GOODWIN PLC

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the half year ended 31st October 2021

CHAIRMAN'S STATEMENT

The pre-tax profit for the Group for the first six month period ending 31st October 2021 was £7.7 million (2020: £5.8 million) on a revenue of £69 million.

At the half year the Group's workload remains steady at £156 million and does not yet contain some of the major projects that the Mechanical Engineering Division has confidently been pursuing within the military, nuclear waste re-processing and surveillance markets.

The Refractory Engineering Division has delivered a strong performance and its activity continues to travel on an upward trajectory, delivering like-for-like sales growth of 40%.  With the recent acquisitions now generating revenue; our end user markets growing; our research and development investment programmes in the fire protection and construction products now gaining traction in their respective markets, the Division currently represents 40% of the Group's revenue.  The Division's focus on price increases, global sourcing, network capabilities and operational footprint has enabled it to date to manage the price pressures and supply chain disruptions.

The Mechanical Engineering Division has experienced low levels of activity due to customer approval delays on documentation for cast and machined products going into complex stakeholder environments. This, coupled with navigating supply availability and increased energy costs (with there being a time lag before such costs can be passed on to the end users), has impacted both sales and profitability in the first six months of the year. We now have in place fixed price energy contracts that go out until June 2023 that will remove the extreme spikes in energy prices that were seen in September 2021.  A pragmatic approach has also been taken to highlight and reduce the amount of red tape and address the increased costs of production that will enable efficient production, moving forward, of orders in hand.

The Group's net debt stands at £34.8 million (31st October 2020: £31.1 million) with a relatively moderate level of gearing of 31.7%.  During the six month period just completed, the Group's cash generation has been reduced by the requirement of additional working capital as new projects start to ramp up.  Furthermore, the Group has proceeded as planned with its investment programme that is spread across both Divisions, including projects that will reduce its carbon footprint and its reliance on the energy markets, details of which will be released in the next Annual Report.