DJ Goodwin PLC Preliminary Results
We achieved major progress in negotiating agreements and long-term commitments with certain customers in an unprecedented period of unexpected delays caused by elections, political positioning and delays in orders being released due to market situations. Examples include supply into the US submarine and the UK Type 26 frigates programmes and into long-running radar programmes.
We have continued to improve the balance of risk between the capital goods and consumer markets and thus increase sustainability and stability.
Our growth and positioning in the consumable oriented sales of investment casting powders, waxes, rubber and 3D printers for the jewellery lost wax casting industry, especially in India and China associated with the increasing wealth in these countries, has meant the proportion of the share of operating profits of our refractory engineering companies within the Group has risen from 28% to 46%.
World investment within the fossil fuels industries has been down 25% year on year for the last two years but the forecast is that three quarters of energy consumption will still be from these sources by 2040 with the demand for natural gas increasing 2% per year to 2030 and 4.5% per year for LNG. Our valve company in Germany has had an exceptional year being close to those markets that have re-commenced investment but we expect it will be a further 18 months before other areas in the world realise they will be short of supplies. The exception to this is India, where coal production and thermal power generation are increasing and will do so quite rapidly for the next seven years; this has helped our Indian pump company increase sales by 58 % last year. At the time of writing, I am pleased to report that Goodwin International has now received its first order for its new range of axial piston isolation valves and we expect that our axial piston control and isolation valves will be well positioned to benefit when the activity of the petroleum companies starts to recover (World Petroleum Congress – YouTube WPC2017 Day 1 AM Live stream).
During the year some cost cutting and efficiency improvements have been necessary, without which the reduced margins we did obtain on the lower oil and gas valve order input would have been even more reduced. The reported pre-tax profits this year were after recognising GBP0.9 million costs associated with reducing our manpower to match the market demands. We have considered Brexit together with the exceptional decrease in sterling and, whilst not material, we have reported on the effects in Objectives, Strategy and Business Model section of the Directors Report and Accounts to be published shortly.
We have often been frustrated by the comments by government and in the press and on TV regarding the very poor productivity of UK manufacturing companies versus our European and USA counterparts. As it is, and has been our corporate strategy for over 20 plus years, to build and run highly efficient manufacturing companies, the Directors have decided to include a graph illustrating how the Goodwin Group of companies both in the UK and overseas performs in productivity terms measured by thousands of pounds of sales output per employee man year and compare this to the average European multi-nationals. This graph will be shown in the Chairman’s Statement in the Directors Report and Accounts to be published shortly and in future years will be put within the Group Strategic Report as a KPI. It is hoped that the shareholders appreciate the aspect that we achieve a productivity figure of more than 100% greater than the average of our European counterparts and that is even when our sales output and pricing levels are down due to the market situation, as they have been for the past two years. This performance is a feature of substantial investment in capital equipment, good product design over the years and the fact that our trained employees work efficiently and very hard.
Principal risks are covered in the Audit Committee Report but guidance from the FRC has been excellent on cyber protection and we have invested in this area and improved as a result, bearing in mind the greater threats from ransomware and need to address the new General Data Protection Regulation requirements.
Cash generation, control of capital expenditure and bank facility headroom remain key to financing work in progress as order levels increase. Down payments are achieved where possible. We continue to drive the Company for a dividend and total return on share value as seen from long-term growth despite market cycles.
Key Performance Indicators will be shown in the Objectives, Strategy and Business Model of the Strategic Report in the Directors Report and Accounts to be published shortly, and for further ratios please refer to www.goodwin.co.uk/2017, which includes the productivity graph mentioned above.
The Directors are of the view that a share based payments charge against pre-tax profits of GBP601,000, whilst in accordance with Accounting Standard IFRS 2, does not reflect current market conditions the Group faces. The accepted pricing model used to produce the valuation uses the Company’s share price at the grant date and does not take in to account subsequent changes. Consequently, whilst a charge of GBP601,000 has been taken through the profit and loss account as required by the Standard, the Directors believe there is now significant doubt that options will vest under the scheme.
We wish to thank both our employees and Directors in the UK and overseas for their hard work in these challenging times.
We have continued to improve the balance of risk between the capital goods and consumer markets and thus increase sustainability and stability.
Our growth and positioning in the consumable oriented sales of investment casting powders, waxes, rubber and 3D printers for the jewellery lost wax casting industry, especially in India and China associated with the increasing wealth in these countries, has meant the proportion of the share of operating profits of our refractory engineering companies within the Group has risen from 28% to 46%.
World investment within the fossil fuels industries has been down 25% year on year for the last two years but the forecast is that three quarters of energy consumption will still be from these sources by 2040 with the demand for natural gas increasing 2% per year to 2030 and 4.5% per year for LNG. Our valve company in Germany has had an exceptional year being close to those markets that have re-commenced investment but we expect it will be a further 18 months before other areas in the world realise they will be short of supplies. The exception to this is India, where coal production and thermal power generation are increasing and will do so quite rapidly for the next seven years; this has helped our Indian pump company increase sales by 58 % last year. At the time of writing, I am pleased to report that Goodwin International has now received its first order for its new range of axial piston isolation valves and we expect that our axial piston control and isolation valves will be well positioned to benefit when the activity of the petroleum companies starts to recover (World Petroleum Congress – YouTube WPC2017 Day 1 AM Live stream).
During the year some cost cutting and efficiency improvements have been necessary, without which the reduced margins we did obtain on the lower oil and gas valve order input would have been even more reduced. The reported pre-tax profits this year were after recognising GBP0.9 million costs associated with reducing our manpower to match the market demands. We have considered Brexit together with the exceptional decrease in sterling and, whilst not material, we have reported on the effects in Objectives, Strategy and Business Model section of the Directors Report and Accounts to be published shortly.
We have often been frustrated by the comments by government and in the press and on TV regarding the very poor productivity of UK manufacturing companies versus our European and USA counterparts. As it is, and has been our corporate strategy for over 20 plus years, to build and run highly efficient manufacturing companies, the Directors have decided to include a graph illustrating how the Goodwin Group of companies both in the UK and overseas performs in productivity terms measured by thousands of pounds of sales output per employee man year and compare this to the average European multi-nationals. This graph will be shown in the Chairman’s Statement in the Directors Report and Accounts to be published shortly and in future years will be put within the Group Strategic Report as a KPI. It is hoped that the shareholders appreciate the aspect that we achieve a productivity figure of more than 100% greater than the average of our European counterparts and that is even when our sales output and pricing levels are down due to the market situation, as they have been for the past two years. This performance is a feature of substantial investment in capital equipment, good product design over the years and the fact that our trained employees work efficiently and very hard.
Principal risks are covered in the Audit Committee Report but guidance from the FRC has been excellent on cyber protection and we have invested in this area and improved as a result, bearing in mind the greater threats from ransomware and need to address the new General Data Protection Regulation requirements.
Cash generation, control of capital expenditure and bank facility headroom remain key to financing work in progress as order levels increase. Down payments are achieved where possible. We continue to drive the Company for a dividend and total return on share value as seen from long-term growth despite market cycles.
Key Performance Indicators will be shown in the Objectives, Strategy and Business Model of the Strategic Report in the Directors Report and Accounts to be published shortly, and for further ratios please refer to www.goodwin.co.uk/2017, which includes the productivity graph mentioned above.
The Directors are of the view that a share based payments charge against pre-tax profits of GBP601,000, whilst in accordance with Accounting Standard IFRS 2, does not reflect current market conditions the Group faces. The accepted pricing model used to produce the valuation uses the Company’s share price at the grant date and does not take in to account subsequent changes. Consequently, whilst a charge of GBP601,000 has been taken through the profit and loss account as required by the Standard, the Directors believe there is now significant doubt that options will vest under the scheme.
We wish to thank both our employees and Directors in the UK and overseas for their hard work in these challenging times.