TIDMGHH
RNS Number : 3020A
Gooch & Housego PLC
01 June 2021
1 June 2021
GOOCH & HOUSEGO PLC
("G&H", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2021
Sustained recovery in industrial lasers contributes to profit
growth and positive outlook.
Gooch & Housego PLC (AIM: GHH), the specialist manufacturer
of optical components and systems, today announces its interim
results for the six months ended 31 March 2021.
Key Financials
Period ended 31 March H1 2021 H1 2020 Change
Revenue GBP58.5m GBP57.5m 1.8%
--------- --------- -----------
Adjusted profit before
tax* GBP4.9m GBP2.7m 83.7%
--------- --------- -----------
Adjusted basic earnings
per share* 15.7p 8.2p 7.5p
--------- --------- -----------
Net debt excluding IFRS GBP4.7m GBP18.5m GBP(13.8m)
16
--------- --------- -----------
Net debt including IFRS GBP12.1m GBP28.0m GBP(15.9m)
16
--------- --------- -----------
Statutory profit before
tax GBP0.7m GBP1.7m (60.9)%
--------- --------- -----------
Statutory basic earnings
per share 2.1p 4.8p (2.7p)
--------- --------- -----------
Interim dividend per share 4.5p nil 4.5p
--------- --------- -----------
*Adjusted for amortisation of acquired intangible assets and
non-recurring items.
Key points
-- Revenue growth of 1.8% compared with the same period last year, or 4.9% at constant currency.
-- Sustained recovery in industrial lasers, building on the
previously reported growth in semiconductors. Demand for
hi-reliability fibre couplers and A&D remained robust, with the
exception of our limited number of commercial aerospace customers.
Life sciences has shown strong growth, benefiting from continued
growth in medical diagnostics and the return to growth of medical
lasers for elective surgery.
-- Travel restrictions and self isolating have presented
delivery hurdles during the period, but we expect these to ease as
the vaccine roll out in the UK and USA progresses.
-- Restructuring programmes are on track to deliver the expected
full year profit benefit (GBP1.75m) in FY2022.
-- Order book at the half year end was GBP92.8m (31 March 2020:
GBP91.7m), an increase of 1.3%, or 7.9% at constant currency. H1
order intake 1.12 times revenue.
-- Adjusted profit before tax of GBP4.9m, up 83.7% from the
prior year, as a result of improving volumes and the benefits of
the Group's site consolidation programmes.
-- Net cash inflow from operating activities totalled GBP9.2m (2020: GBP7.5m).
-- Interim dividend reinstated at 4.5p per share (2020: nil)
reflecting trading recovery and positive outlook.
-- Full year expectations unchanged despite currency headwinds.
Longer term prospects remain strong.
Mark Webster, Chief Executive Officer of Gooch & Housego,
commented:
"Trading in the first half of the financial year reflected
generally improving end markets, in particular industrial lasers.
The roll out of new technologies such as 5G and greater use of new
materials in microelectronic manufacturing has fuelled demand,
building on the sustained growth in semiconductors.
"Our manufacturing sites all remain fully open and are compliant
with all the relevant health and safety regulations. Travel
restrictions and self isolating have presented delivery hurdles
during the period, but we expect these issues to ease as the
vaccine roll out progresses in the UK and USA.
"The Group's restructuring programmes are progressing well and
are expected to be substantially complete by the end of the
financial year. They have made a contribution to the improved
profit performance in the period and are on track to deliver the
expected full year benefit in FY 2022.
"The challenge of the pandemic has validated our long term
strategic goals of diversification and moving up the value chain.
We intend to vigorously pursue these goals through internal
investment in our target sectors and where appropriate,
acquisitions."
Analyst meeting
A conference call for analysts will be held at 9.30am this
morning, 1 June 2021; analysts who require dial-in details, please
contact Buchanan at G&H@buchanan.uk.com
For further information please contact:
Gooch & Housego PLC Mark Webster / Chris Jewell 01460 256 440
Mark Court / Sophie Wills
Buchanan / Charlotte Slater 020 7466 5000
Investec Bank plc (Nomad Chris Baird / Patrick Robb
& Broker) / David Anderson 020 7597 5970
Notes to editors
1 Gooch & Housego is a photonics technology business with
operations in the USA, Europe and China. A world leader in its
field, the company researches, designs, engineers and manufactures
advanced photonic systems, components and instrumentation for
applications in the Aerospace and Defence, Industrial and Telecom,
Life Sciences and Scientific Research sectors. World leading
design, development and manufacturing expertise is offered across a
broad range of complementary technologies. It is headquartered in
Ilminster, Somerset, UK.
2 This announcement contains certain forward-looking statements
that are based on management's current expectations or beliefs as
well as assumptions about future events. These are subject to risk
factors associated with, amongst other things, the economic and
business circumstances occurring from time to time in the countries
and sectors in which G&H operates. It is believed that the
expectations reflected in these statements are reasonable but they
may be affected by a wide range of variables which could cause
actual results, and G&H's plans and objectives, to differ
materially from those currently anticipated or implied in the
forward-looking statements. Investors should not place undue
reliance on any such statements. Nothing in this announcement
should be construed as a profit forecast.
Operating and Financial Review
Performance Overview
In the first half of the financial year we have seen a good
recovery in our industrial laser business. Demand for
hi-reliability fibre couplers and our life sciences products and
services has remained strong. Order intake from our defence markets
has been robust, although revenues in the reporting period were
affected by phasing of deliveries. The demand from our limited
number of commercial aerospace customers was affected by current
end-market conditions.
In the first few months of the reporting period Asian markets
led the recovery in industrial lasers, but as the reporting period
progressed we saw demand from our US and European markets increase
as they started to emerge from the pandemic downturn. The roll out
of new technologies such as 5G, along with greater use of new
materials in microelectronic manufacturing, has fuelled demand,
building on the previously reported growth in semiconductors.
In the UK we have secured some important new A&D programme
positions for our UK Precision Optic (PO) hub, adding to the
existing strong US defence order book.
Medical diagnostics has continued to demonstrate good growth and
we are now seeing improving levels of demand for our specialist
medical laser products, which were adversely affected by the
pandemic induced reduction in elective procedures in FY 2020.
Order intake for the six month period was 112% of revenue,
compared with 100% of revenue for the second half of FY 2020,
reflecting further recovery in the markets for our products and
services. At 31 March 2021 our order book was at GBP92.8m (31 March
2020: GBP91.7m), an increase of 1.3%, or 7.9% at constant currency,
compared with the same time last year.
We are proud of the way our staff have responded to the
challenge of the pandemic. All of our sites remained fully open
during the period and are operating in line with all relevant
health and safety rules and regulations. Nevertheless, travel
restrictions and social distancing measures have presented hurdles
that we have worked hard to overcome. We anticipate that these
issues will ease in the coming months as the vaccine roll out
continues to progress in the UK and USA.
The reinstatement of the dividend reflects the recovery of the
Group's trading position following the pandemic and the Board's
confidence in a positive outlook for the business.
Revenue
Six months ended 31 March 2021 2020
--------------- ---------------
GBP'000 % GBP'000 %
--------------------------- -------- ----- -------- -----
Industrial 26,570 45% 26,549 46%
Aerospace & Defence 18,440 32% 18,666 33%
--------------------------- -------- ----- -------- -----
Life Sciences 13,450 23% 12,239 21%
--------------------------- -------- ----- -------- -----
Group Revenue 58,460 100% 57,454 100%
--------------------------- -------- ----- -------- -----
Products and Markets - Industrial
Gooch & Housego's principal industrial markets are
industrial lasers, telecommunications, sensing and semiconductor
manufacturing. Industrial lasers are used in a diverse range of
precision material processing applications ranging from
microelectronics and semiconductors to automotive
manufacturing.
Overall, sales of products into our industrial markets in the
six months to 31 March 2021 were at the same level as the
equivalent period last year, but when measured on a constant
currency basis grew by 3.6%. We saw strong growth in our industrial
laser and semiconductor revenues. Our Asian markets led the
recovery in industrial lasers and in the latter stages of the
reporting period demand from our US and European customers also
started to increase as these markets recovered from the effects of
the pandemic. The roll out of new technologies such as 5G, along
with greater use of new materials in microelectronic manufacturing,
are fuelling demand.
This trend more than offset programme driven reductions in
revenues in our sensing markets. Our sensing modules generally form
part of large infrastructure projects and there were some end
customer programme delays that impacted on our revenues in this
subsector during the period.
Volumes to our telecoms market also declined marginally compared
with the record demand levels seen in the first half of FY2020 due
to the US/ China trade dispute disrupting supply of telecom product
from one of our US facilities to China. Demand for our hi-rel fibre
couplers used in undersea cable networks remained strong.
Products and Markets - Aerospace & Defence (A&D)
Product quality, reliability and performance are paramount in
this sector, playing to G&H's strengths, along with our
commitment to provide value. We have solid, well established
positions in target designation and range finding, ring laser and
fibre optic gyroscope navigational systems, infrared and RF
countermeasures, periscopes and sighting systems, opto-mechanical
subsystems used in unmanned aerial vehicles (UAVs) and space
satellite communications.
The A&D market for G&H is characterised by high-value,
long-term programmes involving the main US and European defence
contractors. This market represents an attractive growth area for
G&H as more applications seek photonic solutions in a sector
with high regulatory and compliance hurdles and challenging
expectations of its equipment.
A&D revenue declined by 1.2% during the first six months of
FY2021, compared with the equivalent period last year, or had
growth of 2.6% when measured at constant currency. G&H's US
defence order book remains strong and our Boston, MA facility
transitioned two significant programmes from development to the
volume production phase. We were able to secure important new
A&D business for our UK Precision Optic (PO) hub. This was
offset by order book timing issues in some UAV and armoured vehicle
programmes and a drop in volume from our commercial aerospace
business. Second half performance in UAVs and armoured vehicles is
expected to show good improvement, though as previously announced
we do not expect a recovery in the commercial aerospace market
until FY2023.
Overall we expect a stronger second half and A&D remains an
area of long term growth potential for G&H.
Products and Markets - Life Sciences
G&H's three principal Life Sciences revenue streams are
derived from diagnostics applications (the design, development and
manufacturing of diagnostic systems and fibre-optic modules based
around our optical coherence tomography (OCT) technology), surgery
/ treatments (electro-optics and acousto-optics for medical lasers)
and biomedical research (acousto-optics for microscopy
applications).
Our Life Sciences / Biophotonics revenue grew by 9.9% in the six
months to 31 March 2021, compared with the equivalent period last
year. When measured at constant currency this represents growth of
11.3%. Medical diagnostic demand remained at the high levels seen
in the second half of FY2020. The continued strong performance of a
product designed to improve respiratory function as part of
ventilator system has been a key factor.
OCT systems and components showed good growth during the period.
Demand for our specialist medical laser products, which was
adversely affected by the pandemic induced reduction in elective
procedures during FY 2020, has started to demonstrate a marked
improvement in performance. Overall these two sub-sectors were up
12% in the first half compared with same period last year, on a
constant currency basis.
Strategy
G&H's strategy is built around the twin pillars of
diversification and moving up the value chain. In order to ensure
its strategic goals are met, management actively looks to invest in
R&D, acquisitions and strategic partnerships.
R&D: In the first six months of the current financial year,
G&H invested GBP3.9m in targeted research & development.
Our main target areas are the next generation of precision lasers
and laser systems, optical sensing for harsh environments, OCT
medical diagnostics, laser surgery, space satellite communications,
opto- mechanical systems for UAVs and armoured vehicles and direct
energy systems. In the period the following products made notable
progress: new key components for CO2 lasers applicable to
semiconductor fabrication, high speed lasers to enable RF
communication over fibre and new fibre sensing sub-systems for
security and wind farms. Our US Precision Optic engineering team
are well advanced in developing new motorised lens systems for
short/longwave infrared applications. During H1 our Torquay R&D
team completed important milestones on a space photonics programme
which is expected to open the way to new revenue streams from
photonics modules used in space communications.
Our income statement charge represented 6.7% of revenue, a
similar level to the same period last year (2020: GBP3.8m),
demonstrating G&H's continued commitment to investing in
targeted R&D programmes. Our focused approach to R&D
investment continues to deliver a good return with a record GBP8.9m
of revenue in the half year coming from new products (GBP7.6
million: H1 FY2020). We will continue to invest in novel, cutting
edge technologies in order to drive future growth across all of our
target sectors.
Diversification: G&H's strategy is to develop, through our
organic and inorganic investment, a growing presence in markets
that offer the potential for significant growth as a result of
their adoption of photonic technology. The Group is also working to
reduce its exposure to cyclicality in any particular sector. This
strategy is proving successful as we progressively increase our
position in our Life Sciences and A&D markets. The continuing
success of the ITL business is helping to increase the proportion
of Group revenues from the Life Sciences market which now
represents 23% of our business.
Moving up the Value Chain: G&H's strategy remains to move up
the value chain to more complex sub-assemblies and systems through
leveraging its excellence in materials and components, and by
providing photonic design and engineering solutions for our
customers. This is enabling G&H to transition from a components
supplier to a solutions provider. A significant proportion of our
business in the A&D market now comes from the sale of
sub-systems rather than discrete components. The recent investments
made by the Group in both the UK Precision Optics (PO) Centre of
Excellence as well as its newly formed PO Engineering and Design
hub in St Asaph mean that we are able to offer our customers an
expanded range of services in this area. We are now being invited
to tender for more complex, innovative optical assemblies by both
existing and new customers. The proportion of our business derived
from sub-system or system revenues declined to 30.3% in H1 FY2021
from 33.1% in FY2020, but this is expected to increase in the
second half as volumes increase in respect of our sub-system
deliveries to a number of A&D programmes.
Operations
As part of the Company's ongoing performance improvement
programme we are making good progress streamlining our
acousto-optic (AO) and precision optic (PO) manufacturing despite
the operational hurdles that have been raised by the pandemic.
As previously reported, an AO hub is being created at our
Fremont, California site, combining the AO capabilities of our
Fremont and Ilminster facilities. Fremont is becoming the global AO
design authority and lead for the Group's AO technological
roadmap.
In support of this approach the outsourcing of a large
proportion of our AO manufacturing to an established contract
manufacturer in South East Asia is well underway. Our supplier's
employees have been trained at our Ilminster facility and G&H
employees are now supporting the skills transfer programme at our
supplier's facility. We are well progressed in validating the
supplier's production capability and confirming the stringent
product quality levels required are being achieved prior to full
scale production being transferred to the supplier. We expect to
have the transfer of the Group's AO products, currently built in
our Ilminster facility, substantially completed before the end of
the financial year.
Our UK PO centre of excellence based in Ilminster is now
established. We have completed the transfer of the production lines
and associated equipment from our Glenrothes facility, which is now
closed. In January we announced that we will also transfer
production from our facility in St Asaph to our Ilminster site. An
optical systems engineering and design centre is being retained in
St Asaph, housing our world leading optical systems engineers in
order to continue their work developing a pipeline of innovative
new products. The design centre is housed in a newly established
facility which includes laboratory facilities to enable our team to
prototype new designs in support of our customers' programmes.
Finally production at our Baltimore, MD facility will be
transferred to our Boston, MA and Torquay facilities and our site
in Baltimore will close. Many of our Baltimore customers are
already served by our Boston and Torquay facilities. This will
result in two fibre optic hubs, one on each side of the
Atlantic.
We expect these three transfer programmes to be substantially
completed during the second half of FY2021.Total project costs are
expected to be c. GBP7.5m and the one off income statement impact
is being excluded from adjusted profit before tax. Savings from
these projects are expected to give an annualised benefit of c.
GBP1.75m by FY2022.
Principal Risks and Uncertainties
The principal risks and uncertainties to which the Group is
exposed and our approach to managing those risks are unchanged from
those identified on page 30 of our 2020 Annual Report. Whilst the
risk to the business from the pandemic appear to be abating we
remain alert to the impact of potential further disruption arising
from new variants of the virus.
Acquisitions
G&H continues 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 remains focused on moving up the value chain in
each of those markets. Despite the continuing obstacles the
pandemic raises in the execution of acquisitions we have been
active in assessing potential target companies using where possible
our local staff to undertake those assessments. Building upon the
success of the Company's acquisition of the ITL business the Group
has been actively exploring other businesses in the Life Sciences
market. We will also consider acquisitions that would support our
strategic objectives in our Industrial and A&D markets.
Alternative Performance Measures
In the analysis of the Group's financial performance alternative
performance measures are presented to provide readers with
additional information. The interim report includes both statutory
and adjusted non-GAAP financial measures, the latter of which the
Directors believe better reflect the underlying performance of the
business. Items excluded from the adjusted results, together with
their prior period comparatives, are set out below.
Reconciliation of adjusted performance measures
Operating Net finance Taxation Profit after Earnings
profit costs tax per share
------------------------- ---------------- ---------------- ---------------- --------------
Half Year to 31 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
March GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 pence pence
------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------
Reported 1,175 1,861 (505) (148) (132) (519) 538 1,194 2.1 4.8
------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------
Amortisation of
acquired intangible
assets 1,091 1,837 - - (214) (379) 877 1,458 3.5 5.8
Restructuring costs 3,134 207 - - (615) (41) 2,519 166 10.1 0.7
Interest on discounted
deferred consideration - - - 152 - - - 152 - 0.6
Interest and fees
awarded on Fremont
lease litigation - (467) - (778) - 316 - (929) - (3.7)
-------
Adjusted 5,400 3,438 (505) (774) (961) (623) 3,934 2,041 15.7 8.2
------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------
Adjusted profit before tax was GBP4.9m, an increase of 83.7% on
the prior year (H1 2020: GBP2.7 m). This improvement in profit
reflects both the recovery in our end markets, as well as the
reductions to the Group's cost base, in large part as a result of
its site restructuring projects.
Cash Flow and Financing
In the six months ended 31 March 2021, G&H generated cash
from operations of GBP9.7m, compared with GBP7.9m in the same
period of 2020. Inventory has reduced by GBP1.5m a constant
currency basis since the year end. This reduction has been achieved
despite increases in trading volumes thanks to the continued focus
on sales and operations planning. Trade receivables have reduced by
GBP1.7m in the six months to 31 March 2021 due to strong collection
performance.
The final earn-out payment in connection with the acquisition of
the ITL business was made in the period. This amounted to GBP3.25m
and represented that business achieving the maximum level of its
earn out targets.
Capital expenditure on property, plant and equipment was GBP3.3m
in the period (2020: GBP2.8m). Further investments have been made
at our Ilminster facility for advanced coating and polishing
capabilities. New investments were also made in hi-rel fibre
coupler production equipment to allow further diversification of
our supply chain for these products.
Drawings against the Group's revolving credit facility were
reduced by $6.4m during the six month period. At 31 March 2021 the
Group's net debt totalled GBP12.1m (30 September 2020 - GBP14.7m)
including lease liabilities of GBP7.3m (30 September 2020 -
GBP8.2m). Consistent with the Group's borrowing agreements, which
exclude the impact of IFRS 16, Leases, our leverage ratio was 0.3
times at 31 March 2021 (31 March 2020: 0.9 times).
Board Changes
After serving as a Non-Executive Director of the business for
nine years, most recently as the senior independent director, Peter
Bordui stepped down from the Board at the Annual General Meeting.
We would like to thank him for his very considerable contribution
to the business.
We recently announced that Jim Haynes has been appointed to the
Company's Board as a Non-Executive Director with effect from 12
March 2021. Jim brings to the Group extensive experience from his
distinguished executive career in the photonics industry where he
held a range of senior leadership roles in engineering and
operations, most recently Executive Vice President, Operations, at
Oclaro/Lumentum and we are sure he will make a valuable
contribution to the continuing progress of the Group.
Dividends
Given the trading recovery and positive outlook for the Group,
the Board has declared an interim dividend of 4.5 pence per share.
This dividend will be payable to shareholders on the register as at
25 June 2021 on 30 July 2021.
Prospects and outlook
Trading in the first half of the financial year has been
encouraging. We are seeing sustained recovery in our Industrial
laser market while our other end markets, with the exception of
commercial aerospace, continue to provide good levels of demand.
The Group's operational streamlining programmes are progressing
well despite the challenges of the pandemic, are expected to be
substantially complete by the end of the financial year and deliver
the expected full year profit benefit.
Investment in the future growth of the business has continued as
exemplified by the growth in the contribution of new products
during the period. Through a customer focussed approach to the
development of our technology and commercial roadmaps we believe we
are well positioned to support our customers' next generation
products and applications. We have invested in new capital
equipment at our UK precision optics hub in Ilminster enabling us
to offer a broader range of products and capabilities to our
customers and increasing the number of customers' tenders we can
respond to.
In the first half of the year the Group's liquidity improved and
total headroom from existing facilities increased. Our balance
sheet is strong and that means we are in a good position to
continue to invest in our target sectors.
We remain committed to further diversification and moving up the
value chain. G&H will continue to invest in R&D and where
appropriate make acquisitions to meet these strategic
objectives.
Full year expectations are unchanged despite currency headwinds
and longer term prospects for the business remain very strong.
Mark Webster Chris Jewell
Chief Executive Officer Chief Financial Officer
1 June 2021
Group Income Statement
Unaudited interim results for the 6 months ended 31 March
2021
Half Year to 31 March Half Year to 31 March Full Year
2021 (Unaudited) 2020 (Unaudited) to 30 September
2020 (Audited)
Note Underlying Non-underlying Total Underlying Non-underlying Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 4 58,460 - 58,460 57,454 - 57,454 122,095
Cost of revenue (39,575) - (39,575) (40,929) - (40,929) (82,845)
---------- -------------- -------- ---------- -------------- -------- ----------------
Gross profit 18,885 - 18,885 16,525 - 16,525 39,250
Research and
development (3,933) - (3,933) (3,829) - (3,829) (7,924)
Sales and
marketing (3,962) - (3,962) (3,982) - (3,982) (7,440)
Administration (6,169) (4,225) (10,394) (5,933) (1,577) (7,510) (18,634)
Other income
and expenses 579 - 579 657 - 657 1,082
---------- -------------- -------- ---------- -------------- -------- ----------------
Operating profit 4 5,400 (4,225) 1,175 3,438 (1,577) 1,861 6,334
Net finance
costs (505) - (505) (774) 626 (148) (942)
---------- -------------- -------- ---------- -------------- -------- ----------------
Profit before
income tax
expense 4,895 (4,225) 670 2,664 (951) 1,713 5,392
Income tax expense 6 (961) 829 (132) (623) 104 (519) (1,610)
---------- -------------- -------- ---------- -------------- -------- ----------------
Profit for the
year 3,934 (3,396) 538 2,041 (847) 1,194 3,782
---------- -------------- -------- ---------- -------------- -------- ----------------
Basic earnings
per share 7 15.7p (13.6p) 2.1p 8.2p (3.4p) 4.8p 15.1p
Diluted earnings
per share 7 15.6p (13.5p) 2.1p 8.1p (3.4p) 4.7p 15.0p
---------- -------------- -------- ---------- -------------- -------- ----------------
Group Statement of Comprehensive Income
Group Statement of Comprehensive Half Year Half Year Full Year
Income to to to
31 Mar 31 Mar 2020 30 Sep 2020
2021
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- --------------
Profit for the period 538 1,194 3,782
Other comprehensive income /
(expense)
Gains on cash flow hedges 59 - 333
Currency translation differences (2,890) (486) (2,105)
-------------- -------------- --------------
Other comprehensive expense for
the period (2,831) (486) (1,772)
Total comprehensive (expense)
/ income for the period (2,293) 708 2,010
-------------- -------------- --------------
Group Balance Sheet
Unaudited interim results for the 6 months ended 31 March
2021
Group Balance Sheet 31 Mar 2021 31 Mar 2020 30 Sep 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Non-current assets
Property, plant and equipment 38,354 39,835 38,741
Right of use assets 6,064 7,967 6,742
Intangible assets 51,572 57,037 54,624
Deferred tax assets 1,466 1,917 1,432
-------------- -------------- ------------
97,456 106,756 101,539
Current assets
Inventories 28,226 35,208 30,580
Trade and other receivables 23,861 26,802 26,298
Cash and cash equivalents 15,286 14,030 19,734
67,373 76,040 76,612
Current liabilities
Trade and other payables (17,704) (16,277) (17,971)
Borrowings (64) (63) (64)
Lease liabilities (1,647) (1,844) (1,832)
Tax liabilities (282) (1,706) (1,120)
Deferred consideration - (3,098) (3,250)
-------------- -------------- ------------
(19,697) (22,988) (24,237)
Net current assets 47,676 53,052 52,375
-------------- -------------- ------------
Non-current liabilities
Borrowings (19,951) (32,419) (26,211)
Lease liabilities (5,684) (7,690) (6,364)
Provision for other liabilities
and charges (1,705) (1,628) (1,692)
Deferred tax liabilities (6,376) (6,238) (6,294)
(33,716) (47,975) (40,561)
Net assets 111,416 111,833 113,353
-------------- -------------- ------------
Shareholders' equity
Called up share capital 5,008 5,008 5,008
Share premium account 16,000 16,000 16,000
Merger reserve 7,262 7,262 7,262
Cumulative translation reserve 4,785 9,294 7,675
Hedging reserve 392 - 333
Retained earnings 77,969 74,269 77,075
-------------- -------------- ------------
Equity Shareholders' Funds 111,416 111,833 113,353
-------------- -------------- ------------
Statement of Changes in Equity
Unaudited interim results for the 6 months ended 31 March
2021
Statement of Changes Share Share Merger Retained Hedging Cumulative Total
in Equity capital premium reserve earnings reserve translation equity
account account reserve
-------- -------- -------- --------- -------- ------------ -------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2019 5,008 16,000 7,262 74,793 - 9,780 112,843
Profit for the period - - - 1,194 - - 1,194
Other comprehensive
expense for the period - - - - - (486) (486)
-------- -------- -------- --------- -------- ------------ -------
Total comprehensive
income / (expense)
for the period - - - 1,194 - (486) 708
-------- -------- -------- --------- -------- ------------ -------
Dividends - - - (1,803) - - (1,803)
Fair value of employee
services - - - 85 - - 85
At 31 March 2020 (unaudited) 5,008 16,000 7,262 74,269 - 9,294 111,833
-------- -------- -------- --------- -------- ------------ -------
At 1 October 2020 5,008 16,000 7,262 77,075 333 7,675 113,353
Profit for the period - - - 538 - - 538
Other comprehensive
expense for the period - - - - 59 (2,890) (2,831)
-------- -------- -------- --------- -------- ------------ -------
Total comprehensive
income / (expense)
for the period - - - 538 59 (2,890) (2,293)
-------- -------- -------- --------- -------- ------------ -------
Fair value of employee
services - - - 356 - - 356
At 31 March 2021 (unaudited) 5,008 16,000 7,262 77,969 392 4,785 111,416
-------- -------- -------- --------- -------- ------------ -------
Group Cash Flow Statement
Unaudited interim results for the 6 months ended 31 March
2021
Group Cash Flow Statement Half Year Half Year Full Year
to 31 Mar to 31 Mar to 30 Sep
2021 (Unaudited) 2020 (Unaudited) 2020 (Audited)
GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------------
Cash flows from operating activities
Cash generated from operations 9,720 7,885 21,561
Income tax paid (476) (397) (1,119)
------------------ ------------------ ----------------
Net cash generated from operating
activities 9,244 7,488 20,442
------------------ ------------------ ----------------
Cash flows from investing activities
Acquisition of subsidiaries, net
of cash acquired (3,250) (4,750) (4,750)
Purchase of property, plant and equipment (3,340) (2,794) (5,495)
Sale of property, plant and equipment - - 353
Purchase of intangible assets (524) (665) (1,291)
Interest received 1 26 846
Interest paid (465) (662) (1,399)
Legal dispute settlement - - 1,580
------------------ ------------------ ----------------
Net cash used in investing activities (7,578) (8,845) (10,156)
------------------ ------------------ ----------------
Cash flows from financing activities
Drawdown of borrowings - 779 8,346
Repayment of borrowings (4,736) (31) (12,610)
Repayment of lease liabilities (899) (983) (1,583)
Dividends paid to ordinary shareholders - (1,803) (1,803)
Net cash used in financing activities (5,635) (2,038) (7,650)
------------------ ------------------ ----------------
Net decrease in cash (3,969) (3,395) 2,636
Cash at beginning of the period 19,734 17,512 17,512
Exchange losses gains on cash (479) (87) (414)
------------------ ------------------ ----------------
Cash at the end of the period 15,286 14,030 19,734
------------------ ------------------ ----------------
Notes to the Group Cash Flow Statement
Notes to the Group Cash Flow Half Year Half Year Full Year
Statement to 31 Mar to 31 Mar to 30 Sep
2021 (Unaudited) 2020 (Unaudited) 2020 (Audited)
GBP'000 GBP'000 GBP'000
Profit before income tax 670 1,713 5,392
Adjustments for:
- Amortisation of acquired
intangible assets 1,091 1,837 2,676
- Amortisation of other intangible
assets 567 185 984
- Profit on disposal of property,
plant and equipment - - (27)
- Depreciation 3,282 3,270 6,901
- Share based payment obligations 356 85 303
- Amounts claimed under the
RDEC (174) (195) (315)
- Finance income (1) (791) (834)
- Finance costs 506 939 1,776
------------------ ------------------ ----------------
Total adjustments 5,627 5,330 11,464
Changes in working capital
- Inventories 1,528 (2,130) 2,042
- Trade and other receivables 1,676 8,655 6,812
- Trade and other payables 219 (5,683) (4,149)
Total changes in working capital 3,423 842 4,705
Cash generated from operating
activities 9,720 7,885 21,561
------------------ ------------------ ----------------
Reconciliation of net cash flow to movements in net debt
Half Year Half Year Full Year
to to to 30 Sep
2020
31 Mar 2021 31 Mar 2020 (Audited)
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
(Decrease) / increase in
cash in the period (3,969) (3,395) 2,636
Drawdown of borrowings - (779) (8,346)
Repayment of borrowings 5,635 1,014 14,193
Changes in net debt resulting
from cash flows 1,666 (3,160) 8,483
Adoption of IFRS16 - (9,616) (9,429)
New leases (503) - (766)
Non cash movements (8) (1,110) 1,165
Translation differences 1,522 186 97
-------------- -------------- ------------
Movement in net debt in
the period / year 2,677 (13,700) (450)
Net debt at start of period (14,737) (14,287) (14,287)
Net debt at end of period (12,060) (27,987) (14,737)
-------------- -------------- ------------
Analysis of net debt
At 1 Oct New leases Cash flow Exchange Non-cash At 31
2020 movement movement Mar
2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ----------- ---------- ---------- ---------- ---------
Cash at bank and
in hand 19,734 - (3,969) (479) - 15,286
Due within one year
Debt (64) - 32 - (32) (64)
Lease liabilities (1,832) (15) 899 75 (774) (1,647)
Due after one year
Debt (26,211) - 4,704 1,532 24 (19,951)
Lease liabilities (6,364) (488) - 394 774 (5,684)
Net debt (14,737) (503) 1,666 1,522 (8) (12,060)
--------- ----------- ---------- ---------- ---------- ---------
Notes to the Interim Report
1. Basis of Preparation
The unaudited Interim Report has been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS"), as adopted by the European
Union.
The Group's liquidity has further improved since the end of the
previous financial year. Cash flow projections show that the Group
has sufficient funding available to withstand plausible downside
scenarios, and therefore the financial statements have been
prepared on a going concern basis.
The Interim Report was approved by the Board of Directors and
the Audit Committee on 1 June 2021. The Interim Report does not
constitute statutory financial statements within the meaning of the
Companies Act 2006 and has not been audited.
Comparative figures in the Interim Report for the year ended 30
September 2020 have been taken from the Group's audited statutory
financial statements on which the Group's auditors,
PricewaterhouseCoopers LLP, expressed an unqualified opinion. The
comparative figures to 31 March 2020 are unaudited.
The Interim Report will be announced to all shareholders on the
London Stock Exchange and published on the Group's website on 1
June 2021. Copies will be available to members of the public upon
application to the Company Secretary at Dowlish Ford, Ilminster,
Somerset, TA19 0PF.
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 30 September 2020,
as described in those financial statements.
2. Estimates
The preparation of interim financial statements requires
management to make estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expense. Actual results may
differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgments made by management in
applying the Company's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 30 September
2020.
3. Financial risk management
The Company's activities expose it to a variety of financial
risks, market risk (including currency risk, cash flow interest
rate risk and price risk), credit risk and liquidity risk.
The interim condensed consolidated financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements and should be read in
conjunction with the Company's annual financial statements as at 30
September 2020. There have been no changes to the risk management
policies since the year end.
4. Segmental analysis
Aerospace Life Sciences Industrial Corporate Total
& Defence / Biophotonics
For half year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2021
Revenue
Total revenue 18,440 14,742 30,519 - 63,701
Inter and intra-division - (1,292) (3,949) - (5,241)
------------------------------ ---------- --------------- ---------- --------- --------
External revenue 18,440 13,450 26,570 - 58,460
Divisional expenses (18,466) (10,694) (23,618) 433 (52,345)
------------------------------ ---------- --------------- ---------- --------- --------
EBITDA(1) (26) 2,756 2,952 433 6,115
EBITDA % - 20.5% 11.1% - 10.5%
Depreciation and amortisation (1,284) (652) (1,199) (714) (3,849)
------------------------------ ---------- --------------- ---------- --------- --------
Operating profit before
amortisation of acquired
intangible assets (1,310) 2,104 1,753 (281) 2,266
Amortisation of acquired
intangible assets - - - (1,091) (1,091)
------------------------------ ---------- --------------- ---------- --------- --------
Operating profit (1,310) 2,104 1,753 (1,372) 1,175
Operating profit margin
% (7.1%) 15.6% 6.6% - 2.0%
------------------------------ ---------- --------------- ---------- --------- --------
Add back non-recurring
items 1,503 435 1,196 1,091 4,225
Operating profit excluding
non-recurring items 193 2,539 2,949 (281) 5,400
------------------------------ ---------- --------------- ---------- --------- --------
Adjusted operating profit
margin % 1.0% 18.9% 11.1% - 9.2%
------------------------------ ---------- --------------- ---------- --------- --------
Aerospace Life Sciences Industrial Corporate Total
& Defence / Biophotonics
For half year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2020
Revenue
Total revenue 18,666 12,794 29,264 - 60,724
Inter and intra-division - (555) (2,715) - (3,270)
------------------------------ ---------- --------------- ---------- --------- --------
External revenue 18,666 12,239 26,549 - 57,454
Divisional expenses (17,453) (9,416) (24,331) 899 (50,301)
------------------------------ ---------- --------------- ---------- --------- --------
EBITDA(1) 1,213 2,823 2,218 899 7,153
EBITDA % 6.5% 23.1% 8.4% - 12.4%
Depreciation and amortisation (992) (391) (1,704) (368) (3,455)
------------------------------ ---------- --------------- ---------- --------- --------
Operating profit before
amortisation of acquired
intangible assets 221 2,432 514 531 3,698
Amortisation of acquired
intangible assets - - - (1,837) (1,837)
------------------------------ ---------- --------------- ---------- --------- --------
Operating profit 221 2,432 514 (1,306) 1,861
Operating profit margin
% 1.2% 19.9% 1.9% - 3.2%
------------------------------ ---------- --------------- ---------- --------- --------
Add back non-recurring
items 70 2 37 1,468 1,577
Operating profit excluding
non-recurring items 291 2,434 551 162 3,438
------------------------------ ---------- --------------- ---------- --------- --------
Adjusted operating profit
margin % 1.6% 19.9% 2.1% - 6.0%
------------------------------ ---------- --------------- ---------- --------- --------
(1)EBITDA = Earnings before interest, tax, depreciation and
amortisation.
All of the amounts recorded are in respect of continuing
operations.
4. Segmental analysis continued
Analysis of revenue by destination
Half year Half year
to to
31 Mar 2021 31 Mar 2020
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------- -------------
United Kingdom 15,008 16,335
North and South America 23,093 21,085
Continental Europe 9,159 12,092
Asia-Pacific 11,200 7,942
58,460 57,454
------------- -------------
5. Non-recurring items
Half Year Half Year Full Year
to to to
31 Mar 2021 31 Mar 2020 30 Sep 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- --------------
Profit before tax 670 1,713 5,392
Amortisation of acquired
intangible assets 1,091 1,837 2,676
Restructuring costs 3,134 207 2,609
Interest on discounted deferred
consideration - 152 303
Costs awarded on Fremont
litigation - (467) (410)
Interest awarded on Fremont
litigation - (778) (818)
Adjusted profit before tax 4,895 2,664 9,752
-------------- -------------- --------------
The restructuring costs in the period ended 31 March 2021 relate
to non-recurring costs arising from our manufacturing streamlining
activities, further detail of which is given in the Operating and
Financial Review.
6. Tax expense
Analysis of tax charge in the period
Half Year Half Year Full Year
to to to 30 Sep
2020 (Audited)
31 Mar 2021 31 Mar
2020
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------
Current taxation
UK Corporation tax 105 154 1,089
Overseas tax 79 896 631
Adjustments in respect of prior
year tax charge - - (199)
Total current tax 184 1,050 1,521
Deferred tax
Origination and reversal of temporary
differences (316) (531) (255)
Adjustments in respect of prior
years - - 199
Change to UK tax rate - - 145
Total deferred tax (316) (531) 89
Tax expense per income statement 132 519 1,610
The tax charge for the six months ended 31 March 2021 is based
on the estimated effective rate of the tax for the Group for the
full year to 30 September 2021. The estimated rate is applied to
the profit before tax.
The adjusted effective tax rate is 19.6% (H1 2020: 23.4%).
7. Earnings per share
The calculation of earnings per 20p Ordinary Share is based on
the profit for the period using as a divisor the weighted average
number of Ordinary Shares in issue during the period. The weighted
average number of shares is given below.
Half Year Half Year Full Year
to to to 30 Sep
2020
31 Mar 2021 31 Mar (Audited)
2020
(Unaudited) (Unaudited)
No. No. No.
-------------- -------------- ------------
Number of shares used for basic
earnings per share 25,040,919 25,039,260 25,039,519
Dilutive shares 195,624 97,615 174,664
Number of shares used for dilutive
earnings per share 25,236,543 25,136,875 25,214,183
-------------- -------------- ------------
A reconciliation of the earnings used in the earnings per share
calculation is set out below:
Half Year to Half Year to Full Year to
31 Mar 2021 31 Mar 2020 30 Sep 2020
(Unaudited)
(Unaudited) (Audited)
p per p per p per
GBP'000 share GBP'000 share GBP'000 share
-------- ------- -------- ------- -------- -------
Basic earnings per share 538 2.1p 1,194 4.8p 3,782 15.1p
Adjustments net of income
tax expense:
Amortisation of acquired intangible
assets 877 3.5p 1,458 5.8p 2,279 9.1p
Restructuring costs 2,519 10.1p 166 0.7p 2,218 8.9p
Interest on discounted deferred
consideration - - 152 0.6p 303 1.2p
Interest and costs awarded
on Fremont litigation - - (929) (3.7p) (958) (3.8p)
Total adjustments net of income
tax expense 3,396 13.6p 847 3.4p 3,842 15.4p
Adjusted basic earnings per
share 3,934 15.7p 2,041 8.2p 7,624 30.5p
-------- ------- -------- ------- -------- -------
Basic diluted earnings per
share 538 2.1p 1,194 4.7p 3,782 15.0p
-------- ------- -------- ------- -------- -------
Adjusted diluted earnings
per share 3,934 15.6p 2,041 8.1p 7,624 30.2p
-------- ------- -------- ------- -------- -------
Adjusted earnings per share before amortisation of acquired
intangible assets and adjustments has been shown because, in the
opinion of the Directors, it more accurately reflects the trading
performance of the Group.
8. Dividend
The Directors have declared an interim dividend of 4.5p per
share for the half year ended 31 March 2021 (2020: nil).
Half Year Half Year Full Year
to to to
31 Mar 2021 31 Mar 2020 30 Sep 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
--------------- -------------- --------------
Final 2019 dividend paid in 2020:
7.2p per share - 1,803 1,803
- 1,803 1,803
--------------------------------------------------- -------------- --------------
9. Borrowings
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP'000
--------- --------- -------------
Current:
Bank borrowings 64 63 64
Leases 1,647 1,844 1,832
--------- --------- -------------
1,711 1,907 1,896
--------- --------- -------------
Non-current:
Bank borrowings 19,951 32,419 26,211
Leases 5,684 7,690 6,364
25,635 40,109 32,575
--------- --------- -------------
Total borrowings 27,346 42,016 34,471
--------- --------- -------------
G&H's primary lending bank is NatWest Bank. The Group's
facilities comprise a $50m (GBP36.1m) dollar revolving credit
facility and a $20m (GBP14.4m) flexible acquisition facility. At 31
March 2021, the balance drawn on the revolving credit facility was
$27.8m (GBP20.1m) (September 2020: $34m (GBP26.3m)) and on the
flexible acquisition facility nil (September 2020: nil).
The facilities above are committed until 6 April 2023 and
attract an interest rate of between 1.4% and 1.9% above US LIBOR
dependent upon the Company's leverage ratio, payable on rollover
dates.
The Group's banking facilities are secured on certain of its
assets including land and buildings, property plant and equipment
and inventory.
Maturity profile of bank borrowings
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP'000
---------
Within one year 64 63 64
Between one and five years 19,951 32,419 26,211
20,015 32,482 26,275
--------- --------- -------------
Maturity profile of lease liabilities
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP'000
---------
Within one year 1,647 1,844 1,832
Between two and five years 4,133 5,483 4,467
After five years 1,551 2,207 1,897
--------- --------- -------------
7,331 9,534 8,196
--------- --------- -------------
10. Provisions for other liabilities and charges
The movements in the Group provision for other liabilities and
charges during the period are as follows:
2021
GBP000
--------
At 1 October 1,692
Utilised during period (20)
Increase in period 44
Exchange movements (11)
--------
At 31 March 1,705
--------
The Company offers warranty periods ranging up to 10 years on
some of its products. The provision for other liabilities and
charges includes GBP1.0m provided for the anticipated cost of
repair and rectification of products under warranty (Mar 2020:
GBP0.8m). Whilst future claims could result in outflows different
from the quantum of the warranty provisions held management has
reflected current knowledge in assessing provision levels at the
reporting date.
11. Called up share capital
31 Mar 2021 30 Sep 2020 31 Mar 2021 30 Sep 2020
No. No. GBP'000 GBP'000
------------
Allotted, issued and fully
paid
Ordinary share of 20p
each 25,040,919 25,040,919 5,008 5,008
------------- ------------ ------------ ------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FLFFTEFILVIL
(END) Dow Jones Newswires
June 01, 2021 02:00 ET (06:00 GMT)
Gooch & Housego (LSE:GHH)
Historical Stock Chart
From Apr 2024 to May 2024
Gooch & Housego (LSE:GHH)
Historical Stock Chart
From May 2023 to May 2024