PRELIMINARY ANNOUNCEMENT FOR RELEASE ON 30TH JULY 2025

Goodwin PLC today announces its preliminary results for the year ended 30th April, 2025.

CHAIRMAN'S STATEMENT

I am pleased to report a record level of profits for the Group for the twelve month period ended 30th April, 2025. The "Trading" pre-tax profit was £35.5 million (2024: £24.1 million) an increase of 47% from the previous financial year's trading profits on revenue of £220 million, which is up 15% on the revenue reported for last financial year.

The Directors propose an increased dividend of 280 pence (2024: 133 pence) per share, an 111% increase, for the reasons outlined further below and in the Dividend and Capital Expenditure Policy in the financial statements to be published shortly.

The Group's increased performance was in line with expectations, with the growing momentum within the Mechanical Division being the primary driver of the improved result. The increase in the Group's gross margin to 42% is a reflection of the quality of the nuclear and defence related contracts starting to come through.  The excellent Group result was not only in terms of profitability but also in the total amount of cash generated from operations during the year that amounted to £67 million (2024: £33 million) and has resulted in the Group's net debt being reduced from £42.9 million to £13.6 million as at 30th April, 2025, and consequently the Group's gearing has reduced from 35.1% to 9.9%.

Mechanical Engineering Division

The growth in profitability from both Goodwin Steel Castings and Goodwin International within the Mechanical Division continues to come from the supply of precision-machined, high-integrity castings into mission critical defence and nuclear applications. It is these markets, specifically the defence markets, where the market backdrop of increased defence spending has placed the Division in a favourable position to capitalise from the pipeline of growing opportunities within this sector.

Over the past seven years, the respective teams have worked hard to be the preferred incumbent supplier on many UK and US Navy frigate and submarine programmes, due to being able to supply high-quality products, that are technically difficult to make on a fast and consistent basis. The breadth of our involvement into these programmes continues to grow, with components now manufactured for the Astute, Virginia, Columbia and Dreadnaught submarine programmes, as well as for the Type 26 and DDG frigate programmes and the Gerald R Ford-class aircraft carrier. Furthermore, we are under contract and actively working on pre-manufacturing activities in relation to the AUKUS partnership, to build and supply components for the next generation of nuclear-powered submarines. With the majority of these programmes being multi-decade projects, it provides the Group with great visibility and confidence in the long-term growth that lies ahead, even though the vast majority of the value in these programmes to Goodwin has yet to be included in the Group's overall workload figure, which, at the time of writing, stands at £287 million.

The Division has benefitted from the mix of work flowing through both the facilities. Typically, the defence products are made from an impact-resistant, low-carbon, high-alloy martensitic steel, which enables the foundry, with all of its recent investments and upgrades, to utilise different furnaces to also supply the 29 tonne ductile iron self-shielded boxes (SSB), that are being manufactured for the containment of nuclear waste at Sellafield. This product line is another example of a multi-decade programme, that will continue to contribute to our growth over the long-term. To date, 237 SSBs have been contractually awarded and 90 of these have been manufactured and shipped. However, it is reported that up to 747 of these SSBs could be required and, with no one else in the UK able to supply the product, it provides the Board with further confidence, and is another product that will continue to contribute to our growth over the long term.

Easat Radar Systems, as expected, has won several contracts during the year, to supply its state of the art surveillance systems, that has helped the Easat Group transition from loss-making to generating profits of approximately £1 million. Whilst the timing of the contract awards has been slow, which has resulted in the in-year activity being significantly lower than anticipated and possible, it nevertheless provides the Board with greater assurance that the management team at Easat Radar Systems can now capitalise on recent successes and increase the profitability of the Company. This is particularly relevant given the number of customers now approaching Easat, having heard within air traffic control circles that a UK supplier is offering a high-performance system at a cost-effective price - something they have not been used to for many years. The in-year activity at Easat relates to building systems for the Royal Thai Airforce, a new civil airport in Vietnam and Cranfield airport in the UK, which, later on in the year, will act as a reference for many other UK potential customers, who have confirmed their requirements for new surveillance systems.

The two other components of the Mechanical Division of note are our valve company in Germany, Noreva GmbH, and the new advanced polyimide subsidiary, Duvelco. Noreva, as reported in the March trading update, has received its largest ever order, a $15 million contract to supply valves for an LNG project. Furthermore, since the trading update, the Company has gone on to win additional LNG contracts, that are to be delivered over the next few years. For Duvelco, whilst in its infancy, with customer trials already underway, the Board believes this strategic development for the Group will be the largest and most profitable division in years to come. We have increased the commercial team in size by headhunting key individuals with longstanding specific industry knowledge in different sectors, who also have an understanding of super engineering plastics, that can sell the benefits of our enhanced material produced by our worldwide patented process (patent award granted May 2025). The Duvelco team exhibited our material at the Paris Air Show last month, where significant interest was shown in the product by aerospace customers. To further enhance Duvelco's overall offering and earning potential, investments have been made in Noreva in the form of a new 1,200 square metre building and high technology CNC powder-pressing machinery. The building has been constructed on its existing site, and the purchase of three electrically-driven CNC powder presses will mean that the Group can sell both the raw resin powder, stock shapes and finished pressed parts. The building has been completed and it is envisaged that the presses will be fully commissioned and operational by the end of the year, which is when we expect to start to make the first commercial sales of our material in all its forms. The German pressing facility can be expanded up to 30 presses in the constructed facility; with additional future expansion planned on the adjacent site the Group bought in 2021 to facilitate additional growth as the operation expands.

I am pleased to report with respect to USA tariffs that the impact on our operations has been minimal. Goodwin Steel Castings supplies machined castings into the US Navy shipbuilding programmes, which are exempt from such tariffs, the remainder of the Group has experienced negligible effects due to the nature of our contractual shipping terms. For contracts such as the supply of valves for US LNG projects, many are shipped to tariff-free trade zones, which avoid the application of tariffs, or else the Group has ensured that the products sold to the US are supplied on an ex-works or similar basis, so that the cost of any applicable tariffs are borne by the buyer. It is also worth noting that, for high-value and high-integrity products, a 10% surcharge on the cost of goods for the buyer is relatively insignificant, when you compare it to not obtaining the goods they require in terms of quality or lead times, especially within the gas industry that is currently so buoyant. As a result of prudent risk mitigation by the commercial teams, and the specialised nature of the Division's product offering, the direct incremental tariff cost to the Division, arising from US policy changes during the year ended 30th April, 2025, is limited to less than £100,000 over several small orders, of which most customers have split the tariff and have agreed to pay 50% of the tariff cost on our behalf. This figure includes the current workload, that will largely be shipped over the next three years.

Refractory Engineering Division

The Refractory Division has once again performed strongly, reflecting its resilience and market leadership.  The geographic spread of its operations, specifically those in China, India and Thailand have helped the Division to increase its operating profits by 9% during the year.

Highlights in relation to the investment casting powder markets include pre-tax profits in China increasing by 33%, as the team capitalised on domestic middle-income growth, whilst also growing their market share within the low-end brass sector. In Thailand, the restructuring and overhead reductions initiated last year aided the Company to deliver a 25% improvement in profitability.

In India, our new 76,000 square foot investment powder manufacturing facility is now fully operational. With India continuing to represent a key growth market for investment casting powders, this facility - constructed over the past two years - will provide much needed capacity to meet current demand and support substantial market expansion over the next five to ten years, as India expands its GDP at a similar rate to China from 2005 to 2015. Much of the growth in product sales to the Indian jewellery casting sector is driven by rising domestic consumption, fuelled by the country's rapid economic development and increasing levels of disposable income. In response, management has strategically prioritised market share expansion, resulting in stable profits for the year. However, by maintaining tight control over cost structures, we remain well-positioned to stay competitive and agile in this evolving market, ensuring we retain global market leadership while continuing to grow profitability.

Sales of vermiculite-based fire extinguishers and extinguishing agents, known as Lithex and AVD, continue to grow. Given the broad range of applicable industries, we remain highly optimistic about the long-term potential of this product line. While the build-up in sales volume is taking time, there are numerous ongoing customer discussions and certification processes in various countries that are expected to support sustained growth in the years ahead. Encouragingly, feedback consistently confirms that, despite the emergence of alternative products, none matches the performance of AVD in extinguishing flames and limiting fire propagation.

In parallel, we have commenced production of specialist lithium ion battery fire blankets at our Indian facility. These blankets, made from vermiculite dispersion-coated e-glass fabrics, offer significantly superior thermal resistance compared to competing products. In the UK, renovation of the newly acquired 50,000 square foot facility is now complete and contains our expanded in-house production plant for vermiculite dispersion, the core material used in AVD, as well as the Lith-ex fire extinguisher manufacturing and filling plant. Certification from BSI for the production line was granted in January 2025, and we are now filling extinguishers produced in-house at a lower cost.

Other successes within the Refractory Engineering Division include the sale of high-quality fire-stopping mortars, that are sold by the Sandersfire division of Hoben International under the brand name of Firecrete. Following the disaster of Grenfell, there has been a much greater focus on preventing the spread of fires within buildings, and, with Sandersfire fire-rated mortars being specifically designed for large span floor openings and the sealing of cabling/ pipework, the sales of the product have increased by 38%.

With regards to tariffs, the Refractory Engineering Division has not been materially impacted by the US tariffs during the year. Nonetheless though, we continue to be vigilant of the evolving landscape and the long-term impacts of the enacted changes. However, our sales to China of AVD have benefitted as some Chinese users of AVD, who were buying from our USA competitor, are now buying from us, due to the tariff increases between the USA and China.

Cash flow

With capital expenditure in the year being only £13 million, the Group's excellent ability to generate cash has been highlighted by the gearing falling from 35.1% to only 9.9% during the year, which equates to a net debt of only £13.6 million.

We continue to maintain tight control on discretionary spend, as we intend to reduce and maintain the Group debt at such a level so that it is kept below the £30 million interest rate SWAP that is currently in place, which has an interest rate of less than 1% and is in place until August 2031. As a direct impact of this instrument the Group has enjoyed an interest saving of £1.2 million compared to last year, and, should the debt level remain constant at this level throughout the current year, there will be additional savings in interest payable.

One of the areas that has materially helped the reduction in debt has been the excellent work by the commercial teams in negotiating upfront payment within their contracts. Furthermore, due to many of the contracts containing multiple cash payment milestones at various production sign off points, we do not envisage an overall cashflow unwind on these contracts.

With one of the Group's bank facilities due to mature in July 2025, I can confirm, following a competitive tender to obtain the best deal, that the Board has renewed this facility agreement. The facility renewal occurred post year end, in June 2025, and was for the same quantum which will provide the Group with ample headroom, should an opportunity arise that the Group wishes to capitalise on, particularly where free cash flow alone may not be sufficient. The four-year committed facility was renewed on much improved terms, which is a reflection of the Group's profitability, newly acquired FTSE250 status and our overall stronger financial standing.

Dividend

With having spent over £50 million at the foundry, Goodwin Steel Castings, over the last ten years and over £23 million invested in the advanced polyimide business, Duvelco, the Group has over many years, prioritised significant capital investment to equip the Group with the capacity, capability and geographical reach to drive long-term growth, both in the UK and overseas. The Board now considers it appropriate, without it jeopardising its ability to capitalise on opportunities as they arise, to amend the dividend policy to further reward shareholders for their continued support. 

Taking into consideration the longer term visibility, supported by the workload and the Group's lower gearing, the Board is confident that the alteration of the dividend policy from 38% to 58% of post-tax profits plus depreciation and amortisation is a safe and viable change for now and the foreseeable future. 

Group Growth Strategy and Ethos

We are frequently asked by individual shareholders how the Group has been able to achieve, and continues to achieve, a compound annual growth rate of 19% in total shareholders return (TSR) over the past 20 years - a performance that has far outpaced the FTSE100, FTSE350 and even the Standard&Poor500 (S&P500), that the latter has only had an annualised growth rate of 11% over the same period. Goodwin PLC's Total Shareholder Return (TSR) has increased 3,104%, compared to just 274% for the FTSE 100 and 696% for the S&P500 over the last twenty years.

As a PLC, we are unable to respond to such questions individually, unless the information is shared with all shareholders simultaneously. Accordingly, we provide below a brief outline of the approach and principles that underpin this long-term success.

At the heart of the Group's strategy is a clear and consistent policy: to target "niche" global markets with annual revenue potential typically measured in the hundreds of millions of pounds, not billions. These are specialist markets that tend not to attract the attention or investment of large, multinational corporations, due to their limited scale and high barriers to entry. This selective targeting allows us to build competitive advantages without facing disruptive levels of competition from global conglomerates.

Accompanied by this policy, we have deliberately engineered product and market diversity across all our trading subsidiaries. Each business, within a reasonable period, must strive to be the number one or number two global supplier - both in terms of technical performance and turnover. This is enabled by the majority of the technology we offer either being patent protected or uniquely difficult to manufacture, further reinforcing our leadership in each market we serve and these two facets provide opportunity for high gross margin to be earned.

For over two decades, the Group has held annual business conferences, originally attended by fifteen directors from a handful of companies; these now bring together over eighty-five directors and senior leaders from across our global businesses. It is at these conferences that the drive for growth in gross margin is reinforced, as each company presents in front of its peers its past performance, capital investment plans, and how they intend to sustainably grow their gross margin.

Our core focus remains on gross margin - not only in percentage terms, but more importantly in absolute margin contribution per product. Turnover, in isolation, is not a KPI we target. Instead, we consistently strive to enhance gross margin through superior product quality, ongoing cost reduction, patent-protected innovations, and exceptionally high manufacturing efficiencies by global purchasing of quality materials and products, as well as using advanced CNC machining and the development of capabilities that few others possess.

All of the above, as well as targeting our overheads to be below a set percentage of sales, is underpinned by a deep-rooted commitment to quality assurance and health and safety. As this is part of our way of life, it has enabled - and continues to enable - the Group to grow strongly and sustainably, and it reflects the deeply-rooted ethos shared by our Directors and employees across Goodwin. We are not overly concerned if competitors read this, as what we have achieved has taken many years to build, and it is this ingrained culture that remains the key to our continued success.

The core product contributions, as outlined in our business model in the financial statements to be published shortly, form the foundation of the Group. It is our unwavering commitment to engineering excellence, much of it underpinned by patented technologies, combined with an embedded Group ethos, that gives the Board confidence in the Group's ability to continue on our growth trajectory. While no business is immune to external risks, the Board believes the Group's strategy, systems, and culture are uniquely positioned to deliver continued success well into the future.

This progress is ultimately made possible by the talent and dedication of our people. It is a testament to their contribution that Group profitability has increased tenfold compared to levels achieved twenty years ago. On behalf of the Board, we express our sincere gratitude to all our employees - both in the UK and overseas - for their ongoing commitment and hard work.

T.J.W. Goodwin

Chairman

Alternative performance measures mentioned above are defined in Note 6.

OBJECTIVES, STRATEGY AND BUSINESS MODEL

The Group's main OBJECTIVE and PURPOSE is to have a sustainable long-term engineering based business with good potential for profitable growth while providing a fair return to our shareholders.

The Board's VALUES of engineering excellence, quality, efficiency, reliability, competitive price and delivery contribute to the delivery of its strategy.

The Board's STRATEGY to achieve this is:

·    to supply a range of technically advanced products to growth markets in the Mechanical Engineering and Refractory Engineering Divisions in which we have built up a global reputation for engineering excellence, quality, efficiency, reliability, competitive price and delivery;

·    to manufacture advanced technical products profitably, efficiently and economically;

·    to maintain an ongoing programme of investment in plant, facilities, sales and marketing, research and development with a view to increasing efficiency, reducing costs, increasing performance, delivering better products for our customers, expanding our global customer base and keeping us at the forefront of technology within our markets, whilst at all times taking appropriate steps to ensure the health and safety of our employees and customers;

·    to control our working capital and investment programme to ensure a safe level of gearing;

·    to maintain a strong capital base to retain investor, customer, creditor and market confidence and so help sustain future development of the business;

·    to support a local presence and a local workforce in order to stay close to our customers;

·    to invest in training and development of skills for the Group's future;

·    engineering activity and investment into the reduction of C0₂ emissions where it is commercially viable taking into account the long-term effects of CBAM (Carbon Border Adjustment Mechanism);

·    to manage the environmental and social impacts of our business to support its long-term sustainability.

BUSINESS MODEL

The Group's focus is on manufacturing within two sectors, Mechanical Engineering and Refractory Engineering, and through this division of our manufacturing activities, our overseas business facilities and our global sales and marketing activities, the Group benefits from market diversity. Further details of our business and products are shown on our website www.goodwin.co.uk

Mechanical Engineering

The Group specialises in supplying precision engineered solutions and industrial goods into critical applications, generally on a project basis, more often than not involving the complementary skill set of other group companies to deliver the requirement. The projects normally involve international procurement, high integrity castings, forgings or wrought high-alloy steels, carbon fibre composite structures, precision CNC machining, complex welding and fabrication, and other operations as are required. In addition to specialist projects, the Group manufactures and sells a wide range of dual plate check valves, axial nozzle check valves and axial piston control and isolation valves. These solutions and products typically form part of large construction projects, including the construction of naval propulsion and hull components, nuclear waste storage components, liquefied natural gas (LNG), oil and gas, petrochemical, mining, and water markets.

We generate value by creating leading edge technology designs and manufacturing processes, globally sourcing the best quality raw material at good prices, manufacturing in highly efficient facilities using up to date technology to provide reliable high performance products to the required specification, at competitive prices and with timely deliveries.

The Group through its foundry, Goodwin Steel Castings Limited, has the capability to pour high performance alloy castings up to 35 tonnes net in weight, radiograph and to finish CNC machine and fabricate them at the foundry's sister company, Goodwin International Limited. This capability is targeting the naval defence industry and nuclear decommissioning, the oil and gas industry, as well as large, global projects requiring high integrity machined castings. 

Goodwin International Limited, the largest company in the Mechanical Engineering Division, not only designs and manufactures dual plate check valves, axial nozzle check valves and axial piston control and isolation valves but also undertakes specialised CNC machining and fabrication work for nuclear decommissioning projects. Goodwin International Limited also has a division that is focused on manufacturing / machining high precision, high integrity components for naval marine vessels. Noreva GmbH also designs, manufactures and sells axial nozzle check valves and has built a facility to house machinery that can CNC press polyimide components from the resin produced by Duvelco. Both Goodwin International Limited and Noreva GmbH purchase the majority of their sand mould castings from Goodwin Steel Castings Limited for their ranges of check valves and this vertical integration gives rise to competitive benefits, increased efficiencies and timely deliveries.