TIDMGHH
RNS Number : 5476Y
Gooch & Housego PLC
02 December 2014
For immediate release 2 December 2014
Gooch & Housego PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2014
Gooch & Housego PLC ("Gooch & Housego", or "G&H", or
the "Company", or the "Group"), the specialist manufacturer of
optical components and systems, today announces its preliminary
results for the year ended 30 September 2014.
Year ended 30 September 2014 2013 Change
---------------------------------- ----- ----- --------
Revenue (GBPm) 70.1 63.3 10.7%
---------------------------------- ----- ----- --------
Adjusted profit before tax
(GBPm)* 11.5 9.7 18.6%
---------------------------------- ----- ----- --------
Adjusted basic earnings per
share (pence)* 35.6 32.0 11.3%
---------------------------------- ----- ----- --------
Total dividend per share (pence) 7.2 6.3 14.3%
---------------------------------- ----- ----- --------
Net cash (GBPm) 8.7 5.7 GBP3.0m
---------------------------------- ----- ----- --------
Statutory profit before tax
(GBPm) 7.9 8.3 (4.8%)
---------------------------------- ----- ----- --------
Basic earnings per share (pence) 22.5 27.7 (18.8%)
---------------------------------- ----- ----- --------
*adjusted figures are stated after excluding the amortisation of
acquired intangible assets, gain on bargain purchase and
exceptional items being acquisition costs, restructuring costs and
impairment of goodwill.
Operating & Strategic Highlights
-- Profitable growth despite foreign exchange headwinds
-- Operational efficiencies & volume drive margin improvement from 15.3% to 16.4%
-- Commenced site rationalisation to reduce costs and duplication
-- Statutory profit includes one off costs associated with the site rationalisation
-- Implemented initiatives to drive operational excellence at all sites
-- Two acquisitions completed & successfully integrated
-- Systems Technology Group expanded to spearhead organic growth
-- Strong cash performance delivering record net cash at year end
-- Board succession plan successfully implemented
-- 14.3% growth on full year dividend reflecting the strength of the balance sheet
Gareth Jones, CEO commented
"This has been another year of development and progress for the
Company. Our initiatives to streamline the business and reduce
costs are laying the building blocks for future growth to bear
fruit in the coming years. With a solid order book and an
encouraging pipeline of new products and opportunities, Gooch &
Housego is well positioned to deliver further progress in FY15 and
beyond."
For further information please contact:
Gareth Jones / Mark
Gooch & Housego PLC Webster / Andrew Boteler 01460 256 440
Mark Court / Gabriella
Buchanan Clinkard 020 7466 5000
Investec Bank plc (Nomad Patrick Robb / David
& Broker) Anderson 020 7597 5970
Expected Financial Calendar
Annual General Meeting 26 February 2015
Final dividend for the year ended 30 September 5 March 2015
2014 to shareholders on the register at
close of business 18 December 2014.
Subject to approval by shareholders at
the Annual General Meeting June 2015
Interim Results announced 30 September 2015
Financial Year End December 2015
Preliminary announcement of results for
the year ended
30 September 2015
Chairman's Statement
2014 was a year in which the strategy defined by the Board
resulted in continuing success for your company. Growth was
achieved in revenues and adjusted profit and, with a focus on cash
generation, the company had a net cash balance of GBP8.7m at the
year-end.
Important elements of the Board's strategy include: moving up
the value chain by developing and supplying increasingly
sophisticated products and systems in collaboration with our
customers; increasing Gooch & Housego's diversification to
ensure that any one market sector does not dominate; operating in
an efficient manner with appropriate resources and using our cash
generation, banking facilities and potentially the market to make
suitable acquisitions to complement organic growth.
This defined strategy continued to be implemented in the year.
The Systems Technology Group, which was established in 2013 to
enable the group to develop more complex and valuable products and
sub-systems won further contracts particularly in the Space sector
and has grown both through acquisition and recruitment. Systems are
being developed which in the medium term we expect to generate
revenues and profit once the products reach the production
stage.
The Board believed that the group had too many operating sites
leading to inefficiencies. With the objective of improving the
situation, one small site was closed during the year and by the
calendar year end the Gooch & Housego site in Melbourne,
Florida will have closed with its activities being moved partly to
our Ilminster site in the UK with the remainder to Palo Alto in
California. Additionally, we continue to move production of some
volume products to our lower cost manufacturing partner in the
Czech Republic where we are comfortable that our traditional
product quality is maintained.
As we enter our new financial year, the global economy remains
supressed. In the US a recovery is continuing although defence
spending remains under pressure. Nevertheless, given the increasing
trend for photonic technologies to be deployed for target
designation, range finding, navigation and countermeasures, the
technology of Gooch & Housego is likely to be less affected by
reduced budgets. Our order book entering our new trading year was
an encouraging 18% higher than at the previous year end.
During the year, major changes were announced regarding the
senior management of the company. In May Terry Scribbins, Chief
Operating Officer retired from the company. On behalf of the Board,
I would like to thank him for his many years of excellent
contribution. His replacement, Alex Warnock joined the company in
November and brings with him a wealth of relevant experience. At
the end of the calendar year, after almost nine years in the role,
I will be stepping down as Chairman, to be replaced by Gareth Jones
who will in turn retire from the CEO role. Mark Webster, who has
been a non-executive director of the company for two years, will
take over from Gareth as CEO. I would like to welcome them both in
their new roles and thank Gareth for his many years of leading
Gooch & Housego into the success it is today.
I would like to thank all employees for their support and
efforts both this year and during my tenure as Chairman. Our
success would not have been possible without their dedication. I
have enjoyed my time with the company and believe, along with the
Board, that with its technology, its employees and the new
management team, the business is well placed to continue its growth
into the future.
Dr Julian Blogh
Chairman
Chief Executive Officer's Statement
Overview of 2014
Gooch & Housego made good progress in delivering its
long-term objectives of sustainable growth and adjusted margin
improvement in 2014. By combining organic and acquisitive revenue
growth with initiatives to streamline operations, enhance
operational efficiency and drive continuous improvement, the
Company was able to meet its expectations notwithstanding a
lacklustre trading environment and significant foreign exchange
headwinds. Despite two acquisitions and increased investment in
R&D net cash increased during the year.
The two acquisitions completed during the first quarter have
been successfully integrated. They have made a positive
contribution to revenue and profit and brought valuable additional
products, capabilities and customers. Spanoptic Limited
("Spanoptic"), based in Glenrothes, Scotland, was acquired in
October 2013. Spanoptic's advanced lens manufacturing and infrared
optics capabilities have substantially broadenedGooch &
Housego's precision optics product offering and opened up a number
of new opportunities, particularly in the Aerospace & Defence
sector. Constelex Technology Enablers Limited ("Constelex"),
acquired in November 2013, is a small photonic systems business
with expertise in fibre optic amplifiers for satellite
communications. Constelex, which brought strong relationships with
space agencies and satellite manufacturers, has been absorbed into
Gooch & Housego's Torquay-based Systems Technology Group
(STG).
Gooch & Housego's long term strategic themes of
diversification and moving up the value chain have resulted in
further progress towards a more balanced and vertically integrated
business with reduced exposure to risk and cyclicality. Developing
and maintaining close relationships with key customers has helped
the Company to anticipate and respond to market trends. Such market
intelligence has informed Gooch & Housego's near term new
product development initiatives and guided the Company's longer
term organic and acquisitive growth strategies. A targeted approach
to acquisitions has been developed in the past year with the aim of
accelerating delivery of the strategic objectives of the
business.
While still at an early stage, initiatives commenced during 2014
to enhance operational efficiency and drive continuous improvement
throughout the organisation are already delivering results in the
form of reduced costs and improving margins. Rationalising
operations and simplifying the management and organisational
structure are key aspects of this process.
R&D expenditure increased as expected in 2014. Investments
in the STG and a small number of significant new product
development opportunities have accounted for the majority of this
increase. The STG has met its ambitious growth targets in what was
its first full year of operations.
The trend towards a more balanced spread of business across the
Company's principal market sectors has continued.
In order to facilitate both organic and acquisitive investments,
the business refinanced its banking facilities in November 2014.
Further detail is given in the Financial & Operating
Review.
Markets and applications - Industrial
Gooch & Housego has addressed an increasingly diverse range
of industrial applications for photonics during 2014, including
semiconductor manufacturing and test, microelectronics, remote
sensing, metrology and telecommunications. The Industrial market
has demonstrated significant growth in 2014, driven by both organic
growth in our telecommunications and fibre laser business, and
acquisitive growth that has come from Spanoptic. In addition,
technology trends in the Company's traditional industrial laser
market have enabled rationalisation of the product range and
provided the opportunity to consolidate operations.
Shifts in technology represent both a threat and an opportunity.
As the world leader in acousto-optics for industrial lasers, Gooch
& Housego has been able to anticipate and prepare for the
growing use of fibre lasers in materials processing applications.
While sales of conventional water-cooled Q-switches declined during
2014 as expected, this trend was more than compensated for by a
growing demand for acousto-optic modulators for fibre laser
applications. Sales of this comparatively new product eclipsed
those of the conventional Q-switch in 2014 in both volume and
revenue terms. Although highly cost-sensitive, efforts to scale
production volumes while controlling costs have enabled Gooch &
Housego to retain its dominant position in this sector. With
further initiatives in the pipeline the Company is well-positioned
to maintain its market leading position.
At the opposite end of the scale, the semiconductor
manufacturing and test market demands high levels of complexity and
exceptional performance in modest volumes. New products launched
during 2014 have been well received, and with the combination of
acousto-optic and laser technology providing the key to enhancing
miniaturisation and speed in this rapidly advancing field, the
signs are that this sector will grow in importance in the coming
years.
Lasers are increasingly being used in sensing applications, both
free-space and in-fibre, and Gooch & Housego has strengthened
its position in this growing market during the past year. Key new
products include narrow line width laser sources and acousto-optic
and fibre optic components. Gooch & Housego has been able to
leverage its world-class photonic component technologies to meet
customer pull for integrated sensor sub-systems, and in doing so
has been successful in moving up the value chain in the sensor
market.
The telecommunications sector in 2014 was mixed. Products for
modulation systems performed extremely well while sales of
high-reliability fibre optics for sub-sea applications were flat as
a result of delays to long-haul cable infrastructure projects. With
the first of these projects receiving the go ahead towards the end
of the financial year it is anticipated that there will be more
activity in this sector in 2015.
Markets and applications - Aerospace & Defence
During 2014 revenue from the Aerospace & Defence sector
accounted for 27% of revenue, and in absolute terms was GBP1.5m
higher than the previous year. Established customer relationships
have been reinforced, and new ones forged, as a result of business
development activities initiated in the past 12 months. Guidance
and navigation, laser target designation and laser range finding
continue to be the principal applications.
The Aerospace & Defence sector has always been exceptionally
demanding in terms of product quality, reliability and performance,
but in recent years it has also become intensely cost focused. In
order to maintain competitiveness and keep pace with customer
expectations, Gooch & Housego has invested considerable effort
in the past year to reduce costs while continuing to improve
quality and delivery performance. Areas of focus have included
supply-chain, management, sub-contract partners and internal
manufacturing equipment and processes. These initiatives are
ongoing and are an essential aspect of doing business in this
sector, which presents significant opportunities for future
growth.
Markets and applications - Life Sciences
Whilst demand from the Life Sciences sector for sub-system
products was solid during 2014, sales of some acousto-optic
products in this sector were weaker than in previous years,
resulting in an overall flat performance year on year. Principal
applications were optical coherence tomography (OCT),
ophthalmology, microscopy, laser surgery and aesthetic laser
treatments. We continue to believe the increasingly widespread use
of photonics in biomedical research, diagnostics and surgery
represents a significant growth opportunity for Gooch &
Housego. Companies in this market frequently prefer suppliers that
are capable of providing more than just components, and during the
past year Gooch & Housego has worked closely with several key
customers to support the design and development of their next
generation systems. Through the acquisition of Spanoptic Gooch
& Housego gained a manufacturing partner in China capable of
producing high-quality, competitively priced sub-systems and has
been working with them to establish procedures and controls
appropriate for this demanding but exciting market.
Markets and applications - Scientific Research
For Gooch & Housego, the Scientific Research market is
dominated by a small number of "Big Science" projects in the fields
of nuclear fusion research and synchrotron radiation sources. These
large, long term projects are reliant on government funding and are
frequently subject to delay when budgets are under pressure.
Following delays in the previous year that extended into the early
months of 2014, demand picked up later in the year but was not
sufficient to prevent a small decline in overall revenues from this
sector.
Growth
Good progress has been made in delivering growth via a
combination of organic and acquisitive means. Initiatives to
increase the rate of organic growth have included focussing on a
smaller number of higher-value near-market opportunities,
increasing investment in the STG and introducing new technology,
capabilities and relationships via the acquisition of
Constelex.
Several new product opportunities have necessitated working
closely with customers to refine and qualify complex sub-system and
instrumentation products for applications new to Gooch &
Housego. With the potential to provide further diversification and
balance in the business, these projects are on target for
commercialisation in the coming year.
The acquisition of Constelex, the increase in headcount to
eleven and the growth in the number of contracts and funded
projects has made it necessary to provide dedicated facilities for
the STG. Further investment in the Company's Torquay facility is
planned, supported by GBP1.2 million of grant funding from the
Regional Growth Fund, to make available dedicated R&D
laboratories alongside additional space for expansion of fibre
optic components and systems manufacturing in Torquay.
The STG has been successful in securing European Space Agency,
UK Space Agency and European Union funding in 2014. By the end of
the year the STG was leading or participating in a total of six
space photonics projects, including the projects that came with the
acquisition of Constelex. The first satellite communications
project won by the STG was successfully completed in 2014 with the
delivery of a technology demonstrator. A follow-on contract to
produce a flight-capable system has since been awarded. While these
projects are part of a medium to long term strategy to develop a
leadership position in space photonics, the STG is also actively
engaged in near-market developments in OCT, fibre lasers and fibre
optic sensing as the Companyleverages its components expertise to
move up the value chain into systems.
Complementing Gooch & Housego's already strong position in
planar optics, the acquisition of Spanoptic has added high
precision spherical and aspheric lens manufacturing capabilities,
as well as infrared optics and coatings. The latter are
particularly relevant for Aerospace & Defence applications.
Operational Excellence
Gooch & Housego embarked on a number of initiatives to
improve margins and reduce working capital in 2014. Whilst the full
anticipated benefits are not expected to be seen until later in
2015 and beyond, these are aimed at applying a uniform standard of
operational excellence across all of the Company's operating
facilities. These initiatives are addressing site rationalisation,
product consolidation, manufacturing, quality and process controls,
supply-chain management and inventory reduction. Although very much
work-in-progress, the benefits of these initiatives are already
beginning to be reflected in improving margins.
Recent trends in the industrial laser market have resulted in a
more streamlined product range, which has made it possible to
consolidate manufacturing operations. In April 2014 the closure of
the Company's acousto-opticmanufacturing site in Melbourne,
Florida, was announced. Customers will continue to be fully
supported from Gooch & Housego's other acousto-optic
manufacturing operations in the UK and California. The business
transfer process is well advanced and is on schedule to be
completed by the end of the calendar year.
Board Succession
Succession planning to underpin the continued success of the
business and support the smooth evolution of the board was a
priority during 2014. At the end of May 2014 Terry Scribbins
retired as Chief Operating Officer. I would like to reiterate my
thanks to Terry for his enormous contribution to Gooch &
Housego over the past decade. In August 2014, Mark Webster made the
transition from a non-executive to an executive role and was
appointed as Deputy Chief Executive Officer. He will succeed me as
Chief Executive Officer in January 2015. I would like to welcome
Mark to the executive team. In November 2014 Alex Warnock joined
the board as Chief Operating Officer, and will be instrumental in
delivering operational excellence across the organisation.
Outlook
Gooch & Housego has made good progress in executing its
strategy during 2014, and in doing so has met expectations for
growth and profitability. Strategic acquisitions have been used to
accelerate organic growth and add new capabilities and customers,
resulting in a more diversified and better balanced business that
is well-positioned to deliver sustained growth. The initiatives to
embed a culture of continuous improvement and deliver operational
excellence that commenced in 2014 provide a sound basis for further
margin improvement in 2015 and beyond under the direction of the
new executive team and with a solid order book the Board are
confident of the Group's prospects.
Gareth Jones
Performance Overview
The business has delivered profitable growth and improving
margins whilst experiencing considerable foreign exchange
headwinds. During the year the business has acquired and
successfully integrated two companies, which have both contributed
positively to adjusted profits in their first year of ownership
under Gooch & Housego.
The Company has delivered an excellent cash performance in the
year, increasing its net cash position from GBP5.7m at 30 September
2013 to GBP8.7m at 30 September 2014. During this period, Gooch
& Housego has also invested GBP5.5m in acquisitions and GBP2.8m
in property, plant and equipment and intangible assets.
REVENUE
----------------------------------- ----- -------- -------
2014 2013
--------------- -----------------
Year ended 30 September GBP'000 % GBP'000 %
------------------------- -------- ----- -------- -----
Industrial 39,813 57% 34,345 54%
------------------------- -------- ----- -------- -----
Aerospace & Defence 18,786 27% 17,273 27%
------------------------- -------- ----- -------- -----
Life Sciences 7,318 10% 7,353 12%
------------------------- -------- ----- -------- -----
Scientific Research 4,139 6% 4,281 7%
------------------------- -------- ----- -------- -----
Group Revenue 70,056 100% 63,252 100%
------------------------- -------- ----- -------- -----
In the financial year under review, margins benefited from the
greater operating leverage gained from increased volumes and
efficiency gains made by the business this year. As a result,
adjusted operating margins have increased to 17.1% (2013:
16.2%).
Group revenue for the year was a record GBP70.1m, an increase of
GBP6.8m, or 11% over the previous year of GBP63.3m. On a consistent
currency basis revenue was 16% higher than the previous year, with
10% of this growth coming from acquisitions.
In our Industrial segment, revenue grew by 15.9% from GBP34.3m
last year to GBP39.8m this year. Similarly, revenue in our
Aerospace & Defence business grew by 8.8%, from GBP17.3m to
GBP18.8m. Sales into our Life Sciences market were flat, whilst our
smallest segment of Scientific Research fell by 3.3%.
A more detailed analysis of revenues by market is shown in the
Market Analysis section, earlier in this report.
GROUP EARNINGS PERFORMANCE
----------------------------------- -------- -------- ----------
All amounts in GBP'000 Adjusted Reported
--------------------
Year ended 30 September 2014 2013 2014 2013
------------------------- -------- -------- -------- --------
Operating profit 11,974 10,268 8,395 8,951
------------------------- -------- -------- -------- --------
Net finance costs (514) (608) (514) (608)
------------------------- -------- -------- -------- --------
Profit before taxation 11,460 9,660 7,881 8,343
------------------------- -------- -------- -------- --------
Taxation (2,951) (2,490) (2,482) (2,151)
------------------------- -------- -------- -------- --------
Profit for the year 8,509 7,170 5,399 6,192
Basic earnings per
share (p) 35.6p 32.0p 22.5p 27.7p
------------------------- -------- -------- -------- --------
The Group adjusted profit before tax amounted to GBP11.5m (2013:
GBP9.7m) and represented a return on revenue of 16.4% compared with
15.3% in the previous year. Statutory profit before tax was GBP7.9m
compared with GBP8.3m last year, reflecting the one off costs
associated with the closure of our New Jersey R&D facility, the
closure of our Melbourne facility and the write off of goodwill
associated with our 2011 EM4 acquisition. Against this, the company
had a one off benefit associated with the gain on acquisition of
Spanoptic.
The adjusted effective rate of tax was 25.8% (2013: 25.8%). The
effective rate of tax of 31.5% (2013: 25.8%) was higher due to the
impairment of goodwill and write off of deferred tax assets due to
the closure of the Melbourne site. The rate also reflects a
combination of the varying tax rates applicable throughout the
countries in which the Group operates, principally the UK and the
USA. The effect of the reduction of the UK corporation tax rate was
largely offset by a greater proportion of the Group's profit being
taxed in the US.
The introduction of the patent box tax regime from April 2013
has not contributed to a lower tax rate in 2014 and will not in
2015 due to the Group historically filing patents in the USA rather
than in the UK or Europe. Current policy is to file patents in the
UK when possible. The effective rate of tax should benefit in the
future from further reductions in the UK tax rate, although the
increased percentage of profit generated in the USA, where tax
rates are higher, will also have an impact.
Adjusted earnings per share (EPS) increased from 32.0p to 35.6p.
Basic EPS was 22.5p compared with 27.7p last year.
RECONCILIATION OF ADJUSTED PERFORMANCE MEASURES
Operating Net finance Taxation Earnings
Profit costs per share
-------------------- ------------------ ------------------ ------------------ ----------------
Year ended 30 2014 2013 2014 2013 2014 2013 2014 2013
September GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 pence pence
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
Reported 8,395 8,951 (514) (608) (2,482) (2,151) 22.5p 27.7p
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
Amortisation
of acquired
intangible assets 1,525 875 - - (381) (225) 4.8p 2.9p
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
Gain on bargain
purchase (1,039) - - - - - (4.3p) -
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
Impairment of
goodwill 1,538 - - - - - 6.4p -
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
Acquisition
costs - 164 - - - (42) - 0.5p
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
Restructuring
costs 1,555 278 - - (88) (72) 6.2p 0.9p
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
Adjusted 11,974 10,268 (514) (608) (2,951) (2,490) 35.6p 32.0p
-------------------- -------- -------- -------- -------- -------- -------- ------- -------
NON GAAP MEASURES
The Company uses a number of non GAAP measures which are shown
in the table above and in the segmental analysis. These measures
are used to illustrate the impact of non-recurring and non-trading
items on the Company's financial results. These are the impact of
the amortisation of acquired intangible assets, gain on bargain
purchase of Spanoptic, impairment of goodwill, acquisition costs
and costs associated with restructuring activities. In addition,
the Company uses the term EBITDA (Earnings before interest,
taxation, depreciation and amortisation). This is a commonly used
measure of operating performance and cash flow.
SEGMENTAL ANALYSIS
Industrial
Our Industrial business grew strongly during the year, with
revenues of GBP39.8m, compared with GBP34.3m last year. Revenue
from the Group's traditional Q-switch product fell during the year,
as anticipated, and now represents 10.2% of total group revenue
(2013: 12.2%). We believe this reflects the continuing shift
towards the use of fibre lasers in materials processing
applications. Once again this appears to be supported by the
significant increase in sales of fibre laser components experienced
by Gooch & Housego in 2014. Telecommunications revenues were up
significantly in the year due to increased demand for our crystal
products for modulation applications. The acquisition of Spanoptic
Ltd also strengthened our offering in the Industrial space.
After adjusting for the Melbourne site restructuring costs and
the revised corporate allocation basis, operating profit for the
Industrial sector as a whole was 26.3% higher at GBP8.1m, compared
with GBP6.4m last year. This reflects a combination of the
Spanoptic acquisition and operational gearing resulting from
additional volume flowing through our Palo Alto facility.
Aerospace & Defence (A&D)
A&D business revenue increased by 8.8% from GBP17.3m to
GBP18.8m in 2014. The business continues to provide both components
and systems to the Company's UK and US A&D customers and this
year this was supplemented by the additional contribution from the
Spanoptic acquisition. Despite continuing softness in engineering
contracts as a result of US Government spending constraints, our
engineering services business also performed better in 2014.
Operating margins in this sector improved largely as a result of
the additional volume.
Life Sciences
In 2014 the Life Science market was flat for Gooch &
Housego. Whilst the business benefited from the additional
contribution that the Spanoptic acquisition brought, sales of
acousto optic products into this market were down. Operating
margins in this sector were down, largely as a result of product
mix. We continue to believe this market offers a significant growth
opportunity.
Scientific Research
Our activities in the Scientific Research market are dominated
by a small number of large, long-term programmes.
This market was weaker for Gooch & Housego in 2014 as a
result of a slow-down in demand from the laser fusion programmes as
a result of budgetary pressures. Once the construction of Laser
Megajoule is complete we expect on-going business to be service
replacement and maintenance requirements for these projects.
RESEARCH & DEVELOPMENT (R&D)
Gooch & Housego continues to invest in R&D in all areas
of the business and regards this as fundamental to the continued
growth of the company. There were fourteen product releases in
2014, together with four new patents granted.
Expenditure on R&D in the year to 30 September 2014
increased by 16.3% from GBP4.9m to GBP5.7m. A proportion of this
increase was funded through UK and European grant funding. R&D
expenditure represented 8.1% of revenue (2013: 7.8%). The Group
capitalised GBP0.5m (2013: GBP0.03m) of development
expenditure.
PERFORMANCE OF ACQUISITIONS AND SITE PERFORMANCE
The acquisitions of Spanoptic and Constelex continued our
strategy, reinforcing Gooch & Housego's leadership in precision
optics and high-end fibre optics for space applications,
contributing to our diversification and strengthening our position
in our core, and new target, markets.
The acquisition of Spanoptic has brought high precision
spherical and aspherical optics, as well as infra-red optics and
coatings to Gooch & Housego's existing stable of precision
optic capabilities. This acquisition was completed in October 2013
and has contributed GBP6.6 million in revenue and GBP1.4 million in
profit before allocation of central costs in the year to 30
September 2014. The acquisition also resulted in a gain on bargain
purchase of GBP1.0 million.
The acquisition of Constelex, a small photonic systems business
specialising in fibre amplifier technology for the space market,
was completed in November 2013. As well as providing a great
stimulus to the STG, the Constelex has contributed GBP36,000 in
revenue and GBP16,000 in profit in the year to 30 September
2014.
As part of its bi-annual review of the carrying value of
goodwill, the Board has taken the decision to impair the goodwill
relating to the Boston cash generating unit. This goodwill arose on
the acquisition of EM4, now referred to as Gooch & Housego
Boston, in January 2011 for consideration of $11.6 million and,
prior to the impairment, the carrying value of the associated
goodwill was GBP5.8m. Over the last three years this acquisition
has played a vital role in Gooch & Housego's diversification
strategy, by providing the systems and critical mass needed for the
Company to become a credible player in the Aerospace & Defence
market. The duplication of Boston's technology in our Torquay
facility has also been a key factor in allowing Gooch & Housego
to address the European space market. However, on a stand-alone
basis, Boston has struggled to grow its engineering services
business during the well documented cuts in US government spending
on defence. Recent trends in this market and a success in its
products business, are encouraging signs for the future. These
changes have yet to produce tangible results and as a result, the
Board feels it is appropriate to make an impairment of GBP1.0m to
the carrying value of Boston.
Following inconclusive discussions with potential commercial
partners earlier this year, it was decided to mothball the Group's
work on cancer diagnostics using hyperspectral imaging and to close
its research facility in New Jersey. The cost of closing this
facility was GBP0.8 million, of which GBP0.7 million related to
non-cash costs (GBP0.6 million of goodwill impairment). It is
expected that the closure of this facility will result in an annual
cash saving of GBP0.3 million per annum. Gooch & Housego will
continue to develop and manufacture hyperspectral imaging products
from its Orlando facility.
On 16 April 2014, management announced the proposed closure of
the Group's Melbourne, Florida facility in connection with the
consolidation of acousto-optic development and manufacturing into
two of the Group's existing sites. The closure of this facility is
expected to be completed by the end of December 2014. The cost of
closing this site is expected to be GBP1.8m, of which GBP1.4m has
been recognised in the year to 30 September 2014.
BALANCE SHEET
The Group's shareholders' funds at the end of the year were
GBP69.9m, an increase of GBP5.0m over the prior year. This increase
comprised GBP0.2m due to the issue of share capital and GBP4.8m
from retained earnings.
Additions to property, plant and equipment totalled GBP1.9m. The
main fixed asset additions related to investment in plant and
machinery and the expansion of our Torquay facilities and equipment
to accommodate the Systems Technology Group.
Working capital was 22.0% of revenue in the current year
compared to 24.7% in 2013. Inventories have increased by GBP1.3m
from GBP13.4m in 2013 to GBP14.7m at this year-end, although if
acquisitions are excluded the increase was GBP0.5m. Trade and other
receivables have increased by GBP0.3m from GBP12.7m in 2013 to
GBP13.0m at this year-end. However, again after stripping out the
trade and other receivables attributable to acquisitions of
GBP1.4m, the balance has actually decreased by GBP1.1m compared to
2013.
Cash balances at 30 September 2014 were GBP17.1m, compared with
GBP14.6m at 30 September 2013. Net cash flows from operating
activities generated GBP13.7m, compared with GBP9.2m last year.
During the year the business moved from a net cash position of
GBP5.7m as at 30 September 2013, to a net cash position of
GBP8.7m.
MOVEMENT IN NET CASH
All amounts in GBPm Gross Gross Net
Cash Debt Cash
---------------------------------- ------ ------ ------
At 1 October 2013 14.6 (8.9) 5.7
Operating cash flows 13.6 - 13.6
Acquisitions (5.5) (0.3) (5.8)
Debt repayment (net of drawdown) (0.9) 0.9 -
Capital expenditure (2.7) - (2.7)
Working capital 1.7 - 1.7
Proceeds from share issue 0.1 - 0.1
Interest, tax and dividends (3.8) - (3.8)
Exchange movement - (0.1) (0.1)
---------------------------------- ------ ------ ------
At 30 September 2014 17.1 (8.4) 8.7
---------------------------------- ------ ------ ------
ORDER BOOK
As at 30 September 2014, the Group order book stood at GBP32.8m,
compared to GBP27.8m at the end of the 2013 financial year, an 18%
increase. On a like for like basis, excluding the impact of
acquisitions, the order book was 7% higher. Book to bill ratios for
the business as a whole were 1.43 times (six month rolling average)
as at 30 September 2014, compared to 1.01 times for the same period
last year.
STAFF
The Group workforce increased from 581 at 30 September 2013 to
664 at the end of September 2014, an increase of 83, of which 63
was due to acquisitions. This is a net position and therefore
reflects both the reductions in staffing resulting from the work
the business has done in integration and rationalisation of sites
and processes and the additional investment that the business has
made in engineering, business development and management.
POST BALANCE SHEET EVENTS
On 13 November 2014, the remaining EUR125,000 of deferred
consideration in respect of the acquisition of Constelex Technology
Enablers Limited was settled in the form of share capital.
On 14 November 2014, the Company refinanced its debt facilities
with the Royal Bank of Scotland. The Group now has a committed
revolving credit facility of $15m and an uncommitted flexible
acquisition facility of $20m available until 30 April 2019. Upon
inception of the new facility, all existing RBS borrowings were
repaid and $8m of the new revolving credit facility was drawn.
DIVIDENDS
The Directors propose a final dividend of 4.6p per share making
a total dividend for the year of 7.2p (2013: 6.3p). The final
dividend will be payable on 5 March 2015 to shareholders on the
Company's share register as at close of business on 18 December
2014.
KEY PERFORMANCE INDICATORS (KPIs)
The Group objective is to deliver sustainable, long-term growth
in revenue and profits. This is to be achieved through the
execution of the Board's strategies of market diversification, the
continued investment in R&D to support organic growth, the
acquisition of strategically complementary businesses and the
on-going drive to move up the value chain.
In striving to achieve these strategic objectives, the main
financial performance measures monitored by the Board are:
Total revenue growth 2014 2013 2012
---------------------------- ----- ----- -----
At actual exchange rates 11% 4% 0%
---------------------------- ----- ----- -----
At constant exchange rates 16% 3% (1%)
---------------------------- ----- ----- -----
The Board is focused on delivering revenue growth by investing
both organically and through acquisitions. The Group business has
delivered underlying growth, whilst experiencing variable demand
patterns within its core markets.
Target market revenue 2014 2013 2012
---------------------------- ----- ----- -----
Aerospace & Defence (GBPm) 18.8 17.3 15.4
---------------------------- ----- ----- -----
Life Sciences (GBPm) 7.3 7.4 5.7
---------------------------- ----- ----- -----
The Group target markets of Aerospace & Defence and Life
Sciences provide a route to sustainable growth, and a more
diversified revenue base. These markets also provide significant
opportunities for Gooch & Housego to migrate up the value-chain
from materials and components to higher value sub-assemblies,
modules and systems in response to the trend for our larger
customers to outsource increasingly complex parts of their
business. The business has made good progress in addressing its
target markets of Aerospace & Defence and Life Sciences which,
in aggregate, have increased by 5.7% in the 2014 financial
year.
Net cash analysis 2014 2013 2012
------------------------ ----- ----- ------
Net cash/(debt) (GBPm) 8.7 5.7 (0.3)
------------------------ ----- ----- ------
In order to balance business risk with the investment needs of
the Company, management closely monitor and manage net debt. This
year the business increased its net cash position of from GBP5.7m
to GBP8.7m, putting the business in a strong position both in terms
of headroom for further investment and from the perspective of
managing its business risk.
Earnings per share (EPS) 2014 2013 2012
------------------------------ ------ ----- -----
Adjusted diluted EPS (pence) 35.2p 30.5 26.4
------------------------------ ------ ----- -----
As a result of a strong trading performance, the business has
been able to deliver growth in adjusted diluted EPS of 15.4%, from
30.5p to 35.2p in 2014.
Group Income Statement
For the year ended 30 September 2014 (unaudited)
2014 2013
Note GBP000 GBP000
--------- ---------
Revenue 2 70,056 63,252
Cost of revenue (41,706) (37,635)
--------- ---------
Gross profit 28,350 25,617
Research and Development (5,160) (4,913)
Sales and Marketing (4,498) (4,666)
Administration (10,026) (8,814)
Other income and expenses (271) 1,727
--------- ---------
Operating profit 2 8,395 8,951
Finance income 8 15
Finance costs (522) (623)
--------- ---------
Profit before income tax expense 7,881 8,343
Income tax expense 3 (2,482) (2,151)
--------- ---------
Profit for the year 5,399 6,192
--------- ---------
Basic earnings per share 4 22.5p 27.7p
Diluted earnings per share 4 22.3p 26.4p
--------- ---------
Reconciliation of operating profit to adjusted operating
profit:
2014 2013
GBP000 GBP000
-------- -------
Operating profit 8,395 8,951
Amortisation of acquired intangible
assets 1,525 875
Acquisition costs - 164
Restructuring costs 1,555 278
Gain on bargain purchase of Spanoptic (1,039) -
Limited
Impairment of goodwill 1,538 -
Adjusted operating profit 11,974 10,268
-------- -------
Group Balance Sheet
For the year ended 30 September 2014 (unaudited)
2014 2013
GBP000 GBP000
--------- ---------
Non-current assets
Property, plant and equipment 24,140 21,456
Intangible assets 20,668 19,821
Deferred income tax assets 3,114 3,830
--------- ---------
47,922 45,107
Current assets
Inventories 14,663 13,390
Income tax assets 487 420
Trade and other receivables 13,005 12,706
Cash and cash equivalents 17,094 14,558
45,249 41,074
Current liabilities
Trade and other payables (11,829) (10,461)
Borrowings (8,048) (5,726)
Income tax liabilities (244) (307)
Provision for other liabilities
and charges (447) (271)
--------- ---------
(20,568) (16,765)
24,014
--------- ---------
Net current assets 24,681 24,309
Non-current liabilities
Borrowings (360) (3,113)
Deferred income tax liabilities (2,306) (1,330)
Derivative financial instruments - (34)
--------- ---------
(2,666) (4,477)
Net assets 69,937 64,939
--------- ---------
Shareholders' equity
Capital and reserves
attributable to equity shareholders
Called up share capital 4,774 4,620
Share premium account 15,420 15,213
Merger reserve 2,671 2,671
Hedging reserve (21) (79)
Cumulative translation reserve (770) (860)
Retained earnings 47,863 43,374
--------- ---------
Total equity 69,937 64,939
--------- ---------
Group Statement of Changes in Shareholders' Equity
For the year ended 30 September 2014 (unaudited)
Called Share
up share premium Merger Hedging Retained Total
capital account reserve reserve earnings equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------- --------- --------- ---------- ----------- ---------
At 1 October 2012 4,382 14,311 2,671 (169) 37,371 58,566
Profit for the financial
year - - - - 6,192 6,192
Other comprehensive
income/(expense)
for the year - - - 90 (364) (274)
---------- --------- --------- ---------- ----------- ---------
Total comprehensive
income for the year - - - 90 5,828 5,918
---------- --------- --------- ---------- ----------- ---------
Dividends 5 - - - - (1,229) (1,229)
Proceeds from shares
issued 238 902 - - (96) 1,044
Fair value of employee
services - - - - 341 341
Tax credit relating
to share option schemes - - - - 299 299
Total contributions
by and distributions
to owners of the
parent recognised
directly in equity 238 902 - - (685) 455
At 30 September 2013 4,620 15,213 2,671 (79) 42,514 64,939
At 1 October 2013 4,620 15,213 2,671 (79) 42,514 64,939
Profit for the financial
year - - - - 5,399 5,399
Other comprehensive
income for the year - - - 58 90 148
---------- --------- --------- ---------- ----------- ---------
Total comprehensive
income for the year - - - 58 5,489 5,547
---------- --------- --------- ---------- ----------- ---------
Dividends 5 - - - - (1,569) (1,569)
Proceeds from shares
issued 154 207 - - (149) 212
Fair value of employee
services - - - - 361 361
Tax credit relating
to share option schemes - - - - 447 447
Total contributions
by and distributions
to owners of the
parent recognised
directly in equity 154 207 - - (910) (549)
At 30 September 2014 4,774 15,420 2,671 (21) 47,093 69,937
---------- --------- --------- ---------- ----------- ---------
Group Statement of Comprehensive Income
For the year ended 30 September 2014 (unaudited)
2014 2013
Note GBP000 GBP000
------- -------
Profit for the year 5,399 6,192
Other comprehensive income / (expense)
- items that may be reclassified
subsequently to profit or loss
Fair value adjustment of interest
rate swap net of tax 58 90
Currency translation differences 90 (364)
Other comprehensive income / (expense)
for the year net of tax 148 (274)
Total comprehensive income for the
year attributable to the shareholders
of Gooch & Housego PLC 5,547 5,918
------- -------
Group Cash Flow Statement
For the year ended 30 September 2014 (unaudited)
2014 2013
Note GBP000 GBP000
-------- --------
Cash flows from operating activities
Cash generated from operations 6 15,298 10,130
Income tax paid (1,625) (882)
-------- --------
Net cash generated from operating
activities 13,673 9,248
-------- --------
Cash flows from investing activities
Acquisition of subsidiaries, net
of cash acquired (5,532) (22)
Purchase of property, plant and
equipment (1,909) (2,032)
Sale of property, plant and equipment 26 67
Purchase of intangible assets (852) (202)
Interest received 8 15
-------- --------
Net cash used in investing activities (8,259) (2,174)
-------- --------
Cash flows from financing activities
Drawdown of borrowings 4,832 -
Repayment of borrowings (3,196) (3,394)
Proceeds from issues of share
capital 105 1,044
Dividends paid to ordinary shareholders (1,569) (1,229)
Interest paid (569) (505)
Net cash used in financing activities (397) (4,084)
-------- --------
Net increase in cash, cash equivalents,
revolving credit facility and
bank overdraft 5,017 2,990
Cash, cash equivalents, revolving
credit facility and bank overdraft
at beginning of the year 12,088 9,235
Exchange losses on cash and bank
overdrafts (11) (137)
-------- --------
Cash, cash equivalents, revolving
credit facility and bank overdraft
at the end of the year 17,094 12,088
-------- --------
Cash, cash equivalents, revolving credit facility and bank
overdrafts at the end of the year comprise:
2014 2013
GBP000 GBP000
------- --------
Cash and cash equivalents 17,094 14,558
Revolving credit facility and
overdraft - (2,470)
------- --------
Cash, cash equivalents, revolving
credit facility and bank overdraft
at the end of the year 17,094 12,088
------- --------
Notes to the preliminary report
1. Basis of preparation
The unaudited Preliminary Report has been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and interpretations in issue at 30 September 2014.
The Preliminary Report does not constitute statutory financial
statements within the meaning of section 434 of the Companies Act
2006 and has not been audited.
Comparative figures in the Preliminary Report for the year ended
30 September 2013 have been taken from the Group's audited
statutory financial statements on which the Group's auditors,
PricewaterhouseCoopers LLP, expressed an unqualified opinion.
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 30 September 2013,
as described in those financial statements. New standards or
interpretations which came into effect for the current reporting
period did not have a material impact on the net assets or results
of the Group.
The Preliminary Report will be announced to all shareholders on
the London Stock Exchange and published on the Group's website on 2
December 2014. Copies will be available to members of the public
upon application to the Company Secretary at Dowlish Ford,
Ilminster, Somerset, TA19 0PF.
2. Segmental analysis
The Company's segmental reporting reflects the information that
management uses within the business. The business is divided into
four market sectors, being Aerospace & Defence, Life Sciences,
Industrial and Scientific Research, together with the Corporate
cost centre.
The industrial business segment primarily comprises the
industrial laser market for use in the semiconductor and
microelectronic industries, but also includes other industrial
applications such as metrology and telecommunications. Scientific
Research covers academic and government funded research including
major multi-national projects.
Aerospace Scientific
& Defence Life Sciences Industrial Research Corporate Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
For year ended 30
September 2014
-------------------------- ----------- --------------
Revenue
Total revenue 18,786 7,318 44,248 4,139 - 74,491
Inter and intra-division - - (4,435) - - (4,435)
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
External revenue 18,786 7,318 39,813 4,139 - 70,056
Divisional expenses (15,612) (6,083) (31,207) (3,713) (214) (56,829)
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA(1) 3,174 1,235 8,606 426 (214) 13,227
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA % 16.9% 16.9% 21.6% 10.3% - 18.9%
Depreciation and
amortisation (522) (270) (1,702) (152) (162) (2,808)
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit
before amortisation
of acquired intangible
assets 2,652 965 6,904 274 (376) 10,419
Amortisation of acquired
intangible assets - - - - (2,024) (2,024)
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit 2,652 965 6,904 274 (2,400) 8,395
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit
margin % 14.1% 13.2% 17.3% 6.6% - 12.0%
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Add back Melbourne
closure costs 79 59 1,155 91 - 1,384
Operating profit
excluding Melbourne
closure costs 2,731 1,024 8,059 365 (2,400) 9,779
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Adjusted profit margin
% 14.5% 14.0% 20.2% 8.8% - 14.0%
-------------------------- ----------- -------------- ----------- ----------- ---------- ---------
(1)EBITDA = Earnings before interest, tax, depreciation and
amortisation
Management have added back the cost of the Melbourne site
closure in the above analysis. This has been shown because the
Directors consider the analysis to be more meaningful excluding the
impact of this non-recurring expense.
2. Segmental analysis (continued)
Aerospace Scientific
As restated & Defence Life Sciences Industrial Research Corporate Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
For year ended 30 September
2013
------------------------------- ----------- --------------
Revenue
Total revenue 17,273 7,353 38,179 4,281 - 67,086
Inter and intra-division - - (3,834) - - (3,834)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
External revenue 17,273 7,353 34,345 4,281 - 63,252
Divisional expenses (14,652) (5,799) (27,055) (3,679) (127) (51,312)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA(1) 2,621 1,554 7,290 602 (127) 11,940
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA % 15.2% 21.1% 21.2% 14.1% - 18.9%
Depreciation and amortisation (550) (220) (907) (143) (294) (2,114)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit before
amortisation of acquired
intangible assets 2,071 1,334 6,383 459 (421) 9,826
Amortisation of acquired
intangible assets - - - - (875) (875)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit 2,071 1,334 6,383 459 (1,296) 8,951
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit margin
% 12.0% 18.1% 18.6% 10.7% - 14.2%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
The above analysis has been restated to reflect the allocation
of corporate expenses on a consistent basis with that adopted in
respect of the year ended 30 September 2014.
All of the amounts recorded are in respect of continuing
operations.
Analysis of net assets/(liabilities) by location:
2014 2014 2014 2013 2013 2013
Assets Liabilities Net Assets Assets Liabilities Net Assets
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------- ------------ ----------- ------- ------------ -----------
United Kingdom 38,387 (12,388) 25,999 38,258 (11,418) 26,840
USA 54,282 (10,345) 43,937 47,751 (9,776) 37,975
Continental
Europe 486 (497) (11) 162 (42) 120
Asia Pacific 16 (4) 12 10 (6) 4
------- ------------ ----------- ------- ------------ -----------
93,171 (23,234) 69,937 86,181 (21,242) 64,939
------- ------------ ----------- ------- ------------ -----------
Analysis of revenue by destination:
2014 2013
GBP000 GBP000
-------- --------
United Kingdom 14,412 9,481
USA 29,657 30,213
Continental Europe 14,425 13,821
Asia Pacific and
Other 11,562 9,737
Total revenue 70,056 63,252
-------- --------
3. Income tax expense
Analysis of tax charge in the year
2014 2013
GBP000 GBP000
Current taxation
UK Corporation tax 1,446 1,263
Overseas tax 630 238
Adjustments in respect of prior
year tax charge (165) (304)
-------- --------
Total current tax 1,911 1,197
-------- --------
Deferred tax
Origination and reversal of temporary
differences 49 677
Adjustments in respect of prior
year deferred tax 504 234
Impact of UK tax rate change to
20% (2013: 20%) 18 43
-------- --------
Total deferred tax 571 954
Income tax expense per income
statement 2,482 2,151
-------- --------
4. Earnings per share
The calculation of earnings per 20p Ordinary Share is based on
the profit for the year using as a divisor the weighted average
number of Ordinary Shares in issue during the year. The weighted
average number of shares for the year ended 30 September is given
below:
2014 2013
Number of shares used for basic earnings
per share 23,984,536 22,376,650
Dilutive shares 213,581 1,097,927
Number of shares used for dilutive
earnings per share 24,198,117 23,474,577
----------- -----------
A reconciliation of the earnings used in the earnings per share
calculation is set out below:
2014 2013
pence pence
GBP000 per share GBP000 per share
-------- ----------- ------- -----------
Basic earnings per share 5,399 22.5p 6,192 27.7p
Amortisation of acquired intangible
assets (net of tax) 1,144 4.8p 650 2.9p
Goodwill impairment 1,538 6.4p - -
Gain on bargain purchase (1,039) (4.3p) - -
Acquisition costs (net of
tax) - - 122 0.5p
Restructuring costs (net of
tax) 1,467 6.2p 206 0.9p
-------- ----------- ------- -----------
Total adjustments net of income
tax expense 3,110 13.1p 978 4.3p
-------- ----------- ------- -----------
Adjusted basic earnings per
share 8,509 35.6p 7,170 32.0p
-------- ----------- ------- -----------
Basic diluted earnings per
share 5,399 22.3p 6,192 26.4p
-------- ----------- ------- -----------
Adjusted diluted earnings
per share 8,509 35.2p 7,170 30.5p
-------- ----------- ------- -----------
Basic and diluted earnings per share before amortisation and
other adjustments has been shown because, in the opinion of the
Directors, it provides a useful measure of the trading performance
of the Group.
5. Dividends
2014 2013
GBP000 GBP000
-------- --------
Final 2013 dividend paid in 2014:
4.0p per share (Final 2012 dividend
paid in 2013: 3.2p per share) 950 712
2014 Interim dividend paid: 2.6p
per share (2013: 2.3p) 619 517
-------- --------
1,569 1,229
-------- --------
The Directors propose a final dividend of 4.6p per share making
the total dividend paid and proposed in respect of the 2014
financial year 7.2p (2013: 6.3p).
6. Cash generated from operating activities
2014 2013
GBP000 GBP000
-------- --------
Profit before income tax 7,881 8,343
Adjustments for:
- Amortisation of acquired intangible
assets 1,525 875
- Amortisation of other intangible
assets 164 168
- Gain on bargain purchase of Spanoptic (1,039) -
Limited
- Impairment of goodwill 1,538 -
- Depreciation 2,644 1,949
- Loss on disposal of property,
plant and equipment 21 91
- Share based payment obligations 361 341
- Finance income (8) (15)
- Finance costs 522 623
-------- --------
Total 5,728 4,032
Changes in working capital
- Inventories (538) (970)
- Trade and other receivables 2,097 (882)
- Trade and other payables 130 (393)
Total 1,689 (2,245)
Cash generated from operating activities 15,298 10,130
-------- --------
7. Post Balance Sheet Events
On 13 November 2014, the remaining EUR125,000 of deferred
consideration in respect of the acquisition of Constelex Technology
Enablers Limited was settled in the form of share capital.
On 14 November 2014, the Company refinanced its debt facilities
with the Royal Bank of Scotland. The Group now has a committed
revolving credit facility of $15m and an uncommitted flexible
acquisition facility of $20m available until 30 April 2019. Upon
inception of the new facility, all existing RBS borrowings were
repaid and $8m of the new revolving credit facility was drawn.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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