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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Goodwin | AQSE:GDWN.GB | Aquis Stock Exchange | Ordinary Share | GB0003781050 | Ordinary Shares 10p |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 7,050.00 | 6,800.00 | 7,300.00 | 7,050.00 | 7,050.00 | 7,050.00 | 0.00 | 06:56:11 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMGDWN
RNS Number : 3793X
Goodwin PLC
20 December 2023
GOODWIN PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the half year ended 31st October 2023
CHAIRMAN'S STATEMENT
I am pleased to report our half-year results for the first six months ending 31st October 2023. The Group has realised a pre-tax trading profit of GBP11.2 million, marking a notable 23.1% uplift from the previous year's GBP9.1 million. This successful outcome is attributed to an increased revenue of GBP97.6 million. Both of the Group's Divisions have played a significant role in this achievement during the first six months, and we anticipate a continuation of this increased performance for the rest of the financial year, with a current forward order book of GBP266 million.
The Refractory Engineering Division has continued to advance its profitability. Notably, the sales of our internally developed, patent-protected fire extinguishing agent for lithium-ion battery fires, known as AVD, have reached a milestone at the mid-year point, equalling the total sales for the previous financial year.
AVD achieved Underwriters Laboratory (UL) certification for component recognition as an extinguishing agent, and a six-litre fire extinguisher containing AVD received UL8 certification. This has opened up substantial opportunities, particularly in the United States, which we anticipate will emerge as a rapidly expanding market for our product, with sales to the USA already starting to grow at a good pace. There is ever-growing interest and adoption that extends way beyond the automotive sector, encompassing a diverse range of applications worldwide. To support this demand, proactive measures have been taken to expand AVD manufacturing capacity. The Group has acquired a 2.5-acre site with a 5,000 square metre industrial building, conveniently located close to Dupré Minerals L imi t e d's primary manufacturing facility in Staffordshire. The site is ready for immediate use with the planned commissioning date of the new, higher-capacity AVD manufacturing line set for April 2024.
The new Calciner at Hoben International Limited has proved to be approximately 15% more efficient than the original Calciner due to the strategic design modifications that were incorporated into the initial design. This efficiency improvement has translated into enhanced productivity and energy cost savings. Hoben's sales of Soluform concrete bags continue to grow and there is wider adoption amongst some project engineers who are increasingly favouring it as their product of choice.
The Refractory Engineering Division's sales of investment casting powder to the global jewellery casting industry has benefited from the jewellery and brass casting market in China returning to a level of normality and due to the Chinese consumers increasing confidence post COVID.
The Mechanical Engineering D i vision is witnessing the continual progression of activities that was anticipated due to the substantial forward order book. More to do with timing rather than anything else, the Group's cash position has det erior ated in the first six months of the financial year which is due to the increasing levels of working capital that have been accumulating through the increased activity of the Division. However, whilst we have sufficient facility headroom available we expect this position to improve by the financial year end.
There are also a significant number of additional future pro j ects for the Mechanical Engineering Division, for which , at the time of writing, orders have yet to be placed. We anticipate addressing these as they emerge. Reflecting on our active pursuit of major opportunities in the Mechanical Engineering Division over the past three years, it is reassuring to note that none have been lost. However, the slow pace of third party decision making has been a source of frustration. Nevertheless, we are well prepared to capitali s e on these opportunities as they arise, whether at Goodwin Steel Castings Limited , Goodwin International Limited or Easat Radar Systems Limited . In all instances, be it technical performance, proven track record or the fact our proposals offer the best value proposition for our customers, globally, we are confident that the existing businesses will continue delivering improved results once we add on some of these new contracts to the existing business activity.
Keeping one eye on the future, our patent pending polyimide resin production company, Duvelco Limited , remains on track to have its production plant commissioned and operational by June 2024. All the major capital expenditure has been completed with the majority of any spend left being labour to finish off the wiring, pipework and commissioning. All initial chemicals to make up to 30 tonnes of polymer resin are on site, so there should not be any large increases in working capital affecting the Group's future cash position , as it should become self - funding once operational.
After due consideration, from listening to shareholder enquiries at the AGM, we recognise the importance of providing more frequent updates. Considering our Group's diverse and complex operations, we have decided to introduce quarterly trading updates to keep our investors more informed.
The Group's overall net debt stands at GBP54.6 million (31st October 2022: GBP46.1 million) which equates to a gearing ratio of 47.8% which is in line with the Group's forecasts and due to an end in large amounts of capital expenditure and stabilisation of working capital levels, will fall back towards 30% within the next 18 months.
The Board and I want to thank the employees for their continued efforts in pushing the Group performance forward, and wish everyone a very Happy Christmas and a prosperous New Year.
T.J.W. Goodwin Chairman 19 December 2023
MANAGEMENT REPORT
Financial Highlights
Unaudited Unaudited Audited Half Year Half Year Year ended to to 31st October 31st October 30th April 2023 2022 2023 GBPm GBPm GBPm Consolidated Results Revenue 97.6 89.3 185.7 Operating profit 12.5 9.8 20.3 Trading profit * 11.2 9.1 18.9 Unrealised gain on 10 year interest rate swap derivative 0.9 3.1 3.2 Profit before tax 12.1 12.2 22.1 Profit after tax 9.2 9.1 16.5 Capital additions Property, plant and equipment (PPE) owned 7.0 7.8 21.2 Property, plant and equipment (PPE) right-of-use assets 0.1 1.1 1.5 Operating lease assets (former IAS 17 definition) -- (0.2) (0.4) Intangible assets 0.4 0.3 1.8 ---------------------------------------------------------- ------------- ------------- ----------- Capital expenditure for KPI purposes 7.5 9.0 24.1 ---------------------------------------------------------- ------------- ------------- ----------- 115.66 Earnings per share - basic p 113.93 p 206.81 p 115.66 Earnings per share - diluted p 113.93 p 206.81 p
* Trading profit is defined as profit before taxation less the movement in fair value of interest rate swap.
Revenue
Revenue of GBP97.6 million for the six months represents a 9.3% increase from the GBP89.3 million achieved for the same six month period last year .
Trading profit
Trading profit for the six months of GBP11.2 million represents a 23.1% increase from the GBP9.1 million achieved for the same six month period last year.
Key performance indicators
Unaudited Unaudited Audited Half Year Half Year Year ended to 31st to 31st 30th April October October 2023 2022 2023 Trading profit (GBP'm) 11.2 9.1 18.9 Post tax profit + depreciation + amortisation (GBP'm) * 12.7 10.5 22.7 Gross profit % of revenue 26.7 % 26.5 % 24.9 % Trading profit % of revenue 11.5 % 10.2 % 10.2 % Gearing % 47.8 % 40.9 % 26.3 % Non cash charges (GBP'm) Depreciation 3.9 3.6 7.5 Amortisation and impairment 0.7 0.6 1.3 ---------- ---------- ------------ Total non cash charges 4.6 4.2 8.8
---------- ---------- ------------
Alternative performance measures mentioned above are defined on page 104 of the Group Annual Accounts to 30th April 2023.
* The figure for 31st October 2022 has been restated to show the interest rate swap adjustment net of tax, to be consistent with the other periods.
2023/24 Outlook
The Group's increased levels of activity that have occurred in the first half of the year are expected to continue throughout the second half of the year, generating a similar level of profitability as was achieved in the first six months.
Within the Mechanical Engineering Division, whilst it is unlikely to immediately create activity within the factory before the year end, we remain confident that over the next six months Easat Radar Systems will be announced as the successful bidder of a number of contracts that will create a level of workload for the company that will allow it to generate respectable profits for the next two to three years whilst continuing to compete for more projects that are being tendered. The reason the Board remains confident is due to the fact that the vast majority of the opportunities that we referenced in a previous statement ("an additional GBP47 million of firm buy radar systems were quoted") have either been delayed or re-tendered due to the specification of the requirement changing, typically to our advantage due to the company now being able to offer the full suite of surveillance systems.
If a few of the notable contracts that are expected to arrive over the coming months do not get delayed again for the Mechanical Engineering Division, the forward workload will be further increased by the year end.
In the second half of the year , we will also see the completion of the 7,690 square metre new building in India that will substantially increase the manufacturing capacity of both the investment powders and the submersible slurry pump businesses. These increases will not only enable the Group to benefit from the growing domestic market over the next decade but will also support the growth of the other submersible pump companies in the Group, which for the last three years have grown at an average compound rate of 18% per year, and is expected to continue. Currently the pump companies represent approximately 12% of Group turnover.
Risks and Uncertainties
The Group, mainly through its centralised management structure, makes best endeavours to have in place internal control procedures to identify and manage the key risk s and uncertainties affecting the Group. We would refer you to pages 13 to 14 of the Group Annual Accounts to 30th April 2023 which describe the principal risks and uncertainties, and to note 28 , starting on page 81 , which describes in detail the key financial risks and uncertainties affect ing the business, such as credit risk and foreign exchange risk.
Judging the future relationship of the major currency pairs of the US Dollar, Sterling and the Euro continues to be a challenge.
The Group has mitigated the impact of rising interest rates by fixing the effective base rate at less than 1% for a notional GBP30 million of debt until August 2031.
Report on Expected Developments
This report describes the expected development of the Group during the year ended 30th April 2024 . The report may contain forward-looking 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 to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.
Going concern
The Group continues to trade profitably by building on the increase in activity seen in the second half of the previous financial year and, with the current order book levels where they are, this should continue and improve in the second half of this financial year and into the next financial year. The Group has continued with its value added activities and traded throughout this period and previous periods with minimal disruptions to manufacturing activities from the challenges that have been seen over the last few years that have affected many other businesses. As at 31st October 2023, the Group's net debt stood at GBP54.6 m illion (31st October 2022 GBP46.1 m illion ) as set out in note 16 of these accounts. Whilst the net debt levels are higher than those recorded at April 2023 and October 2022 , they are in line with the Group's forecasts and are expected to reduce over time, as working capital unwinds, along with lower forecasted capital expenditure . Given the abovementioned, the Directors, after having reviewed the Group projections and possible challenges that may lie ahead, do not see an issue with the continued ability of the Group to meet its financial commitments as they fall due for at least twelve months from the date of these accounts and have drawn up these accounts to reflect that on a going concern basis.
Responsibility statement of the Directors in respect of the half-yearly financial report
The Directors confirm to the best of their knowledge that:
1. this condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the United Kingdom; and
2. the Interim Management Report and condensed financial statements include a fair review of the information required by Disclosure and Transparency Rules
-- 4.2.7R (being an indication of important events that have occurred during the first six months of the year); and
-- 4.2.8R (being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last Annual Report that could do so).
T.J.W. Goodwin Chairman 19 December 2023
Condensed Consolidated Statement of Profit or Loss
for the half year to 31st October 2023
Unaudited Unaudited Audited Half Year Half Year Year ended to to 31st October 31st October 30th April 2023 2022 2023 GBP'000 GBP'000 GBP'000 Continuing operations Revenue 97,584 89,335 185,742 Cost of sales (71,493) (65,645) (139,521) ------------- ------------- ----------- Gross profit 26,091 23,690 46,221 Distribution expenses (1,700) (2,056) (3,741) Administrative expenses (11,872) (11,801) (22,167) ------------- ------------- ----------- Operating profi t 12,519 9,833 20,313 Finance costs (net) (1,351) (761) (1,438) Share of profit of associate company 34 33 65 ------------- ------------- ----------- Profit before taxation and movement in fair value of interest rate swap 11,202 9,105 18,940 Unrealised gain on 10 year interest rate swap derivative 938 3,132 3,189 ------------- ------------- ----------- Profit before taxation 12,140 12,237 22,129 Tax on profit (2,971) (3,157) (5,616) ------------- ------------- ----------- Profit after taxation 9,169 9,080 16,513 ------------- ------------- ----------- Attributable to: Equity holders of the parent 8,729 8,761 15,904 Non -controlling interests (NCI) 440 319 609 ------------- ------------- ----------- Profit for the period 9,169 9,080 16,513 ------------- ------------- -----------
115.66 Basic earnings per ordinary share (note 13 ) p 113.93 p 206.81 p ------------- ------------- ----------- 115.66 Diluted earnings per ordinary share (note 13 ) p 113.93 p 206.81 p ------------- ------------- -----------
Condensed Consolidated Statement of Comprehensive Income
for the half year to 31st October 2023
Unaudited Unaudited Audited Half Year Half Year Year ended to to 31st October 31st October 30th April 2023 2022 2023 GBP'000 GBP'000 GBP'000 Profit for the period 9,169 9,080 16,513 Other comprehensive expense Items that are or may be reclassified subsequently to the income statements Foreign exchange translation differences (218) (167) (1,412) Effective portion of changes in fair value of cash flow hedges (3,243) (4,958) 3,741 Ineffective portion of changes in fair value of cash flow hedges (177) (92) 518 Change in fair value of cash flow hedges transferred to profit or loss (242) 949 1,308 Effective portion of changes in fair value of cost of hedging 1,466 96 (1,447) Ineffective portion of changes in fair value of cost of hedging 9 -- (76) Change in fair value of cost of hedging transferred to profit or loss 37 (15) 33 Tax on items that are or may be reclassified subsequently to profit or loss 495 950 (919) ------------- --------------- ----------- Other comprehensive expense for the period, net of income tax (1,873) (3,237) 1,746 ------------- --------------- ----------- Total comprehensive income for the period 7,296 5,843 18,259 ------------- --------------- ----------- Attributable to: Equity holder of the parent 6,950 5,633 17,726 Non-controlling interests 346 210 533 ------------- --------------- ----------- 7,296 5,843 18,259 ------------- --------------- -----------
Condensed Consolidated Statement of Changes in Equity
for the half year to 31st October 2023
Share Translation Share-based Cash Cost of Retained Total Non-controlling Total capital reserve payments flow hedging earnings attributable interests equity reserve hedge reserve to equity reserve holders of the parent GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Half Y ear to 31st October 2022 (Unaudited) Balance at 1st May 2022 769 463 5,244 (2,746) 140 111,440 115,310 4,433 119,743 Total comprehensive income: Profit -- -- -- -- -- 8,761 8,761 319 9,080 Other comprehensive income: Foreign exchange translation differences -- (81) -- -- -- -- (81) (86) (167) Net movements on cash flow hedges -- -- -- (3,114) 67 -- (3,047) (23) (3,070) -------- ------------ ------------ -------- -------- --------- ------------- ---------------- -------- Total comprehensive income / expense for the period -- (81) -- (3,114) 67 8,761 5,633 210 5,843 Dividends paid -- -- -- -- -- (4,145) (4,145) (380) (4,525) Dividends declared * -- -- -- -- -- (4,144) (4,144) -- (4,144) -------- ------------ ------------ -------- -------- --------- ------------- ---------------- -------- Balance at 31st October 2022 769 382 5,244 (5,860) 207 111,912 112,654 4,263 116,917 -------- ------------ ------------ -------- -------- --------- ------------- ---------------- --------
* The statement of changes in equity has been restated to reflect the dividends declared .
Condensed Consolidated Statement of C hanges in Equity
for the half year to 31st October 2023
Share Translation Share-based Cash Cost of Retained Total Non-controlling Total capital reserve payments flow hedging earnings attributable interests equity reserve hedge reserve to equity reserve holders of the parent GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Year ended 3 0th April 2023 (Audited) Balance at 1st May 2022 769 463 5,244 (2,746) 140 111,440 115,310 4,433 119,743 Total comprehensive income: Profit -- -- -- -- -- 15,904 15,904 609 16,513 Other comprehensive income: Foreign exchange translation differences -- (1,312) -- -- -- -- (1,312) (100) (1,412) Net movements on cash flow hedges -- -- -- 4,250 (1,116) -- 3,134 24 3,158 -------- ------------ ------------ -------- -------- --------- ------------- ---------------- -------- Total comprehensive income / expense for the period -- (1,312) -- 4,250 (1,116) 15,904 17,726 533 18,259 Dividends paid -- -- -- -- -- (8,289) (8,289) (556) (8,845) Balance at 3 0th April 2023 769 (849) 5,244 1,504 (976) 119,055 124,747 4,410 129,157 -------- ------------ ------------ -------- -------- --------- ------------- ---------------- --------
Condensed Consolidated Balance Sheet
Unaudited Unaudited Audited as at 31st as at 31st as at 30th October October April 2023 2023 2022 GBP'000 GBP'000 GBP'000 Restated * Non-current assets Property, plant and equipment 99,623 92,104 101,243 Right-of-use assets 11,344 6,956 6,763 Investment in associates 978 912 964 Intangible assets 25,126 24,380 25,448 Derivative financial assets 5,644 5,446 5,932 142,715 129,798 140,350 -------------------------------------- ----------- ----------- ----------- Current assets Inventories 48,835 43,323 47,955 Contract assets 19,808 17,811 16,257 Trade and other financial assets 36,737 30,341 29,757 Corporation tax receivable 418 1,339 1,337 Other receivables 5,796 5,984 4,775 Deferred tax asset 119 59 57 Derivative financial assets 1,577 2,105 2,684 Cash and cash equivalents 13,404 8,604 19,661 ----------- ----------- ----------- 126,694 109,566 122,483 -------------------------------------- ----------- ----------- ----------- Total assets 269,409 239,364 262,833 ----------- ----------- ----------- Current liabilities Bank overdrafts and interest-bearing liabilities 13,942 3,318 6,729 Contract liabilities * * 31,412 19,462 32,747 Trade payables and other financial liabilities 23,065 18,722 25,164 Other payables 6,873 6,266 6,601 Dividends payable 4,318 4,144 -- Derivative financial liabilities 2,121 4,984 2,383 Liabilities for current tax 2,009 1,194 921 Provisions for liabilities and charges 229 206 266 ----------- ----------- ----------- 83,969 58,296 74,811 -------------------------------------- ----------- ----------- ----------- Non-current liabilities Interest-bearing liabilities 55,357 53,042 47,256 Derivative financial liabilities 108 2,326 -- Provisions for liabilities and charges 304 333 246 Deferred tax liabilities 10,983 8,450 11,363 ----------- ----------- ----------- 66,752 64,151 58,865 -------------------------------------- ----------- ----------- ----------- Total liabilities 150,721 122,447 133,676 ----------- ----------- ----------- Net assets 118,688 116,917 129,157 ----------- ----------- ----------- Equity attributable to equity holders of the parent Share capital 751 769 769 Translation reserve (957) 382 (849) Share-based payments reserve 5,244 5,244 5,244 Cash flow hedge reserve (1,298) (5,860) 1,504 Cost of hedging reserve 155 207 (976) Retained earnings 110,297 111,912 119,055 ----------- ----------- ----------- Total equity attributable to equity holders of the parent 114,192 112,654 124,747 Non-controlling interests 4,496 4,263 4,410 ----------- ----------- ----------- Total equity 118,688 116,917 129,157 ----------- ----------- -----------
* The balance sheet has been restated to reflect the dividends payable at 31st October 2022.
** Contract liabilities include advance payments from customers of GBP30,462,000 (31(st) October 2022: GBP18,627,000), with the balance of GBP950,000 (31(st) October 2022: GBP835,000) being costs accrued for contracts.
Condensed Consolidated Statement of Cash Flows
for the half year ended 31st October 2023
Unaudited Unaudited Audited Half Year to Half Year to Year ended 31st October 31st October 30th April 2023 2022 2023 GBP'000 GBP'000 GBP'000 Cash flow from operating activities Profit from continuing operations after tax 9,169 9,080 16,513 Adjustments for: Depreciation of property, plant and equipment 3,153 2,965 6,272 Depreciation of right-of-use assets 717 642 1,198 Amortisation and impairment of intangible assets 654 610 1,257 Financ e costs (net) 1,351 761 1,438 Foreign exchange losses / (gains) 267 (1,965) 1,213 Loss / (p rofit ) on sale of property, plant and equipment (27) 7 134 Unrealised gain on 10 year interest rate swap derivative (938) (3,132) (3,189) Share of profit of associate companies (34) (33) (65) UK tax incentive credit on research and development -- -- (610) Tax expense 2,971 3,157 5,616 ------------- ------------- ----------- Cash generated from operating activities before changes in working capital and provisions 17,283 12,092 29,777 Increase in inventories (980) (3,112) (8,377) In crease in contract assets (3,572) (5,461) (3,804) Increase in trade and other receivables (8,213) (5,426) (5,304) (Decrease) / increase in contract liabilities (1,325) 4,720 17,954 (Decrease) / increase in trade and other payables (1,364) (2,488) 4,072 Cash inflow from operations 1,829 325 34,318 Interest paid (1,629) (763) (1,940) Corporation tax paid (885) (2,196) (3,251) ------------- ------------- ----------- Net cash from operating activities (685) (2,634) 29,127 ------------- ------------- ----------- Cash flows from investing activities Proceeds from sale of property, plant and equipment 196 39 218 Acquisition of property, plant and equipment (2,385) (6,796) (18,871) Acquisition of intangible assets (91) (143) (675) Development expenditure capitalised (307) (166) (1,196) ------------- ------------- ----------- Net cash outflow from investing activities (2,587) (7,066) (20,524) ------------- ------------- ----------- Cash flows from financing activities
Buy back of shares (8,869) -- -- Payment of capital element of lease obligations (1,325) (882) (1,874) Dividends paid (4,318) (4,145) (8,289) Dividends paid to non-controlling interests (260) (380) (556) Proceeds from new loans and committed facilities 12,500 13,000 11,500 Repayment of loans and committed facilities (613) (868) (1,181) Change in bank overdrafts (119) -- 119 ------------- ------------- ----------- Net cash (outflow) / inflow from financing activities (3,004) 6,725 (281) ------------- ------------- ----------- Net (d ecrease ) / increase in cash and cash equivalents (6,276) (2,975) 8,322 Cash and cash equivalents at beginning of year 19,661 11,651 11,651 Effect of exchange rate fluctuations on cash held 19 (72) (312) ------------- ------------- ----------- Closing cash and cash equivalents 13,404 8,604 19,661 ------------- ------------- ----------- 1 . Reporting Entity
Goodwin PLC (the "Company") is a company incorporated in England and Wales. The unaudited condensed consolidated interim financial statements of the Company as at and for the six months ended 31st October 2023 comprise the Company, its subsidiaries, and the Group's interests in associates (together referred to as the "Group").
The audited consolidated financial statements of the Group as at and for the year ended 30th April 2023 are available upon request from the Company's registered office at Ivy House Foundry, Hanley, Stoke-on-Trent, ST1 3NR or via the Company's web site: www.goodwin.co.uk .
2 . Statement of compliance
These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting , as adopted in the United Kingdom. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the audited consolidated financial statements of the Group as at and for the year ended 30th April 2023 .
The comparative figures for the financial year ended 30th April 2023 are extracts and not the full Group's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The Audit Committee has reviewed these unaudited condensed consolidated interim financial statements and has advised the Board of Directors that, taken as a whole, they are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's half year performance. These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on 19 December 2023 .
3 . Significant Accounting Policies
The accounting policies applied by the Group in these unaudited condensed consolidated financial statements are the same as those applied by the Group in its audited consolidated financial statements as at and for the year ended 30th April 2023 , except where accounting standards have been amended and the Group has adopted these amendments during the current period.
The following amendments , which have bec o me effective for the current reporting period, and therefore have been adopted by the Group , are not expected to have a significant impact on the Group's financial statements .
-- Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies - (effective for periods commencing on or after 1 st January 2023).
-- Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 'Definition of Accounting Estimates' - (effective for periods commencing on or after 1 st January 2023).
-- Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction - (effective for periods commencing on or after 1 st January 2023).
-- Amendments to IAS 12 Income Taxes: International Tax Reform - Pillar Two Model Rules (effective for periods commencing on or after 1st January 2023).
New IFRS standards, amendments and interpretations not adopted
The IASB and IFRIC have issued additional standards and amendments which are effective for periods starting after the date of these financial statements. The following amendments have not yet been adopted by the Group:
-- 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 1 st January 202 4 ).
-- Amendments to IAS 1 Presentation of Financial Statements: Non-current liabilities with covenants - (effective for periods commencing on or after 1 st January 202 4 ).
The Group does not expect the above amendments to have a material impact on profit, earnings per share and net assets in future periods.
4 . Accounting Estimates and Judgements
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these unaudited consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited consolidated financial statements as at and for the year ended 30th April 2023 .
The tax charge in the period is based on management's estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period, and the impact of any disallowed costs.
5 . Operating Segments
For reporting to the chief operating decision maker, the Board of Directors, the Group is organised into two reportable operating segments, according to the different products and services provided by the Mechanical Engineering and Refractory Engineering Divisions. Segment assets and liabilities include items directly attributable to segments as well as group centre balances, which can be allocated on a reasonable basis. Associates are included in Refractory Engineering. In accordance with the requirements of IFRS 8, information regarding the Group's operating segments is reported below.
In previous years, the segmental analysis of net assets, capital expenditure and depreciation was based on the legal structure of the Group. As the analysis from 30(th) April 2023 has been prepared on the basis of the operational structure of the Group, the comparative figures for 31(st) October 2022 have been restated accordingly.
6 . Operating segment revenue Unaudited Unaudited Audited Half Year to 31st Half Year to 31st October Year ended 30th April October 2023 2022 2023 Mechanical Refractory Total Mechanical Refractory Total Mechanical Refractory Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Total revenue 80,549 38,657 119,206 70,276 40,039 110,315 147,538 80,340 227,878 Inter-segment revenue (14,723) (6,899) (21,622) (12,226) (8,754) (20,980) (23,771) (18,365) (42,136) ----------------- ----------------- --------------- ----------------- ----------------- --------------- ----------------- ----------------- --------------- External revenue 65,826 31,758 97,584 58,050 31,285 89,335 123,767 61,975 185,742 ----------------- ----------------- --------------- ----------------- ----------------- --------------- ----------------- ----------------- --------------- 7 . Operating segment profit
Unaudited Unaudited Audited Half year to 31st Half year to 31st Year ended 30th October 2023 October 2022 April 2023 % GBP'000 % GBP'000 % GBP'000 Mechanical Engineering 52 7,719 47 5,809 49 12,171 Refractory Engineering 48 7,146 53 6,525 51 12,772 ---------- -------------- ---------- -------------- ---------- -------------- Segment operating profit 100 14,865 100 12,334 100 24,943 Group centre (2,346) (2,501) (4,630) -------------- -------------- -------------- Group operating profit 12,519 9,833 20,313 Group finance costs (net) (1,351) (761) (1,438) Share of profit of Refractory associate company 34 33 65 -------------- -------------- -------------- Profit before taxation and movement in fair value of interest rate swap 11,202 9,105 18,940 -------------- -------------- -------------- Unrealised gain on 10 Year Interest rate swap 938 3,132 3,189 -------------- -------------- -------------- Profit before tax 12,140 12,237 22,129 Tax (2,971) (3,157) (5,616) -------------- -------------- -------------- Profit after tax 9,169 9,080 16,513 -------------- -------------- --------------
8 . Operating segment assets and liabilities
Unaudited Unaudited Half Year to 31st October 2023 Half Year to 31 October 2022 Mechanical Refractory Group Total Mechanical Refractory Group Total Centre Centre GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Net assets Total assets 187,155 61,843 20,411 269,409 159,760 60,908 18,696 239,364 Total liabilities (121,959) (23,149) (5,613) (150,721) (98,900) (18,013) (5,534) (122,447) ----------------- ----------------- -------------- ---------------- ----------------- ----------------- -------------- ----------------- Total 65,196 38,694 14,798 118,688 60,860 42,895 13,162 116,917 ----------------- ----------------- -------------- ---------------- ----------------- ----------------- -------------- ----------------- A udited Year ended 3 0 April 2023 Group Mechanical Refractory Centre Mechanical Net assets Total assets 175,023 69,166 18,644 262,833 Total liabilities (103,234) (27,621) (2,821) (133,676) ----------------- ----------------- -------------- ----------------- Total 71,789 41,545 15,823 129,157 ----------------- ----------------- -------------- ----------------- 9 . Operating segment capital expenditure, depreciation and amortisation Unaudited Unaudited Half Year to 31st October Half Year to 31st October 2023 2022 Mechanical Refractory Group Total Mechanical Refractory Group Total centre centre GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Capital expenditure on: Property, plant and equipment 5,420 1,019 494 6,933 5,567 2,144 115 7,826 Right-of-use assets -- 34 34 68 976 66 62 1,104 Intangible assets 381 17 -- 398 208 45 9 262 ----------------- ----------------- -------------- ----------------- ----------------- ----------------- -------------- -------------- Total capital expenditure 5,801 1,070 528 7,399 6,751 2,255 186 9,192 ----------------- ----------------- -------------- ----------------- ----------------- ----------------- -------------- -------------- Depreciation 2,445 858 567 3,870 2,338 761 508 3,607 Amortisation 225 408 21 654 221 359 30 610 Total 2,670 1,266 588 4,524 2,559 1,120 538 4,217 ----------------- ----------------- -------------- ----------------- ----------------- ----------------- -------------- -------------- Audited Year ended 30th April 2023 Mechanical Refractory Group Total centre GBP'000 GBP'000 GBP'000 GBP'000 Capital expenditure on Property, plant and equipment 15,623 4,928 630 21,181 Right-of-use assets 1,233 66 220 1,519 Intangible
assets 508 1,305 11 1,824 ----------------- ----------------- ----------------- ------------------------------ Total capital expenditure 17,364 6,299 861 24,524 ----------------- ----------------- ----------------- ------------------------------ Depreciation - property, plant and equipment 4,872 1,528 1,070 7,470 Amortisation 446 747 64 1,257 Total 5,318 2,275 1,134 8,727 ----------------- ----------------- ----------------- ------------------------------ 10 . Geographical segments Unaudited Unaudited Half Year to 31st October 2023 Half Year to 31st October 2022 Revenue Net Non-current Capital Revenue Net Non-current Capital assets assets expenditure assets assets expenditure GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 UK 34,171 73,302 115,763 5,130 25,108 71,240 102,487 7,957 Rest of Europe 10,526 6,530 4,258 330 13,360 9,096 3,981 385 USA 9,458 -- -- -- 7,807 -- -- -- Pacific Basin 21,865 16,378 6,656 199 18,349 16,993 7,395 119 Rest of World 21,564 22,478 10,394 1,740 24,711 19,588 10,489 731 -------------- -------------- ------------------ ------------------ -------------- -------------- ------------------ ------------------ Total 97,584 118,688 137,071 7,399 89,335 116,917 124,352 9,192 -------------- -------------- ------------------ ------------------ -------------- -------------- ------------------ ------------------ A udit e d Y ear ended 3 0th April 2023 Revenue Net assets Non-current Capital assets expendi t ure GBP'000 GBP'000 GBP'000 GBP'000 UK 55,867 82,669 114,235 21,533 Rest of Europe 28,367 10,636 4,224 790 USA 19,854 -- -- -- Pacific Basin 34,725 15,982 7,029 330 Rest of Wo r ld 46,929 19,870 8,930 1,871 -------------- ----------------- ------------------ --------------- Total 185,742 129,157 134,418 24,524 -------------- ----------------- ------------------ ---------------
11 . Revenue
The Group's revenue is derived from contracts with customers. The following tables provide an analysis of revenue by geographical market and by product line.
Unaudited Unaudited Audited Half Year to 31st Half Year to 31st Year ended 30th April October 2023 October 2022 2023 Mechanical Refractory Total Mechanical Refractory Total Mechanical Refractory Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Primary geographical markets UK 25,594 8,577 34,171 17,916 7,193 25,109 41,112 14,755 55,867 Rest of Europe 6,478 4,048 10,526 9,322 4,038 13,360 21,269 7,098 28,367 USA 9,069 389 9,458 7,400 407 7,807 19,141 713 19,854 Pacific Basin 10,082 11,783 21,865 5,885 12,464 18,349 12,253 22,472 34,725 Rest of World 14,603 6,961 21,564 17,527 7,183 24,710 29,992 16,937 46,929 ----------------- ----------------- -------------- ----------------- ----------------- -------------- ----------------- ----------------- -------------- Total 65,826 31,758 97,584 58,050 31,285 89,335 123,767 61,975 185,742 ----------------- ----------------- -------------- ----------------- ----------------- -------------- ----------------- ----------------- -------------- Product lines Standard products and consumables 7,043 31,758 38,801 7,222 31,285 38,507 13,767 61,975 75,742 Bespoke engineered products - point in time 8,377 -- 8,377 17,468 -- 17,468 30,002 -- 30,002 ----------------- ----------------- -------------- ----------------- ----------------- -------------- ----------------- ----------------- -------------- Total point in time revenue 15,420 31,758 47,178 24,690 31,285 55,975 43,769 61,975 105,744 ----------------- ----------------- -------------- ----------------- ----------------- -------------- ----------------- ----------------- -------------- Minimum period contracts for goods and services 2,840 -- 2,840 2,252 -- 2,252 4,335 -- 4,335 Bespoke engineered products - over time 47,566 -- 47,566 31,108 -- 31,108 75,663 -- 75,663 ----------------- ----------------- -------------- ----------------- ----------------- -------------- ----------------- ----------------- -------------- Total over time revenue 50,406 -- 50,406 33,360 -- 33,360 79,998 -- 79,998 ----------------- ----------------- -------------- ----------------- ----------------- -------------- ----------------- ----------------- -------------- Total revenue 65,826 31,758 97,584 58,050 31,285 89,335 123,767 61,975 185,742 ----------------- ----------------- -------------- ----------------- ----------------- -------------- ----------------- ----------------- --------------
12 . Dividends
The Directors do not propose the payments of an interim dividend.
Unaudited Unaudited Audited Half Year Half Year Year ended to to 31st October 31st October 30th April 2023 2022 2023 GBP'000 GBP'000 GBP'000 Equity dividends paid during the period: Ordinary dividends paid in respect of the year ended 30th April 2023 4,318 -- -- Ordinary dividends paid in respect of the year ended 30th April 2022 -- 4,145 8,289 ------------------- ------------------- ----------------- Total 4,318 4,145 8,289 ------------------- ------------------- -----------------
As noted in the Group Annual Accounts to 30th April 2023, the dividend payments for the year ended 30th April 2023 are being paid in two equal instalments, with the second payment due in April 2024.
13 . Earnings per share
Unaudited Unaudited Audited as at as at as at 31st October 31st October 30th April 2023 2022 2023 Number of ordinary shares Ordinary shares in issue Opening balance 7,689,600 7,689,600 7,689,600 Shares bought back in the period (180,000) -- -- ------------------- ------------------- ----------------- Closing balance 7,509,600 7,689,600 7,689,600 ------------------- ------------------- ----------------- Weighted average number of ordinary shares in issue 7,546,774 7,689,600 7,689,600 ------------------- ------------------- ----------------- GBP'000 Relevant profits attributable to shareholders 8,729 8,761 15,904 ------------------- ------------------- -----------------
The Company bought back 180,000 of its ordinary shares on 7th June 2023 and cancelled them off the register, following a tender offer to its shareholders.
14 . Property, plant and equipment and intangible assets
Unaudited Unaudited Half Year to 31st October Half Year to 31st October 2023 2022 Property, Right-of-use Intangible Property, Right-of-use Intangible plant and assets assets plant and assets assets equipment equipment GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Net book value at the beginning of the period 101,243 6,763 25,448 87,594 6,191 24,817 Additions 6,933 68 398 7,826 1,104 262 Disposals (at net book value) (169) -- -- (46) -- -- Transfers (5,242) 5,242 -- (306) 306 -- Depreciation (3,153) (717) -- (2,965) (642) -- Amortisation -- -- (654) -- -- (610) Exchange adjustment 11 (12) (66) 1 (3) (89) ---------------- ------------------- ----------------- ---------------- ------------------- ----------------- Net book value at the end of the period 99,623 11,344 25,126 92,104 6,956 24,380 ---------------- ------------------- ----------------- ---------------- ------------------- -----------------
The depreciation on right-of-use assets maybe be analysed as follows:
Unaudited Unaudited Half Year Half Year to 31st to 31st October October 2023 2022 GBP'000 GBP'000 Finance leases (former IAS 17 definition) 439 365 Operating leases (former IAS 17 definition) 278 277 ---------------- ---------------- 717 642 ---------------- ----------------
15 . Interest-bearing liabilities
Unaudited Unaudited Audited as at as at as at 31st October 31st October 30th April 2023 2022 2023 GBP'000 GBP'000 GBP'000 Bank overdrafts -- -- 119 Bank loans - repayable by instalments 1,072 1,058 1,154 Bank loans - rolling credit facilities 10,000 -- 3,500 Lease liabilities 2,870 2,260 1,956 ------------------- ------------------- ----------------- Due within one year 13,942 3,318 6,729 ------------------- ------------------- ----------------- Bank loans - repayable by instalments 6,443 7,367 6,985 Bank loans - rolling credit facilities 42,000 41,000 36,000 Lease liabilities 6,914 4,675 4,271 ------------------- ------------------- ----------------- Due after more than one year 55,357 53,042 47,256 ------------------- ------------------- ----------------- Bank overdrafts -- -- 119 Bank loans - repayable by instalments 7,515 8,425 8,139 Bank loans - rolling credit facilities 52,000 41,000 39,500 Lease liabilities 9,784 6,935 6,227 ------------------- ------------------- ----------------- Total 69,299 56,360 53,985 ------------------- ------------------- ----------------- Former IAS 17 analysis of lease liabilities Finance leases 8,510 5,306 4,725 Operating leases 1,274 1,629 1,502 ------------------- ------------------- -----------------
9,784 6,935 6,227 ------------------- ------------------- ----------------- 16 . Capital management
As at 31st October 2023 the capital utilised was GBP 168,813,000 , as shown below:
Unaudited Unaudited Audited As at As at As at 31st October 31st October 30th April 2023 2022 2023 Note GBP'000 GBP'000 GBP'000 Cash and cash equivalents (13,404) (8,604) (19,661) Bank overdrafts 15 -- -- 119 Bank loans and committed facilities 15 59,515 49,425 47,639 Lease liabilities 15 9,784 6,935 6,227 ------------------- ------------------- ----------------- Net debt in accordance with IFRS 16 55,895 47,756 34,324 Operating lease debt (former IAS 17 definition) 15 (1,274) (1,629) (1,502) ------------------- ------------------- ----------------- Relevant net debt for KPI purposes 54,621 46,127 32,822 Total equity attributable to equity holders of the parent 114,192 112,654 124,747 ------------------- ------------------- ----------------- Capital 168,813 158,781 157,569 ------------------- ------------------- -----------------
17 . Total financial assets and financial liabilities
The following table sets out the Group's accounting classification of its financial assets and financial liabilities, and their carrying amounts at 31st October 2023 . The carrying amount is a reasonable approximation of fair value for all financial assets and financial liabilities.
Fair value Fair value Amortised Total carrying hedging through cost amount / instruments profit and fair value loss amount GBP'000 GBP'000 GBP'000 GBP'000 Financial assets measured at fair value Forward exchange contracts used for hedging 335 -- -- 335 Other forward exchange contracts -- 19 -- 19 Interest rate swap -- 6,867 -- 6,867 ------------------- ------------------ ---------------- --------------------- 335 6,886 -- 7,221 ------------------- ------------------ ---------------- --------------------- Financial assets not measured at fair value Cash and cash equivalents -- -- 13,404 13,404 Contract assets -- -- 19,808 19,808 Trade receivables and other financial assets -- -- 36,737 36,737 Corporation tax receivable -- -- 418 418 ------------------- ------------------ ---------------- --------------------- -- -- 70,367 70,367 ------------------- ------------------ ---------------- --------------------- Financial liabilities measured at fair value Forward exchange contracts used for hedging 1,528 -- -- 1,528 Other forward exchange contracts -- 701 -- 701 ------------------- ------------------ ---------------- --------------------- 1,528 701 -- 2,229 ------------------- ------------------ ---------------- --------------------- Financial liabilities not measured at fair value Bank loans -- -- 59,515 59,515 Lease liabilities -- -- 9,784 9,784 Contract liabilities -- -- 31,412 31,412 Trade payables and other financial liabilities -- -- 23,065 23,065 Corporation tax payable -- -- 2,009 2,009 ------------------- ------------------ ---------------- --------------------- -- -- 125,785 125,785 ------------------- ------------------ ---------------- ---------------------
The interest rate SWAP and forward exchange contract 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).
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