Preliminary Results

RNS Number : 0405S
Gooch & Housego PLC
27 November 2012
 



For immediate release

Tuesday 27 November 2012

 

Gooch & Housego PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2012

Gooch & Housego PLC ("Gooch & Housego" 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 2012.

 

Year ended 30 September

2012

2011

change

Revenue (£m)

60.9

61.0

0%

Adjusted profit before tax (£m)*

8.2

10.8

-24%

Adjusted basic earnings per share (pence)*

28.2

38.0

-26%

Total dividend per share (pence)

5.2

5.0

4%

Net debt (£m)

0.3

1.8

-83%

Statutory profit before tax (£m)

7.1

8.8

-20%

Basic earnings per share (pence)

24.4

35.5

-31%

*adjusted figures are stated after excluding the amortisation of acquired intangible assets and exceptional items being acquisition costs, restructuring costs, goodwill impairment  & the write back of the EM4 earn out provision.

Operating & Strategic Highlights

·      Satisfactory result for the year following a stronger second half performance

·      Net debt reduced, with continued focus on cash generation

·      Investment in key management to deliver growth and strategic objectives

·      Acquisitions now fully assimilated into the business

·      Strategy of diversification adds resilience

Gareth Jones, CEO commented: -

"We have made good progress in executing our strategy of establishing a more diversified, resilient and broadly-based business.  After a difficult first half we have delivered results in line with our revised expectations in a difficult trading environment."

 

For further information please contact:

Gooch & Housego PLC

Gareth Jones / Andy Boteler

01460 256 440




Buchanan

Tim Thompson/Gabriella Clinkard/Louise Hadcocks

020 7466 5000




Investec Investment Banking (Nomad)

Patrick Robb

020 7597 5970

 

 

 

 

 

 

 

 

 

Expected Financial Calendar

 

Annual General Meeting

 

Final dividend for the year ended 30 September 2012 to shareholders on the register at close of business 25 January 2013.  Subject to approval

by shareholders at the Annual General Meeting

 

Interim Results announced

 

Financial Year End

 

Preliminary announcement of results for

the year ending 30 September 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27 February 2013

 

01 March 2013

 

 

 

 

June 2013

 

30 September 2013

 

November 2013

 

 

 

 

Chairman's Statement

"With a broader market and product portfolio, the business's strategy of diversification has put it on a more resilient footing"

Dr Julian Blogh

Despite a slower than expected start to the year, your company has delivered a satisfactory full year result, helped by a combination of internal cost control measures and an encouraging increase in activity in the second half.  We have also made good progress in delivering our strategic objectives to diversify the earnings of your company and to make us more resilient in the face of on-going macroeconomic difficulties.

 

Headline revenues were flat year on year, with approximately 55% of total sales in the second half. Due to a change to the product mix and the lower volumes in the first quarter, there was a reduction in adjusted profit before tax.  We continued to focus on cash generation resulting in reduced net debt at the year end.  Our banking facilities remain committed until April 2015.

 

Significant progress was made in the year towards our strategic aim of broadening our product offerings and diversifying our markets.  We are investing in new capabilities and have strengthened our management team considerably, to provide significantly higher value sub-systems, rather than just components, for our customers.  In 2011 we acquired EM4 and Crystal Technology; both businesses have now been fully integrated and are starting to deliver opportunities, not only by strengthening our position and expertise in our chosen markets, but also through cross selling value added products, particularly in the defence market.  

 

During the year, we undertook a programme of rationalising some of our facilities. We will continue to look for opportunities to make the business more efficient.

 

As we start our new financial year, uncertainty continues in world markets.  In Europe, the Eurozone difficulties are affecting both Government and other spending. In the US, the "fiscal cliff" remains which, if not resolved, will result in significantly reduced Government spending impacting defence expenditure in particular.  Whilst your company relies on a tiny part of these budgets and is focused on areas where expenditure is least likely to be reduced, the Group is not immune to tightening fiscal measures.  As a result visibility is limited but we begin the new financial year with a number of encouraging opportunities, as a more resilient Group and with a broader range of products.

 

At the end of October, Mr Jan Melles, one of Gooch & Housego's Non-executive Directors, stepped down from the Board after 15 years.  The Directors wish to thank Jan for his constructive advice and contribution during his tenure.  I am pleased to welcome to the Board, Dr  Peter Bordui and Mr Mark Webster who bring with them important sector experience.  I and the Board  would also like to thank all our valued employees for their important contributions to the success of the company during the year.

 



CEO Review

"Gooch & Housego has made substantial progress towards its goal of becoming a photonics solutions provider while delivering solid results in challenging trading conditions"

Gareth Jones

For Gooch & Housego, 2012 was a year in which we made good progress in executing our strategy of establishing a more diversified, resilient and broadly-based business which enabled us to deliver results in line with our revised expectations despite a difficult trading environment.

 

After a slower than expected start to the year, we saw a steady recovery in the second quarter and experienced sustained demand for our products and services throughout the second half of the year. This variability, exemplified by a two fold increase in order intake between the first and third quarters, presented significant challenges for our manufacturing operations. Despite this we were able to achieve revenues only marginally lower than those of 2011, which was a record year for the company.  Margins were impacted by the changing product mix, with lower, but more sustainable, levels of Q-switch sales in 2012 compared to the year ended 30 September 2011.

 

Trading conditions at the start of the 2012 financial year were challenging as adverse macro-economic factors together with a down turn in the semiconductor equipment and microelectronics sectors combined to create a difficult business environment in our Industrial sector.  In the Aerospace & Defence sector there were delays in placing a number of large contracts, which despite subsequently being awarded later in the year, combined with the business dynamics of our Industrial sector to create a difficult first quarter.

 

The second half of the 2012 financial year was characterised by generally favourable market conditions. In the Industrial sector, the recovery experienced during the second quarter was followed

by steady demand throughout the final six months. Although there was probably a degree of restocking, the market has been reasonably measured without the fluctuations experienced in the past.  In the Aerospace & Defence sector, as reported in July, we received a number of previously delayed orders some of which were for the supply of higher-value sub-system products against what are forecast to be longer term programmes, in line with our strategic objectives.

 

We have made good progress with our strategy of diversification into new markets and the move to sub-system products, evidenced by the reduction of Q-Switch revenue contribution from 21% in 2011 to 14% this financial year, on broadly flat total Group revenues year on year. At this level of sales the Q-switch is close to the long term average in absolute revenue terms.

 

Having consolidated our leadership positions in core technologies and markets with the two acquisitions made in 2011, Gooch & Housego was ready to take the next step in 2012. By leveraging our portfolio of world-class photonic products we have already demonstrated our ability to move up the value-chain into sub-system and system level products, especially in Aerospace & Defence and Life Sciences applications. The next step is to accelerate this process as we make the transition from components supplier to solutions provider.

 

Through the provision of design and engineering services that feed into highly vertically integrated manufacturing, Gooch & Housego aims to deliver sustained growth even in times of reduced economic activity. As an example, our largest contract in 2012 was the second phase of a design and engineering project that is forecast to transition to the manufacturing phase from 2014. While contracts of this type are still the exception today, we are engaged at an early stage in an increasing number of such programmes and we believe that they will account for more than half our revenues within five years.

 

To achieve this will require fundamental changes throughout the business. The first of these changes were implemented in 2012 with the appointment of a Chief Technology Officer (CTO) and the creation of a business development team focused on the Aerospace & Defence sector. The CTO position was created in order to bring all research and development (R&D) and engineering functions across nine locations under common leadership to ensure that their focus and priorities are fully aligned with the Company's strategic objectives. We were fortunate to be able to recruit Dr Murray Reed, a highly experienced and commercially focused photonics technologist for this key role. The Aerospace & Defence business development team was established to develop enhanced sector expertise in order to engage at a higher level with "tier 1" defence contractors on complex, high-value, sub-system and system level programmes. The CEO of EM4, Inc., acquired by Gooch & Housego in 2011, has been appointed to head up this team, and a new General Manager has been recruited (from the Aerospace & Defence sector) to run our operations in Boston.

 

Our initiatives to drive organic growth via re-focused R&D and engineering are already bringing a new focus to our most important product development initiatives. An example is our development of diagnostic systems for screening applications. We have recently appointed a senior executive with extensive experience in the life sciences and diagnostics sectors to lead the commercialisation of the technology. In parallel, we are engaging additional hospital research laboratory partners to accelerate our initial trials.

 

Looking forward, we will be exploring opportunities to strengthen further our capabilities in optical, mechanical, electronic, firmware and software design and engineering, as well as project management expertise, to support our strategy of moving up the value-chain.

 

 



 

Performance Overview

 

REVENUE




Year ended 30 September

2012

2011

2010


£,000

£,000

£,000

Industrial

35,789

36,294

23,383

Aerospace & Defence

15,440

15,412

11,304

Life Sciences

5,731

5,655

4,890

Scientific Research

3,891

3,648

5,106

Group Revenue

60,851

61,009

44,683

 

Total Group revenue for the year was £60.9m compared to £61.0m in 2011.  Excluding the impact of acquisitions and on a constant currency basis, revenues fell by 12% in 2012 compared to the record year of 2011. 

 

GROUP EARNINGS PERFORMANCE





All amounts in £'000

Adjusted


Reported

Year ended 30 September

2012

2011


2012

2011

 

Operating profit

8,973

11,556


7,852

9,676

 

Net finance costs

(776)

(804)


(776)

(868)

 

Profit before taxation

8,197

10,752


7,076

8,808

 

Taxation

(2,032)

(2,693)


(1,753)

(1,285)

 

Profit for the period

6,165

8,059


5,323

7,523

 

Basic earnings per share (p)

28.2p

38.0p


24.4p

35.5p

 

Adjusted profit before tax for the year was £8.2m (2011 £10.8m). Adjusted basic earnings per share were 28.2p (2011 38.0p) a fall of 26%.  Reported basic earnings per share were 24.4p (2011 35.5p).

 

RECONCILIATION OF ADJUSTED PERFORMANCE MEASURES


Operating Profit

Net finance costs

Taxation

Earnings

per share

Year ended 30 September

2012

£,000

2011

£,000

2012

£,000

2011

£,000

2012

£,000

2011

£,000

2012

pence

2011

pence

Reported

7,852

9,676

(776)

(868)

(1,753)

(1,285)

24.4p

35.5p

Amortisation of acquired intangible assets

881

1,425

-

-

(219)

(342)

3.0p

5.1p

Acquisition costs

-

571

-

-

-

(137)

-

2.1p

Restructuring costs

240

-

-

-

(60)

-

0.8p

-

Release of deferred consideration for acquisition

-

(2,085)

-

-

-

-

-

(9.9p)

Goodwill impairment of investment

-

1,969

-

-

-

(670)

-

6.1p

Debt refinancing costs

-

-

-

64

-

(27)

-

0.2p

Recognition of deferred  tax assets

-

-

-

-

-

(232)

-

(1.1p)

Adjusted

8,973

11,556

(776)

(804)

(2,032)

(2,693)

28.2p

38.0p

 

 

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, acquisition costs, the one off gain resulting from the write back of the 2011 acquisition of EM4 earn-out provision, the impairment of goodwill, costs associated with restructuring activities and the one off impact associated with the recognition of deferred tax assets. 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 fell marginally during the year, with revenues of £35.8m, compared with £36.3m last year. Much lower year-on-year sales of Q-switches for industrial applications were offset by a full year of trading from our Crystal Technology acquisition and strong performances in our Sensing and Semiconductor sub-markets within the Industrial sector.   During the year the Company consolidated its electronics capabilities into other existing facilities and closed its site in Norderstedt, Germany.Operating profit for this sector was 32% lower at £6.6m, compared with £9.6m last year, reflecting a change in product mix.

 

Aerospace & Defence

 

Our Aerospace & Defence business saw revenue consistent with last year at £15.4m (2011 : £15.4m). Following a slow start to the year in this sector as a result of delays in the receipt of defence related contracts, order intake picked up as the year progressed, with many delayed contracts being awarded.  Operating margins in this sector fell during the year due to investment in people and capabilities in our EM4 business.

 

Life Sciences

 

Gooch & Housego consolidated its presence in the Life Sciences sector in 2012 with revenues of £5.7m (2011: £5.7m).  Operating margin improved, reflecting a maturity in our manufacturing processes.   Our optical coherence tomography (OCT) sub-assembly products still lead the world in this market segment, producing a 10% growth rate in 2012. Our development of hyperspectral imaging systems for applications in diagnostics and microscopy continues to make encouraging progress.

 

Scientific Research

 

Our activities in the Scientific Research market are dominated by a small number of large, long term programmes.   This market saw some modest growth in 2012, and is a focus for our business development activities going forward as we seek to engage with a wider range of "big science" projects.

 



 

Performance of prior year acquisitions

 

Following the acquisition of EM4 in January 2011, the Group has invested in people and equipment at this site to support its significant potential and to replicate the Group's fibre optic capabilities in Europe and the US in order to meet the requirements of the Aerospace & Defence markets in these regions.  This replication process is now well progressed, with the first passive fused components made in Boston currently proceeding through internal qualification.  As an illustration of the strategic benefits of the acquisition, during 2012 Gooch & Housego established a leading position in the supply of space qualified lasers for applications in the growing market for satellite optical communications systems.

This acquisition is now fully integrated into the Group's IT and ERP systems.

In the year to 30 September 2012 EM4 contributed $1.1m in EBITDA.

The acquisition of Crystal Technology, a manufacturer of acousto-optic and electro-optic devices and a grower of optical crystals, was completed at the end of March 2011.  Crystal Technology is also now fully integrated into the Group's IT and ERP systems and since acquisition has contributed $5.4m in EBITDA.

 

Following the acquisition, the decision was made to integrate Crystal Technology's crystal growth facility into the Group's main crystal Growth facility in Cleveland, Ohio.  This process was completed in 2012 with all of the Group's crystal growth capabilities now being housed in one purpose built facility.  Consolidating the Group's optical crystal growth has enabled Gooch & Housego to benefit from a concentration of expertise and operational economies of scale.

 

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.  Gooch & Housego developed and launched a number of new products in 2012 including a next generation hyperspectral imaging system, the HSi-440C, with real-time spectral unmixing, aimed at medical researchers, the EM655 integrated RF-over-fibre transmitter module, and a line of high-power fiber-in, fiber-out (FIFO) isolators for the pulsed fiber laser market.  Moreover, the acquisitions made in 2011 have enhanced the technical capabilities of the Company as a whole, with the introduction of lithium niobate and tellurium dioxide crystal growth and laser welding technologies. The appointment of a CTO and the reorganisation of our R&D and engineering teams during 2012 have substantially strengthened Gooch & Housego's capabilities and will improve the return on our R&D expenditure going forward.

 

Gross expenditure on R&D in the year to 30 September 2012 was £4.3m (2011 £3.7m), which represented 7.0% of revenue (2011 5.4%). 



 

Key Performance Indicators (KPIs)

 

The Company's 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

2012

2011

2010

At actual exchange rates

0%

37%

23%

At constant exchange rates

(1%)

40%

23%

 

The Board is focused on delivering revenue growth by investing both organically and through acquisitions.  Weak growth in 2012 reflects the difficult trading conditions in the first quarter of this financial year when compared to the record Q Switch sales in 2011.

 

Target market revenue

2012

2011

2010

Aerospace & Defence  (£m)

15.4

15.4

11.3

Life Sciences (£m)

5.7

5.7

4.9

 

The Company's target markets of Aerospace & Defence and Life Science provide a route to sustainable growth, and a more diversified revenue base. These markets also provided 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.  Whilst the evidence of progress to date is limited in our financial results, Gooch & Housego made considerable progress in the year both in terms of how it addresses its customers, through the establishment of a dedicated Aerospace & Defence business development organisation and how it addresses its geographic markets, through its technology replication programmes.

 

Net debt analysis

2012

2011

2010

Net debt  (£m)

0.3

1.8

5.2

 

In order to balance business risk with the investment needs of the Company, Gooch & Housego closely monitors and manages its net debt.  This year net debt has again fallen significantly, 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

2012

2011

2010

Adjusted diluted earnings per share  (pence)

26.4

36.0

22.5

 

Includes the dilutive effect of the current Value Creation Plan based upon the year end share price of £4.35 per share.

 



Balance Sheet

 

The Company spent a total of £3.4m on property, plant and equipment during the year. (2011 £2.8m).

 

Following the acquisition of Crystal Technology LLC on  31 March 2011, Gooch & Housego took the strategic decision to consolidate its three crystal growth operations into a single, state-of-the-art facility at the main Cleveland site, thereby establishing a centre of excellence for crystal growth and enabling the Company to benefit from economies of scale.  This necessitated the relocation of crystal growth operations from the Crystal Technology facility in Palo Alto, California and from the Company's secondary growth facility in Cleveland.

 

As at 30 September 2012, the new facility had been completed and all of the Crystal Technology crystal growth had been transferred to Cleveland.  During the year £1.1m was capitalised as part of this project.

 

A £0.5m investment was also made in  the Group's fibre optic technology replication programmes.  These programmes will enable the business to better address the geographically distinct Aerospace & Defence markets of Europe and the US.

 

The Company has invested in working capital during the year.  Inventories have increased by £1.5m, as the Company has sought to ensure adequate stock to meet customer requirements for shorter lead times and secure strategically important supplies of key components.   At 30 September 2012, inventories were £12.8m compared with £11.3m at 30 September 2011.

 

In the year ended 30 September 2012 Gooch & Housego generated net cash from operating activities of £8.9m, compared to £11.9m in 2011. 

 

On 26 March 2012, Gooch & Housego paid $3.25m as the final tranche of the deferred consideration in respect of its 2011 Crystal Technology acquisition.  There is no more deferred consideration to pay in respect of our previous acquisitions.

 

Cash, cash equivalents and bank overdrafts as at 30 September 2012 amounted to a positive cash position of £9.2m(2011: £11.3m).  This compares to £5.7m at the half year.

Net debt reduced from £1.8m at 30 September 2011 to £0.3m at 30 September 2012, a reduction of 83%. The movement in net debt is outlined in the table below.

 

MOVEMENT IN NET DEBT




All amounts in £m

Gross

Cash

Gross

Debt

Net

Debt

At 1 October 2011

13.8

(15.6)

(1.8)

Cash flow from operating activities

11.6

-

11.6

Debt repayment

(3.4)

3.4

-

Acquisitions (deferred consideration)

(2.1)

-

(2.1)

Capital expenditure

(3.8)

-

(3.8)

Working capital

(0.9)

-

(0.9)

Interest, tax, share options  & dividends

(3.4)

-

(3.4)

Exchange movement

(0.1)

0.2

0.1

At 30 September 2012

11.7

(12.0)

(0.3)

 

Gooch & Housego's bank is the Royal Bank of Scotland.  The Company's facilities comprise an $18 million US Dollar denominated term loan (of which $11.3m is still outstanding), a £3.1 million Sterling denominated term loan (of which £2.4m is still outstanding), an $8 million revolving credit facility (drawn to $4 million as at 30 September 2012) and an undrawn capital expenditure facility of $8 million. All facilities are committed until April 2015, subject to certain covenant provisions. 

 

Order book

 

As at 30 September 2012, the Group order book stood at £24.9m, compared to £28.5m at the end of the 2011 financial year, a 13% fall.  On a like for like basis, excluding the impact of foreign exchange, the order book is 11% lower.  Book to bill ratios for the business as a whole were 1.01 times (six month rolling average) as at 30 September 2012, compared to 0.88 times for the same period last year.  This is a reflection of the strong order performance over the last six months of the 2012 financial year in which £33.3m of orders were booked.

 

Staff

 

The Group workforce fell from 623 at 30 September 2011 to 588 at the end of September 2012, a fall of 35. This is a net fall and therefore reflects both the reductions in staffing resulting from the work the business has done in integration &rationalisation of sites and processes; and the additional investment that the business has made in engineering, business development and senior management. Most notably this has been demonstrated through the appointment of a Chief Technology Officer, to drive organic new product development, and through the creation of a dedicated Aerospace & Defence business development team with the sector specialisation necessary to further exploit the potential for Gooch & Housego in this complex market. We would like to welcome them all to Gooch & Housego.

 

Prospects

 

Although the global macroeconomic outlook remains uncertain in the short term, Gooch & Housego's markets continue to exhibit attractive long term structural growth drivers as a result of the continued global investment in optical technologies. 

 

We remain of the view that the Aerospace & Defence sector has the potential to deliver significant growth for Gooch & Housego despite near-term delays and uncertainty resulting from budgetary constraints and political uncertainty in the US. With our highly specialised capabilities, Gooch & Housego is well positioned to address a growing demand for photonic technology in what is likely to be a shrinking overall market. In Life Sciences we are exploiting similarly unique capabilities in OCT and diagnostics, both of which are high-value, high-growth markets. Diversification within the Industrial sector into fields such as sensing, metrology and semiconductor equipment is progressively reducing our historic dependence on the Q-switch and the industrial laser market, although we are committed to maintaining our dominant position in this field.

 

To provide long term sustainable growth and increased resilience to market cyclicality and macro-economic uncertainties, we will continue to execute our strategy of diversification and moving up the value-chain through a combination of organic R&D and strategic acquisitions.

 

 

Dividends

 

The Directors propose a final dividend of 3.2p per share making a total dividend for the year of 5.2p (2011 5.0p).  The final dividend will be payable on 1March 2013 to shareholders on the Company's share register as at close of business on 25 January 2013.

 

 

 

 

 

 

 

 

 Group Income Statement

For the year ended 30 September 2012 (unaudited)

 


Note

2012

2011



£000

£000

Revenue

2

60,851

61,009

Cost of revenue


(37,405)

(34,815)

Gross profit


23,446

26,194

Research & Development


(4,277)

(3,746)

Sales & Marketing


(4,119)

(3,733)

Administration


(8,181)

(9,826)

Other income


983

787

Operating profit

2

7,852

9,676

Finance income


24

30

Finance costs


(800)

(898)

Profit before income tax expense


7,076

8,808

Income tax expense

3

(1,753)

(1,285)

Profit for the year


5,323

7,523





Basic earnings per share

 

4

24.4p

35.5p

Diluted earnings per share

4

22.8p

33.6p





 

Reconciliation of operating profit to adjusted operating profit:

 



2012

2011



£000

  £000

Operating profit


7,852

9,676

Amortisation of acquired intangible assets


881

1,427

Acquisition costs

 


-

571

Impairment of goodwill


1,969

Release of accrued contingent consideration


(2,085)

Restructuring costs


240

-

Adjusted operating profit


8,973

11,558

 

 

Reconciliation of net finance costs to adjusted net finance costs:

 



2012

2011



£000

£000

Net finance costs


(776)

(868)

Costs associated with debt re-financing


-

64

Adjusted net finance costs


(776)

(804)

 

 

Group Balance Sheet

As at 30 September 2012 (unaudited)

 



2012

     2011



£000

  £000

Non-current assets




Property, plant & equipment


21,405

20,440

Intangible assets


20,720

22,081

Deferred income tax assets


4,308

4,045



46,433

46,566

Current assets




Inventories


12,802

11,264

Trade and other receivables


11,062

12,596

Cash and cash equivalents


11,712

13,844



35,576

37,704

Current liabilities




Trade and other payables


(10,202)

(12,726)

Borrowings


(5,774)

(6,001)

Income tax liabilities


(17)

(424)

Provision for other liabilities and charges


(357)

(505)

 



(16,350)

(19,656)





Net current assets


19,226

18,048





Non-current liabilities




Borrowings


(6,261)

(9,696)

Deferred income tax liabilities

 


(698)

 

(563)

Derivative financial instruments


(134)

 

(255)



(7,093)

(10,514)





Net assets


58,566

54,100





Shareholders' equity

Capital and reserves
attributable to equity shareholders




Called up share capital


4,382

4,370

Share premium account


14,311

 

14,200

Merger reserve


2,671

 

2,671

 

Hedging reserve


(169)

 

(264)

Cumulative translation reserve


(496)

 

588

 

Retained earnings


37,867

 

32,535

Equity Shareholders' Funds


58,566

 

54,100

 

 

 

Group Statement of Changes in Shareholders' Equity

For the year ended 30 September 2012 (unaudited)

 



2012

     2011



£000

  £000





Balance at 1 October


54,100

36,053





Profit for the year


5,323

7,523

Movement in the value of derivative financial instruments


95

(80)

Currency translation differences


(1,084)

312

Total comprehensive income for the year


4,334

7,755









Fair value of employee services


471

471

Tax credit relating to share option schemes


631

80

Proceeds from shares issued net of costs


123

10,612

Dividends paid to equity holders of the company


(1,093)

(871)

Total contributions by and distributions to owners of the company recognised directly in equity


132

10,292





Balance at 30 September


58,566

54,100





 

 

Consolidated Statement of Comprehensive Income

For the year ended 30 September 2012 (unaudited)

 



2012

     2011



£000

  £000





Profit for the period


5,323

7,523





Other comprehensive income

 




Movement in the value of derivative financial instruments


95

(80)

Currency translation differences


(1,084)

312

Other comprehensive (expense)/ income for the period net of tax


(989)

232





Total comprehensive income for the period


4,334

7,755





Total comprehensive income for the period is attributed to:

Shareholders of Gooch & Housego PLC


 

4,334

 

7,755

 



Group Cash Flow Statement

For the year ended 30 September 2012 (unaudited)

 


Note

2012

2011



£000

£000

Cash flows from operating activities




Cash generated from operations

6

10,708

13,238

Income tax payment


(1,793)

(1,386)

Net cash generated from operating activities


8,915

11,852





Cash flows from investing activities




Acquisition of subsidiaries, net of cash acquired


(2,061)

(14,484)

Purchase of property, plant and equipment


(3,362)

(2,813)

Sale of property, plant and equipment


59

93

Purchase of intangible assets


(435)

(153)

Interest received


24

29

Net cash used in investing activities


(5,775)

(17,328)





Cash flows from financing activities




Proceeds from borrowings


-

4,643

Repayment of borrowings


(3,397)

(2,702)

Proceeds from issuance of share capital


123

10,612

Dividends paid to ordinary shareholders


(1,093)

(871)

Interest paid


(711)

(748)

Net cash (used in) / generated from  financing activities


(5,078)

10,934





Net (decrease) / increase in cash, cash equivalents, working capital facility and bank overdraft


(1,938)

5,458

Cash, cash equivalents, working capital facility and bank overdraft at beginning of the period


11,276

5,746

 

Exchange (losses) / gains on cash and bank overdraft


(103)

72

Cash, cash equivalents, working capital facility and bank overdraft at the end of the period


9,235

11,276





 

 Cash, cash equivalents, working capital facility and bank overdrafts at the end of the period comprise:

 



2012

2011



£000

£000

Cash and cash equivalents


11,712

13,844

Bank borrowings and overdraft


(2,477)

(2,568)

Cash, cash equivalents, working capital facility and bank overdraft at the end of the period


9,235

 

11,276

 



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 2012.  

 

The Preliminary Report was approved by the Board of Directors and the Audit Committee on 27 November 2012.  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 2011 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 2011, as described in those financial statements.

 

The Preliminary Report will be announced to all shareholders on the London Stock Exchange and published on the Group's website on 27 November 2012. 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 business of the Company is divided into four market sectors, being Aerospace & Defence, Life Sciences, Industrial and Scientific Research, together with a 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.

 

For the year ended

30 September 2012

Aerospace & Defence

Life

 Sciences

Industrial

Scientific

Research

Corporate

Total


£000

£000

£000

£000

£000

£000

Revenue







Total revenue

15,440

5,731

39,067

3,912

-

64,150

Inter and intra-division

-

-

(3,278)

(21)

-

(3,299)

External revenue

15,440

5,731

35,789

3,891

-

60,851

Divisional expenses

(12,712)

(4,283)

(28,045)

(3,571)

(1,119)

(49,730)

EBITDA¹

2,728

1,448

7,744

320

(1,119)

11,121

EBITDA %

17.7%

25.3%

21.6%

8.2%

0.0%

18.3%

Depreciation & amortisation

(548)

(231)

(1,177)

(88)

(344)

(2,388)

Operating profit/(loss) before amortisation of acquired intangible assets

2,180

1,217

6,567

232

(1,463)

8,733

Acquired intangible assets amortisation

-

-

-

-

(881)

(881)

Operating profit/(loss)

2,180

1,217

6,567

232

(2,344)

7,852

Operating profit margin %

14.1%

21.2%

18.3%

6.0%

0.0%

12.9%

 



2.      Segmental analysis - continued

 

For the year ended

30 September 2011

Aerospace & Defence

Life

 Sciences

Industrial

Scientific

Research

Corporate

Total


£000

£000

£000

£000

£000

£000

Revenue







Total revenue

15,412

5,655

38,596

3,648

-

63,311

Inter and intra-division

-

-

(2,302)

-

-

(2,302)

External revenue

15,412

5,655

36,294

3,648

-

61,009

Divisional expenses

(12,349)

(4,654)

(25,816)

(3,319)

(1,382)

(47,520)

EBITDA¹

3,063

1,001

10,478

329

(1,382)

13,489

EBITDA %

19.9%

17.7%

28.9%

9.0%

0.0%

22.1%

Depreciation & amortisation

(496)

(122)

(858)

(86)

(824)

(2,386)

Operating profit/(loss) before amortisation of acquired intangible assets

2,567

879

9,620

243

(2,206)

11,103

Acquired intangible assets amortisation

-

-

-

-

(1,427)

(1,427)

Operating profit/(loss)

2,567

879

9,620

243

(3,633)

9,676

Operating profit margin %

16.7%

15.5%

26.5%

6.7%

0.0%

15.9%

 

¹EBITDA = Earnings before interest, tax, depreciation and amortisation

 

All of the amounts recorded are in respect of continuing operations.

 

 

Analysis of revenue by destination and net assets by origination:

for year ended 30 September


Revenue


Net Assets


2012

2011


2012

2011


£000

£000


£000

£000

United Kingdom

8,644

8,055


20,663

23,423

North America

28,443

26,278


37,852

30,508

Continental Europe

14,343

13,654


54

169

Asia Pacific & Other

9,421

13,022


-

-

Total revenue

60,851

61,009


58,569

54,100

 

 



3.      Income tax expense

 

The income tax expense for the year to 30 September 2012 is set out below.

 




2012

£000

2011

£000

Current taxation





UK Corporation tax



1,264

1,018

Overseas tax



394

1,273

Adjustments in respect of prior year tax charge



(298)

(181)

Total current tax



1,360

2,110






Deferred tax





Origination and reversal of timing differences



32

(592)

Adjustments in respect of prior year deferred tax



307

(298)

Impact of tax rate change to 23% (2011: 25%)



54

65

Total deferred tax



393

(825)






Total income tax expense per income statement



1,753

1,285






Add back one-off items:





Losses utilised not previously recognised



-

232

Total one-off items



-

232






Adjusted income tax expense



1,753

1,517

 

 



4.   Earnings per share

 

The calculation of earnings per 20p Ordinary Share is based on the profit for the period using the weighted average number of Ordinary Shares in issue during the period as a divisor.  The weighted average number of shares for the year ending 30 September is given below:

 


2012

No.

2011

No.

Number of shares used for basic earnings per share

21,860,241

21,162,500

Dilutive shares

1,531,993

1,194,768

Number of shares used for dilutive earnings per share

23,392,234

22,357,268

 

A reconciliation of the earnings used in the earnings per share calculation is set out below:

 


2012

2011


£000

pence

per share

£000

pence
per share

Basic earnings per share

5,323

24.4p

7,523

35.5p

Acquired intangible assets amortisation (net of tax)

662

3.0p

1,083

5.1p

Acquisition costs

-

-

434

2.1p

Goodwill impairment of investment

-

-

1,299

6.1p

Release deferred consideration for acquisition

-

-

(2,085)

(9.9p)

Cost associated with debt re-financing

-

-

37

0.2p

Impact of one off tax adjustments

-

-

(232)

(1.1p)

Restructuring costs (net of tax)

180

0.8p

-

-

Total adjustments net of income tax expense:

842

3.8p

536

2.5p

Adjusted basic earnings per share

6,165

28.2p

8,059

38.0p






Diluted earnings per share

5,323

22.8p

7,523

33.6p

Adjusted diluted earnings per share

6,165

26.4p

8,059

36.0p

 

 

 

5.         Dividend



2012
£000

2011
£000

Final 2011 dividend paid in 2012: 3.0p per share.  (Final 2010 dividend paid in 2011: 2.0p per share)


656

434

2012 Interim dividend paid: 2.0p per share (2011: 2.0p)


437

437



1,093

871

The Directors propose a final dividend of 3.2p per share making the total dividend paid and proposed in respect of the 2012 financial year 5.2p (2011: 5.0p). 

 



6.      Cash generated from operating activities



2012

2011



£000

£000

Profit before income tax


7,076

8,808

Adjustments for:




- Amortisation of acquired intangible assets


881

1,427

- Amortisation of other intangible assets


296

323

- Depreciation


2,092

2,063

- Loss/(profit) on disposal of property, plant and equipment


48

(20)

- Share-based payment charges


471

471

- Acquisition costs


-

571

- Impairment of goodwill


-

1,969

- Non cash release of contingent consideration


-

(2,085)

- Finance income


(24)

(30)

- Finance costs


800

898

Total


4,564

5,587





Changes in working capital




- Inventories


(1,465)

(2,613)

- Trade and other receivables


1,351

(945)

- Trade and other payables


(272)

1,537

- Provisions


(546)

864

Total


(932)

(1,157)





Cash generated from operating activities


10,708

13,238

 

 

 

7.      Called up share capital

 

 

 

2012

2011

2012

2011

No.

No.

£000

£000

Allotted, issued and fully paid





At 1 October

21,850,798

19,264,390

4,370

3,853

Shares issued and fully paid

59,976

2,586,408

12

517

At 30 September

21,910,774

21,850,798

4,382

4,370

 

During the year ended 30 September 2012 59,976 shares were allotted under share option schemes.

 

Of the shares issued in the year ended 30 September 2011, 219,742 were allotted under share option schemes. In addition on 5 January 2011, Gooch & Housego PLC raised approximately £10.2 million (net of expenses) through a placing of 2,366,666 new 20p Ordinary Shares.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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