…
…
…
(6)
(1,205)
(662)
-
(1,873)
Exchange adjustment …
…
…
…
661
245
83
53
1,042
Balance at 30th April, 2022
…
…
52,204
84,993
6,771
9,865
153,833
Depreciation
Balance at 1st May, 2020
…
…
…
8,150
45,799
2,339
-
56,288
Charged in year …
…
…
…
…
1,195
4,004
497
-
5,696
Reclassification …
…
…
…
…
-
(3,032)
3,032
-
-
Reclassification – ROU*
…
…
…
-
1,045
-
-
1,045
Disposals …
…
…
…
…
…
-
(812)
(659)
-
(1,471)
Exchange adjustment …
…
…
…
(119)
(147)
(44)
-
(310)
Balance at 30th April, 2021
…
…
9,226
46,857
5,165
-
61,248
Balance at 1st May, 2021
…
…
…
9,226
46,857
5,165
-
61,248
Charged in year …
…
…
…
…
1,345
4,413
444
-
6,202
Disposals …
…
…
…
…
…
-
(903)
(647)
-
(1,550)
Exchange adjustment …
…
…
…
139
105
95
-
339
Balance at 30th April, 2022
…
…
10,710
50,472
5,057
-
66,239
Net book value
At 1st May, 2020
…
…
…
…
33,521
33,160
939
2,006
69,626
At 30th April, 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
*This is a transfer from the right-of-use assets category on the settlement of a lease purchase agreement and
payment of the option to purchase fee.
Plant and machinery
During the year the Group expended £16.35 million on property, plant and equipment. Headline items here are
expenditures on the infrastructure works for Goodwin Steel Castings Ltd; on our new calciner plant at Hoben
International Ltd; plant for Duvelco Ltd and land acquired for Noreva GmbH.
Other equipment
Other equipment comprises motor vehicles, IT hardware and office equipment.
65
NOTES TO THE FINANCIAL STATEMENTS
11.
Property, plant and equipment (continued)
Assets in course of construction
2022
2021
£’000
£’000
Land and buildings
…
…
…
…
…
…
…
…
…
…
1,823
4,481
Plant and machinery
…
…
…
…
…
…
…
…
…
…
8,042
3,298
9,865
7,779
Depreciation
Depreciation is reported as follows:
2022
2021
£’000
£’000
Cost of sales…
…
…
…
…
…
…
…
…
…
…
5,942
5,393
Administrative expenses
…
…
…
…
…
…
…
…
…
260
303
6,202
5,696
Security
There is a charge over Noreva GmbH’s land and buildings of €1.36 million to secure a bank loan repayable by
instalments. At Goodwin PLC a bank loan of £3.4 million is secured against three furnaces located at Goodwin Steel
Castings Limited (refer to note 20), and a loan of £4.5 million is secured against the land acquired during the year.
12. Right-of-use assets
Land and
Plant and
Other
buildings
machinery
equipment
Total
Cost
£’000
£’000
£’000
£’000
Balance at 1st May, 2020
…
…
…
1,937
4,787
132
6,856
Additions
…
…
…
…
…
…
1,079
70
1,251
2,400
Transfer to property, plant and equipment…
-
(4,045)
-
(4,045)
Reclassification
…
…
…
…
…
-
(86)
86
-
Disposals
…
…
…
…
…
…
(285)
(6)
-
(291)
Exchange adjustment
…
…
…
…
(3)
1
(10)
(12)
Balance at 30th April, 2021
2,728
721
1,459
4,908
Balance at 1st May, 2021
…
…
…
2,728
721
1,459
4,908
Additions
…
…
…
…
…
…
123
3,215
385
3,723
Disposals
…
…
…
…
…
…
(107)
(35)
-
(142)
Exchange adjustment
…
…
…
…
17
(18)
(2)
(3)
Balance at 30th April, 2022
2,761
3,883
1,842
8,486
Depreciation
Balance at 1st May, 2020
…
…
…
500
982
31
1,513
Charged in year
…
…
…
…
…
499
306
167
972
Transfer to property, plant and equipment
-
(1,045)
-
(1,045)
Reclassification
…
…
…
…
…
-
(13)
13
-
Disposals
…
…
…
…
…
…
(212)
(6)
-
(218)
Exchange adjustment
…
…
…
…
(2)
-
(3)
(5)
Balance at 30th April, 2021
785
224
208
1,217
Balance at 1st May, 2021
…
…
…
785
224
208
1,217
Charged in year
…
…
…
…
…
457
351
384
1,192
Disposals
…
…
…
…
…
…
(107)
-
-
(107)
Exchange adjustment
…
…
…
…
(1)
(5)
(1)
(7)
Balance at 30th April, 2022
1,134
570
591
2,295
Net book value
At 1st May, 2020 …
…
…
…
…
1,437
3,805
101
5,343
At 30th April, 2021
…
…
…
…
1,943
497
1,251
3,691
At 30th April, 2022
1,627
3,313
1,251
6,191
66
NOTES TO THE FINANCIAL STATEMENTS
12. Right-of-use assets (continued)
Depreciation
Depreciation is reported as follows:
2022
2021
£’000
£’000
Cost of sales……
…
…
…
…
…
…
…
…
…
735
473
Administrative expenses
…
…
…
…
…
…
…
…
…
457
499
1,192
972
13.
Investments in subsidiaries
The Group has the following principal subsidiaries. Non-principal subsidiaries are listed in note 30:
Company name
Registered
Country of
Class of
Subsidiaries:
address*
Incorporation
shares held
% held
Mechanical Engineering:
100
Goodwin Steel Castings Limited
…
…
…
1
England and Wales Ordinary
Goodwin International Limited …
…
…
…
1
England and Wales Ordinary
100
Easat Radar Systems Limited
…
…
…
…
1
England and Wales Ordinary
77
Goodwin Korea Company Limited
…
…
…
3
South Korea
Ordinary
95
Goodwin Pumps India Private Limited
…
…
4
India
Ordinary
100
Goodwin Shanghai Company Limited …
…
…
5
China
Ordinary
100
Noreva GmbH
…
…
…
…
…
…
6
Germany
Ordinary
100
Goodwin Indústria e Comércio de Bombas
100
Submersas Ltda
…
…
…
…
…
…
8
Brazil
Ordinary
Internet Central Limited
…
…
…
…
…
1
England and Wales Ordinary
100
Goodwin Submersible Pumps Australia Pty. Limited
9
Australia
Ordinary
100
Metal Proving Services Limited …
…
…
…
1
England and Wales Ordinary
100
NRPL Aero Oy
…
…
…
…
…
…
10
Finland
Ordinary
77
Goodwin Submersible Pumps Africa Pty. Limited
…
15
South Africa
Ordinary
100
Duvelco Limited
…
…
…
…
…
…
1
England and Wales Ordinary
100
Refractory Engineering:
100
Goodwin Refractory Services Limited …
…
…
1
England and Wales Ordinary
Dupré Minerals Limited
…
…
…
…
…
1
England and Wales Ordinary
100
Hoben International Limited
…
…
…
…
2
England and Wales Ordinary
100
Gold Star Powders Private Limited
…
…
…
4
India
Ordinary
100
Siam Casting Powders Limited …
…
…
…
11
Thailand
Ordinary
58
Ultratec Jewelry Supplies Limited
…
…
…
12
China
Ordinary
75.5
SRS (Qingdao) Casting Materials Company Limited
13
China
Ordinary
75.5
Jewelry Plaster Limited
…
…
…
…
…
14
Thailand
Ordinary
75
*The registered address for each company can be found in note 32.
All of the above companies are included as part of the consolidated accounts. All the companies are involved in mechanical or
refractory engineering, with the exception of Internet Central Limited, which is an internet service provider.
Non-controlling interests (NCI)
The following subsidiaries each have non-controlling interests:
Company name
Registered
Country of
Class of
Mechanical Engineering:
address*
Incorporation
shares held
% held
23
Easat Radar Systems Limited
…
…
…
…
1
England and Wales Ordinary
Goodwin Korea Company Limited
…
…
…
3
South Korea
Ordinary
5
NRPL Aero Oy
…
…
…
…
…
…
10
Finland
Ordinary
23
Refractory Engineering:
25
Jewelry Plaster Limited
…
…
…
…
…
14
Thailand
Ordinary
Jewelry Wax Limited
…
…
…
…
…
14
Thailand
Ordinary
25
Siam Casting Powders Limited …
…
…
…
11
Thailand
Ordinary
42
GRS Silicone Company Limited …
…
…
…
17
China
Ordinary
24.5
SRS (Qingdao) Casting Materials Company Limited
13
China
Ordinary
24.5
Shenzhen King-Top Modern Hi-Tech Company Limited 16
China
Ordinary
24.5
Ultratec Jewelry Supplies Limited
…
…
…
12
China
Ordinary
24.5
Ying Tai (UK) Limited
…
…
…
…
…
1
England and Wales Ordinary
24.5
*The registered address for each company can be found in note 32.
During the year, the Group acquired the non-controlling interests in Internet Central Limited for £430,000. For further details,
please refer to the Statement of Changes in Equity on page 46.
67
NOTES TO THE FINANCIAL STATEMENTS
13.
Investments in subsidiaries (continued) Non-
controlling interests (NCI) (continued)
The financial information on subsidiaries with non-controlling interests has been aggregated, analysing the data by segment, as
the entities in each segment have similar characteristics and risk profiles.
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Profit / (loss) allocated
to non-controlling
(463)
1,103
640
interests …
…
…
(283)
795
512
Dividends paid to
non-controlling
-
(808)
(808)
interests …
…
…
-
(125)
(125)
Accumulated reserves
held by non-controlling
(690)
5,123
4,433
interests …
…
…
243
4,644
4,887
The summarised financial information below represents the amounts in the financial statements of the subsidiaries,
before any intercompany eliminations, and does not reflect the Group’s share of those amounts.
Year ended 30th April, 2022
Year ended 30th April, 2021
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Non-current assets
…
3,436
11,955
15,391
2,954
12,037
14,991
Current assets …
…
6,824
16,264
23,088
13,425
14,529
27,954
Current liabilities
…
(11,651)
(6,822)
(18,473)
(13,333)
(7,071)
(20,404)
Non-current liabilities
(439)
(305)
(744)
(388)
(511)
(899)
Total net assets of
companies with
(1,830)
21,092
19,262
non-controlling interests
2,658
18,984
21,642
Revenue of companies
with non-controlling
7,655
23,455
31,110
interests …
…
…
15,984
19,269
35,253
Profit / (loss) for the
year of companies with
(2,013)
4,356
2,343
non-controlling interests
(918)
3,137
2,219
Total comprehensive
income of companies with
non-controlling interests
(1,571)
3,544
1,973
(769)
2,733
1,964
Net cash flow from
(324)
3,072
2,748
operating activities
…
823
1,926
2,749
Net cash flow from
-
(181)
(181)
investing activities
…
(320)
(992)
(1,312)
Net cash flow from
(32)
(3,307)
(3,339)
financing activities
…
(146)
(1,037)
(1,183)
68
NOTES TO THE FINANCIAL STATEMENTS
14.
Investment in associate
The Group’s share of profit after tax in its immaterial associate for the year ended 30th April, 2022 was £63,000
(2021: £60,000).
Summary financial information of the Group’s share of its associate company is as follows:
2022
2021
£’000
£’000
Balance at 1st May
…
…
…
…
…
…
…
…
…
…
829
816
Profit before tax
…
…
…
…
…
…
…
…
…
…
…
75
75
Tax …
…
…
…
…
…
…
…
…
…
…
…
…
(12)
(15)
Exchange adjustment …
…
…
…
…
…
…
…
…
…
4
(47)
Balance at 30th April…
…
…
…
…
…
…
…
…
…
896
829
Assets
…
…
…
…
…
…
…
…
…
…
…
…
914
967
Liabilities
…
…
…
…
…
…
…
…
…
…
…
…
(18)
(138)
896
829
15.Intangible assets
Brand
names
and
Manufact-
Software Develop-
intellectual
Order
uring
and
ment
Goodwill
property
book
rights
Licences
costs
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Cost
Balance at 1st May, 2020
…
10,233
9,672
161
5,420
1,175
8,426
35,087
Additions…
…
…
…
-
18
-
68
224
1,420
1,730
Disposals…
…
…
…
-
-
(161)
-
(11)
(25)
(197)
Exchange adjustment
…
(15)
(45)
-
5
3
-
(52)
Balance at 30th April, 2021
10,218
9,645
-
5,493
1,391
9,821
36,568
Balance at 1st May, 2021
…
10,218
9,645
5,493
1,391
9,821
36,568
Additions…
…
…
…
159
-
-
123
1,505
1,787
Disposals…
…
…
…
-
-
-
(594)
(3)
-
(597)
Exchange adjustment
…
(208)
(142)
-
-
(11)
-
(361)
Balance at 30th April, 2022
10,010
9,662
-
4,899
1,500
11,326
37,397
Amortisation and impairment
Balance at 1st May, 2020
…
343
5,884
161
2,227
810
967
10,392
Amortisation for the year
…
-
591
-
334
240
381
1,546
Impairment
…
…
…
-
-
-
-
-
20
20
Disposals…
…
…
…
-
-
(161)
-
(6)
(24)
(191)
Exchange adjustment
…
(4)
(12)
-
2
2
-
(12)
Balance at 30th April, 2021
339
6,463
-
2,563
1,046
1,344
11,755
Balance at 1st May, 2021
…
339
6,463
-
2,563
1,046
1,344
11,755
Amortisation for the year
…
-
511
-
324
163
559
1,557
Impairment
…
…
…
-
-
-
-
-
15
15
Disposals…
…
…
…
-
-
-
(594)
(3)
-
(597)
Exchange adjustment
…
-
(140)
-
1
(11)
-
(150)
Balance at 30th April, 2022
339
6,834
-
2,294
1,195
1,918
12,580
Net book value
At 1st May, 2020…
…
…
9,890
3,788
-
3,193
365
7,459
24,695
At 30th April, 2021
…
…
9,879
3,182
-
2,930
345
8,477
24,813
At 30th April, 2022
…
9,671
2,828
-
2,605
305
9,408
24,817
69
NOTES TO THE FINANCIAL STATEMENTS
15.
Intangible assets (continued)
Customer lists are included within brand names and intellectual property or within manufacturing rights, depending on
the nature of the acquisition; non-compete agreements are disclosed within manufacturing rights. During the year, the
Group added to its portfolio of intangible assets.
Amortisation and impairment charges are reported in cost of sales in the statement of profit or loss.
Impairment testing for cash-generating units containing goodwill
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be
impaired. For the purpose of impairment testing, goodwill is allocated to the relevant subsidiary which is the lowest
level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying
amounts of goodwill allocated to each unit are:
2022
2021
£’000
£’000
Noreva GmbH
………………
…
…
…
…
…
4,575
4,742
Goodwin Refractory Services Holdings Limited …
…
…
…
…
…
3,346
3,346
NRPL Aero Oy
…
…
…
…
…
…
…
…
…
…
…
1,215
1,260
Other…
…
…
…
…
…
…
…
…
…
…
…
535
531
9,671
9,879
An impairment test is a comparison of the carrying value of the assets of a cash-generating unit (“CGU”) to their
recoverable amount, based on a value-in-use calculation. Recoverable amount is the greater of value-in-use and fair
value less costs of disposal. Where the recoverable amount is less than the carrying value an impairment results.
During the year each CGU containing goodwill was separately assessed and tested for impairment.
As part of testing goodwill for impairment detailed forecasts of operating cash flows for the next five years are used,
which are based on budgets and plans approved by the Board. The forecasts represent the best estimate of future
performance of the CGU based on past performance and expectations for the market development of the CGU.
A number of key assumptions are used as part of impairment testing. These key assumptions, such as the CGU’s
position within its relevant market; its ability to generate profitable orders within that market; expected growth rates both
in the market and geographically, are made by management who also take into account past experience and
knowledge of forecast future performance together with other relevant external sources of information.
The projections use various growth rates consistent with the profit forecasts of the CGU for the first five years, (typically
0% - 15%), with a zero growth rate (2021: zero growth rate) then assumed for any terminal values. The forecasts are
then discounted at an appropriate pre-tax weighted average cost of capital rate considering the perceived levels of risk,
ranging between 11.8% and 17.8% (2021: between 9.8% and 17.8%) for the Mechanical Engineering Division and
12.4% to 13% (2021: between 11.4% and 12%) for the Refractory Engineering Division. Further sensitivity tests are
then performed reducing the discounted cash flows by 10% and also increasing the discount rate by a range of up to
10% to confirm there is no need to consider further a need for impairment.
The estimates and assumptions made in connection with the impairment testing could differ from future actual results of
operations and cash flows. A reasonably likely variation in the assumptions, as disclosed, would not give rise to an
impairment. However, future events could cause the Group to conclude that impairment indicators exist and that the
asset values associated with a given operation have become impaired.
16.Inventories
2022
2021
£’000
£’000
Net balances
Raw materials and consumables
…
…
…
…
…
…
…
…
19,828
16,572
Work in progress …
…
…
…
…
…
…
…
…
…
…
10,161
9,784
Finished goods …
…
…
…
…
…
…
…
…
…
…
10,375
8,191
40,364
34,547
Provisions held
Raw materials and consumables
…
…
…
…
…
…
…
…
438
373
Work in progress …
…
…
…
…
…
…
…
…
…
…
276
493
Finished goods …
…
…
…
…
…
…
…
…
…
…
482
435
1,196
1,301
Inventory impaired during the year
1,390
1,427
70
NOTES TO THE FINANCIAL STATEMENTS
17.Trade and other financial assets
Balances due within one year
2022
2021
£’000
£’000
Trade receivables …
…
…
…
…
…
…
…
…
…
…
22,529
19,378
Other financial assets
…
…
…
…
…
…
…
…
…
…
1,188
1,162
23,717
20,540
Balances due after more than one year
Trade receivables …
…
…
…
…
…
…
…
…
…
…
1,191
-
18.Other receivables
2022
2021
£’000
£’000
Advance payments to suppliers
…
…
…
…
…
…
…
…
1,235
2,002
Prepayments and other non-financial assets
…
…
…
…
…
…
3,635
2,594
Corporation tax assets
…
…
…
…
…
…
…
…
…
…
1,347
902
Deferred tax asset (see note 24)
…
…
…
…
…
…
…
…
60
129
6,277
5,627
19.Cash and cash equivalents
2022
2021
£’000
£’000
Cash and cash equivalents
…
…
…
…
…
…
…
…
…
11,651
15,160
20.
Borrowings
Information is provided below about the contractual terms of the Group’s lease liabilities, bank loans and borrowings.
The bank loans repayable by instalment are secured against a property in Germany together with furnaces and land in
the UK (refer to note 11). For more information about the Group’s exposure to interest rate and foreign currency risk,
refer to note 26.
Year ended 30th April, 2022
Year ended 30th April, 2021
Non-current
Current
Total
Non-current
Current
Total
liabilities
liabilities
liabilities
liabilities
liabilities
liabilities
£’000
£’000
£’000
£’000
£’000
£’000
Bank loans - repayable
8,059
1,005
9,064
by instalments …
…
4,538
761
5,299
Bank loans - rolling
28,000
-
28,000
credit facilities …
…
26,000
-
26,000
Other loans …
…
-
202
202
-
-
-
Lease liabilities…
…
4,317
1,557
5,874
2,528
846
3,374
40,376
2,764
43,140
33,066
1,607
34,673
71
NOTES TO THE FINANCIAL STATEMENTS
20.
Borrowings (continued)
Reconciliation of liabilities arising from financing activities
Bank
overdrafts
Bank loans
used for cash
repayable by
rolling credit
Lease
management
instalments
facilities
Other loans
liabilities
Total
£’000
£’000
£’000
£’000
£’000
£’000
Opening balance at
1st May, 2020
…
…
391
6,010
21,000
-
2,822
30,223
Non-cash movements
-
-
-
-
2,195
2,195
Change in bank
overdrafts
…
…
(391)
-
-
-
-
(391)
Cash flows
…
…
-
(724)
5,000
-
(1,635)
2,641
Foreign exchange
movement
…
…
-
13
-
-
(8)
5
Closing balance
30th April, 2021
-
5,299
26,000
-
3,374
34,673
Opening balance at
1st May, 2021
…
…
-
5,299
26,000
-
3,374
34,673
Non-cash movements
-
-
-
-
3,630
3,630
Cash flows
…
…
-
3,817
2,000
202
(1,153)
4,866
Foreign exchange
movement
…
…
-
(52)
-
-
23
(29)
Closing balance
30th April, 2022
-
9,064
28,000
202
5,874
43,140
Contractual undiscounted cash flows
Year ended 30th April, 2022
Year ended 30th April, 2021
Minimum
Minimum
loan
loan
payments
Interest
Principal
payments
Interest
Principal
£’000
£’000
£’000
£’000
£’000
£’000
Bank loans - repayable
by instalments
Less than one year
…
1,234
229
1,005
903
142
761
Between one and
4,434
615
3,819
five years
…
…
3,570
324
3,246
More than five years …
4,985
745
4,240
1,406
114
1,292
10,653
1,589
9,064
5,879
580
5,299
Lease liabilities
Less than one year
…
1,684
127
1,557
938
92
846
Between one and
4,137
170
3,967
five years
…
…
2,219
127
2,092
More than five years …
362
12
350
454
18
436
6,183
309
5,874
3,611
237
3,374
Former IAS 17 analysis of lease liabilities
2022
2021
£’000
£’000
Finance leases
…
…
…
…
…
…
…
…
…
…
…
4,170
1,292
Operating leases …
…
…
…
…
…
…
…
…
…
…
1,704
2,082
5,874
3,374
72
NOTES TO THE FINANCIAL STATEMENTS
21.Trade and other financial liabilities
2022
2021
£’000
£’000
Trade payables …
…
…
…
…
…
…
…
…
…
…
…
18,958
16,791
Other financial liabilities…
…
…
…
…
…
…
…
…
…
…
1,929
1,424
Other taxation and social security
…
…
…
…
…
…
…
…
…
2,117
3,515
23,004
21,730
22.Other payables
2022
2021
£’000
£’000
Accrued expenses…
…
…
…
…
…
…
…
…
…
…
…
4,001
3,543
Advance payments from customers …
…
…
…
…
…
…
…
…
255
482
4,256
4,025
23.Provisions
2022
2021
£’000
£’000
Balance at 1st May
…
…
…
…
…
…
…
…
…
…
…
859
484
Increase in provision
…
…
…
…
…
…
…
…
…
…
…
167
550
Release of provision
…
…
…
…
…
…
…
…
…
…
…
(408)
(164)
Provision utilised …
…
…
…
…
…
…
…
…
…
…
…
(144)
(11)
Exchange adjustment
…
…
…
…
…
…
…
…
…
…
…
(18)
-
Balance at 30th April…
…
…
…
…
…
…
…
…
…
…
456
859
Due within one year
…
…
…
…
…
…
…
…
…
…
…
205
608
Due after one year
…
…
…
…
…
…
…
…
…
…
…
251
251
Balance at 30th April…
…
…
…
…
…
…
…
…
…
…
456
859
Provisions include warranties for products sold which generally cover a period of between 1 and 3 years, and other
provisions which are due within one year.
24.
Deferred tax assets and liabilities
Deferred tax balances are attributable to the following:
Year ended 30th April, 2022
Year ended 30th April, 2021
Assets
Liabilities
Net
Assets
Liabilities
Net
£’000
£’000
£’000
£’000
£’000
£’000
Property, plant
63
(8,344)
(8,281)
and equipment …
…
127
(4,509)
(4,382)
Intangible assets
…
-
(2,186)
(2,186)
46
(1,732)
(1,686)
Derivative financial
714
(702)
12
instruments
…
…
58
(494)
(436)
Share based
-
-
-
payments reserve
…
915
-
915
Tax losses
…
…
2,496
-
2,496
-
-
-
Other temporary
430
(122)
308
differences
…
…
234
(90)
144
3,703
(11,354)
(7,651)
1,380
(6,825)
(5,445)
Deferred tax balances are reported in the balance sheet as follows:
2022
2021
£’000
£’000
Deferred tax asset (see note 18)
…
…
…
…
…
…
…
…
60
129
Deferred tax liability
…
…
…
…
…
…
…
…
…
…
(7,711)
(5,574)
(7,651)
(5,445)
73
NOTES TO THE FINANCIAL STATEMENTS
24.
Deferred tax assets and liabilities (continued)
Share-
Property,
Derivative
based
Other
plant and
Intangible
financial
payments
Tax
temporary
equipment
assets
instruments
reserve
losses
differences
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at
1st May, 2020
(3,544)
(1,612)
143
1,888
-
114
(3,011)
Recognised in
profit and loss
(866)
(31)
94
(973)
-
18
(1,758)
Recognised in
equity
-
-
(673)
-
-
-
(673)
Exchange
‒
adjustment
28
(43)
-
-
12
(3)
Balance at
30th April, 2021
(4,382)
(1,686)
(436)
915
-
144
(5,445)
Recognised in
profit and loss
(3,891)
(477)
(666)
(915)
2,496
145
(3,308)
Recognised in
equity
-
-
1,114
-
-
-
1,114
Exchange
adjustment
(8)
(23)
-
-
-
19
(12)
Balance at
30th April, 2022
(8,281)
(2,186)
12
-
2,496
308
(7,651)
Deferred tax has been calculated at 19% on temporary differences due to reverse by 31st March, 2023, and at 25% for
all other temporary differences.
Deferred tax assets not recognised on losses
2022
2021
£’000
£’000
Gross tax losses …………
…
…
…
…
…
…
…
2,364
2,016
Deferred tax assets not recognised …
…
…
…
…
…
…
…
500
436
The Group has not recognised a deferred tax asset against taxable losses incurred by some of its subsidiaries.
Typically these are subsidiaries which are still in their formative years and, whilst profitability is expected in the long-
term, it is deemed prudent to not recognise a deferred tax asset at this stage.
25.Capital and reserves
Share capital
2022
2021
£’000
£’000
Authorised, allotted, called up and fully paid:
7,526,400 (2021: 7,363,200) ordinary shares of 10p each
…
…
…
…
753
736
Issue of 163,200 ordinary shares of 10p each… …
…
…
…
…
16
17
769
753
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations.
Share-based payments reserve
The share-based payments reserve is a non cash-impacting provision, as required by IFRS 2, relating to the Equity
Long Term Incentive Plan, which vested at 1st May, 2019. Further details are included in note 33.
Cash flow hedge reserve and cost of hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedge
instruments related to hedged transactions that have not yet occurred. The cost of hedging reserve relates to the
associated costs attaching to the cash flow hedge reserve, such as counterparty risk and forward point adjustments.
74
NOTES TO THE FINANCIAL STATEMENTS
25.
Capital and reserves (continued)
Asset / (liability)
Deferred tax
2022
2021
Aggregate deferred tax balances recognised in equity:
£’000
£’000
Derivative financial instruments
…
…
…
…
…
…
…
…
723
(387)
Equity Long Term Incentive Plan
…
…
…
…
…
…
…
…
-
915
723
528
26.
Financial risk management
The Group’s operations expose it to a variety of financial risks that include the effects of changes in market prices
(interest rates, foreign exchange rates and commodity prices), credit risk and liquidity. The Group has in place risk
management policies that seek to limit the adverse effects on the financial performance of the Group by using various
instruments and techniques.
Risk management policies have been set by the Board and applied by the Group.
a)
Credit risk
The Group’s financial assets are cash and cash equivalents; trade and other receivables; contract assets;
derivative financial assets; the carrying amounts of which represent the Group’s maximum exposure to credit risk
in relation to financial assets.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
The Group’s credit risk is primarily attributable to its trade receivables and is managed through the following
processes:
i)
The majority of orders accepted by Group companies are backed by credit insurance.
ii)
Some orders are accepted with no credit insurance but with letters of credit.
iii)
Some orders are accepted with no credit insurance and no letter of credit but with an internal analysis of the
customer’s size, creditworthiness, historic profitability and payment record.
iv)
A few orders (less than 10%), with a material value, are taken at risk following review by at least two Board
members.
v)
Major orders are normally accompanied by stage payments which go towards mitigating our credit risk.
Whilst the theoretical credit risk would be the actual balances themselves as reported within the table below, this
assumes that the credit insurance company is also a credit risk for the invoiced trade debtors and contract assets
underwritten by them. Our insurer enjoys a strong credit rating with the likes of Moody’s, S&P and Fitch. As a
result, and after having looked back on the Group’s track record of negligible impairment losses on these type of
assets over the last 10 years, the Directors are of the opinion that there is no cost / benefit in performing an ECL
type loss analysis and so impairment provisions are based on known issues rather than a statistical estimate.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was:
Carrying amount
Notes
2022
2021
£’000
£’000
Contract assets………
…
…
…
…
…
4
12,331
15,844
Trade and other financial assets – due within one year
…
…
17
23,717
20,540
Trade and other financial assets – due after more than one year
17
1,191
-
Cash at bank and cash equivalents
…
…
…
…
…
19
11,651
15,160
Derivative financial assets – due within one year …
…
…
26 (d)
1,211
4,106
Derivative financial assets – due after more than one year
…
26 (d)
2,741
191
52,842
55,841
At the reporting date, the maximum exposure to credit risk for trade receivables, before taking into account credit
insurance, by geographic region was:
Carrying amount
2022
2021
£’000
£’000
UK …
…
…
…
…
…
…
…
…
…
…
…
3,603
3,874
Rest of Europe
…
…
…
…
…
…
…
…
…
…
4,053
4,102
USA …
…
…
…
…
…
…
…
…
…
…
…
1,506
775
Pacific Basin
…
…
…
…
…
…
…
…
…
…
5,080
5,008
Rest of World
…
…
…
…
…
…
…
…
…
…
9,478
5,619
23,720
19,378
75
NOTES TO THE FINANCIAL STATEMENTS
26.
Financial risk management (continued)
a)
Credit risk (continued)
Exposure to credit risk (continued)
The ageing of trade receivables and impairments at the reporting date was:
2022
Impairment
2021
Impairment
Net
Gross
provision
Net
Gross
provision
2022
2022
2022
2021
2021
2021
£’000
£’000
£’000
£’000
£’000
£’000
Not past due ……
…
13,933
13,979
(46)
13,446
13,503
(57)
Past due 1-30 days …
…
4,880
4,962
(82)
3,033
3,035
(2)
Past due 31-90 days…
…
2,330
2,613
(283)
1,175
1,189
(14)
Past due more than 90 days
2,577
2,866
(289)
1,724
2,199
(475)
23,720
24,420
(700)
19,378
19,926
(548)
Management believes that there are no significant credit risks remaining with the above net receivables and that
the credit quality of customers is good, based on a review of past payment history and the current financial status
of the customers. Included in trade receivables are retentions which are job specific and have varying due dates
depending on the complexity of the job. These are included in the not past due category. The Group has not
renegotiated the terms of any trade receivables and has not pledged any trade receivables as security.
The Directors estimate that the fair value of the Group’s trade and other receivables is approximate to their
carrying values.
An analysis of the provision for impairment of receivables is as follows:
2022
2021
£’000
£’000
Opening balance at 1st May
…
…
…
…
…
…
…
…
548
316
Increase in provision
…
…
…
…
…
…
…
…
…
470
369
Release of provision
…
…
…
…
…
…
…
…
…
(342)
(50)
Provision utilised during the year
…
…
…
…
…
…
…
-
(89)
Exchange adjustment
…
…
…
…
…
…
…
…
…
24
2
Closing balance at 30th April …
…
…
…
…
…
…
…
700
548
b)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Group’s reputation.
At the year end the Group had the following unutilised bank facilities in respect of which all conditions
precedent had been met:
2022
2021
Uncommitted
Committed
Total
Uncommitted
Committed
Total
£’000
£’000
£’000
£’000
£’000
£’000
Unutilised bank
6,050
16,500
22,550
facilities
6,050
18,500
24,550
The Group’s principal borrowing facilities are provided by three banks in the form of borrowings and short-term
overdraft facilities. The quantum of borrowing facilities available to the Group is reviewed regularly in light of
current working capital requirements and the need for capital investment for the long-term future for the Group.
76
NOTES TO THE FINANCIAL STATEMENTS
26.
Financial risk management (continued)
b)
Liquidity risk (continued)
Maturity analysis
The table below analyses the Group’s financial non-derivative liabilities into maturity groupings based on the
period outstanding at the balance sheet date up to the contractual maturity date. All figures are contracted gross
cash flows that have not been discounted.
Contractual cash flows
Carrying
Within
value
1 year
1-5 years
5+ years
Total
Total
Non-derivative financial liabilities
£’000
£’000
£’000
£’000
£’000
Bank loans - repayable by instalments…
903
3,570
1,406
5,880
5,299
Bank loans - rolling credit facilities
…
-
26,000
-
26,000
26,000
Lease liabilities
…
…
…
…
938
2,219
454
3,157
3,374
Trade and other financial liabilities
…
21,730
-
-
21,730
21,730
At 30th April, 2021
…
…
…
23,571
31,789
1,860
57,220
56,403
Bank loans - repayable by instalments…
1,234
4,434
4,985
10,653
9,064
Bank loans - rolling credit facilities
…
-
28,000
-
28,000
28,000
Other loans …
…
…
…
…
202
-
-
202
202
Lease liabilities
…
…
…
…
1,684
4,137
362
6,183
5,874
Trade and other financial liabilities
…
23,004
-
-
23,004
23,004
At 30th April, 2022
…
…
…
26,124
36,571
5,347
68,042
66,144
The interest rates chargeable on these loans are on a floating basis against SONIA and UK base rate, with bank
margins of less than 2.1%. With effect from 1st September, 2021, the Group entered into a ten year derivative with
HSBC to fix its variable interest rate at less than 1% against a notional £30 million of debt.
There is one bank loan of £1.2 million repayable by instalments, with the final payment due in the year ended 30th
April, 2039. Interest is charged at an effective interest rate of 1.96%, which is fixed for the whole period.
A second bank loan of £4.5 million is repayable by instalments, with the final payment due in the year ended 30th
April, 2042. The effective interest rate is 2.55%, which will vary over the loan period.
c)
Market risk
Foreign exchange risk
The Group is subject to fluctuations in exchange rates on its net investments overseas and transactional monetary
assets and liabilities not denominated in the operating (or “functional”) currency of the operating unit involved.
The Group is exposed to fluctuations in several currencies which give rise to the net currency gains and losses
recognised in the statement of profit or loss.
The Group at its discretion is empowered to hedge its estimated annual foreign currency exposure in respect of
forecast sales and purchases if the Board deems it appropriate after having taken into account the expected
movement in the foreign exchange rates. The Group uses forward exchange contracts to hedge its foreign
currency risk. The foreign exchange contracts have maturities within three years after the balance sheet date.
Where necessary, the forward exchange contracts are rolled over at maturity.
In respect of other monetary assets and liabilities held in currencies, the Group ensures that the net exposure is
eliminated through the use of forward exchange contracts or spot transactions at the time the contractual
commitment is in place.
Currency profile of financial assets and liabilities:
US
2022
US
2021
Dollar
Euro
Other
Total
Dollar
Euro
Other
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Trade and other
6,193
2,242
51
8,486
receivables
2,511
1,513
-
4,024
Cash and cash
1,388
14
74
1,476
equivalents
789
(40)
454
1,203
Trade and other
(1,121)
(965)
(24)
(2,110)
payables
(537)
(661)
(763)
(1,961)
6,460
1,291
101
852
2,763
812
(309)
3,266
77
NOTES TO THE FINANCIAL STATEMENTS
26.
Financial risk management (continued)
c)
Market risk (continued)
Currency profile of financial assets and liabilities (continued)
The following significant exchange rates applied during the year, for reporting purposes;
2022
2021
Average
Reporting
Average
Reporting
exchange rate
date spot rate
exchange rate
spot rate
US Dollar
…
…
…
…
…
1.3591
1.2570
1.3202
1.3845
Euro …
…
…
…
…
…
1.1791
1.1920
1.1222
1.1500
Interest rate risk
The Group is subject to fluctuations in interest rates on its borrowings and surplus cash. The Group is aware of
the financial products available to hedge against adverse movements in interest rates. Formal reviews are
undertaken to determine whether such instruments are appropriate for the Group. As reported elsewhere in these
financial statements, the Company on 2nd July, 2021 signed a contract to mitigate the impact of interest rate risk
by taking out an interest rate swap derivative fixing £30 million of notional debt at less than 1% versus the variable
inter-bank lending rate (SONIA) for a period of ten years, commencing 1st September, 2021.
The table below shows the Group’s financial assets and liabilities split by those bearing fixed and floating rates
and those that are non interest-bearing.
2022
2021
Non-
Non-
Fixed
Floating
interest-
Fixed
Floating
interest-
rate
rate
bearing
Total
rate
rate
bearing
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Cash and cash
-
11,651
-
11,651
equivalents
-
15,160
-
15,160
Contract assets
-
-
12,331
12,331
-
-
15,844
15,844
Trade and financial
-
-
24,908
24,908
assets
250
-
20,290
20,540
Derivative assets
-
-
3,952
3,952
-
-
4,297
4,297
Contract liabilities
-
-
(14,749)
(14,749)
-
-
(14,332)
(14,332)
Trade and other
-
-
(23,004)
(23,004)
financial liabilities
-
-
(21,730)
(21,730)
Derivative liabilities
-
-
(4,036)
(4,036)
-
-
(2,016)
(2,016)
Bank loans -
repayable by
(4,564)
(4,500)
-
(9,064)
instalments
(5,299)
-
-
(5,299)
Bank loans -
rolling credit
-
(28,000)
-
(28,000)
facilities
-
(26,000)
-
(26,000)
Other loans
(202)
-
-
(202)
-
-
-
-
Lease liabilities
(2,280)
(3,594)
-
(5,874)
(2,945)
(429)
-
(3,374)
(7,046)
(24,443)
(598)
(32,087)
(7,994)
(11,269)
2,353
(16,910)
78
NOTES TO THE FINANCIAL STATEMENTS
26.
Financial risk management (continued)
d)
Capital management
The Group’s main objective when managing capital is to safeguard the Group’s ability to continue as a going
concern in order to provide returns to shareholders. The Board maintains a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of the business. Operations are
funded through various shareholders’ funds, bank debt, leases and, where appropriate, deferred consideration on
acquisitions. The capital structure of the Group reflects the judgement of the Board as to the appropriate balance
of funding required. At 30th April, 2022, the capital used was £145.1 million, (2021: £130.6 million) as shown in
the following table:
2022
2021
£’000
£’000
Cash and cash equivalents
…
…
…
…
…
…
…
…
…
(11,651)
(15,160)
Other loans…
…
…
…
…
…
…
…
…
…
…
202
-
Total lease liabilities
…
…
…
…
…
…
…
…
…
…
5,874
3,374
Bank loans - repayable by instalments
…
…
…
…
…
…
…
9,064
5,299
Bank loans - rolling credit facilities…
…
…
…
…
…
…
…
28,000
26,000
Net debt in accordance with IFRS 16
…
…
…
…
…
…
…
31,489
19,513
Operating lease debt (former IAS 17 definition)…
…
…
…
…
…
(1,704)
(2,082)
Relevant net debt for KPI purposes…
…
…
…
…
…
…
…
29,785
17,431
Total equity attributable to equity holders of the parent
…
…
…
…
115,310
113,141
Capital
145,095
130,572
The Group aims to maintain a strong credit rating and headroom whilst optimising return to shareholders through
an appropriate balance of debt and equity funding. The Group's general strategy is to keep the debt to equity ratio
below 30%, adjusted where appropriate for the effect of acquisitions. At 30th April, 2022 net debt was £29.8
million (2021: £17.4 million). The gearing ratio is 25.8% (2021: 15.4%).
The Group manages its capital structure and makes adjustments to it with regard to the risks inherent in the
business and in light of changes to economic conditions.
Working capital is managed in order to generate maximum conversion of profits into cash and cash equivalents.
Dividends are based on current year profits, thereby maintaining equity.
The policy for debt is to ensure a smooth debt maturity profile with the objective of ensuring continuity of funding.
The repayment profile for the debt is shown in note 26 (b).
There were no changes in the Group’s approach to capital management during the year.
Currency derivatives
The Group utilises currency derivatives to hedge future transactions and cash flows. The Group is party to a
variety of foreign currency forward contracts in the management of its exchange rate exposures. Foreign currency
forward contracts are denominated in the same currency as the highly probable future sales and the hedged ratio
is 1:1.
Forecast transactions
The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges and states
them at fair value.
Recognised assets and liabilities
Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities in
foreign currencies and for which no hedge accounting is applied are recognised in the statement of profit or loss.
Both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating to the
monetary items are recognised as part of cost of sales.
Forward exchange contracts designated in a cash flow hedge relationship
Year ended 30th April, 2022
Year ended 30th April, 2021
Forward exchange contracts
Forward exchange contracts
Current
Matured
Total
Current
Matured
Total
£’000
£’000
£’000
£’000
£’000
£’000
Nominal value
…
56,487
7,329
63,816
43,945
15,852
59,797
Carrying amount of
769
-
769
hedged assets
…
1,166
904
2,070
Carrying amount of
(3,787)
(423)
(4,210)
hedged liabilities …
(5)
-
(5)
79
NOTES TO THE FINANCIAL STATEMENTS
26.
Financial risk management (continued)
d)
Capital management (continued)
Accumulated amount of fair value hedge adjustments
included in the carrying amount of the hedged item:
Year ended 30th April, 2022
Year ended 30th April, 2021
Forward exchange contracts
Forward exchange contracts
Current
Matured
Total
Current
Matured
Total
£’000
£’000
£’000
£’000
£’000
£’000
Assets…
…
…
769
-
769
1,166
904
2,070
Liabilities
…
…
(3,787)
(423)
(4,210)
(5)
-
(5)
Change in value used
to calculate hedge
(3,037)
(423)
(3,460)
ineffectiveness
…
1,259
904
2,163
Cash flow hedge
(2,445)
(343)
(2,788)
reserve
…
…
929
732
1,661
Cash flow hedge reserve
Attributable to equity holders of the parent
(2,746)
1,601
Attributable to non-controlling interests
(42)
60
Cash flow hedge reserve (net of tax)
(2,788)
1,661
Cost of hedging reserve
Attributable to equity holders of the parent
140
(1)
Attributable to non-controlling interests
8
15
Cost of hedging reserve (net of tax)
148
14
Forward exchange contracts not designated in a cash flow hedge relationship / currency swaps
2022
2021
£’000
£’000
Nominal value
………………
…
…
…
…
…
14,800
28,926
Carrying value of unhedged derivative contracts
Assets
…
…
…
…
…
…
…
…
…
…
…
…
443
3,131
Liabilities
…
…
…
…
…
…
…
…
…
…
…
…
(251)
(2,011)
Net
…
…
…
…
…
…
…
…
…
…
…
…
192
1,120
Interest rate swaps
The Group utilises interest rate swap derivatives to hedge against future movements in floating interest rates
against the Group's floating rate debt. Hedge accounting is not applied for these instruments and all movements in
fair value are recognised in profit or loss.
2022
2021
£’000
£’000
Nominal value
…
…
…
…
…
…
…
…
…
…
…
30,000
-
Carrying value of interest rate swap
Assets
…
…
…
…
…
…
…
…
…
…
…
…
2,740
-
Expected cash flow
Within one year…
…
…
…
…
…
…
…
…
…
…
…
274
-
Between one and five years
…
…
…
…
…
…
…
…
1,448
-
More than five years…
…
…
…
…
…
…
…
…
…
…
1,018
-
2,740
-
80
NOTES TO THE FINANCIAL STATEMENTS
26.
Financial risk management (continued)
d)
Capital management (continued)
Interest rate swaps (continued)
The following table sets out the periods when the cash flows for foreign exchange contracts are expected to occur
and when they are expected to affect profit or loss:
Year ended 30th April, 2022
Year ended 30th April, 2021
Designated
Designated
Not
and effective
Not
and effective
designated
as cash flow
designated
as cash flow
in a cash flow
hedging
in a cash flow
hedging
relationship
instruments
Total
relationship
instruments
Total
£’000
£’000
£’000
£’000
£’000
£’000
Assets:
Carrying amount
443
769
1,212
3,131
1,166
4,297
Expected cash flow:
443
494
937
Within one year …
3,128
978
4,106
Between one and five years
-
275
275
3
188
191
Total assets
443
769
1,212
3,131
1,166
4,297
Liabilities:
Carrying amount
(249)
(3,787)
(4,036)
(2,011)
(5)
(2,016)
Expected cash flow:
(249)
(2,144)
(2,393)
Within one year …
(2,011)
(5)
(2,016)
Between one and five years
-
(1,643)
(1,643)
-
-
-
Total liabilities
(249)
(3,787)
(4,036)
(2,011)
(5)
(2,016)
Sensitivity analysis
The Group has calculated the following sensitivities based on available data from forward contract markets for the
principal foreign currencies in which the Group operates. Given recent fluctuations in rates, it is deemed sensible
to provide the quantum for a 1% change in rates to aid understanding. These figures can be extrapolated
proportionately to obtain an estimate of the impact of large movements. The Group’s exposure to foreign currency
changes for all other foreign currencies is not considered material.
Year ended 30th April, 2022
Year ended 30th April, 2021
(Profit) / loss
(Profit) / loss
(Profit) / loss
impact on
(Profit) / loss
impact on
impact on
statement of
impact on
statement of
equity
profit or loss
equity
profit or loss
£’000
£’000
£’000
£’000
1% increase in US Dollar fx rate
(597)
(207)
against pound Sterling
…
…
(345)
(177)
1% increase in Euro fx rate
(37)
68
against pound Sterling
…
…
(207)
(96)
1% decrease in US Dollar fx rate
597
207
against pound Sterling
…
…
345
177
1% decrease in Euro fx rate
37
(68)
against pound Sterling
…
…
207
96
1% increase in interest rates …
…
-
-
-
(424)
81
NOTES TO THE FINANCIAL STATEMENTS
26. Financial risk management (continued)
e) Total financial assets and liabilities
The table below sets out the Group’s accounting classification of each class of financial assets and liabilities and
their fair values at 30th April, 2022 and 30th April, 2021.
Year ended 30th April, 2022
Year ended 30th April, 2021
Carrying
Carrying
amount
Fair value
amount
Fair value
Financial assets
£’000
£’000
£’000
£’000
At amortised cost
Cash and cash equivalents
…
…
…
11,651
11,651
15,160
15,160
Contract assets
…
…
…
…
…
12,331
12,331
15,844
15,844
Trade receivables …
…
…
…
…
23,720
23,720
19,378
19,378
Other financial assets
…
…
…
…
1,188
1,188
1,162
1,162
At fair value through profit and loss
Derivative financial assets not designated in
443
443
a cash flow hedge relationship
…
…
3,131
3,131
Interest rate swap
…
…
…
…
2,740
2,740
-
-
Fair value – hedging instrument
Derivative financial assets designated and
769
769
effective as cash flow hedging instruments
1,166
1,166
Total financial assets
…
…
…
52,842
52,842
55,841
55,841
Financial liabilities at amortised cost
Contract liabilities
…
…
…
…
14,749
14,749
14,332
14,332
Trade payables
…
…
…
…
…
18,958
18,958
16,791
16,791
Other financial liabilities
…
…
…
4,046
4,046
4,939
4,939
Lease liabilities
…
…
…
…
…
5,874
5,874
3,374
3,374
Bank loans - repayable by instalments
…
9,064
9,064
5,299
5,299
Bank loans - rolling credit facilities
…
…
28,000
28,000
26,000
26,000
Other loans
…
…
…
…
…
202
202
-
-
At fair value through the profit and loss
Derivative financial liabilities not designated in
a cash flow hedge relationship
…
…
249
249
2,011
2,011
Fair value – hedging instrument
Derivative financial liabilities designated and
3,787
3,787
effective as cash flow hedging instruments
5
5
Total financial liabilities
…
…
…
84,929
84,929
72,751
72,751
Derivative financial assets and liabilities fair values in the above table are derived using Level 2 inputs as defined
by IFRS 7 as detailed in the paragraph below.
IFRS 7 requires that the classification of financial instruments at fair value be determined by reference to the
source of inputs used to derive the fair value. This classification uses the following three-level hierarchy: Level 1 -
quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted
prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); Level 3 - inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The Group does not use derivatives for speculative purposes. All transactions in derivative financial instruments
are underpinned by firm orders from customers or to suppliers or where there is a high degree of probability that
orders will be received.
For short-term cash and cash equivalents, trade and other receivables, contract assets, trade and other financial
liabilities, contract liabilities, fixed and floating rate borrowings, the fair values are the same as carrying value.
82
NOTES TO THE FINANCIAL STATEMENTS
27.
Capital commitments
Contracted capital commitments at 30th April, 2022 for which no provision has been made in these financial
statements were £8,393,000 (2021: £488,000).
28.
Guarantees and contingencies
The table below sets out the number and value of unexpired bank guarantee bonds as at 30th April, 2022 and 30th
April, 2021. These guarantee bonds are required as part of the terms and conditions within our mechanical
engineering contracts.
20222021
£’000£’000
148 guarantee and bonds contracts (2021: 165)……………6,5869,613
29.
Subsequent events
After the balance sheet date an ordinary dividend of 107.80p per qualifying ordinary share was proposed by the
Directors (2021: Ordinary dividend of 102.24p).
The current year proposed ordinary dividend of £8,289,000 has not been provided for within these financial
statements (2021: Proposed ordinary dividend of £7,862,000 was not provided for within the comparative figures).
30.
Non-principal subsidiaries and associates
Company name
Registered
Country of
Class of
address*
Incorporation
shares held
% held
Non-principal Subsidiaries:
Mechanical Engineering:
Easat Radar Systems India Private Limited
…
…
4
India
Ordinary
100
Goodwin (Shanxi) Pump Company Limited**
…
…
7
China
Ordinary
100
Refractory Engineering:
Asian Industrial Investment Casting
Powders Private Limited
…
…
…
…
…
4
India
Ordinary
100
Gold Star Brazil Limited
…
…
…
…
…
8
Brazil
Ordinary
100
Goodwin Refractory Services India Limited
…
…
4
India
Ordinary
100
Jewelry Wax Limited
…
…
…
…
…
…
14
Thailand
Ordinary
75
GRS Silicone Company Limited
…
…
…
…
17
China
Ordinary
75
Shenzhen King-Top Modern Hi-Tech Company Limited
16
China
Ordinary
75
Non-principal holding companies:
Goodwin Refractory Services Holdings Limited…
…
1
England and Wales
Ordinary
100
Ying Tai (UK) Limited
…
…
…
…
…
…
1
England and Wales
Ordinary
75
Non-principal Associates:
Tet Goodwin Property Company Limited …
…
…
11
Thailand
Ordinary
49
Dormant companies:
Gold Star Powders Limited
…
…
…
…
…
1
England and Wales
Ordinary
100
Net Central Limited
…
…
…
…
…
…
1
England and Wales
Ordinary
100
Sandersfire International Limited
…
…
…
…
1
England and Wales
Ordinary
100
Specialist Refractory Services Limited
…
…
…
1
England and Wales
Ordinary
100
*The registered address for each company can be found in note 32.
**Goodwin (Shanxi) Pump Company Limited was dissolved in the year ended 30th April, 2021.
All of the above companies are included as part of the consolidated accounts. The trading companies are all involved in
mechanical or refractory engineering.
31.
Related parties
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not reported
in this note. Year end balances and transactions during the year with the Group’s associate company, Tet Goodwin
Property Company Limited, are shown below.
2022
2021
£’000
£’000
Rental cost …
…
…
…
…
…
…
…
…
…
…
301
311
Interest income
…
…
…
…
…
…
…
…
…
…
3
7
Receivable balance
…
…
…
…
…
…
…
…
…
…
19
260
83
NOTES TO THE FINANCIAL STATEMENTS
32.
Registered offices of subsidiaries and associates
The registered offices of the companies listed in notes 13 and 30 are listed below.
1.
Ivy House Foundry, Hanley, Stoke-on-Trent ST1 3NR
2.
Brassington, Nr. Matlock, Derbyshire DE4 4HF
3.
13-1, Jungbong-daero, 396 Beon-Gil, Seo-gu, Incheon, South Korea
4.
No 39/1-5, Old Mahabalipuram Road, Kalavakkam, Thiruporur Chengalpattu District – 603110, India
5.
Suite C, F1, Building #14, Xiya Road No.11, Waigaoqiao Free Trade Zone, 200131, Shanghai, China
6.
Hocksteiner Weg 56, D - 41189 Mönchengladbach, Germany
7.
Suite 1105, Building 1, Wanguocheng Moma, No.16 Changfeng West Street, Wanbailin District, Taiyuan,
Shanxi Province, 30021, China
8.
Rua das Margaridas s/n, No. 70, Barrio Terra Preta - Mairipora – SP, CEP 07662-025, São Paulo, Brazil
9.
Confidential Tax and Business Services, Level 1, 449 Gympie Road, Kedron Qld 4031, Australia
10.
Koivupuistontie 34, 01510 Vantaa, Finland
11.
99/9 Moo5 Khlong Yong, Bhudhamontol, Nakhonpathom, 73170 Thailand
12.
No.73, Jiao Xin Road, Lanhe Town, Nansha District, Guangzhou City, 511480, China
13.
400 metres North from Nan Zhai Committee, Xifuzhen Street, Chengyang District, Qingdao City, 266106,
China
14.
238, 3rd Floor, OPG Tech Building Bangkhuntien-Chatalay, Samaedum Sub-district, Bangkhuntien District,
Bangkok 10150, Thailand
15.
Unit 1 Bridgeway Business Park, Cnr Sam Green Road and Pinnacle Close, Tunney Extension 9, Germiston,
Gauteng, 1401, South Africa
16.
No.2-1, Shanzixia Road, Dakang Community, Yuanshan Street, Longgang District, Shenzhen City,
Guangdong Province, China
17.
165 Minsheng Road, Lanhe Town, Nansha District, Guangzhou, China
33.
Share-based payment transactions
The Group had one share option scheme, the LTIP, the terms of which are outlined in the Directors’ Remuneration
Policy and Report on page 33. The scheme has now ended.
Grant date/
Method of
Maximum
Vesting
Contractual life
employees
settlement
number of
conditions
of options
entitled
instruments
Options granted on
Equity
576,000
For every 10%
Expiry date:
5th October, 2016
growth in TSR
30th April, 2019
to Executive
28,800 shares
Directors
will vest
Awards entitle each holder to earn up to 1% of the share capital of the Company subject to the performance condition.
An award vested and became exercisable over 0.05% of the share capital of the Company for every 10% increase in
the TSR of the Company at the end of the three financial years ending on 30th April, 2019 with a base year of 2009
but excluding the growth already achieved up to 30th April, 2016.
Number of share options
2022
2021
Vested 1st May, 2019
…
…
…
…
…
…
…
…
489,600
489,600
Outstanding at beginning of year
…
…
…
…
…
…
…
…
163,200
326,400
Exercised during the year
…
…
…
…
…
…
…
…
163,200
163,200
Exerciseable at end of year
…
…
…
…
…
…
…
…
-
163,200
Share price at the date of exercise
…
…
…
…
…
…
…
…
£30.70
£30.45
84
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY BALANCE SHEET
at 30th April, 2022
2022
2021
NON-CURRENT ASSETS
Notes
£’000
£’000
Property, plant and equipment …
…
…
…
…
…
C4
33,696
27,984
Investment properties
…
…
…
…
…
…
…
C4
26,805
23,900
Right-of-use assets…
…
…
…
…
…
…
…
C4
4,085
1,077
Investments …
…
…
…
…
…
…
…
…
C5
25,822
25,392
Intangible assets
…
…
…
…
…
…
…
…
C6
15,681
15,877
Derivative financial assets
…
…
…
…
…
…
26, C7
2,466
-
108,555
94,230
CURRENT ASSETS
31,355
Other receivables
…
…
…
…
…
…
…
…
C8
28,609
Derivative financial assets
…
…
…
…
…
…
26, 27
274
-
Cash at bank and in hand
…
…
…
…
…
…
851
3,783
32,480
32,392
TOTAL ASSETS
…
…
…
…
…
…
…
…
141,035
126,622
CURRENT LIABILITIES
Borrowings …
…
…
…
…
…
…
…
…
C9
2,086
920
Other payables
…
…
…
…
…
…
…
…
C10
6,446
7,570
Provisions …
…
…
…
…
…
…
…
…
-
300
8,532
8,790
NON-CURRENT LIABILITIES
Borrowings …
…
…
…
…
…
…
…
…
C9
38,053
30,116
Deferred income
…
…
…
…
…
…
…
…
803
981
Deferred tax liabilities
…
…
…
…
…
…
…
C11
5,052
2,737
43,908
33,834
TOTAL LIABILITIES
…
…
…
…
…
…
…
…
52,440
42,624
NET ASSETS …
…
…
…
…
…
…
…
…
88,595
83,998
EQUITY
Called up share capital
…
…
…
…
…
…
…
C12
769
753
Share-based payments reserve
…
…
…
…
…
5,244
5,244
Profit and loss account
…
…
…
…
…
…
…
82,582
78,001
TOTAL EQUITY
…
…
…
…
…
…
…
…
88,595
83,998
Profit after tax for the year
…
…
…
…
…
…
…
12,443
6,582
These financial statements were approved by the Board of Directors on 2nd August, 2022 and signed on its behalf by:
T. J. W. Goodwin
Director
M. S. Goodwin
Director
S. R. Goodwin
Director
Company Registration Number: 305907
The notes on pages 87 to 96 form part of these financial statements.
85
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2022
Share-
based
Share
payments
Retained
Total
capital
reserve
earnings
equity
£’000
£’000
£’000
£’000
YEAR ENDED 30TH APRIL, 2022
Balance at 1st May, 2021
…
…
…
…
753
5,244
78,001
83,998
Total comprehensive income:
Profit for the year
…
…
…
…
…
-
-
12,443
12,443
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
-
-
12,443
12,443
Issue of shares
…
…
…
…
…
…
16
-
-
16
Dividends paid
…
…
…
…
…
…
-
-
(7,862)
(7,862)
BALANCE AT 30TH APRIL, 2022
769
5,244
82,582
88,595
YEAR ENDED 30TH APRIL, 2021
Balance at 1st May, 2020
…
…
…
…
736
5,244
77,435
83,415
Total comprehensive income:
Profit for the year
…
…
…
…
…
-
-
6,582
6,582
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
-
-
6,582
6,582
Issue of shares
…
…
…
…
…
…
17
-
-
17
Dividends paid
…
…
…
…
…
…
-
-
(6,016)
(6,016)
BALANCE AT 30TH APRIL, 2021
753
5,244
78,001
83,998
The notes on pages 87 to 96 form part of these financial statements.
86
NOTES TO THE FINANCIAL STATEMENTS
C1Accounting policies
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:
•
A cash flow statement and related notes;
•
Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
•
Disclosures in respect of transactions with wholly-owned subsidiaries;
•
Disclosures in respect of capital management and
•
The effects of new but not yet effective IFRSs.
As the consolidated financial statements of Goodwin PLC include the equivalent disclosures, the Company has
also taken the exemptions under FRS 101 available in respect of certain disclosures required by IFRS 13 Fair
Value Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures.
Judgements made by the Directors, in the application of these accounting policies, that have significant effect on
the financial statements and estimates with a significant risk of material adjustment in the next year are discussed
in note 2 of the Group financial statements.
Measurement convention
The financial statements have been prepared under the historical cost accounting rules except where the
measurement of balances at fair value is required as below.
Investments in subsidiary undertakings
In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less amounts
written off for impairment.
Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies at the foreign exchange
rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the statement of profit or loss within operating profit.
Financial instruments
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company has
become a party to the contractual provisions of the instrument. The principal financial assets and liabilities of the
Company are as follows:
Principal non-derivative financial assets
Other receivables
Other receivables principally comprise short-term tax balances and receivables from Group undertakings. After
being recognised initially at fair value, other receivables are measured, subsequently, at amortised cost. The
carrying amount of other receivables is considered to be a reasonable approximation of their fair value. A
provision for expected credit losses (ECL) is not seen as necessary given that the counterparties here are
Group undertakings. The Company is privy to both the accounts and future prospects of its subsidiary and
associate companies. Accordingly, impairment provisions are raised where the carrying value of a subsidiary
company / associated company cannot be fully supported.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand including cash deposits with an original maturity
of three months or less.
Equity instruments
Equity instruments are stated at par value. For ordinary share capital, the par value is recognised in share
capital and the premium in the share premium reserve.
87
NOTES TO THE FINANCIAL STATEMENTS
C1Accounting 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
…
…
…
…
3 - 5 years
Intellectual property rights …
…
…
…
15 - 20 years
Non-compete agreements …
…
…
…
2 - 15 years
Capitalised development costs
…
…
… Minimum expected order unit intake or
minimum product 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
…
…
…
…
…
… over estimated production life
Other equipment
…
…
…
…
… 15% to 25% on reducing balance
Assets in the course of construction are not depreciated.
Investment properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or for
both. Investment properties are stated at cost less accumulated depreciation.
Depreciation is charged to the statement of profit or loss on a straight-line basis or reducing balance basis over the
estimated useful lives of investment properties which is typically 25 years.
Government grants
Government grants relating to income are recognised in the statement of profit or loss.
Unamortised government grants relating to property, plant and equipment are recognised in the balance sheet as a
deferred creditor. Amortisation of such grants is credited to profit and loss in accordance with the useful lives of the
assets to which they relate.
Provisions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as
a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the
obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability.
Leases
Definition of a lease
A contract is a lease or contains a lease if it transfers the right to use an identified asset over the contract term, in
exchange for payment. In determining whether a contract gives the Company the right to use an asset, the
Company assesses whether:
88
NOTES TO THE FINANCIAL STATEMENTS
C1Accounting policies (continued)
Leases (continued)
Definition of a lease (continued)
•
the contract involves the use of an identified asset;
•
the Company has the right to obtain substantially all of the economic benefit of using the asset; and
•
the Company has the right to direct the use of the asset by deciding how the asset is employed.
Lease term
The lease term is the non-cancellable period of a lease, and options to extend the lease or terminate it, where it is
probable that the Company will exercise the available options. At the start of a lease, the Company makes a
judgement about whether it is reasonably certain to exercise the options, and reassesses this judgement at every
reporting period. Contracts, where the original lease term has expired, with assets continuing to be leased on a
short-term rolling basis of a few months, are treated as short-term leases.
Lease balances
A right-of-use asset and a lease liability are calculated at the beginning of a lease. The right-of-use asset is
measured initially at cost, being the opening lease liability, adjusted for any lease payments made by the start of
the lease, adjusted for any initial direct costs, which have been incurred.
The lease liability is measured initially at the present value of the lease payments, which are outstanding at the
start date, discounted at either the rate implicit in the lease or the Company’s incremental borrowing rate. With the
exception of leases containing an option to purchase, the Company uses its incremental borrowing rate as the
discount rate. Lease liabilities are measured at amortised cost, using the effective rate, and adjusted as required
for any subsequent change to the lease terms.
The right-of-use asset is depreciated on a straight-line basis over the lease term, or from the start date of the lease
to the end of the useful life of the right-of-use asset as appropriate. The method of calculating the estimated useful
lives of the right-of-use assets and testing for impairment is the same as that for property, plant and equipment.
Recognition exemptions
Payments for short-term leases, lasting twelve months or less, without a purchase option, are reported an as
operating expense on a straight-line basis over the term of the lease.
The cost of leasing low-value items is reported as an operating expense over the life of the lease.
Finance costs (net)
Finance costs comprise interest payable and interest on finance leases using the effective interest method,
together with the amortisation of any facility arrangement fees. Borrowing costs that are directly attributable to the
acquisition, construction or production of an asset, which takes a substantial time to be prepared for use, are
capitalised as part of the cost of that asset.
Interest income and interest payable is recognised in the statement of profit or loss as it accrues.
Pension costs
The Company contributes to a defined contribution pension scheme for employees under an Auto Enrolment
Pension arrangement as required by Government legislation. The assets of the scheme are held in independently
administered funds. Company pension costs are charged to the statement of profit or loss in the year for which
contributions are payable.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of profit
or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax
rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
Share-based payment transactions
Share-based payment arrangements, in which the Company receives goods or services as consideration for its
own equity instruments, are accounted for as equity-settled share-based payment transactions, regardless of how
the equity instruments are obtained by the Company.
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period in which the employees become unconditionally
entitled to the awards. The fair value of the awards is measured using an option valuation model, taking into
account the terms and conditions upon which the awards were granted.
89
NOTES TO THE FINANCIAL STATEMENTS
C1Accounting 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.
C2Auditor’s remuneration
Included in the profit / (loss) before taxation are the following:
20222021
£’000£’000
Fees receivable by the auditors and the auditor’s associates in respect of:
Audit of these financial statements
…
…
…
…
…
…
…
66
40
Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the
Company’s financial statements, have not been disclosed as the information is required instead to be disclosed on
a consolidated basis (see note 5 of the Group financial statements).
C3Staff 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
20222021
Administration staff …………………… ……
50
49
20222021
£’000£’000
The aggregate payroll costs of these persons were as follows:
Wages and salaries
…
…
…
…
…
…
…
…
…
…
4,293
4,055
Social security costs
…
…
…
…
…
…
…
…
…
…
1,199
1,902
Other pension costs
…
…
…
…
…
…
…
…
…
…
103
99
5,595
6,056
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on page 31. The
emoluments of the highest paid Director were £374,000 (2021: £355,000). The number of Directors who were
members of a defined contribution pension scheme was 6 (2021: 6). The social security costs include £0.7 million
(2021: £1.4 million) in respect of employer’s national insurance relating to exercised share options under the
Executive Directors’ Equity Long Term Incentive Plan.
90
NOTES TO THE FINANCIAL STATEMENTS
C4 Tangible fixed assets
Investment
Property, Plant and Equipment
properties
Other
Assets in
Land and
Plant and
equipment
course of
buildings
machinery
*
construction
Total
£’000
£’000
£’000
£’000
£’000
£’000
Cost
Balance at 1st May, 2021
30,593
1,166
38,425
1,878
6,256
47,725
Additions
…
…
197
4,587
931
144
3,466
9,128
Reclassification …
…
3,780
-
1,501
-
(5,281)
(3,780)
Disposals
…
…
-
-
-
(81)
-
(81)
Intercompany transfers
5
-
-
-
2,510
2,510
Balance at 30th April, 2022
34,575
5,753
40,857
1,941
6,951
55,502
Depreciation
Balance at 1st May, 2021
6,693
683
17,680
1,378
-
19,741
Charged in the year
…
1,077
19
1,999
121
-
2,139
Disposals
…
…
-
-
-
(74)
-
(74)
Balance at 30th April, 2022
7,770
702
19,679
1,425
-
21,806
Net book value
At 30th April, 2021
…
23,900
483
20,745
500
6,256
27,984
At 30th April, 2022
26,805
5,051
21,178
516
6,951
33,696
* Other equipment comprises motor vehicles, IT hardware and office equipment.
A bank loan of £3.4 million is secured against three furnaces and a £4.5 million loan secured against land
acquired during the year (refer to note C9).
The Company’s investment properties have been valued, using the cost model, and depreciated over their
estimated useful lives – typically 25 years. In the opinion of the Directors, the fair value of the investment
properties as at 30th April, 2022 was estimated to be £51 million (2021: £47 million). Fair value for this purpose is
based on Level 3 fair value inputs and, specifically, the Directors’ opinion as to the amount for which the property
could be exchanged between knowledgeable, willing parties in an arm’s length transaction given a reasonable
timeframe in which to conclude such an exchange. Independent valuations have not been performed.
Right-of-use assets
Plant and
Other
machinery
equipment
Total
£’000
£’000
£’000
Cost
Balance at 1st May, 2021
…
…
…
…
…
-
1,181
1,181
Additions
…
…
…
…
…
…
…
56
385
441
Intercompany transfers
…
…
…
…
…
3,159
-
3,159
Balance at 30th April, 2022
3,215
1,566
4,781
Depreciation
Balance at 1st May, 2021
…
…
…
…
…
-
104
104
Charged in the year …
…
…
…
…
…
215
377
592
Balance at 30th April, 2022
215
481
696
Net book value
At 30th April, 2021
…
…
…
…
…
…
-
1,077
1,077
At 30th April, 2022
3,000
1,085
4,085
91
NOTES TO THE FINANCIAL STATEMENTS
C5 Fixed asset investments
Shares in
Shares in
associated
Group
undertakings
undertakings
Total
£’000
£’000
£’000
Cost
Balance at 1st May, 2021
…
…
…
…
…
237
31,068
31,305
Additions
…
…
…
…
…
…
…
-
430
430
Balance at 30th April, 2022
237
31,498
31,735
Impairment
Balance at 1st May, 2021
…
…
…
…
…
-
5,913
5,913
Balance at 30th April, 2022
-
5,913
5,913
Net book value
At 30th April, 2021
…
…
…
…
…
…
237
25,155
25,392
At 30th April, 2022
237
25,585
25,822
A list of principal subsidiaries and associates is given in note 13 and a list of non-principal subsidiaries and
associates is given in note 30 of the Group financial statements.
During the year, the Company acquired the remaining shares in Internet Central Limited for a consideration of
£430,000 (refer to note 13 in the Group accounts).
C6
Intangible assets
Brand names
and
Manu- Software Develop-
intellectual
facturing
and
ment
property
rights
Licences
costs
Total
£’000
£’000
£’000
£’000
£’000
Cost
Balance at 1st May, 2021
…
…
…
7,884
2,247
416
9,964
20,511
Additions
…
…
…
…
…
159
-
79
-
238
Intercompany transfers
…
…
…
-
-
-
761
761
Disposals
…
…
…
…
…
-
(594)
-
-
(594)
Balance at 30th April, 2022
8,043
1,653
495
10,725
20,916
Amortisation
Balance at 1st May, 2021
…
…
…
1,542
1,597
236
1,259
4,634
Amortisation for the year
…
…
…
355
117
100
608
1,180
Impairment charge
…
…
…
…
-
-
-
15
15
Disposals
…
…
…
…
…
-
(594)
-
-
(594)
Balance at 30th April, 2022
1,897
1,120
336
1,882
5,235
Net book value
At 30th April, 2021
…
…
…
…
6,342
650
180
8,705
15,877
At 30th April, 2022
6,146
533
159
8,843
15,681
C7
Interest rate swap
The Group utilises interest rate swap derivatives to hedge against future movements in floating interest rates
against the Group's floating rate debt. Hedge accounting is not applied for these instruments and all movements in
fair value are recognised in profit or loss. Further details are contained in note 26 of the Group financial statements.
92
NOTES TO THE FINANCIAL STATEMENTS
C8 Debtors
2022
2021
Interest-bearing
£’000
£’000
Amounts owed by Group undertakings – repayable on demand
…
…
7,381
8,038
Non interest-bearing
Amounts owed by Group undertakings – repayable on demand
…
…
22,194
18,759
Amounts owed by Group undertakings – repayable within five years …
…
602
602
Other debtors ………
…
…
…
…
…
…
…
…
383
240
Prepayments and accrued income
…
…
…
…
…
…
…
695
813
Corporation tax receivable…
…
…
…
…
…
…
…
…
100
157
31,355
28,609
C9Borrowings
This note provides information about the contractual terms of the Company’s interest-bearing bank loans and
borrowings. For more information about the Group’s exposure to interest rate risk, see note 26 (d) of the Group
financial statements.
2022
2021
Non-
Non-
current
Current
Total
current
Current
Total
liabilities liabilities
borrowings
liabilities
liabilities borrowings
£’000
£’000
£’000
£’000
£’000
£’000
Bank loans repayable
6,988
937
7,925
by instalments
…
…
…
3,359
690
4,049
Bank loans - rolling
28,000
-
28,000
credit facilities
…
…
…
26,000
-
26,000
Other loans
…
…
…
-
202
202
-
-
-
Lease liabilities …
…
…
3,065
947
4,012
757
230
987
38,053
2,086
40,139
30,116
920
31,036
Lease liabilities
Lease liabilities are payable as follows:
2022
2021
Minimum
Minimum
lease
lease
payments
Interest
Principal
payments
Interest
Principal
£’000
£’000
£’000
£’000
£’000
£’000
Less than one year
…
…
1,033
86
947
264
34
230
Between one and
3,172
107
3,065
five years
…
…
…
799
42
757
4,205
193
4,012
1,063
76
987
Bank loan repayable by instalments
The loans are secured against three furnaces and land (see note C4). Bank loans are payable as follows:
2022
2021
Minimum
Minimum
loan
loan
payments
Interest
Principal
payments
Interest
Principal
£’000
£’000
£’000
£’000
£’000
£’000
Less than one year
…
…
1,145
208
937
807
117
690
Between one and
4,091
544
3,547
five years
…
…
…
3,208
244
2,964
More than five years
…
…
4,096
655
3,441
399
4
395
9,332
1,407
7,925
4,414
365
4,049
93
NOTES TO THE FINANCIAL STATEMENTS
C10 Other payables
2022
2021
£’000
£’000
Trade payables
…
…
…
…
…
…
…
…
…
…
966
352
Amounts owed to Group undertakings – interest-bearing…
…
…
…
4,526
4,596
Amounts owed to Group undertakings – non interest-bearing …
…
…
14
372
Other taxation and social security
…
…
…
…
…
…
…
335
1,890
Other creditors
…
…
…
…
…
…
…
…
…
…
245
-
Accruals and deferred income
…
…
…
…
…
…
…
…
360
360
6,446
7,570
C11 Provisions for deferred tax
Property,
Share-
plant and
based
Tax
equipment
payments
losses
Derivatives
Other
Total
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1st May, 2021
3,656
(915)
-
-
(4)
2,737
Recognised in profit or loss
3,209
915
(2,496)
685
2
2,315
Balance at 30th April, 2022
6,865
-
(2,496)
685
(2)
5,052
C12 Called up share capital
2022
2021
£’000
£’000
Authorised, allotted, called up and fully paid:
Balance at 1st May, 2021, 7,525,400 (2021: 7,362,200 ordinary shares of 10p each)
753
736
Issue of 163,200 ordinary shares of 10p each
…
…
…
…
……
16
17
Balance at 30th April
769
753
Details of the share issue are contained in note 33 of the Group financial statements.
C13Contingent liabilities
The Company is jointly and severally liable for value added tax due by other members of the Group amounting to
£Nil (2021: £216,000).
C14Related party balances and transactions
The Company has applied the exemptions available under FRS 101 in respect of the disclosure of transactions
with wholly-owned subsidiary companies. The Company has transacted with Easat Radar Systems Limited,
Goodwin Korea Company Limited, Internet Central Limited, Jewelry Plaster Limited, NRPL Aero Oy, Siam Casting
Powders Limited, Ultratec Jewelry Supplies Limited and Ying Tai (UK) Limited which are not wholly-owned
subsidiaries.
2022
2021
£’000
£’000
Related party balances
Interest-bearing balances
7,767
Amounts owed by Group undertakings – repayable on demand
…
…
…
8,038
Non interest-bearing balances
784
Amounts owed by Group undertakings – repayable on demand
…
…
…
1,631
Interest-bearing balances
-
Amounts owed to Group undertakings – repayable on demand
…
…
…
2,011
Related party transactions
Dividend income
…
…
…
…
…
…
…
…
1,260
389
Interest expense
…
…
…
…
…
…
…
…
5
11
Interest income
…
…
…
…
…
…
…
…
219
239
Management fee income
…
…
…
…
…
…
…
…
536
536
Rental income
…
…
…
…
…
…
…
…
76
213
Royalty income
…
…
…
…
…
…
…
…
116
218
Compensation of key management personnel
Key management personnel are defined in the Directors’ Remuneration Report on page 29, and their
remuneration is disclosed on page 31 of the Group financial statements. Some of the Executive Directors are
party to an Equity Long Term Incentive Plan (LTIP). Further details of the LTIP can be found in note 33 of the
Group financial statements.
94
NOTES TO THE FINANCIAL STATEMENTS
C15Commitments
Contracted capital commitments at 30th April, 2022 for which no provision has been made in these financial
statements were £8,393,000 (2021: £142,000).
C16Subsequent events
After the balance sheet date, ordinary dividends were declared of £8,289,000, which have not been provided for
within these financial statements.
C17 Dividends
2022
2021
Paid ordinary dividends during the year in respect of prior years
£’000
£’000
7,862
102.24p (2021: 81.71p) per qualifying ordinary share.
…
…
…
…
6,016
After the balance sheet date an ordinary dividend of 107.80p per qualifying ordinary share was proposed by the
Directors (2021: Ordinary dividend of 102.24p).
The proposed current year ordinary dividend of £8,289,000 has not been provided for within these financial
statements (2021: Proposed ordinary dividend of £7,862,200 was not provided for).
C18Accounting 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.
C19Share-based payment transactions
Details of the equity-settled share-based payment transactions are disclosed in note 33 of the Group financial
statements.
95
NOTES TO THE FINANCIAL STATEMENTS
Alternative performance measures
Measure
Method of calculation / reference
Page No.
2022
2021
Gross profit (£’000)
Consolidated statement of profit or loss
44
42,704
39,001
Revenue (£’000)
Consolidated statement of profit or loss
44
144,108
131,231
Gross profit as percentage of
revenue (%)
Gross profit / revenue
29.6
29.7
Profit before tax (£’000)
Consolidated statement of profit or loss
44
19,941
16,514
Unrealised gain on 10 year
(2,740)
interest rate swap derivative
Consolidated statement of profit or loss
44
-
Trading profit (£’000)
17,201
16,514
Operating profit (£’000)
Consolidated statement of profit or loss
44
18,307
17,094
Capital employed (£’000)
Note 26 (d)
79
145,095
130,572
Return on capital employed (%)
Operating profit / capital employed
12.6
13.1
Net debt (£’000)
Note 26 (d)
79
29,785
17,431
Net assets attributable to equity
115,310
holders of the parent (£’000)
Consolidated balance sheet
48
113,141
Gearing (%)
Net debt / equity, as above
25.8
15.4
Net profit attributable to equity
12,980
holders of the parent (£’000)
Consolidated statement of profit or loss
44
12,494
Net assets attributable to equity
115,310
holders of the parent (£’000)
Consolidated balance sheet
48
113,141
Return on investment (%)
Net profit / net assets
11.3
11.0
Revenue (£’000)
Consolidated statement of profit or loss
44
144,108
131,231
Average number of employees
Note 6
62
1,112
1,129
Sales per employee (£’000)
Group revenue / average employees
130
116
Annual post tax profit (£’000)
Consolidated statement of profit or loss
44
13,620
13,006
Interest rate swap mark to market
(2,219)
net of tax @ 19% (£’000)
Consolidated statement of profit or loss
44
-
Deferred tax rate change (£’000)
Note 8
63
2,012
-
Depreciation owned assets (£’000)
Note 5
62
6,202
5,696
Depreciation right-of-use assets (£’000)
Note 5
62
1,192
972
Amortisation and impairment (£’000)
Note 5
62
1,572
1,566
Exclude operating
62
(508)
(550)
lease depreciation (£’000)
Note 5
Annual post tax profit +
depreciation + amortisation (£’000)
21,871
20,690
96
FIVE YEAR FINANCIAL SUMMARY
2018
2019
2020
2021
2022
Continuing operations
£’000
£’000
£’000
£’000
£’000
Revenue…
…
…
…
…
…
…
…
124,811
127,046
144,512
131,231
144,108
Trading profit …
…
…
…
…
…
…
13,300
16,410
12,115
16,514
17,201
Profit before taxation
…
…
…
…
…
13,300
16,410
12,115
16,514
19,941
Tax on profit
…
…
…
…
…
…
…
(3,865)
(3,963)
(3,775)
(3,508)
(6,321)
Profit after taxation …
…
…
…
…
…
9,435
12,447
8,340
13,006
13,620
Basic earnings per ordinary share (in pence)…
…
118.11p
159.79p
107.93p
167.82p
169.14p
Diluted earnings per ordinary share (in pence)
…
118.11p
159.79p
103.31p
164.23p
169.14p
Total equity
…
…
…
…
…
…
…
104,827
109,291
109,602
118,028
119,743
Trading profit is defined as profit before tax, less the impact of the interest rate swap valuation. The calculation is reported
in the Alternative Performance Measures on page 96.
97