TIDMGHH
RNS Number : 3559A
Gooch & Housego PLC
07 June 2016
For immediate release 7 June 2016
GOOCH & HOUSEGO PLC
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2016
Gooch & Housego PLC (AIM:GHH) ("Gooch & Housego",
"G&H", the "Company" or the "Group"), the specialist
manufacturer of optical components and systems, today announces its
interim results for the six months ended 31 March 2016.
Financial Highlights
Period ended 31 March HY2016 HY2015
---------------------------- --------- ---------
Revenue GBP38.4m GBP38.9m
---------------------------- --------- ---------
Adjusted profit before GBP5.6m GBP6.3m
tax(1)
---------------------------- --------- ---------
Adjusted basic earnings
per share (1) 17.0p 19.3p
---------------------------- --------- ---------
Net cash GBP12.3m GBP11.9m
---------------------------- --------- ---------
Statutory profit before GBP3.5m GBP5.1m
tax
---------------------------- --------- ---------
Basic earnings per share 10.8p 15.6p
---------------------------- --------- ---------
Interim dividend per share 3.3p 3.0p
---------------------------- --------- ---------
(1) Adjusted for amortisation of acquired intangible assets,
restructuring costs and site closure costs.
Highlights
-- First half performance as expected
-- Full year trading remains in line with our expectations
-- Robust order book of GBP39.1 million as at 31 March, a 13.1%
increase on the same time last year
-- Mixed markets
o Industrial laser market improved in Q2
o Strong performance from telecommunications and fibre sensing
products
o Aerospace & defence markets lower due to programme
timings
-- Continued investment for the future - GBP5.6 million invested
in the Group's facilities and equipment and GBP3.5 million in
R&D and new products
-- Interim dividend increased to 3.3p (2015: 3.0p)
Mark Webster, Chief Executive Officer of Gooch & Housego
PLC, commented on the results:
"G&H is well-positioned to benefit from improving market
conditions and has the capacity to respond to increasing demand.
Our commitment to diversification has enabled us to navigate a
challenging period at the beginning of the year and still be on
track to deliver our full year expectations.
We remain committed to our strategy of diversification and
moving up the value chain whilst continuing to invest in our
continuous improvement programme, which will underpin future
performance."
For further information please contact:
Mark Webster / Andrew
Gooch & Housego PLC Boteler 01460 256 440
Mark Court / Sophie
Buchanan Cowles 020 7466 5000
Investec Bank plc (Nomad Patrick Robb / David
& Broker) Anderson 020 7597 4000
Notes to editors
1. Gooch & Housego is a photonics technology business
headquartered in Ilminster, Somerset, UK with operations in the USA
and Europe. A world leader in its field, the company researches,
designs, engineers and manufactures advanced photonic systems,
components and instrumentation for applications in the Aerospace
& Defence, Industrial, Life Sciences and Scientific Research
sectors. World leading design, development and manufacturing
expertise is offered across a broad range of complementary
technologies.
2. This announcement contains certain forward-looking statements
that are based on management's current expectations or beliefs as
well as assumptions about future events. These are subject to risk
factors associated with, amongst other things, the economic and
business circumstances occurring from time to time in the countries
and sectors in which G&H operates. It is believed that the
expectations reflected in these statements are reasonable but they
may be affected by a wide range of variables which could cause
actual results, and G&H's plans and objectives, to differ
materially from those currently anticipated or implied in the
forward-looking statements. Investors should not place undue
reliance on any such statements. Nothing in this announcement
should be construed as a profit forecast.
Operating and Financial Review
Performance Overview
The Company saw a steady recovery in the second quarter after a
slower than expected start to the year, characterised by sustained
demand for our products. This move from a weak first quarter to a
much stronger Q2 is demonstrated by the 57% increase in order
intake between the two quarters. Half year revenues were only
marginally lower than those of 1H 2015, which was a record half
year for the Company. We continue to expect a good second half
trading performance driven by orders for our fibre business, in
particular high reliability undersea fibre components, fibre based
satellite communications and fibre optic sensing, in addition to a
recovering microelectronics sector.
The increase in our interim dividend by 10% reflects our
confidence in the business going forward and is underpinned by our
strong balance sheet.
REVENUE
Six months ended 2016 2015
31 March
----------------- -----------------
GBP'000 % of GBP'000 % of
total total
--------------------- -------- ------- -------- -------
Industrial 24,764 65% 22,313 57%
Aerospace & Defence 8,064 21% 10,314 27%
--------------------- -------- ------- -------- -------
Life Sciences 3,941 10% 4,317 11%
--------------------- -------- ------- -------- -------
Scientific Research 1,592 4% 2,001 5%
--------------------- -------- ------- -------- -------
Group Revenue 38,361 100% 38,945 100%
--------------------- -------- ------- -------- -------
Group revenue for the half year was GBP38.4 million, a fall of
GBP0.6 million, or 1% over the comparative period last year. On a
constant currency basis, revenue was 5% lower.
Order intake in the first half of the year has been encouraging.
The order book at 31 March 2016 was GBP39.1 million (31 March 2015:
GBP34.6 million) and the Company has booked GBP41.1 million in
orders since 1 October 2015.
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.
Overall, business in our industrial market was good in the first
six months of the year. Overall, sales of products into our
industrial markets in the six months to 31 March 2016 were 11%
higher compared with the equivalent period last year.
The industrial laser market was weaker in the first half of the
year driven by lower demand from China for lasers used in
microelectronic manufacturing. The shortfall in demand in our
industrial laser market was more than offset by increases in our
fibre-optic sensing and telecommunications markets.
In fibre-optic sensing G&H's Fibre-Q products continue to be
adopted and lead the way in this fast growing market place, with
the result that the Company is now benefitting from positive market
trends in fibre optic sensing and generating meaningful revenue
streams.
In telecommunications, whilst sales of lithium niobate wafers
for modulation applications continue to be strong, the significant
growth has come from demand for fibre optic components for
under-sea telecommunications applications. We expect this growth to
continue to strengthen throughout this year and into next, as
non-traditional companies enter this market and look to lay their
own undersea networks. The overall telecommunications market
segment increased by 18% compared with the equivalent period last
year.
Products and Markets - Aerospace and Defence
Product quality, reliability and performance are paramount in
this sector and that plays to G&H's strengths, along with our
commitment to provide value. We have strong, well established
positions in target designation and range finding, ring laser and
fibre optic gyroscope navigational systems, infrared and RF
countermeasures and space photonics.
The Aerospace & Defence market for G&H is characterised
by high-value, long-term programmes involving the main US and
European defence contractors. G&H's precision optics and
acousto-optic technologies have contributed most to the Aerospace
& Defence markets in the last six months, with navigation,
range finding and target designation being the principal
applications.
This sector was down for G&H during the first six months.
The major part of this reduction is a direct function of order and
programme timing. This sector is expected to recover in the second
half of this financial year. Moreover, with the continued adoption
of technologies which play to G&H's core capabilities, together
with the investment that the business has made in business
development and R&D in this market sector, we continue to
believe there is strong growth potential for us going forward.
Products and Markets - Life Sciences
G&H's three principal Life Sciences revenue streams are
derived from diagnostics (fibre-optic modules for optical coherence
tomography (OCT) applications), surgery / treatments
(electro-optics and acousto-optics for lasers) and biomedical
research (acousto-optics for microscopy applications). In each
application area the Company is making steady progress in moving up
the value chain and is currently selling sub-systems as well as
components to several larger customers.
This market sector fell by 9% in the six months to 31 March
2016, compared with the equivalent period last year, driven mainly
by lower demand requirements from two major customers.
The principal commercial application of OCT systems is retinal
imaging, and G&H continues to be the leading provider of fibre
optic solutions (products and design services) to this industry.
Gooch & Housego considers OCT to be a growth technology and is
investing both in the development of new products and in keeping
its current products cost competitive.
Products and Markets - Scientific Research
The key 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 reduce dependency on fossil
fuels. G&H is continuing to supply crystals, precision optics
and fibre components for new system construction and expects
ongoing business to service replacement and maintenance
requirements.
Strategy
G&H's strategy is based around a continued commitment to the
twin pillars of diversification and moving up the value chain. A
more vertically integrated and balanced business, which is more
robust and less exposed to the cyclical nature of some of our core
products is one of the key aims. The progress to date against this
goal has enabled us to navigate a challenging period at the
beginning of the year and still be on track to deliver our full
year expectations, despite slower than expected sales in the first
quarter. Further investment in R&D and market focused business
development aim to provide the momentum that will drive rates of
organic growth above historical norms. In addition management
continues to actively look for strategic partnerships and
acquisitions.
R&D: In the first six months of the current financial year,
G&H invested GBP3.5 million in research & development. This
represents 9.1% of revenue and is 8% higher than the same period
last year (2015: GBP3.2m). G&H's continued commitment to
investing in targeted R&D programmes is bearing fruit, with a
record thirteen new products launched at the Photonics West trade
show in February 2016.
Diversification: G&H 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. We will continue to invest in all of our key
sectors in order to ensure we maintain a balanced portfolio and
over time achieve a critical mass in Life Sciences and A&D, as
well as the Industrial sector.
Moving up the Value Chain: G&H 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. This
will enable G&H to transition from a components supplier to a
solutions provider. A significant proportion of our business in the
Aerospace & Defence market now comes from the sale of
sub-systems rather than discrete components.
As well as continuing to develop a leadership position in space
photonics, the Systems Technology Group is actively engaged in
near-market developments in OCT, fibre lasers and fibre optic
sensing as the Company leverages its components expertise to move
up the value chain into systems.
Operations
In 2015 G&H took the decision to re-locate its Palo Alto
facility to nearby Fremont. This decision was based on a landlord
change which threatened the long term viability of Palo Alto as a
location. This move is now complete and has provided a much
improved facility and room for growth at a similar rent. The move
itself took longer than expected due to regulatory licence and
landlord contractual issues. The delay contributed an additional
GBP0.9 million in costs in the first six months of 2016. The
Torquay site has recently been expanded and upgraded allowing us to
manage the capacity challenges that come with a 2.5 fold increase
in demand for Hi-Rel undersea fibre couplers. Further investment in
capacity at this site will continue throughout 2016.
Our continuous improvement programme is proceeding well.
Operationally the move to a lean manufacturing environment across
all of our sites is set to deliver efficiency savings in 2016 and
the drive for fewer more productive R&D projects combined with
enhanced business development support has started to deliver an
increased number of product opportunities.
Acquisitions
G&H will continue to evaluate acquisition opportunities that
have the potential to accelerate delivery of the Company's
strategic objectives. Having established a presence in its target
markets, G&H is now focussing on moving up the value chain in
each of those markets. Whilst the business will continue to
evaluate bolt on businesses in our core component technologies,
continued strong focus is being placed on acquisition opportunities
that enhance the Company's ability to wrap electronics and software
around core photonic products to yield system-level solutions.
RECONCILIATION OF ADJUSTED PERFORMANCE MEASURES
Operating Net finance Taxation Earnings
Profit costs per share
---------------------- ------------------ ------------------ ------------------ ----------------
Half Year to 2016 2015 2016 2015 2016 2015 2016 2015
31 March GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 pence pence
---------------------- -------- -------- -------- -------- -------- -------- ------- -------
Reported 3,560 5,248 (33) (148) (913) (1,363) 10.8 15.6
---------------------- -------- -------- -------- -------- -------- -------- ------- -------
Amortisation
of acquired
intangible assets 733 802 - - (191) (209) 2.2 2.5
Restructuring
costs 223 417 - - (58) (108) 0.7 1.2
Fremont site
move costs 883 - - - (230) - 2.7 -
Abortive transaction
fees 194 - - - (50) - 0.6 -
---------------------- -------- -------- -------- -------- -------- -------- ------- -------
Adjusted 5,593 6,467 (33) (148) (1,442) (1,680) 17.0 19.3
---------------------- -------- -------- -------- -------- -------- -------- ------- -------
As expected, adjusted profit before tax was GBP5.6 million, down
11.1% on the prior year (H1 2015: GBP6.3 million). Margins were
impacted by the product mix and the one off costs associated with
the delayed Fremont site relocation.
Cash Flow and Financing
In the six months to 31 March 2016 G&H generated cash from
operations of GBP2.9 million, compared with GBP5.8 million in the
same period of 2015. 1H 2016 operating cash flows include a net
cash outflow of GBP0.9 million relating to the relocation of the
Palo Alto facility.
As part of the preparations for moving its Palo Alto site to
nearby Fremont, the business built inventory levels to satisfy
expected customer requirements while the new facility was brought
on line. Since the completion of the move, inventory levels at our
new Fremont site are $1.7 million lower than at 30 September 2015
as the strategic inventory build has been unwound. At the same time
the business has invested in inventory at our Torquay facility in
order to meet the demanding customer ramp programmes. The
utilisation of the Fremont strategic inventory build, together with
the impact of exchange rates and the working capital investment at
our Torquay facility, have resulted in a net inventory increase of
GBP0.3 million to GBP16.3 million since the year end.
Capital expenditure on property, plant and equipment was GBP5.6
million in the period (2015: GBP1.1 million). The main fixed asset
additions were in relation to the Fremont facility move and
expanding our Torquay site. G&H has completed the upgrade and
expansion of two of its key sites in the last six months. In
addition the Company has commenced the modernisation of its
Cleveland facility. These investments, together with our continued
commitment to the principles of lean manufacturing are vital to
improved manufacturing performance in the medium term.
The Company's net cash position remains robust at GBP12.3
million, down from GBP17.3 million at 30 September 2015, following
the investment in our Fremont and Torquay facilities.
Staff
The Company workforce reduced from 700 at 30 September 2015 to
665 at the end of March 2016. This reduction was facilitated by the
efficiency measures that the business has introduced in the last
twelve months.
Dividends
The Directors have declared an interim dividend of 3.3p per
share (2015 : 3.0p per share), a 10% increase on the prior period,
which is reflective of the Directors' confidence in the business
going forward and is underpinned by our strong balance sheet. This
will be payable on 18 July 2016 to shareholders on the register as
at 24 June 2016.
Prospects and outlook
G&H remains committed to the twin pillars of our strategy,
namely diversification and moving up the value chain. Current mixed
market conditions have emphasised the value of having a more
diversified business where the strong performance of our fibre
business has allowed us to ameliorate some of the first half
impact.
G&H is well-positioned to benefit from improving market
conditions and has the capacity to respond to increasing demand.
Our commitment to diversification has enabled us to navigate a
challenging period at the beginning of the year and still be on
track to deliver our full year expectations.
The Company will continue to pursue its strategy and invest in
our continuous improvement programme prioritising further
operational excellence, enhanced business development in our key
markets and a more focused R&D portfolio; all of which will
underpin our future performance.
Gareth Jones Mark Webster Andrew Boteler
Chairman Chief Executive Officer Chief Financial Officer
7 June 2016
Unaudited interim results for the 6 months ended 31 March
2016
Group Income Statement Half Year Half Year Full Year
to to to
31 Mar 2016 31 Mar 2015 30 Sep 2015
Note (Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- -------------
Revenue 5 38,361 38,945 78,702
Cost of revenue (25,252) (23,385) (47,659)
-------------- -------------- -------------
Gross profit 13,109 15,560 31,043
Research and Development (2,889) (2,921) (5,712)
Sales and Marketing (2,976) (2,687) (5,626)
Administration (5,247) (5,723) (10,353)
Other income and expenses 1,563 1,019 942
-------------- -------------- -------------
Operating profit 5 3,560 5,248 10,294
Net finance costs (33) (148) (188)
-------------- -------------- -------------
Profit before income tax
expense 3,527 5,100 10,106
Income tax expense 6 (913) (1,363) (2,647)
-------------- -------------- -------------
Profit for the period 2,614 3,737 7,459
Earnings per share 7 10.8p 15.6p 30.9p
-------------- -------------- -------------
Reconciliation of operating profit to adjusted operating
profit:
Half Year Half Year Full Year
to to to 30 Sep
2015
31 Mar 2016 31 Mar 2015 (Audited)
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Operating profit 3,560 5,248 10,294
Amortisation of acquired
intangible assets 733 802 1,604
Restructuring costs 223 417 1,204
Fremont site move costs 883 - -
Abortive transaction fees 194 - -
-------------- -------------- ------------
Adjusted operating profit 5,593 6,467 13,102
-------------- -------------- ------------
Group Statement of Comprehensive Half Year Half Year Full Year
Income to to to 30 Sep
2015
31 Mar 31 Mar 2015 (Audited)
2016
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Profit for the period 2,614 3,737 7,459
Other comprehensive income
Fair value adjustment of interest
rate swap net of tax - 16 21
Currency translation difference 2,289 2,871 1,800
-------------- -------------- ------------
Other comprehensive income for
the period 2,289 2,887 1,821
Total comprehensive income for
the period 4,903 6,624 9,280
-------------- -------------- ------------
Unaudited interim results for the 6 months ended 31 March
2016
Group Balance Sheet 31 Mar 2016 31 Mar 2015 30 Sep 2015
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Non-current assets
Property, plant and equipment 29,645 24,031 24,915
Intangible assets 21,074 21,312 20,155
Deferred income tax assets 2,382 2,797 2,552
-------------- -------------- ------------
53,101 48,140 47,622
Current assets
Inventories 16,269 16,304 16,013
Income tax assets 800 401 854
Trade and other receivables 15,532 15,690 14,394
Cash and cash equivalents 17,810 17,240 22,556
50,411 49,635 53,817
Current liabilities
Trade and other payables (11,675) (13,591) (14,059)
Borrowings (10) (5,349) (39)
Income tax liabilities (312) (96) (411)
Provision for other liabilities
and charges (380) (389) (342)
-------------- -------------- ------------
(12,377) (19,425) (14,851)
Net current assets 38,034 30,210 38,966
-------------- -------------- ------------
Non-current liabilities
Borrowings (5,482) - (5,189)
Deferred income tax liabilities (3,169) (2,478) (3,032)
(8,651) (2,478) (8,221)
Net assets 82,484 75,872 78,367
-------------- -------------- ------------
Shareholders' equity
Capital and reserves
attributable to equity
shareholders
Called up share capital 4,852 4,812 4,818
Share premium account 15,530 15,515 15,530
Merger reserve 2,671 2,671 2,671
Hedging reserve - (5) -
Cumulative translation
reserve 3,319 2,101 1,030
Retained earnings 56,112 50,778 54,318
-------------- -------------- ------------
Equity Shareholders' Funds 82,484 75,872 78,367
-------------- -------------- ------------
Unaudited interim results for the 6 months ended 31 March
2016
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 2014 4,774 15,420 2,671 (21) 47,093 69,937
Profit for the period - - - - 3,737 3,737
Other comprehensive income
for the period - - - 16 2,871 2,887
--------- --------- --------- ---------- ----------- ---------
Total comprehensive income
for the period - - - 16 6,608 6,624
--------- --------- --------- ---------- ----------- ---------
Dividends - - - - (1,101) (1,101)
Proceeds from shares issued 38 95 - - (35) 98
Fair value of employee services - - - - 220 220
Tax credit relating to share
option schemes - - - - 94 94
38 95 - - (822) (689)
At 31 March 2015 (unaudited) 4,812 15,515 2,671 (5) 52,879 75,872
At 1 October 2015 4,818 15,530 2,671 - 55,348 78,367
Profit for the period - - - - 2,614 2,614
Other comprehensive income
for the period - - - - 2,289 2,289
--------- --------- --------- ---------- ----------- ---------
Total comprehensive income
for the period - - - - 4,903 4,903
--------- --------- --------- ---------- ----------- ---------
Dividends - - - - (1,254) (1,254)
Proceeds from shares issued 34 - - - (34) -
Fair value of employee services - - - - 319 319
Tax credit relating to share
option schemes - - - - 149 149
--------- --------- --------- ---------- ----------- ---------
At 31 March 2016 (unaudited) 4,852 15,530 2,671 - 59,431 82,484
--------- --------- --------- ---------- ----------- ---------
Unaudited interim results for the 6 months ended 31 March
2016
Group Cash Flow Statement Half Year Half Year Full Year
to to to 30 Sep
2015
31 Mar 31 Mar (Audited)
2016 2015
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Cash flows from operating activities
Cash generated from operations 2,911 5,771 14,692
Income tax paid (465) (692) (1,067)
-------------- -------------- ------------
Net cash generated from operating
activities 2,446 5,079 13,625
-------------- -------------- ------------
Cash flows from investing activities
Purchase of property, plant
and equipment (5,639) (1,090) (3,053)
Sale of property, plant and
equipment - 631 635
Purchase of intangible assets (654) (337) (793)
Interest received 20 11 26
-------------- -------------- ------------
Net cash used in investing
activities (6,273) (785) (3,185)
-------------- -------------- ------------
Cash flows from financing activities
Drawdown of acquisition borrowing
facility - 5,168 5,168
Repayment of borrowings (29) (8,731) (8,777)
Proceeds from issues of share
capital - 98 115
Dividends paid to ordinary
shareholders (1,254) (1,101) (1,823)
Interest paid (50) (178) (189)
Net cash used in financing
activities (1,333) (4,744) (5,506)
-------------- -------------- ------------
Net (decrease) / increase in
cash (5,160) (450) 4,934
Cash at beginning of the period 22,556 17,094 17,094
Exchange gains on cash 414 596 528
-------------- -------------- ------------
Cash at the end of the period 17,810 17,240 22,556
-------------- -------------- ------------
Notes to the Group Cash Half Year Half Year Full Year
Flow Statement to to to
31 Mar 2016 31 Mar 2015 30 Sep 2015
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Profit before income tax 3,527 5,100 10,106
Adjustments for:
- Amortisation of acquired
intangible assets 733 802 1,604
- Amortisation of other
intangible assets 110 88 301
- Depreciation 1,428 1,355 2,715
- Loss on disposal of property,
plant
and equipment - - 508
- Share based payment obligations 319 220 485
- Finance income (20) (11) (26)
- Finance costs 53 159 214
-------------- -------------- -------------
Total adjustments 2,623 2,613 5,801
Changes in working capital
- Inventories 220 (816) (729)
- Trade and other receivables (811) (1,160) (1,101)
- Trade and other payables (2,648) 34 615
Total changes in working
capital (3,239) (1,942) (1,215)
Cash generated from operating
activities 2,911 5,771 14,692
-------------- -------------- -------------
Reconciliation of net cash flow to movements in net cash
Half Year Half Year Full Year
to to to
31 Mar 2016 31 Mar 2015 30 Sep
2015
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
(Decrease) / increase in
cash in the period (5,160) (450) 4,934
Borrowings - (5,168) (5,168)
Repayment of borrowings 29 8,731 8,777
Changes in net cash resulting
from cash flows (5,131) 3,113 8,543
Translation differences 121 92 99
-------------- -------------- ------------
Movement in net cash in
the period / year (5,010) 3,205 8,642
Net cash at start of period 17,328 8,686 8,686
Net cash at end of period 12,318 11,891 17,328
-------------- -------------- ------------
Analysis of net cash
At 1 Exchange At 31 Mar
Oct 2015 Cash flow movement 2016
GBP'000 GBP'000 GBP'000 GBP'000
---------- ----------- ---------- ----------
Cash at bank and
in hand 22,556 (5,160) 414 17,810
Debt due after 1
year (5,189) - (293) (5,482)
Finance leases (39) 29 - (10)
---------- ----------- ---------- ----------
Net cash 17,328 (5,131) 121 12,318
---------- ----------- ---------- ----------
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 7 June 2016. 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 2015 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 2015 are unaudited.
The Interim Report will be announced to all shareholders on the
London Stock Exchange and published on the Group's website on 7
June 2016. 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 2015,
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
2015.
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 2015.
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
2016
Revenue
Total revenue 8,064 3,941 27,365 1,592 - 40,962
Inter and intra-division - - (2,601) - - (2,601)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
External revenue 8,064 3,941 24,764 1,592 - 38,361
Divisional expenses (7,364) (3,271) (20,059) (1,375) (462) (32,531)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA(1) 700 670 4,705 217 (462) 5,830
EBITDA % 8.7% 17.0% 19.0% 13.6% - 15.2%
Depreciation and Amortisation (248) (178) (985) (66) (60) (1,537)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit before
amortisation of acquired
intangible assets 452 492 3,720 151 (522) 4,293
Amortisation of acquired
intangible assets - - - - (733) (733)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit 452 492 3,720 151 (1,255) 3,560
Operating profit margin
% 5.6% 12.5% 15.0% 9.5% - 9.3%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Add back non-recurring
items 21 23 1,055 7 194 1,300
Operating profit excluding
non-recurring items 473 515 4,775 158 (1,061) 4,860
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Adjusted profit margin
% 5.9% 13.1% 19.3% 9.9% - 12.7%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
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
2015
Revenue
Total revenue 10,314 4,317 25,421 2,001 - 42,053
Inter and intra-division - - (3,108) - - (3,108)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
External revenue 10,314 4,317 22,313 2,001 - 38,945
Divisional expenses (8,993) (3,598) (16,716) (1,556) (589) (31,452)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
EBITDA(1) 1,321 719 5,597 445 (589) 7,493
EBITDA % 12.8% 16.7% 25.1% 22.2% - 19.2%
Depreciation and Amortisation (296) (164) (852) (70) (61) (1,443)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit before
amortisation of acquired
intangible assets 1,025 555 4,745 375 (650) 6,050
Amortisation of acquired
intangible assets - - - - (802) (802)
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Operating profit 1,025 555 4,745 375 (1,452) 5,248
Operating profit margin
% 9.9% 12.9% 21.3% 18.7% - 13.5%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Add back non-recurring
items 64 35 295 23 - 417
Operating profit excluding
non-recurring items 1,089 590 5,040 398 (1,452) 5,665
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
Adjusted profit margin
% 10.6% 13.7% 22.6% 19.9% - 14.5%
------------------------------- ----------- -------------- ----------- ----------- ---------- ---------
(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 2016 31 Mar 2015
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------- -------------
United Kingdom 8,351 7,400
America 15,189 17,144
Continental Europe 8,687 8,128
Asia-Pacific 6,134 6,273
38,361 38,945
------------- -------------
6. Income tax expense
Analysis of tax charge in the period
Half Year Half Year Full Year
to to to 30 Sep
2015 (Audited)
31 Mar 2016 31 Mar
2015
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------
Current taxation
UK Corporation tax 448 562 1,480
Overseas tax 319 380 724
Adjustments in respect of prior
year tax charge - - (983)
-------------- -------------- ----------------
Total current tax 767 942 1,221
Deferred tax
Origination and reversal of temporary
differences 146 421 274
Adjustments in respect of prior
year deferred tax - - 1,152
Total deferred tax 146 421 1,426
Income tax expense per income
statement 913 1,363 2,647
The tax charge for the six months ended 31 March 2016 is based
on the estimated effective rate of the tax for the Group for the
full year to 30 September 2016. 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
2015
31 Mar 2016 31 Mar (Audited)
2015
(Unaudited) (Unaudited)
No. No. No.
-------------- -------------- ------------
Number of shares used for basic
earnings per share 24,213,432 24,041,328 24,115,878
Dilutive shares 393,973 373,847 405,311
Number of shares used for dilutive
earnings per share 24,607,405 24,415,175 24,521,189
-------------- -------------- ------------
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 2016 31 Mar 2015 30 Sep 2015
(Unaudited)
(Unaudited) (Audited)
p per p per p per
GBP'000 share GBP'000 share GBP'000 share
-------- ------- -------- ------- -------- -------
Basic earnings per share 2,614 10.8p 3,737 15.6p 7,459 30.9p
Adjustments net of income
tax expense:
Amortisation of acquired
intangible assets 542 2.2p 593 2.5p 1,184 4.9p
Restructuring costs 165 0.7p - - - -
Fremont site move costs 653 2.7p 309 1.2p 891 3.7p
Abortive transaction fees 144 0.6p - - - -
Total adjustments net of
income tax expense 1,504 6.2p 902 3.7p 2,075 8.6p
Adjusted basic earnings per
share 4,118 17.0p 4,639 19.3p 9,534 39.5p
-------- ------- -------- ------- -------- -------
Basic diluted earnings per
share 2,614 10.6p 3,737 15.3p 7,459 30.4p
Adjusted diluted earnings
per share 4,118 16.7p 4,639 19.1p 9,534 38.9p
------ ------ ------ ------ ------ ------
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 3.3 pence per
share for the half year ended 31 March 2016. This dividend has not
been accounted for within the period to 31 March 2016 as it is yet
to be paid.
Half Year Half Year Full Year
to to to 30 Sep
2015
31 Mar 2016 31 Mar (Audited)
2015
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Final 2015 dividend paid : 5.2p 1,254 - -
per share
2015 Interim dividend paid :
2.6p per share - - 722
Final 2014 dividend paid in 2015
: 4.0p per share - 1,101 1,101
-------------- -------------- ------------
1,254 1,101 1,823
-------------- -------------- ------------
9. Borrowings
The group's banking facilities with the Royal Bank of Scotland
comprise a committed revolving credit facility of $15m and an
uncommitted flexible acquisition facility of $20m both available
until 30 April 2019.
The revolving credit facility attracts an interest rate of
between 0.9% and 1.8% above LIBOR dependent upon the Company's
leverage ratio.
10. Called up share capital
2016 2015 2016 2015
No. No. GBP'000 GBP'000
---------
Allotted, issued and fully
paid
Ordinary share of 20p
each 24,260,024 24,062,036 4,852 4,812
------------- ------------- --------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFIRRFIRIIR
(END) Dow Jones Newswires
June 07, 2016 02:00 ET (06:00 GMT)
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