TIDMGHH
RNS Number : 6461X
Gooch & Housego PLC
28 November 2017
For immediate release 28 November 2017
Gooch & Housego PLC
("Gooch & Housego", "G&H", the "Company" or the
"Group")
PRELIMINARY RESULTS FOR THE YEARED 30 SEPTEMBER 2017
Gooch & Housego PLC (AIM: GHH), the specialist manufacturer
of optical components and systems, today announces its preliminary
results for the year ended 30 September 2017.
Year ended 30 September 2017 2016 Change
------------------------- ------ ----- -------
Revenue (GBPm) 112.0 86.1 30.2%
------------------------- ------ ----- -------
Adjusted profit before
tax (GBPm)* 16.1 14.2 13.7%
------------------------- ------ ----- -------
Adjusted basic earnings
per share (pence)* 49.4 42.5 16.2%
------------------------- ------ ----- -------
Statutory profit before
tax (GBPm) 12.6 10.1 24.8%
------------------------- ------ ----- -------
Basic earnings per
share (pence) 36.4 29.1 25.1%
------------------------- ------ ----- -------
Total dividend per
share (pence) 10.2 9.0 13.3%
------------------------- ------ ----- -------
Net cash (GBPm) 14.9 11.7 27.9%
------------------------- ------ ----- -------
*adjusted figures exclude the amortisation of acquired
intangible assets, impairment of goodwill, release of accrued
contingent consideration, exceptional items being restructuring,
provision for export compliance and transaction costs, interest on
deferred consideration and gain on bargain purchase.
Operating & Strategic Highlights
-- Strong financial performance set against a backdrop of
favourable market conditions in our three main sectors of
industrial, aerospace & defence and life sciences
-- Demand was particularly high for critical components used in
microelectronic manufacturing and hi-reliability fibre couplers
used in undersea cable networks
-- Significant progress was made towards our strategic goals of
further diversification and moving up the value chain
-- StingRay Optics, acquired in February 2017, has integrated
well into the wider group and is performing above our
expectations
-- Investment in R&D up 16.2%, 22 new products introduced and 7 new patents granted
-- Substantial investments were made, enabling us to meet
increased demand and laying the foundation for future growth
Financial Highlights
-- Revenue for the year GBP112.0m, 30.2% higher than FY 2016,
18.7% on a constant currency basis. The acquisition contributed
GBP5.3m in the year
-- Adjusted profit before tax up 13.7%
-- Adjusted basic earnings per share up 16.2%
-- Strong cash performance delivering net cash of GBP14.9m at year end, an increase of 27.9%
-- Record year end order book of GBP72.1m, up 36.5% from 30 September 2016
Mark Webster, Chief Executive Officer, commented
"G&H met its FY 2017 financial goals and was able to make
strategically important investments in key skills, processes,
systems and the latest capital equipment. Significant progress has
been made towards meeting our strategic aims of diversifying the
business and moving up the value chain.
"These strategic initiatives combined with a record year end
order book mean the Board remains confident that G&H is well
positioned to deliver further progress in FY 2018 and beyond."
For further information please contact:
Mark Webster / Andrew
Gooch & Housego PLC Boteler 01460 256440
Investec Bank plc Patrick Robb / David
(Nomad & Broker) Anderson 020 7597 5970
Mark Court / Sophie
Buchanan Wills 020 7466 5000
Expected Financial Calendar
Annual General Meeting 21 February 2018
Payment date for final dividend 2 March 2018
for the year ended 30 September
2017 to shareholders on the register
at close of business 26 January
2018. June 2018
Subject to approval by shareholders
at the Annual General Meeting 30 September 2018
Interim Results announcement
November 2018
Financial Year End
Preliminary announcement of results
for the year ended
30 September 2018
Chairman's Statement
Set against a backdrop of favourable market conditions, your
company has delivered a strong financial performance in 2017. This
has been delivered through a mix of organic and acquisitive
growth.
Demand for certain of Gooch & Housego's products,
particularly from the microelectronics and undersea fibre optic
communications sectors, reached unprecedented levels during the
year. The resulting record order book presented a significant
challenge for some of the Company's manufacturing operations.
Investments made in recent years in "lean manufacturing" and
"continuous improvement" meant that G&H was in part able to
respond to this demand through an enhanced ability to match
capacity with demand across the Company's various manufacturing
locations. Combined with significant investments during the year in
people, and in the latest manufacturing equipment, these
initiatives made it possible to satisfy the needs of our customers
and begin to reduce lead times towards the year-end.
In February 2017 G&H acquired StingRay Optics LLC
("StingRay"), a USA based designer and manufacturer of specialist
optical and opto-mechanical systems. StingRay was a particularly
significant acquisition as it provides G&H with advanced
optical systems design capabilities for harsh and demanding
applications. These new capabilities support the Company's twin
strategic objectives of moving up the value chain and achieving
greater diversification by enabling G&H to provide
systems-level solutions to Aerospace & Defence ("A&D")
customers. In 2017 the StingRay acquisition helped sales into the
A&D sector approach one third of total revenues. StingRay has
delivered a consistently strong performance since acquisition. The
acquisitions completed in the previous year (Alfalight and Kent
Periscopes) also made valuable contributions in 2017.
The investment in people during 2017 represents an important
enhancement of the skills-base of G&H, and bodes well for the
future. In order to meet the challenges of greater scale and
complexity G&H has chosen to focus on specific high growth
products and markets. Recent recruitment has reflected the need for
a higher level of specialisation across a wide range of business
functions including manufacturing processes and systems, business
development, human resources, supply-chain and research and
development. These and planned future changes reflect a recent
board review of the organisational structure of G&H that had
the objective of ensuring that it be optimised for delivering
sustainable growth over the long term, as G&H grows both
organically and by acquisition.
In successfully responding to the challenges of 2017 an
exceptional effort was required by many people. I would like to
express my thanks to my fellow directors and to all employees of
Gooch & Housego. I am pleased to welcome David Bauernfeind, who
joined the board as a non-executive director and Chair of the Audit
Committee on 1 May 2017.
Gooch & Housego is stronger today than at any time in its
past. With a sound financial foundation, new talents and
capabilities, a pipeline of exciting new products and a record
order book to start the year the Company is well-positioned to
continue to deliver in 2018 and beyond.
Gareth Jones
Chairman
Chief Executive Officer's Statement
Overview
FY2017 Performance
Gooch & Housego ("G&H") benefited from positive market
conditions and strong demand across its main sectors of
industrials, aerospace & defence ("A&D") and life sciences.
Demand was particularly high for critical components used in
microelectronic manufacturing and high reliability fibre couplers
used in undersea cable networks.
FY 2017 has been a 'watershed' year for the company, as we
passed through the GBP100 million sales barrier for the first time.
Revenue of GBP112.0 million represents year on year growth of
30.2%, or on a constant currency basis 18.7%. Adjusted PBT, which
is less affected by foreign exchange fluctuations due to the
natural hedging within the business, was GBP16.1 million, equating
to a year on year profit growth of 13.7%.
Strategically important investments in people, processes,
systems and the latest capital equipment were made during the year,
enabling us to address high levels of demand in FY2017 and provide
an important platform for G&H's future growth.
Strategic goals
Considerable progress has been made towards our strategic goals
of further diversification and moving up the value chain.
A&D and life sciences both provide a counter balance to the
exposure that the industrial laser sector has to the global
economic cycle. These business areas have customer bases which
include tier one A&D and medical diagnostic companies, who
often prefer G&H to provide sub systems or systems rather than
solely critical components, providing a strong impetus to move up
the value chain. When coupled with the regulatory hurdles inherent
in both A&D and life sciences, these markets provide a
defensible business model with a high barrier to entry.
Our aim is to establish a 'critical mass' of business in both
the A&D and life science sectors.
This has in large part been achieved in A&D, which now
represents 31.1% of G&H's FY2017 revenue (2016: 23.2%); this
was made possible due to a combination of organic growth and by the
three acquisitions made in FY 2016 and FY 2017. Life sciences has
undergone good organic revenue growth, in particular with products
utilising our optical coherence tomography technology and laser
surgery, but the sector still needs further acquisitions to achieve
the desired 'critical mass'.
Sub systems and systems now represent 22.1% of our business
(2016: 15.1%), with the growth again helped by the recent
acquisitions, most notably Kent Periscopes and StingRay. Kent
Periscopes, acquired in FY 2016, moved to a larger custom fitted
facility in St. Asaph, North Wales, during FY 2017. This was funded
in large part by the Welsh Government. As well as being required
for the growth of the existing Kent Periscopes business the
facility is earmarked to become a hub for assembly of sub systems
and systems across the group.
Acquisitions
Strategic acquisitions remain an important part of G&H's
business model and in February 2017 we acquired StingRay Optics LLC
("StingRay").
StingRay is a USA based specialist designer and manufacturer of
high performance optical and opto- mechanical sub systems for
demanding defence and commercial applications. Their product range
is focused on laboratory, ground based, airborne, unmanned aerial
vehicles ('UAVs") and space applications for key US defence
customers. Synergies include leveraging G&H's greater reach
through our global sales teams and our expertise in manufacturing
infrared precision optics and specialist coatings. The partnership
has proven to be very successful so far, with StingRay's
performance exceeding our expectations and their talented workforce
integrating well into the wider company.
Research and Development ("R&D")
There has been continued benefit from concentrating our R&D
efforts on fewer higher return projects. During FY 2017 we
introduced a record 22 new products and we expect the full value of
these products to peak over the next three years. Revenue generated
from new products this year was GBP11.1 million.
Good progress has been achieved in our key R&D areas of
interest, notable among which are the following:
Microelectronics is entering a new phase of nano technology and
the UV lithography and via drilling techniques required to achieve
this need a new generation of precision lasers and laser systems
which are being developed with our laser manufacturer and laser
system partners.
OCT technology dominates the retinal scanning and imaging arena,
but the longer term development partnerships we have with medical
diagnostic companies in the areas of cardiovascular disease and
cancer detection are now moving to the prototype and early
commercial model stage, with the prospect of new product launches
in the near future.
Our space communication group has gone from strength to strength
with European Space Agency and UK Space agency funded work in
satellite communications and is now attracting commercial interest
from the USA and elsewhere. In addition to the grant funded work we
have enhanced our $4 million commercial contract to provide
communication systems for near term satellite launches. We are also
developing similar technology for the adjacent market of UAVs.
Various aspects of our R&D defence programmes in the US and
Europe are classified, but we are able to say that we are making
good headway in developing key parts of Kent Periscopes' product
portfolio, so they are compatible with USA military standards.
We have recently moved some of our R&D effort into sensing
technology, focusing on use in harsh environments with ruggedised
photonics technology. We have been able to bring some of our space
communications experience to problem solving in this arena.
In order to accommodate the need for more system based projects,
the Systems Technology Group ("STG"), primarily based at our
Torquay site, has been expanded. The group consists of scientists
and engineers who bring a wide range of skills such as electronic,
software and mechanical engineering, which are required in order to
present a complete sub system or system to our customers.
Performance improvement programme
In addition to the enhanced R&D performance outlined above,
we have continued to expand our business development group, adding
a microelectronic business development executive to the existing
life science and A&D executives. The established business
development executives have brought enhanced access to tier 1
A&D companies and multi- national medical diagnostic
organisations and have been instrumental in the development of some
of our most notable R&D projects. Our expectation is that with
the addition of the new microelectronics business development
executive we will be able to enhance our contribution to the new
industrial laser systems that are currently in development.
G&H's ongoing operational performance improvement programme
was instrumental in enabling us to meet the challenge of this
year's high growth rate. The major infrastructure projects in
Fremont, CA and Cleveland, OH are now substantially complete.
Investment in key skills, lean processes and systems and the latest
capital equipment was accelerated in sites that provide critical
components for precision lasers used in microelectronic
manufacturing, namely Ilminster, Fremont, CA and Torquay.
We have built on the good work done in previous years to further
improve efficiency, customer service and to establish a more
scalable organisational model for future growth. Our ten
manufacturing sites have been organised into three manufacturing
centres. They are based on our sites' areas of technical expertise,
namely Acousto Optic / Electro Optic, Precision Optics and Fibre
Optics. Each manufacturing area has a leader and their role is to
ensure best practice is shared; there is process harmonisation and
optimal allocation of resource.
G&H is in a strong position financially and is well
positioned to make further investment in the business.
Market and Applications
Industrial
The industrial sector represents 57.4% of G&H's revenue and
is composed of a diverse range of industrial applications aligned
to our world class photonic technologies, including microelectronic
manufacturing, semiconductor manufacturing and test, remote
sensing, metrology and optical communications.
Our industrials division grew by GBP10.0 million or 18.4%
compared to the previous year, reflecting a positive performance
across the range of industrial products.
Critical components for precision lasers used in microelectronic
manufacturing were in particular demand. This was driven by the
next generation of smart phones and tablets and the consequent
change in manufacturing technology required to produce them. The
aforementioned 'cutting edge' technology is primarily dependent on
the latest solid state lasers and we worked closely with the laser
manufacturers and laser system suppliers to meet these demands.
Precision inspection equipment for real time calibration in
smart phone and tablet production continued to deliver significant
revenue for us during FY 2017.
The ongoing need for ever more data capacity from government,
industry and the consumer continues to drive a strong optical
telecommunications performance. G&H provides some of the more
technically challenging elements to both land and undersea optical
communications. Our ultra hi- reliability fibre couplers are used
in amplifiers that are a key part of undersea cable networks. Over
the last couple of years there has been a positive step change in
the requirement for these products, driven by technology firms
laying their own cable networks in order to control the process of
data delivery. This new level of demand has continued unabated
throughout FY 2017.
Aerospace & Defence
A&D represented 31.1% of our revenue and grew year on year
by GBP14.9 million or 74.5%. This was due to a combination of
organic growth and acquisition, as highlighted earlier. G&H is
now able to bring a wide range of photonic capabilities that very
much represent the "direction of travel" in this sector. These
include target designation, range finding, ring laser and fibre
optic gyroscope navigational systems, infra-red and RF counter
measures, periscopes and sighting systems for armoured vehicles and
opto-mechanical sub systems for unmanned aerial vehicles.
Delivering product quality, reliability and performance in
challenging environments is essential in the A&D arena and this
very much plays to G&H's strengths. Our customers encompass the
major European and USA A&D companies.
Space satellite communication is undergoing a technology
revolution. The use of fibre optic lasers to transmit information
means the satellite communication systems are more efficient and
robust, as well being significantly lighter. This has changed the
economics of the sector and has led to smaller satellites and
encouraged the move towards the use of satellite constellations as
part of a communications network. The investment we have made in
this area means we are at the forefront of some of these
developments.
Life Sciences
Life Sciences represents 8.5% of G&H's revenue and grew year
on year by GBP1.7 million or 21.1%. Despite the increase in revenue
the profit did decline year on year, which is primarily due to the
investments made into future capabilities. Though life sciences is
a relatively small sector for G&H, we see this as a
strategically important one going forward.
The principal applications are in optical coherence tomography
("OCT"), laser surgery and microscopy. OCT is widely used in
ophthalmology for 3D retinal scanning and G&H has a dominant
position in supplying critical components and sub systems to the
main equipment suppliers. We also have a number of R&D
collaborations with medical diagnostic companies in cardiovascular
and cancer detection.
Laser surgery is a fast growing area particularly in
ophthalmology, prostate and cosmetic surgery and has significant
potential to be exploited beyond these current areas of use.
There is potential for photonic technology to be used in
minimally invasive surgery, endoscopy and robotic surgery and this
sector remains an area where G&H will continue to invest in
R&D and look for strategic acquisitions.
Scientific Research
G&H's research market is dominated by a small number of "big
science" projects in the fields of nuclear fusion research and
synchrotron radiation sources. It provides 3.0% of our revenue. The
year on year decline was due to phasing of one of the projects.
This is a profitable and prestigious sector for G&H, where we
have some unique capabilities, that has the capacity to deliver
growth and we will continue to selectively invest in this area.
Outlook
G&H met its FY 2017 financial goals and was able to make
strategically important investments in key skills, processes,
systems and the latest capital equipment. Significant progress has
been made towards meeting our strategic aims of diversifying the
business and moving up the value chain, with A&D now
representing 31.1% of our business by revenue. We acquired USA
based StingRay Optics LLC in February 2017, which has integrated
well into the wider organisation and performed strongly.
G&H will continue with an active policy of making further
progress towards a more diverse and balanced business by building
"critical mass" in A&D and life sciences, through a mix of
investment in R&D and acquisitions.
We are committed to making further investment in R&D in our
targeted high growth areas. These include fibre and solid state
laser systems, precision inspection equipment for microelectronic
manufacturing, OCT medical diagnostics, laser surgery, space
satellite communications, A&D sub systems and fibre optic
sensing systems.
G&H intends to take the performance improvement programme to
the next level, by further investment in business development
activity, focusing our global resources on a few high return
R&D projects and continuing to improve operational efficiency.
We believe the introduction of three well defined and focused
manufacturing centres will provide a scalable platform for enhanced
lean manufacturing practice.
These strategic initiatives combined with a record year end
order book mean the Board remains confident that G&H is well
positioned to deliver further progress in FY 2018 and beyond.
Mark Webster
Chief Executive Officer
Performance Overview
The business has once again delivered strong profitable
growth.
Group revenue for the year was a record GBP112.0million. This
represents an increase of GBP25.9 million, or 30.2% over the
previous year of GBP86.1 million. During the year Gooch &
Housego acquired StingRay Optics LLC, which contributed GBP5.3
million to group revenue in the year, so organic revenue was up by
23.9%. On a constant currency basis revenue was 18.7% higher than
the previous year.
During 2017, Gooch & Housego invested GBP5.8 million in
property, plant and equipment and GBP5.7 million in acquisitions.
Despite this the business has increased its net cash position to
GBP14.9 million at 30 September 2017 (2016: GBP11.7 million),
through sustained strong operating cash flows.
REVENUE
------------------------------- ------ -------- --------
2017 2016
---------------- ------------------
Year ended 30 GBP'000 % GBP'000 %
September
--------------------- -------- ------ -------- ------
Industrial 64,261 57.4% 54,296 63.1%
--------------------- -------- ------ -------- ------
Aerospace & Defence
(A&D) 34,860 31.1% 19,977 23.2%
--------------------- -------- ------ -------- ------
Life Sciences 9,570 8.5% 7,904 9.2%
--------------------- -------- ------ -------- ------
Scientific Research 3,325 3.0% 3,874 4.5%
--------------------- -------- ------ -------- ------
Group Revenue 112,016 100% 86,051 100%
--------------------- -------- ------ -------- ------
In the financial year under review, adjusted operating margins
increased by GBP2.1 million in absolute terms to GBP16.4 million
(2016: GBP14.3 million). At a percentage margin level, adjusted
operating margins were 14.6%, compared to 16.6% in 2016, as a
result of foreign exchange and planned investment in people and
systems to support the growth.
In our Industrial segment, revenue grew by 18.4% from GBP54.3
million last year to GBP64.3 million this year. Revenue in our
Aerospace & Defence business increased by 74.5% from GBP20.0m
to GBP34.9m. Excluding the acquisition in the year, A&D revenue
increased by 48.0%. Life Sciences revenue increased by 21.1% whilst
sales in our smallest segment, Scientific Research, reduced by
14.2%.
GROUP EARNINGS PERFORMANCE
------------------------------ -------- -------- ----------
All amounts in Adjusted Reported
GBP'000
--------------------
Year ended 30 2017 2016 2017 2016
September
-------------------- -------- -------- -------- --------
Operating profit 16,406 14,258 13,278 10,184
-------------------- -------- -------- -------- --------
Net finance costs (295) (88) (676) (88)
-------------------- -------- -------- -------- --------
Profit before
taxation 16,111 14,170 12,602 10,096
-------------------- -------- -------- -------- --------
Taxation (4,059) (3,865) (3,710) (3,048)
-------------------- -------- -------- -------- --------
Profit for the
year 12,052 10,305 8,892 7,048
Basic earnings
per share (p) 49.4p 42.5p 36.4p 29.1p
-------------------- -------- -------- -------- --------
The Group adjusted profit before tax amounted to GBP16.1 million
(2016: GBP14.2 million) and represented a net margin of 14.4%.
Statutory profit before tax was GBP12.6 million compared with
GBP10.1 million last year.
The adjusted effective rate of tax was 25.2% (2016: 27.3%), the
reduction caused by a number of factors including a lower
applicable corporate tax rate in the UK, tax deductions being
available on intangibles on recent US acquisitions and certain one
off effects in the prior year. The effective rate of tax of 29.4%
(2016: 30.2%) was higher than the adjusted effective rate because
of the effect of the interest charge on deferred consideration
which is not subject to tax, and the restructuring and acquisition
costs being incurred in the UK which has a lower tax rate than the
overall rate for the Group. The rate reflects a combination of the
varying tax rates applicable throughout the countries in which the
Group operates, principally the UK and the USA.
The effective rate of tax should benefit in the future from
further reductions in the UK tax rate, although the proportion of
profit generated in the USA, where tax rates are higher, will
affect this.
Adjusted earnings per share (EPS) increased from 42.5p to 49.4p.
Reported basic EPS was 36.4p compared with 29.1p last year.
RECONCILIATION OF ADJUSTED PERFORMANCE MEASURES
Operating Net finance Taxation Earnings
Profit costs per share
--------------------- ------------------ ------------------ ------------------ ----------------
Year ended 2017 2016 2017 2016 2017 2016 2017 2016
30 September GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 pence pence
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Reported 13,278 10,184 (676) (88) (3,710) (3,048) 36.4p 29.1p
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Amortisation
of acquired
intangible
assets 2,202 1,263 - - (168) (333) 8.3p 3.8p
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Gain on bargain
purchase - (578) - - - - - (2.4p)
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Impairment
of goodwill 615 771 - - - - 2.5p 3.2p
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Release of
accrued contingent
consideration (615) - - - - - (2.5p) -
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Provision
for regulatory
compliance
risk - 500 - - - - - 2.1p
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Restructuring
costs 536 1,652 - - (105) (391) 1.8p 5.2p
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Transaction
fees 390 466 - - (76) (93) 1.3p 1.5p
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Interest
on deferred
consideration - - 381 - - - 1.6p -
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
Adjusted 16,406 14,258 (295) (88) (4,059) (3,865) 49.4p 42.5p
--------------------- -------- -------- -------- -------- -------- -------- ------- -------
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, costs associated
with restructuring activities, interest on deferred consideration,
impairment of goodwill and release of accrued contingent
consideration. In 2016 they also included the provision for
regulatory risk compliance and the gain on bargain purchase of
Alfalight.
SEGMENTAL ANALYSIS
Industrial
Our Industrial business grew strongly during the year, with
revenues of GBP64.3 million, compared with GBP54.3 million last
year. This growth was largely driven by a combination of our
industrial laser and telecommunications businesses. Revenue from
the Group's industrial laser business segment grew strongly, driven
by high demand for precision lasers used in microelectronic
manufacturing. Demand for the traditional Q Switch grew in 2017 and
represented 14.0% of total group revenue (2016: 10.2%).
Adjusted operating profit for the Industrial sector as a whole
was 10.1% higher at GBP11.8 million, compared with GBP10.8 million
last year.
Aerospace & Defence (A&D)
A&D revenue was GBP34.9 million, up 74.5% on last year,
benefitting from the full year effect of the two acquisitions in
FY16 and the acquisition of StingRay in FY17. These results
reinforce our belief that this sector represents a growth
opportunity for Gooch & Housego, as optical technologies
continue to be increasingly deployed in this market. Operating
margins in this sector increased reflecting the higher volume and
strong margins achieved by StingRay in particular.
Life Sciences
In 2017 Life Sciences revenue was up by 21.1% compared to the
prior year. The majority of this growth was driven by a strong
performance in our Optical Coherence Tomography ("OCT") market
driven largely by our customers' development cycles. Despite this,
adjusted operating margins in this sector were down on the previous
year due to the competitive nature of the OCT market and the
investment in this relatively small sector.
Scientific Research
Our activities in the Scientific Research market are dominated
by a small number of large, long-term programmes.
This market was down in 2017 due to demand phasing.
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 a record 22 product releases in
2017, together with 7 new patents granted.
Expenditure on R&D in the year to 30 September 2017
increased by 16.2% from GBP7.4 million to GBP8.6 million. A
proportion of this increase was funded through UK and European
grant funding. R&D expenditure represented 7.7% of revenue
(2016: 8.6%). The Group capitalised GBP0.7m (2016: GBP0.7 million)
of development expenditure.
OPERATIONS
As reported in our Interim Statement, the Company has committed
to upgrading its Cleveland, Ohio facility. This facility, which
houses G&H's world leading crystal growth capabilities, is a
key contributor to current and future profitability and will
benefit from the modernisation that has been taking place. The
upgrade is substantially complete and we will have invested in the
region of $5 million. The refurbishment will help drive much needed
operational efficiency, provide greater capacity, as well as a more
compelling showcase of our capabilities for customers.
The Company has concluded a legal dispute with the landlord of
its Fremont facility. As a result of this, a Californian court has
awarded G&H in the region of $2 million in damages arising from
the landlord's non-performance in respect of the lease. This will
be accounted for in FY18.
Investment in key skills, lean processes, systems and the latest
capital equipment was accelerated in sites that provide critical
components for precision lasers used in microelectronic
manufacturing, namely Ilminster, Fremont, CA and Torquay.
We have built on the good work done in previous years to further
improve efficiency, customer service and to establish a more
scalable organisational model for future growth. Our ten
manufacturing sites have been organised into three manufacturing
areas. They are based on our sites' areas of technical expertise,
namely Acousto Optic / Electro Optic, Precision Optics and Fibre
Optics. Each manufacturing area has a leader and their role is to
ensure best practice is shared, there is process harmonisation and
optimal allocation of resources.
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.
In February 2017 G&H acquired StingRay Optics LLC, a US
based specialist designer and manufacturer of high performance
optical and opto-mechanical subsystems for demanding defence and
commercial applications.
StingRay was founded in 2004 and has established itself as a
market leading designer, manufacturer and supplier of world class
custom optical assemblies. The business has a proven capability in
providing system level optical products for use in harsh
environments to key US defence customers. StingRay's product range
covers laboratory, ground based, airborne, unmanned aerial vehicles
and space applications.
The acquisition of StingRay is aligned with G&H's strategic
objectives of moving up the value chain and further diversification
into the Aerospace & Defence sector. Potential synergies
include leveraging G&H's greater reach through our global sales
teams and our expertise in manufacturing infrared precision optics
and specialist coatings.
StingRay has performed very well since acquisition, contributing
GBP5.3 million to group revenue and GBP1.6 million in profit before
tax in the year.
As a result of two key customers delaying the delivery of
product from existing orders, Kent Periscopes did not reach its
threshold for the first tranche of its earn-out to be triggered.
Consequently, the provision for a proportion of this payment
(approximately GBP0.6m), made under IFRS accounting rules, has been
released to the income statement for the current year. Whilst the
delay in delivery of these contracts has affected the anticipated
results of Kent Periscopes for the earn-out period, the outlook for
the business remains positive. The order book for the next two
years remains very strong at approximately GBP12.5 million. Whilst
the core value of this business remains strong, as part of its
bi-annual review of the carrying value of goodwill, the Board has
taken the decision to impair the goodwill of the Kent Periscopes
acquisition to the sum of GBP0.6 million.
NON TRADING ITEMS
Restructuring costs of GBP0.5 million (2016: GBP1.7 million)
related to the re-location of our Palo Alto facility to Fremont and
to restructuring costs arising from the efficiency savings the
business has put in place.
BALANCE SHEET
The Group's total equity at the end of the year was GBP98.1
million, an increase of GBP8.0 million over the prior year. This
increase comprised GBP6.6m from retained earnings, GBP2.0m from
issues of share capital and a net reduction of GBP0.6m from foreign
exchange and other movements.
Additions to property, plant and equipment totalled GBP5.8m
(excluding acquisitions). The main additions related to investment
in plant and machinery, the expansion of our Torquay facility, and
the refurbishment of our Cleveland facility.
Working capital was 19.2% of revenue in the current year
compared to 24.5% in 2016. This metric has benefitted from the year
end GBP:USD exchange rate being higher than the average for the
year, but also reflects management efforts to reduce working
capital as a percentage of sales.
Inventory at the year end was GBP21.1 million, an increase of
GBP2.1 million over the prior year. Excluding the impact of
currency and the inventory attributable to the acquisition, the
underlying inventory increased by GBP1.6m, or 8.5%, in the year.
This increase is reflective of the increased activity in the
year.
Trade receivables were unchanged at GBP20.5m. The effect of a
strong shipment profile towards the end of the year and the
acquisition of StingRay were largely offset by movements in the
dollar exchange rate.
Cash balances at 30 September 2017 were GBP26.4 million,
compared with GBP23.2 million at 30 September 2016. Net cash flows
from operating activities totalled GBP17.6 million, compared with
GBP12.6 million last year, reflecting a cash generated from
operations to adjusted operating profit rate of 119% (2016: 96%).
During the year the business increased its net cash position from
GBP11.7m to GBP14.9 million, despite investing GBP5.7m in the
acquisition of StingRay and GBP5.8m in property, plant and
equipment.
MOVEMENT IN NET CASH
All amounts in GBPm Gross Gross Net
Cash Debt Cash
----------------------------- ------ ------- ------
At 1 October 2016 23.2 (11.5) 11.7
Operating cash flows 19.8 - 19.8
Debt repayment (net of
drawdown) 0.4 (0.4) -
Acquisitions (5.7) - (5.7)
Net capital expenditure (6.4) - (6.4)
Working capital (0.3) - (0.3)
Interest, tax and dividends (4.5) - (4.5)
Exchange movement (0.1) 0.4 0.3
----------------------------- ------ ------- ------
At 30 September 2017 26.4 (11.5) 14.9
----------------------------- ------ ------- ------
ORDER BOOK
As at 30 September 2017, the Group order book stood at GBP72.1
million, compared to GBP52.8 million at the end of the 2016
financial year, a 36.5% increase. The acquisition of StingRay added
GBP3.5 million to the order book. On a constant currency basis the
order book was 39.1% higher. The book to bill ratio for the
business as a whole was 1.08 (six month rolling average) as at 30
September 2017 (2016: 1.01).
STAFF
The Group workforce increased from 755 at 30 September 2016 to
823 at the end of September 2017, an increase of 68. This is a net
position and therefore reflects both the work the business has done
in driving efficiency improvements and the additional headcount
that has come from the recent acquisitions and investment in
capacity.
DIVIDS
The Directors propose a final dividend of 6.5p per share making
a total dividend per share for the year of 10.2p (2016: 9.0p), an
increase of 13.3%. The final dividend, if approved, will be payable
on 2 March 2018 to shareholders on the Company's share register as
at the close of business on 26 January 2018.
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.
In striving to achieve these strategic objectives, the main
financial performance measures monitored by the Board are:
Total revenue growth 2017 2016 2015
---------------------- ----- ----- -----
At actual exchange
rates 30% 9% 12%
---------------------- ----- ----- -----
At constant exchange
rates 19% 3% 8%
---------------------- ----- ----- -----
The Board is focused on driving revenue growth by investing both
organically and through acquisitions. The Group business has
delivered strong underlying growth.
Target market revenue 2017 2016 2015
----------------------- ----- ----- -----
Aerospace & Defence
(GBPm) 34.9 20.0 19.8
----------------------- ----- ----- -----
Life Sciences (GBPm) 9.6 7.9 9.0
----------------------- ----- ----- -----
The Group targeted 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 increase in A&D revenue includes the full year
effect of last year's acquisitions, combined with the acquisition
of StingRay in FY17.
Net cash analysis 2017 2016 2015
------------------- ----- ----- -----
Net cash (GBPm) 14.9 11.7 17.3
------------------- ----- ----- -----
In order to balance business risk with the investment needs of
the Company, management closely monitors and manages net cash. This
year, following the acquisition of StingRay and the investment in
capital assets the net cash position increased from GBP11.7 million
to GBP14.9m.
Earnings per share 2017 2016 2015
(EPS)
---------------------- ------ ------ ------
Adjusted diluted EPS
(pence) 48.5p 41.7p 38.9p
---------------------- ------ ------ ------
As a result of a strong trading performance, the business has
been able to deliver growth in adjusted diluted EPS of 16.3%, from
41.7p to 48.5p in 2017.
The revenue, cash and earnings per share targets for the year
were met.
Group Income Statement
For the year ended 30 September 2017 (unaudited)
2017 2016
Note GBP000 GBP000
--------- ---------
Revenue 2 112,016 86,051
Cost of revenue (65,937) (53,752)
--------- ---------
Gross profit 46,079 32,299
Research and Development (8,119) (6,697)
Sales and Marketing (9,459) (6,469)
Administration (16,937) (11,425)
Other income and expenses 1,714 2,476
--------- ---------
Operating profit 2 13,278 10,184
Finance income 27 39
Finance costs (703) (127)
--------- ---------
Profit before income tax
expense 12,602 10,096
Income tax expense 3 (3,710) (3,048)
--------- ---------
Profit for the year 8,892 7,048
--------- ---------
Basic earnings per share 4 36.4p 29.1p
Diluted earnings per share 4 35.8p 28.6p
--------- ---------
Reconciliation of profit before tax to adjusted profit before
tax:
2017 2016
GBP000 GBP000
------- -------
Profit before tax 12,602 10,096
Amortisation of acquired
intangible assets 2,202 1,263
Gain on bargain purchase - (578)
Release of accrued contingent (615) -
consideration
Impairment of goodwill 615 771
Provision for regulatory
compliance risk - 500
Restructuring costs 536 1,652
Transaction fees 390 466
Interest on discounted 381 -
deferred consideration
------- -------
Adjusted profit before
tax 16,111 14,170
------- -------
Group Balance Sheet
For the year ended 30 September 2017 (unaudited)
2017 2016
GBP000 GBP000
--------- ---------
Non-current assets
Property, plant and equipment 33,890 32,384
Intangible assets 40,250 29,916
Deferred income tax assets 2,703 2,674
--------- ---------
76,843 64,974
Current assets
Inventories 21,078 18,973
Income tax assets 267 394
Trade and other receivables 24,723 22,679
Cash and cash equivalents 26,425 23,167
72,493 65,213
Current liabilities
Trade and other payables (23,758) (19,624)
Borrowings (6) (4)
Income tax liabilities (579) (891)
Provision for other liabilities
and charges (888) (940)
Deferred consideration (4,286) -
--------- ---------
(29,517) (21,459)
Net current assets 42,976 43,754
Non-current liabilities
Borrowings (11,492) (11,494)
Deferred income tax liabilities (5,938) (4,806)
Deferred consideration (4,253) (2,256)
(21,683) (18,556)
Net assets 98,136 90,172
--------- ---------
Shareholders' equity
Capital and reserves
attributable to equity
shareholders
Called up share capital 4,903 4,852
Share premium account 15,530 15,530
Merger reserve 4,640 2,671
Cumulative translation
reserve 5,574 6,984
Retained earnings 67,489 60,135
--------- ---------
Total equity 98,136 90,172
--------- ---------
Group Statement of Changes in Shareholders' Equity
For the year ended 30 September 2017 (unaudited)
Note Called Share Cumulative
up share premium Retained translation Total
capital account Merger earnings reserves equity
GBP000 GBP000 reserve GBP000 GBP'000 GBP000
GBP000
----------- ---------- ---------- ----------- -------------- ---------
At 1 October
2015 4,818 15,530 2,671 54,318 1,030 78,367
Profit for the
financial year - - - 7,048 - 7,048
Other comprehensive
income for the
year - - - - 5,954 5,954
----------- ---------- ---------- ----------- -------------- ---------
Total comprehensive
income for the
year - - - 7,048 5,954 13,002
----------- ---------- ---------- ----------- -------------- ---------
Dividends 5 - - - (2,055) - (2,055)
Shares issued 34 - - (34) - -
Fair value of
employee services - - - 638 - 638
Tax credit relating
to share option
schemes - - - 220 - 220
Total contributions
by and distributions
to owners of
the parent
recognised
directly in equity 34 - - (1,231) - (1,197)
At 30 September
2016 4,852 15,530 2,671 60,135 6,984 90,172
At 1 October
2016 4,852 15,530 2,671 60,135 6,984 90,172
Profit for the
financial year - - - 8,892 - 8,892
Other comprehensive
expense for the
year - - - - (1,410) (1,410)
----------- ---------- ---------- ----------- -------------- ---------
Total comprehensive
income / (expense)
for the year - - - 8,892 (1,410) 7,482
----------- ---------- ---------- ----------- -------------- ---------
Dividends 5 - - - (2,289) - (2,289)
Shares issued 51 - 1,969 (15) - 2,005
Fair value of
employee services - - - 587 - 587
Tax credit relating
to share option
schemes - - - 179 - 179
Total contributions
by and distributions
to owners of
the parent
recognised
directly in equity 51 - 1,969 (1,538) - 482
At 30 September
2017 4,903 15,530 4,640 67,489 5,574 98,136
----------- ---------- ---------- ----------- -------------- ---------
Group Statement of Comprehensive Income
For the year ended 30 September 2017 (unaudited)
2017 2016
GBP000 GBP000
-------- -------
Profit for the year 8,892 7,048
Other comprehensive (expense)
/ income - items that may
be reclassified subsequently
to profit or loss
Currency translation differences (1,410) 5,954
Other comprehensive (expense)
/ income for the year net
of tax (1,410) 5,954
Total comprehensive income
for the year attributable
to the shareholders of Gooch
& Housego PLC 7,482 13,002
-------- -------
Group Cash Flow Statement
For the year ended 30 September 2017 (unaudited)
Note 2017 2016
GBP000 GBP000
--------- ---------
Cash flows from operating
activities
Cash generated from operations 6 19,526 13,897
Income tax paid (1,957) (1,324)
--------- ---------
Net cash generated from
operating activities 17,569 12,573
--------- ---------
Cash flows from investing
activities
Acquisition of subsidiaries,
net of cash acquired (5,658) (5,687)
Purchase of property, plant
and equipment (5,799) (9,710)
Sale of property, plant 29 -
and equipment
Purchase of intangible
assets (604) (629)
Interest received 27 39
Interest paid (326) (111)
--------- ---------
Net cash used in investing
activities (12,331) (16,098)
--------- ---------
Cash flows from financing
activities
Drawdown of borrowings 5,918 5,426
Repayment of borrowings (5,523) (39)
Dividends paid to ordinary
shareholders (2,289) (2,055)
Net cash (used in) / generated
from financing activities (1,894) 3,332
--------- ---------
Net increase / (decrease)
in cash 3,344 (193)
Cash at beginning of the
year 23,167 22,556
Exchange (losses) / gains
on cash (86) 804
--------- ---------
Cash at the end of the
year 26,425 23,167
--------- ---------
Analysis of net cash
At 1 Exchange At 30
Oct 2016 Cash movement Sep
flow 2017
GBP000 GBP000 GBP000 GBP000
---------- ------- ---------- ---------
Cash at bank
and in hand 23,167 3,344 (86) 26,425
Debt due after
1 year (11,474) (402) 396 (11,480)
Finance leases (25) 7 - (18)
---------- ------- ---------- ---------
Net cash 11,668 2,949 310 14,927
---------- ------- ---------- ---------
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 2017.
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 2016 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 2016,
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
28 November 2017. 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 Life Scientific
& Defence Sciences Industrial Research Corporate Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
For year ended
30 September
2017
-------------------------- ----------- ----------
Revenue
Total revenue 34,860 9,570 71,336 3,325 - 119,091
Inter and intra-division - - (7,075) - - (7,075)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
External revenue 34,860 9,570 64,261 3,325 - 112,016
Divisional expenses (29,880) (8,165) (50,417) (2,821) (1,389) (92,672)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
EBITDA(1) 4,980 1,405 13,844 504 (1,389) 19,344
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
EBITDA % 14.3% 14.7% 21.5% 15.2% - 17.3%
Depreciation
and amortisation (715) (388) (2,000) (136) (625) (3,864)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Operating profit
before amortisation
of acquired
intangible assets,
goodwill impairment
and release
of contingent
consideration 4,265 1,017 11,844 368 (2,014) 15,480
Amortisation
of acquired
intangible assets,
goodwill impairment
and release
of contingent
consideration - - - - (2,202) (2,202)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Operating profit 4,265 1,017 11,844 368 (4,216) 13,278
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Operating profit
margin % 12.2% 10.6% 18.4% 11.1% - 11.9%
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Add back non-recurring
items and amortisation
of acquired
intangibles,
goodwill impairment
and release
of contingent
consideration - - - - 3,128 3,128
Adjusted operating
profit 4,265 1,017 11,844 368 (1,088) 16,406
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Adjusted profit
margin % 12.2% 10.6% 18.4% 11.1% - 14.6%
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Finance costs - - - - (676) (676)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Profit before
income tax expense 4,265 1,017 11,844 368 (4,892) 12,602
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Aerospace Life Scientific
& Defence Sciences Industrial Research Corporate Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
For year ended
30 September
2016
-------------------------- ----------- ----------
Revenue
Total revenue 19,977 7,904 59,875 3,874 - 91,630
Inter and intra-division - - (5,579) - - (5,579)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
External revenue 19,977 7,904 54,296 3,874 - 86,051
Divisional expenses (18,055) (6,017) (42,719) (2,881) (1,342) (71,014)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
EBITDA(1) 1,922 1,887 11,577 993 (1,342) 15,037
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
EBITDA % 9.6% 23.9% 21.3% 25.6% - 17.5%
Depreciation
and amortisation (545) (335) (1,776) (310) (431) (3,397)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Operating profit
before amortisation
of acquired
intangible assets 1,377 1,552 9,801 683 (1,773) 11,640
Amortisation
of acquired
intangible assets,
gain on bargain
purchase and
goodwill impairment - - - - (1,456) (1,456)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Operating profit 1,377 1,552 9,801 683 (3,229) 10,184
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Operating profit
margin % 6.9% 19.6% 18.1% 17.6% - 11.8%
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Add back amortisation
of intangibles,
impairment of
goodwill, gain
on bargain purchase
and non-recurring
items 108 53 960 37 2,916 4,074
Adjusted operating
profit 1,485 1,605 10,761 720 (313) 14,258
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Adjusted profit
margin % 7.4% 20.3% 19.8% 18.6% - 16.6%
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Finance costs - - - - (88) (88)
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
Profit before
income tax expense 1,377 1,552 9,801 683 (3,317) 10,096
-------------------------- ----------- ---------- ----------- ----------- ---------- ---------
(1)EBITDA = Earnings before interest, tax, depreciation and
amortisation
Management have added back the amortisation of intangibles, gain
on bargain purchase, impairment of goodwill, restructuring costs,
provision for export compliance risk and transaction fees 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)
Management have added back the restructuring costs 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.
All of the amounts recorded are in respect of continuing
operations.
Analysis of net assets by location:
2017 2017 2017 2016 2016 2016
Assets Liabilities Net Assets Assets Liabilities Net Assets
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------- ------------ ----------- -------- ------------ -----------
United Kingdom 75,104 (32,612) 42,492 70,336 (30,580) 39,756
USA 73,641 (18,477) 55,164 59,077 (9,112) 49,965
Continental
Europe 545 (98) 447 726 (318) 408
Asia Pacific 46 (13) 33 48 (5) 43
-------- ------------ ----------- -------- ------------ -----------
149,336 (51,200) 98,136 130,187 (40,015) 90,172
-------- ------------ ----------- -------- ------------ -----------
Analysis of revenue by destination:
2017 2016
GBP000 GBP000
-------- --------
United Kingdom 18,624 17,247
North America 45,485 34,918
Continental
Europe 24,233 19,189
Asia Pacific
and Other 23,674 14,697
Total revenue 112,016 86,051
-------- --------
3. Income tax expense
Analysis of tax charge in the year
2017 2016
GBP000 GBP000
Current taxation
UK Corporation tax 1,318 1,760
Overseas tax 2,165 887
Adjustments in respect
of prior year tax charge (1,315) (77)
-------- --------
Total current tax 2,168 2,570
-------- --------
Deferred tax
Origination and reversal
of temporary differences 227 218
Adjustments in respect
of prior year deferred
tax 1,315 290
Impact of change in the
UK tax rate - (30)
-------- --------
Total deferred tax 1,542 478
Income tax expense per
income statement 3,710 3,048
-------- --------
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:
2017 2016
Number of shares used for
basic earnings per share 24,457,701 24,248,471
Dilutive shares 412,901 436,112
Number of shares used for
dilutive earnings per share 24,870,602 24,684,583
----------- -----------
A reconciliation of the earnings used in the earnings per share
calculation is set out below:
2017 2016
pence
pence per
GBP000 per share GBP000 share
------- ----------- ------- -------
Basic earnings per
share 8,892 36.4p 7,048 29.1p
Amortisation of acquired
intangible assets (net
of tax) 2,034 8.3p 930 3.8p
Goodwill impairment 615 2.5p 771 3.2p
Release of accrued
contingent consideration (615) (2.5p) - -
Gain on bargain purchase
of Alfalight - - (578) (2.4p)
Provision for regulatory
compliance - - 500 2.1p
Restructuring costs
(net of tax) 431 1.8p 1,261 5.2p
Transaction fees (net
of tax) 314 1.3p 373 1.5p
Interest on deferred
consideration 381 1.6p - -
------- ----------- ------- -------
Total adjustments net
of income tax expense 3,160 13.0p 3,257 13.4p
------- ----------- ------- -------
Adjusted basic earnings
per share 12,052 49.4p 10,305 42.5p
------- ----------- ------- -------
Basic diluted earnings
per share 8,892 35.8p 7,048 28.6p
------- ----------- ------- -------
Adjusted diluted earnings
per share 12,052 48.5p 10,305 41.7p
------- ----------- ------- -------
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
2017 2016
GBP000 GBP000
-------- --------
Final 2016 dividend paid
in 2017: 5.7p per share
(Final 2015 dividend paid
in 2016: 5.2p per share) 1,383 1,254
2017 Interim dividend paid:
3.7p per share (2016: 3.3p) 906 801
-------- --------
2,289 2,055
-------- --------
The Directors propose a final dividend of 6.5p per share making
the total dividend paid and proposed in respect of the 2017
financial year 10.2p (2016: 9.0p).
6. Cash generated from operating activities
Reconciliation of cash
generated from operations
2017 2016
GBP000 GBP000
-------- --------
Profit before income tax 12,602 10,096
Adjustments for:
- Amortisation of acquired
intangible assets 2,202 1,263
- Amortisation of other
intangible assets 199 355
- Gain on bargain purchase
of Alfalight - (578)
- Impairment of goodwill 615 771
- Release of accrued contingent (615) -
consideration
- Depreciation 3,664 3,042
- Share based payment charge 587 638
- Amounts claimed under
the RDEC (370) (270)
- Finance income (27) (39)
- Finance costs 703 127
-------- --------
Total 6,958 5,309
Changes in working capital
- Inventories (1,442) 223
- Trade and other receivables (1,465) (4,436)
- Trade and other payables 2,873 2,705
Total (34) (1,508)
Cash generated from operating
activities 19,526 13,897
-------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGGCUGUPMGMM
(END) Dow Jones Newswires
November 28, 2017 02:00 ET (07:00 GMT)
Gooch & Housego (LSE:GHH)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gooch & Housego (LSE:GHH)
Historical Stock Chart
From Apr 2023 to Apr 2024