TIDMGHH
RNS Number : 7062G
Gooch & Housego PLC
11 June 2013
For immediate release 11 June 2013
Gooch & Housego PLC
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2013
Gooch & Housego PLC ('G&H' or 'the Company'), the
specialist manufacturer of optical components and systems, today
announces its interim results for the six months ended 31 March
2013.
Financial highlights H1 2013 H1 2012 Increase FY 2012
Revenue GBP29.0m GBP27.8m 4 % GBP60.9m
Adjusted profit before tax(1) GBP3.8m GBP3.0m 27% GBP8.2m
Adjusted earnings per share(1) 12.7p 10.5p 21% 28.2p
Reported profit before tax GBP3.3m GBP2.5m 32% GBP7.1m
Basic earnings per share 11.2p 8.7p 29% 24.4p
Net cash/(debt) at period GBP0.7m (GBP5.6)m 113% (GBP0.3)m
end
(1) Adjusted for amortisation of acquired intangible assets.
Operational highlights
-- Strong order book, underpinned by significant Aerospace and Defence order wins
-- Net cash position as at 31 March 2013
-- Established Systems Technology Group to accelerate the move up the value chain
-- Exciting opportunities and strong pipeline in Space Photonics
-- New Gooch & Housego subsidiary established in Japan and sales presence strengthened in Asia
-- Interim dividend of 2.3p per share declared
Gareth Jones, Chief Executive of Gooch & Housego PLC,
commented on the results:
"Against a backdrop of continuing economic uncertainty, Gooch
& Housego is focussing on delivering growth.
Despite the prevailing economic conditions I am pleased to
report that Gooch & Housego has had a solid first half,
reporting continued growth in revenue and profit.
We are on track and remain positive about achieving our
strategic objectives to move up the value chain from components
supplier to solutions provider and to deliver growth through the
provision of innovative photonic solutions in specialised
applications where we can take a leading or dominant position."
For further information please contact:
Gareth Jones / Andrew
Gooch & Housego PLC Boteler 01460 256 440
Buchanan Tim Thompson 020 7466 5000
Investec Banking plc (Nomad
& Broker) Patrick Robb 020 7597 5169
Operating and Financial Review
Performance Overview
Revenue for the six months ended 31 March 2013 was GBP29.0
million, up 4% from GBP27.8 million for the corresponding period
last year.
REVENUE
Six months ended 2013 2012
31 March
----------------- -----------------
GBP'000 % of GBP'000 % of
total total
----------------------- -------- ------- -------- -------
Industrial 16,404 56% 16,882 61%
Aerospace and Defence 7,437 26% 6,754 24%
----------------------- -------- ------- -------- -------
Life Sciences 3,142 11% 2,566 9%
----------------------- -------- ------- -------- -------
Scientific Research 2,006 7% 1,598 6%
----------------------- -------- ------- -------- -------
Group Revenue 28,989 100% 27,800 100%
----------------------- -------- ------- -------- -------
The business has delivered profitable growth and improving
margins whilst experiencing variable demand patterns within our
core markets. The trend towards a more evenly balanced business has
continued, reflecting our strategy of diversification and our
efforts to develop new opportunities in Aerospace and Defence and
Life Sciences.
In our industrial market, revenues were marginally lower than
the corresponding period last year as a solid performance in our
traditional industrial laser market was counteracted by poor demand
from the telecommunications and semiconductor sectors.
Aerospace and Defence epitomised the mixed nature of trading. In
overall terms revenues were 10% higher in the current financial
period driven by strong demand from our European customers. In
contrast, budgetary constraints in the US, have delayed decisions
on the award of new contracts.
In life sciences an excellent overall performance, with growth
of 22%, was achieved through strong sales into the medical laser
market, but again this was achieved against a head wind of poorer
sales in retinal imaging.
Order intake in the first half of the year has been strong. The
order book at 31 March 2013 was GBP29.6 million and the Company has
booked GBP32 million in orders since 1 October 2012. As a result,
the order book going into the second half of financial year 2013 is
GBP5 million higher than the corresponding level last year.
Profit before tax was GBP3.3 million, 33% better than the GBP2.5
million reported last year. This reflects the improved trading
conditions in our core industrial laser market, as well the overall
increased volume in our Aerospace and Defence business, which has
driven some benefits in the operational gearing of this
segment.
Operational and Strategy Review
Products and Markets - Industrial
Gooch & Housego's principal industrial markets are
industrial lasers, telecommunications, metrology/sensing and
semiconductor manufacturing. Industrial lasers are used in a
diverse range of precision material processing applications ranging
from microelectronics to automotive.
Business in our industrial laser market was solid in the first
six months of the year, underpinned by steady demand for our
traditional acousto-optic Q-switched products, sales of which were
16% higher than the corresponding period last year.
Whilst precision optics was our best performing product sector
during the period in question, this was largely due to increased
demand from the Aerospace and Defence market. The principal
industrial applications for the Company's precision optics products
arelaser-based metrology where sales remained flat, and
semiconductor manufacturing and inspection equipment, where sales
decreased, reflecting the current downturn in that cyclical
market.
In telecommunications demand for our products was again
adversely affected by delays to large scale undersea cable
infrastructure projects as a result of uncertainties over funding.
This market has recently shown signs of recovery.
The Fibre-Q switch continues to be an exciting new product for
Gooch & Housego. This is a key enabling technology in
fibre-optic sensing applications and we are closely engaged with a
number of customers to design the Fibre-Q into the next generation
of their systems.
The fibre-laser market continues to be a growing subset of the
industrial laser market. Increasingly, fibre-laser manufacturers
are turning to Q-switching for their latest laser designs, which
plays to Gooch & Housego's strengths. Our Q-switch and Fibre-Q
products, have both experienced growth in the first half of the
year.
Products and Markets - Aerospace and Defence
The Aerospace and Defence market for Gooch & Housego is
characterised by high-value, long-term programmes involving the
main US and European defence contractors. During the first six
months of 2013 the Company has seen a healthy increase in its
Aerospace and Defence business, with a significant proportion of
revenues coming from sub-assemblies for the first time. Gooch &
Housego continues to regard Aerospace and Defence as a growth
market and we are investing accordingly. Particular emphasis has
been placed on our defence orientated quality systems. Earlier this
year our Ilminster manufacturing facility gained BS/EN9100
accreditation and as a result will be listed on the International
Aerospace Quality Group (IAQG) Online Aerospace Supplier
Information System (OASIS) supplier database. The same facility
also recently re-qualified as a SC21 Bronze award holder. (SC21 is
an Aerospace, Defence, Security and Space industry initiative to
increase the competitiveness of UK industry through supply chain
improvement.) Taken together this means that Gooch & Housego is
now in a position to supply airframe and avionic manufacturers in
the civil, defence and space sectors with optical components and
sub-systems for both R&D and production.
During the past six months, Space Photonics has emerged as a
significant new application area in which Gooch & Housego has
the opportunity to develop a market leading position by leveraging
its unique expertise in fibre optics, semiconductor lasers and
precision optics. These skills are particularly sought after in the
rapidly evolving field of satellite laser communications, guidance
and control systems. With support and encouragement from UK,
European and US space agencies, Gooch & Housego has
successfully bid on several development programmes, and has more in
the pipeline. Our recently established Systems Technology Group
(STG) has been instrumental in realising these opportunities, which
are focussed on the application of our core component technologies
in complex sub-systems as we seek to move up the value chain. This
is consistent with our strategy of delivering growth by migrating
from component supplier to solutions provider at the systems level.
We expect Space Photonics to become an increasingly important
sub-set of the Aerospace & Defence market.
Products and Markets - Life Sciences
Our three principal Life Sciences revenue streams are derived
from - diagnostics (fibre-optic modules for optical coherence
tomography (OCT) applications), surgery (Q-switches for surgical
lasers) biomedical research (acousto-optics for microscopy
applications). In each application area we are making steady
progress in moving up the value chain and we are currently selling
sub-systems as well as components to several of our larger
customers. In addition to our commercial activities we are also
investing in the development of diagnostic systems based on
hyperspectral imaging technology.
Overall, this sector has shown robust growth, although as with
most of our markets over the last six months, trading conditions
have been mixed with certain areas performing better than
others.
The principal commercial application of OCT systems is retinal
imaging, and Gooch & Housego continues to be the leading
provider of fibre optic solutions (products and design services) to
this industry. The softer demand patterns experienced by this
industry were reflected in sales during the first half of the year.
In contrast, sales of fibre-optic, acousto-optic and electro-optic
components for applications in the medical laser market has been
strong, resulting in an overall year-on-year growth of 22% in this
market.
Products and Markets - Scientific Research
The principal application in Scientific Research is laser
inertial confinement fusion ("laser fusion"), where lasers are used
to create the conditions found in the core of a star. In addition
to pure research in high energy and plasma physics, these vast
laser systems are being used to investigate whether this technology
could provide clean, carbon-free energy to lessen the mankind's
dependency on fossil fuels. Gooch & Housego is already looking
into the practical and financial implications of scaling the
manufacture of the critical optical components to meet the needs of
an electrical power generating industry based on this
technology.
Strategy
Gooch & Housego has developed, and measures itself on a set
of strategies to deliver long term, sustainable growth for its
shareholders. These can be categorised into two broad pillars:
"Diversification" and, "Moving up the Value Chain". In seeking to
achieve its strategic goals Gooch & Housego uses a variety of
tools, including investment in R&D to deliver organic growth,
acquisitions, market focused business development and strategic
partnerships.
In the first six months of the current financial year, Gooch
& Housego invested GBP2.4 million in research and development.
This represents 8.3% of revenue and is 16% higher than the same
period last year.
As the Company moves up the value chain, know-how and trade
secrets no longer provide adequate protection. As a result,
protecting intellectual property by means of patents is becoming
increasingly important. Gooch & Housego has an Intellectual
Property Committee, comprising senior R&D and management
personnel and chaired by the Chief Technology Officer, that meets
on a quarterly basis and whose remit is to identify and protect
commercially relevant intellectual property. So far this year two
patents have been granted and a further five inventions have been
identified and patents are in the process of being filed.
Diversification : Gooch & Housego seeks to develop, through
R&D and acquisition, a presence in new markets that offer the
potential for significant growth as a result of their adoption of
photonic technology, whilst also reducing exposure to cyclicality
in any particular sector. In the current period Gooch & Housego
has grown its business in its two key target markets of Aerospace
and Defence and Life Sciences. Moreover, the business has continued
to invest in its quality systems and business development in order
to strengthen its position in these markets in the future. We will
continue to evaluate potential bolt-on acquisition opportunities to
reinforce our market leading position in key product and technology
sectors.
Moving up the Value Chain : Gooch & Housego seeks to move up
the value chain to more complex sub-assemblies and systems through
leveraging its excellence in materials and components, and by
providing photonic design and engineering solutions for our
customers. With modules and sub-systems accounting for a growing
proportion of orders, Gooch & Housego is progressively making
the transition from components supplier to solutions provider. The
majority of our business in the Aerospace and Defence market now
comes from the sale of sub-systems rather than discrete components.
In the last six months the Company has introduced a new initiative
to accelerate this process organically with the formation of the
Systems Technology Group (STG), which functions as a separate
business, distinct from the existing manufacturing operations. The
STG provides design and engineering services and leads Gooch &
Housego's participation in a number of funded research programmes.
Its initial focus has been on opportunities to take Gooch &
Housego up the value-chain in the fields of Space Photonics and
optical coherence tomography for biomedical imaging
applications.
Cash Flow and Financing
In the six months to 31 March 2013 Gooch & Housego generated
net cash from operations of GBP2.8 million, compared to GBP1.9
million in the same period of 2012.
The Company has invested in working capital during the first six
months of the year. Working capital has increased by GBP2.6 million
since the year end.
Capital expenditure on property, plant and equipment was GBP1.0
million in the period (2012: GBP2.5 million). In 2012 the level of
capital expenditure was higher due to the crystal growth
consolidation and fibre optic technology replication
programmes.
Cash, cash equivalents and bank overdrafts as at 31 March 2013
amounted to a positive cash position of GBP9.0 million, compared to
GBP9.2 million at 30 September 2012.
Since 30 September 2012, the Company has moved from a net debt
position of GBP0.3 million to a net cash position of GBP0.7
million. The movement in net debt is outlined in the table
below.
MOVEMENT IN NET CASH
All amounts in GBPm Gross cash Gross debt Net cash
----------------------------- ----------- ----------- ---------
At 1 October 2012 11.7 (12.0) (0.3)
Net cash flows from trading 5.4 - 5.4
Debt repayments (1.7) 1.7 -
Proceeds from share issues 0.5 - 0.5
Capital Expenditure (1.0) - (1.0)
Working capital (2.6) - (2.6)
Interest and dividends (1.0) - (1.0)
Foreign exchange 0.4 (0.7) (0.3)
At 31 March 2013 11.7 (11.0) 0.7
At 31 March 2013, the banking facilities for Gooch & Housego
with its bankers, the Royal Bank of Scotland, comprise of an $18
million dollar denominated term loan (of which $9.0 million is
still outstanding), a GBP3.1 million sterling denominated term loan
(of which GBP2.2 million is still outstanding), an $8 million
revolving credit facility (drawn to $4 million as at 31 March 2013)
and an undrawn capital expenditure facility of $8 million. All
facilities are committed until April 2015, subject to certain
covenant provisions.
Staff
The Company workforce fell from 588 at 30 September 2012 to 579
at the end of March 2013, a fall of 9. This is a net fall and
reflects both the reductions in staffing resulting from the
rebalancing of capacity at some locations and the additional
investment that the business has made in engineering.
Dividends
The Directors have declared an interim dividend of 2.3p per
share (2012 : 2.0p per share). This will be payable on 26 July 2013
to shareholders on the register as at 21 June 2013.
Prospects
Gooch & Housego's markets continue to exhibit attractive,
long-term structural growth drivers as photonic technology is
adopted across an increasingly wide range of application areas
Despite continuing global economic uncertainties and short-term
fluctuations in activity levels, we continue to invest in our
business with confidence to position it for sustainable long-term
growth.
Julian Blogh Gareth Jones Andrew Boteler
Chairman Chief Executive Officer Chief Financial Officer
11 June 2013 11 June 2013 11 June 2013
Unaudited interim results for the 6 months ended 31 March
2013
Group Income Statement Half Year Half Year Full Year
to to to
31 Mar 2013 31 Mar 2012 30 Sep 2012
Note (Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- -------------
Revenue 5 28,989 27,800 60,851
Cost of revenue (17,674) (17,477) (37,405)
-------------- -------------- -------------
Gross profit 11,315 10,323 23,446
Research and Development (2,423) (2,089) (4,277)
Sales and Marketing (2,218) (2,019) (4,119)
Administration and other
expenses (4,078) (3,826) (8,181)
Other income 1,047 527 983
-------------- -------------- -------------
Operating profit 5 3,643 2,916 7,852
Net finance costs (320) (416) (776)
-------------- -------------- -------------
Profit before income tax
expense 3,323 2,500 7,076
Income tax expense 6 (841) (603) (1,753)
-------------- -------------- -------------
Profit for the period 2,482 1,897 5,323
Earnings per share 7 11.2p 8.7p 24.4p
-------------- -------------- -------------
Reconciliation of operating profit to adjusted operating
profit:
Half Year Half Year Full Year
to to to 30 Sep
2012
31 Mar 2013 31 Mar 2012 (Audited)
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Operating profit 3,643 2,916 7,852
Amortisation of acquired
intangible assets 427 457 881
Restructuring costs - 55 240
Adjusted operating profit 4,070 3,428 8,973
-------------- -------------- ------------
Group Statement of Comprehensive Half Year Half Year Full Year
Income to to to 30 Sep
2012
31 Mar 31 Mar 2012 (Audited)
2013
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Profit for the period 2,482 1,897 5,323
Other comprehensive income
Fair value adjustment of interest
rate swap net of tax 42 62 95
(1,084)
Currency translation difference 1,058 (689) (1,084)
-------------- -------------- ------------
Other comprehensive income/(expense)
for the period 1,100 (627) (989)
Total comprehensive income for
the period 3,582 1,270 4,334
-------------- -------------- ------------
Unaudited interim results for the 6 months ended 31 March
2013
Group Balance Sheet 31 Mar 2013 31 Mar 2012 30 Sep 2012
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Non-current assets
Property, plant and equipment 21,523 21,493 21,405
Intangible assets 21,130 21,410 20,720
Deferred income tax assets 4,203 4,223 4,308
-------------- -------------- ------------
46,856 47,126 46,433
Current assets
Trade and other receivables 13,515 9,632 11,062
Inventories 14,188 13,845 12,802
Cash and cash equivalents 11,672 8,201 11,712
39,375 31,678 35,576
Current liabilities
Borrowings (6,082) (5,859) (10,202)
Trade and other payables (10,569) (8,317) (5,774)
Income tax liabilities (841) (330) (17)
Provision for other liabilities
and charges (324) (358) (357)
-------------- -------------- ------------
(17,816) (14,864) (16,350)
Net current assets 21,559 16,814 19,226
-------------- -------------- ------------
Non-current liabilities
Borrowings (4,879) (7,896) (6,261)
Deferred income tax liabilities (618) (648) (698)
Derivative financial instruments (83) (177) (134)
-------------- -------------- ------------
(5,580) (8,721) (7,093)
Net assets 62,835 55,219 58,566
-------------- -------------- ------------
Shareholders' equity
Called up share capital 4,491 4,372 4,382
Share premium account 14,757 14,211 14,311
Merger reserve 2,671 2,671 2,671
Hedging reserve (128) (202) (169)
Cumulative translation
reserve 1,347 (101) (496)
Retained earnings 39,697 34,268 37,867
-------------- -------------- ------------
Equity Shareholders' Funds 62,835 55,219 58,566
-------------- -------------- ------------
Unaudited interim results for the 6 months ended 31 March
2013
Statement of Changes in Share Share
Equity capital premium Merger Hedging Retained Total
account account reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------- --------- --------- ---------- ----------- ---------
At 1 October 2011 4,370 14,200 2,671 (264) 33,123 54,100
Profit for the period - - - - 1,897 1,897
Other comprehensive income
for the year - - - 62 (689) (627)
--------- --------- --------- ---------- ----------- ---------
Total comprehensive income
for the year - - - 62 1,208 1,270
--------- --------- --------- ---------- ----------- ---------
Dividends - - - - (656) (656)
Proceeds from shares issued 2 11 - - - 13
Fair value of employee services - - - - 235 235
Tax credit relating to share
option schemes - - - - 257 257
2 11 - - (164) (151)
At 31 March 2012 (unaudited) 4,372 14,211 2,671 (202) 34,167 55,219
At 1 October 2012 4,382 14,311 2,671 (169) 37,371 58,566
Profit for the period - - - - 2,482 2,482
Other comprehensive income
for the year - - - 41 1,841 1,882
--------- --------- --------- ---------- ----------- ---------
Total comprehensive income
for the year - - - 41 4,323 4,364
--------- --------- --------- ---------- ----------- ---------
Dividends - - - - (712) (712)
Proceeds from shares issued 76 446 - - - 522
Fair value of employee services - - - - 235 235
Tax credit relating to share
option schemes - - - - (140) (140)
Grant of nil cost share
options 33 - - - (33) -
109 446 - - (650) (95)
At 31 March 2013 (unaudited) 4,491 14,757 2,671 (128) 41,044 62,835
--------- --------- --------- ---------- ----------- ---------
Unaudited interim results for the 6 months ended 31 March
2013
Group Cash Flow Statement Half Year Half Year Full Year
to to to 30 Sep
2012
31 Mar 31 Mar (Audited)
2013 2012
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Cash flows from operating activities
Cash generated from operations 2,794 2,727 10,653
Income tax paid (53) (831) (1,793)
-------------- -------------- ------------
Net cash generated from operating
activities 2,741 1,896 8,860
-------------- -------------- ------------
Cash flows from investing activities
Acquisition of subsidiaries (20) (2,068) (2,061)
Purchase of property, plant
and equipment (896) (2,457) (3,337)
Sale of property, plant and
equipment - 59 59
Purchase of intangible assets (56) (264) (405)
Interest received 6 20 24
-------------- -------------- ------------
Net cash used in investing
activities (966) (4,710) (5,720)
-------------- -------------- ------------
Cash flows from financing activities
Repayment of borrowings (1,694) (1,704) (3,397)
Proceeds from issues of share
capital 522 47 123
Dividends paid to ordinary
shareholders (712) (656) (1,093)
Interest paid (269) (411) (711)
Net cash (used in)/generated
from financing activities (2,153) (2,724) 5,078
-------------- -------------- ------------
Net decrease in cash, cash
equivalents and revolving credit
facility (378) (5,538) (1,938)
Cash, cash equivalents and
revolving credit facility at
beginning of the period 9,235 11,276 11,276
Exchange gains/(losses) on
cash and revolving credit facility 180 (40) (103)
-------------- -------------- ------------
Cash, cash equivalents and
revolving credit facility at
the end of the period 9,037 5,698 9,235
-------------- -------------- ------------
Cash, cash equivalents and revolving credit facility at the end
of the period are made up of:
Half Year Half Year Full Year
to to to
31 Mar 31 Mar 30 Sep
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Cash and cash equivalents 11,672 8,201 11,712
Revolving credit facility (2,635) (2,503) (2,477)
-------------- -------------- ------------
Cash, cash equivalents and
revolving credit facility
at the end of the period 9,037 5,698 9,235
-------------- -------------- ------------
Notes to the Group Cash Half Year Half Year Full Year
Flow Statement to to to
31 Mar 2013 31 Mar 2012 30 Sep 2012
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Profit before income tax 3,323 2,500 7,076
Adjustments for:
- Amortisation of acquired
intangible assets 427 457 881
- Amortisation of other
intangible assets 84 154 296
- Depreciation 1,042 995 2,092
- Profit/(Loss) on disposal
of property, plant
and equipment - (19) 48
- Share based payment obligations 235 235 471
- Finance income (6) (20) (24)
- Finance costs 326 436 800
-------------- -------------- -------------
Total adjustments 2,108 2,238 4,564
Changes in working capital
- Inventories (786) (2,860) (1,465)
- Trade and other receivables (562) 1,684 1,351
- Trade and other payables (1,189) - (327)
- Provisions for liabilities
and charges (100) (835) (546)
-------------- -------------- -------------
Total changes in working
capital (2,637) (2,011) (987)
Cash generated from operating
activities 2,794 2,727 10,653
-------------- -------------- -------------
Reconciliation of net cash inflow to movements in net debt
Half Year Half Year Full Year
to to to
31 Mar 2013 31 Mar 2012 30 Sep
2012
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Decrease in cash in the
period (378) (5,538) (1,938)
Repayment of borrowings 1,694 1,704 3,397
Changes in net debt resulting
from cash flows 1,316 (3,834) 1,459
Translation differences (282) 133 71
-------------- -------------- ------------
Movement in net debt in
the year 1,034 133 1,530
Net debt at start of period (323) (1,853) (1,853)
Net cash/(debt) at end of
period 711 (5,554) (323)
-------------- -------------- ------------
Analysis of net debt
At 1 Oct Exchange Non-cash At 31
2012 Cash flow movement movement Mar
2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ----------- ---------- ---------- --------
Cash at bank and
in hand 11,712 (378) 338 - 11,672
Revolving credit
facility (2,477) - (158) - (2,635)
--------- ----------- ---------- ---------- --------
9,235 (378) 180 - 9,037
Debt due within 1
year (3,264) 1,664 (179) (1,664) (3,443)
Debt due after 1
year (6,261) - (282) 1,664 (4,879)
Finance leases (33) 30 (1) - (4)
--------- ----------- ---------- ---------- --------
Net (debt)/cash (323) 1,316 (282) - 711
--------- ----------- ---------- ---------- --------
Notes to the Interim Report
1. Basis of Preparation
The unaudited Interim Report has been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS"), as adopted by the European
Union.
The Interim Report was approved by the Board of Directors and
the Audit Committee on 11 June 2013. The Interim Report does not
constitute statutory financial statements within the meaning of the
Companies Act 2006 and has not been audited.
Comparative figures in the Interim Report for the year ended 30
September 2012 have been taken from the Group's audited statutory
financial statements on which the Group's auditors,
PricewaterhouseCoopers LLP, expressed an unqualified opinion. The
comparative figures to 31 March 2012 are unaudited.
The Interim Report will be announced to all shareholders on the
London Stock Exchange and published on the Group's website on 11
June 2013. Copies will be available to members of the public upon
application to the Company Secretary at Dowlish Ford, Ilminster,
Somerset, TA19 0PF.
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 30 September 2012,
as described in those financial statements.
2. Application of IFRS
Adoption of new standards
During the current reporting period there were no new standards
or amendments which had a material impact on the net assets of the
Group. In addition, standards or amendments issued but not yet
effective are not expected to have a material impact on the net
assets of the Group. However, the Group is closely monitoring the
IASB projects on Contract Revenue recognition and the Lease
accounting overhaul as they could potentially have a material
impact on the Group's results.
3. Estimates
The preparation of interim financial statements requires
management to make estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expense. Actual results may
differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgments made by management in
applying the Company's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 30 September
2012.
4. Financial risk management
The Company's activities expose it to a variety of financial
risks, market risk (including currency risk, cash flow interest
rate risk and price risk), credit risk and liquidity risk.
The interim condensed consolidated financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements and should be read in
conjunction with the Company's annual financial statements as at 30
September 2012.
There have been no changes to the risk management policies since
the year end.
5. Segmental analysis
Aerospace Scientific
& Defence Life Sciences Industrial Research Corporate Total
For half year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2013
Revenue
Total revenue 7,437 3,142 18,430 2,006 - 31,015
Inter and intra-division - - (2,026) - - (2,026)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
External revenue 7,437 3,142 16,404 2,006 - 28,989
Divisional expenses (6,658) (2,617) (12,799) (1,433) (286) (23,793)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA(1) 779 525 3,605 573 (286) 5,196
EBITDA % 10.5% 16.7% 22.0% 28.6% - 17.9%
Depreciation and Amortisation (281) (124) (558) (80) (83) (1,126)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit before
amortisation of acquired
intangible assets 498 401 3,047 493 (369) 4,070
Amortisation of acquired
intangible assets - - - - (427) (427)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit 498 401 3,047 493 (796) 3,643
Operating profit margin
% 6.7% 12.8% 18.6% 24.6% - 12.6%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit excluding
group cost sharing (1) 970 471 3,352 263 (1,413) 3,643
Operating profit margin
excluding group cost
sharing % 13.0% 15.0% 20.4% 13.1% - 12.6%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
(1) In 2013 Gooch & Housego introduced a new cost sharing regime
for corporate expenditure. The 2013 Operating Profit has been stated
excluding the effects of the group cost sharing for comparative
purposes.
Aerospace Scientific
& Defence Life Sciences Industrial Research Corporate Total
For half year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2012
Revenue
Total revenue 6,754 2,566 18,533 1,598 - 29,451
Inter and intra-division - - (1,651) - - (1,651)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
External revenue 6,754 2,566 16,882 1,598 - 27,800
Divisional expenses (5,786) (2,109) (12,965) (1,478) (940) (23,278)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA(1) 968 457 3,917 120 (940) 4,522
EBITDA % 14.3% 17.8% 23.2% 7.5% - 16.3%
Depreciation and Amortisation (227) (75) (324) (33) (490) (1,149)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit before
amortisation of acquired
intangible assets 741 382 3,593 87 (1,430) 3,373
Amortisation of acquired
intangible assets - - - - (457) (457)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit 741 382 3,593 87 (1,887) 2,916
Operating profit margin
% 11.0% 14.9% 21.3% 5.4% - 10.5%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
(1)EBITDA = Earnings before interest, tax, depreciation and
amortisation.
All of the amounts recorded are in respect of continuing
operations.
5. Segmental analysis continued
Analysis of revenue by destination
Half year Half year
to to
31 Mar 2013 31 Mar 2012
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------- -------------
United Kingdom 4,093 4,419
America 12,940 13,186
Continental Europe 7,491 6,418
Asia-Pacific 4,465 3,777
28,989 27,800
------------- -------------
6. Income tax expense
Analysis of tax charge in the period
Half Year Half Year Full Year
to to to 30 Sep
2012 (Audited)
31 Mar 2013 31 Mar
2012
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------
Current taxation
UK Corporation tax 740 501 1,264
Overseas tax 52 305 491
Adjustments in respect of prior
year tax charge 86 (78) (395)
-------------- -------------- ----------------
Total current tax 878 728 1,360
Deferred tax
Origination and reversal of timing
differences (1) (140) 32
Adjustments in respect of prior
year deferred tax (36) (17) 307
Impact of tax rate change to 23%
(2012: 23%) - 31 54
-------------- -------------- ----------------
Total deferred tax (37) (126) 393
Income tax expense per income
statement 841 602 1,753
The tax charge for the six months ended 30 March 2013 is based
on the estimated effective rate of the tax for the Group for the
full year to 30 September 2013. The estimated rate is applied to
the profit before tax.
7. Earnings per share
The calculation of earnings per 20p Ordinary Share is based on
the profit for the period using as a divisor the weighted average
number of Ordinary Shares in issue during the period. The weighted
average number of shares is given below.
Half Year Half Year Full Year
to to to 30 Sep
2012
31 Mar 2013 31 Mar (Audited)
2012
(Unaudited) (Unaudited)
No. No. No.
-------------- -------------- ------------
Number of shares used for basic
earnings per share 22,123,658 21,858,175 21,860,241
Dilutive shares 1,652,880 1,280,393 1,531,993
Number of shares used for dilutive
earnings per share 23,776,538 23,138,568 22,392,234
-------------- -------------- ------------
A reconciliation of the earnings used in the earnings per share
calculation is set out below:
Half Year Half Year Full Year
to to to
31 Mar 2013 31 Mar 2012 30 Sep 2012
(Unaudited)
(Unaudited) (Audited)
p per p per p per
GBP'000 share GBP'000 share GBP'000 share
-------- ------- -------- ------- -------- -------
Basic earnings per share 2,482 11.2p 1,897 8.7p 5,323 24.4p
Adjustments net of income
tax expense:
Amortisation of acquired
intangible assets (net of
tax) 329 1.5p 347 1.6p 662 3.0p
Redundancy costs - - 42 0.2p - -
Restructuring costs - - - - 180 0.8p
Total adjustments net of
income tax expense 329 1.5p 389 1.8p (536) 3.8p
Adjusted basic earnings per
share 2,811 12.7p 2,286 10.5p 8,059 28.2p
-------- ------- -------- ------- -------- -------
Basic diluted earnings per
share 2,482 10.4p 1,897 8.2p 7,523 33.6p
Adjusted diluted earnings
per share 2,811 11.8p 2,286 9.9p 8,059 36.0p
------ ------ ------ ----- ------ ------
Adjusted earnings per share before amortisation and adjustments
has been shown because, in the opinion of the Directors, it more
accurately reflects the trading performance of the Group.
8. Dividend
The Directors have declared an interim dividend of 2.3 pence per
share for the half year ending 31 March 2013. This dividend has not
been accounted for within the period to 31 March 2013 as it is yet
to be paid.
Half Year Half Year Full Year
to to to 30 Sep
2012
31 Mar 2013 31 Mar (Audited)
2012
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Final 2012 dividend paid : 3.2p 712 - -
per share
2012 Interim dividend paid :
2.0p per share - - 437
Final 2011 dividend paid in 2012
: 2.0p per share - 656 656
-------------- -------------- ------------
712 656 871
-------------- -------------- ------------
9. Borrowings
The group's banking facilities with the Royal Bank of Scotland
comprise of an $18 million dollar denominated term loan (fully
drawn down), a GBP3.1 million sterling denominated term loan (fully
drawn down). The term loan balances at 31 March 2013 were $9
million and GBP2.2 million sterling respectively.
In addition, the Company has a revolving credit facility of $8.0
million of which $4.0 million is utilised and an undrawn capital
expenditure facility of $8.0 million.
All facilities are committed until April 2015 and attract an
interest rate of between 2.25% and 3.00% above LIBOR dependent upon
the Company's leverage ratio.
10. Called Up Share Capital
2013 2012 2013 2012
No. No. GBP'000 GBP'000
---------
Allotted, issued and fully
paid
Ordinary share of 20p
each 22,456,965 21,850,798 4,491 4,382
------------- ------------- --------- ---------
11. Derivative financial instruments
Half Year Half Year Full Year
to to to
31 Mar 31 Mar 30 Sep
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Interest rate swap 166 265 223
-------------- -------------- ------------
Current liability portion 83 88 89
Non-current liability portion 83 177 134
-------------- -------------- ------------
166 265 223
The notional principal amount of the outstanding interest swap
contract at 31 March 2013 was $11.25 million (2012: $15.75
million). The end date for the interest rate swap is 1 April 2015.
At 31 March 2013, the fixed rate of the interest rate swap was
2.14% and the floating rate was US dollar LIBOR. The fair value of
the swap is a mark to market calculation based on future interest
rate expectations over the life of the swap. This is a level 2
method of determining fair value as defined by IFRS 7.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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