GOODWIN PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the half year ended 31st October 2024
CHAIRMAN’S STATEMENT
I am delighted to report that the “trading” pre-tax profit for the Group for the six-month period ending 31st October 2024 was £17.1 million, representing a 53% increase in profitability versus the same period last year. Furthermore, the current forward order book (otherwise known as workload) has continued to strengthen and as at the time of writing stands at £296 million (December 2023: £266 million).
The significant growth in profitability and order book, both of which have more than doubled over the past three years, is primarily driven by the foundry and machine shop’s success in securing and delivering high-integrity products for the nuclear decommissioning and naval vessel markets. In particular, the contract to supply the 29 tonne Self Shielding Boxes (SSB’s) has started to ramp up, as the foundry has reached its production target rate of ten per month. With customer documentation reviews becoming more efficient, the nuclear waste storage boxes are now being regularly delivered to Sellafield.
Duvelco Ltd has reached a significant milestone with the successful production of polyimide resin powder at its cutting-edge, purpose-built facility. This bespoke plant, developed over thirty months, can now produce polyimide resin on an industrial scale.
The facility has two dedicated production lines to ensure zero cross-contamination: one for unfilled polyimide resin and the other for graphite-enhanced resin. The graphite-containing line is scheduled to be online by the end of January, allowing the company to also release graphite-containing trial samples to customers shortly thereafter. This significant step marks the beginning of a new phase for Duvelco as customers can commence validation tests for their specific applications. To complement customers’ own validations, formal data sheets are scheduled for publication in the second quarter of 2025.
The Board is delighted by this achievement, which significantly reduces the risks associated with launching this new technology. We are confident that, as major end-users complete their validation processes-for which, timelines vary by sector-Duvelco will become a major contributor to the Group’s profitability in the years ahead. This milestone represents a key step forward in delivering long-term value to our shareholders and we look forward to providing further updates in the future.
The cash generation of the Group in the first six months has been strong, resulting in the net debt as at 31st October 2024 being £38.8 million (31st October 2023: £54.6 million) which equates to a gearing of 31% (31st October 2023: 48%). With a lower level of capital expenditure forecast, long-term contracts successfully negotiated with multiple cash milestones as well as the increase in profitability, the Group will benefit from a lower level of debt as it starts to fall within the facility we arranged in 2021 to borrow money at an interest rate of 1% until 2031.
It is the dedication and hard work of the Group’s employees over the last few years, which has put the Group in the position that it is in today. The Board would like to extend its sincere gratitude to all of its directors, managers and employees for their focus and determination, which has continually set the Group apart, whether that be breaking into new markets or continually adapting existing products and processes to obtain incremental gains. Thank you.
| T.J.W. Goodwin | |
| Chairman | 16 December 2024 |
Financial Highlights
| Unaudited | Unaudited | Audited | |
| Half Year to | Half Year to | Year ended | |
| 31st October | 31st October | 30th April | |
| 2024 | 2023 | 2024 | |
| £‘m | £’m | £’m | |
| Consolidated Results | |||
| Revenue | 106.4 | 97.6 | 191.3 |
| Operating profit | 18.2 | 12.5 | 26.9 |
| Trading profit * | 17.1 | 11.2 | 24.1 |
| Unrealised (loss) / gain on 10 year interest rate swap derivative | (0.4) | 0.9 | 0.1 |
| Profit before tax | 16.7 | 12.1 | 24.2 |
| Profit after tax | 12.5 | 9.2 | 17.7 |
| Capital additions | |||
| Property, plant and equipment (PPE) owned | 5.3 | 7.0 | 16.4 |
| Property, plant and equipment (PPE) right-of-use assets | 0.1 | 0.1 | 0.2 |
| Operating lease assets (former IAS 17 definition) | ‒ | ‒ | 1.5 |
| Intangible assets | 0.5 | 0.4 | 2.0 |
| Capital expenditure for KPI purposes | 5.9 | 7.5 | 20.1 |
| Earnings per share – basic | 150.91p | 115.66p | 224.53p |
| Earnings per share – diluted | 150.91p | 115.66p | 224.53p |
* Trading profit is defined as profit before taxation excluding the movement in fair value of the interest rate swap.
Revenue
Revenue of £106.4 million for the six months represents a 9.0% increase from the £97.6 million achieved for the same six month period last year.
Trading profit
Trading profit for the six months of £17.1 million represents a 52.7% increase from the £11.2 million achieved for the same six month period last year.
Key performance indicators
| Unaudited | Unaudited | Audited | |
| Half Year to 31st October | Half Year to 31st October | Year ended 30th April | |
| 2024 | 2023 | 2024 | |
| Trading profit (£’m) | 17.1 | 11.2 | 24.1 |
| Post tax profit + depreciation + amortisation (£’m) | 17.3 | 12.7 | 26.4 |
| Gross profit % of revenue | 43.0% | 39.0% | 40.7% |
| Trading profit % of revenue | 16.1% | 11.5% | 12.6% |
| Gearing % | 31.4% | 47.8% | 35.1% |
| Non-cash charges (£’m) | |||
| Depreciation | 4.1 | 3.9 | 8.1 |
| Amortisation and impairment | 0.7 | 0.7 | 1.3 |
| Total non-cash charges | 4.8 | 4.6 | 9.4 |
Alternative performance measures mentioned above are defined on page 105 of the Group Annual Accounts to 30th April 2024.
2024/25 Outlook
Whilst a similar level of activity for the Group is expected for the second half of the year ending 30th April 2025, it is pleasing to report, after many years, that the long-promised future growth for Easat Radar Systems is now coming to fruition. The radar business has signed a significant contract to supply two additional turnkey surveillance systems to an existing Airforce customer based in Southeast Asia, which will return the company to profitability. In addition to this, and following contract award notifications by other customers, Easat is in the final stages of signing two further contracts to supply its proven state-of-the-art primary and secondary surveillance system. This will provide Easat with a workload in excess of £25 million, enabling the company to operate at a higher level of activity, that will further enhance the Group’s profitability over the short to medium term.
Within the Refractory Engineering Division, a stable level of profitability will continue to be generated from its core products, where incremental gains are being targeted within their well-established position in the market. For the newer growth products, such as the fire extinguishing agent for lithium ion battery fires, known as AVD, interest and momentum continue to grow for the superior product, despite alternatives entering the market. Furthermore, with the extinguisher-filling plant having now been commissioned and certified, this will reduce the cost of production of the lithium ion battery fire extinguishers and enable AVD Fire Ltd to have greater control from order placement through to delivery.
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 risks and uncertainties affecting the Group. We would refer you to pages 12 to 13 of the Group Annual Accounts to 30th April 2024 which describe the principal risks and uncertainties, and to note 28, starting on page 83, which describes in detail the key financial risks and uncertainties affecting the business.
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 £30 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 2025. 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 strength of the current order book levels, this should continue and improve in the second half of this financial year and into the next financial year. As at 31st October 2024, the Group’s net debt stood at £38.8 million (31st October 2023 £54.6 million) as set out in note 15 of these accounts. The net debt levels are lower than those recorded at both October 2023 and April 2024, which is in line with the Board’s expectations and will continue to be reviewed and managed across the Group. Given the above, 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 prepared these accounts 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 | 16 December 2024 |