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 £11.2 million, marking a notable 23.1% uplift from the previous year’s £9.1 million. This successful outcome is attributed to an increased revenue of £97.6 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 £266 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 Limited’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 Division 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 deteriorated 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 projects 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 capitalise 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 £54.6 million (31st October 2022: £46.1 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.