TIDMGHH
RNS Number : 7148B
Gooch & Housego PLC
06 June 2023
6 June 2023
GOOCH & HOUSEGO PLC
("G&H", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2023
Positive progress in the first half. New strategy focused on
"Delivering sustainable margin growth"
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 2023.
Key Financials
Period ended 31 March H1 2023 H1 2022 Change
Revenue GBP71.3m GBP54.1m 31.7%
--------- --------- --------
Adjusted profit before tax* GBP4.5m GBP3.6m 26.2%
--------- --------- --------
Adjusted basic earnings per
share* 14.9p 11.8p 26.3%
--------- --------- --------
Net debt excluding IFRS 16 GBP12.9m GBP5.9m GBP7.0m
--------- --------- --------
Net debt including IFRS 16 GBP19.2m GBP12.0m GBP7.2m
--------- --------- --------
Statutory profit before tax GBP3.3m GBP1.2m GBP2.1m
--------- --------- --------
Statutory basic earnings per
share 10.9p 6.9p 58.0%
--------- --------- --------
Interim dividend per share 4.8 4.7 2.1%
--------- --------- --------
*Adjusted for amortisation of acquired intangible assets and
non-recurring items.
Key points
-- H1 revenue up 31.7% at GBP71.3m (H1 2022: GBP54.1m)
reflecting strong growth in all market segments
-- Increase in productive capacity and steady reduction in
overdue backlog
-- Adjusted operating profit up 32.9% to GBP5.2m (H1 2022:
GBP3.9m)
-- Cost inflation persists but is being passed on with some time
lag
-- Order book remains strong at GBP124.4m (H1 2022:
GBP119.9m)
-- Cash from operations of GBP6.0m (H1 2022: GBP3.2m) despite
GBP5m investment in inventory levels
-- Interim dividend of 4.8p per share (H1 2022: 4.7p)
-- Full year expectations are unchanged
-- Review of the Group's strategy complete
Charlie Peppiatt , Chief Executive Officer of Gooch &
Housego, commented:
"Positive progress has been made in the first half with
increasing operational output and continued strong levels of
customer engagement on new product opportunities. Full year
expectations for the Group are unchanged and the outcome of our
strategy review confirms a clear route to mid-teens returns in the
medium term."
Analyst meeting
A meeting for analysts will be held at 10.30am on the morning of
6 June 2023 at the offices of Buchanan, 107 Cheapside, London EC2V
6DN. To register attendance, please contact Buchanan at
G&H@buchanan.uk.com .
A live audio webcast of the meeting will be available via the
following link:
https://webcasting.buchanan.uk.com/broadcast/646b30943c64069e62cb59e0
Following the meeting, a recording of the webcast will be made
available for replay at the Group's website at
https://gandh.com/investors/ .
For further information please contact:
Charlie Peppiatt, Chief Executive
Officer
Chris Jewell, Chief Financial Gooch & Housego +44 (0) 1460
Officer PLC 256440
Mark Court / Abigail Gilchrist +44 (0) 20 7466
G&H@buchanan.uk.com Buchanan 5000
Christopher Baird / David +44 (0) 20 7597
Anderson Investec Bank plc 5970
Notes to editors
1 Gooch & Housego is a photonics technology business with
operations in the USA and Europe. A world leader in its field, the
company researches, designs, engineers and manufactures advanced
photonic systems, components and instrumentation for applications
in the Aerospace and Defence, Industrial and Telecom, and Life
Sciences 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
Revenue for the six month period totalled GBP71.3m representing
a 31.7% growth over the comparator period, or 20.6% on a constant
currency basis. The Group's trading in the first half of the
financial year benefited from the additional capacity that had been
put in place in both the second half of the previous financial year
and the first months of the current trading period allowing us to
trade out the record order book brought forward into FY2023. Our
production teams are now substantially resourced and good progress
has been made in reducing the level of order book arrears and the
lead times the Group is able to offer customers for the delivery of
new orders.
In the first half of the financial year we have seen strong
revenue growth from our industrial laser and semiconductor markets.
The Group is supplying products that are at the heart of state of
the art deep ultraviolet and extreme ultraviolet lithography
equipment used in the production of the most advanced microchips in
the world. One of these programmes is now entering high volume
production and is expected to provide us with good support for our
semiconductor market revenues for several years to come. The drive
for technological sovereignty in the area of semiconductor
manufacture underpins strong demand from end customers.
Deliveries into our industrial laser markets have also grown,
especially into Asian markets. This has been driven by
post-pandemic end customer demand for electronic products
recovering strongly although demand levels are expected to
normalise in the coming period. Revenues from our components used
in medical lasers also grew thanks to higher levels of demand for
cosmetic procedures but again we expect this to normalise. Finally
in our A&D markets we saw strong revenue growth thanks to
several US programmes for military guidance systems entering their
production phase. Demand for our precision optics used in military
imaging systems has also been strong.
Input cost inflation has continued to be a factor impacting the
Group's profitability. We have matched general wage inflation in
the locations in which we operate in order to both retain and
attract the skilled employees we need in our facilities. In
addition, our suppliers have continued to pass on their own cost
inflation in the form of higher material pricing. To counter this
we are running a structured programme to increase our prices on new
quotes issued to customers wherever the competitive environment
allows us to do so. Nevertheless, given the size of the order book
that we brought into the current financial year there is some lag
in the benefit of that higher pricing being seen in the Group's
results. In the first half inflation, therefore, represented a net
headwind to Group profitability although the effect of our pricing
actions will provide more benefit in the second half of the
financial year.
We are starting to see the order book return to more normalised
levels after the record levels of intake achieved by the Group in
the second half of FY2022. This was driven by many customers,
especially in the Industrial markets, overdriving their supply
chains to ensure both continuity of supply and to mitigate the
effect of price inflation. During the first half of FY2023 we have,
therefore, seen some of these customers slow down the level of new
orders as well as seek to push out delivery dates for some of the
orders already placed with us as they look to regularise their
inventory holding levels. Consequently, the Group's book to bill
ratio in the first half of the financial year was 0.8x and the
order book finished the period at GBP124.4m (31 March 2022:
GBP119.9m). This represents a reduction of 15.8%, or 11.1% at
constant currency, on the order book at 30 September 2022 of
GBP147.7m. Nevertheless, the order book at March 2023 remained at a
healthy level and the Group has the necessary order cover in place
for the delivery of full year market consensus revenues.
The Group continues to maintain higher levels of safety stocks
given the continuing extended lead times in some part of our supply
chain. Furthermore, in some cases our customers have requested that
we protect their production programmes by holding higher levels of
inventory. Where this is the case we will seek funding from
customers for this additional investment.
Revenue
Six months ended 31 March 2023 2022
GBP'000 GBP'000 % Change
---------------------------- ----------- ---------- ---------
Industrial 37,928 27,743 36.7%
Aerospace & Defence 17,535 13,127 33.6%
---------------------------- ----------- ---------- ------------
Life Sciences 15,825 13,264 19.3%
---------------------------- ----------- ---------- ------------
Group Revenue 71,288 54,134 31.7%
---------------------------- ----------- ---------- ------------
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 ended 31 March 2023 grew by 36.7%, or 22.1% when
measured on a constant currency basis, compared with the equivalent
period last year. We saw strong growth in our semiconductor and
industrial laser markets. First production revenues of our fibre
optic splitter units used in advanced semiconductor manufacturing
equipment were achieved in the period. Demand for our germanium
acousto-optic modulator products used in CO(2) lasers was also
particularly strong.
Deliveries of our hi-reliability fibre couplers were stable
compared with the comparator period. We are in the final stages of
approving our contract manufacturing partner in Asia for the
production of these products and we expect them to make their first
production shipments to customers in the second half of the current
financial year. This will provide an opportunity to increase supply
and for margin accretion on this product line.
In the sensing market we secured additional volume from our
products used in distributed monitoring solutions used for the
protection of remote assets. We are also making good progress in
securing additional revenues in the wind sensing market where we
are increasingly offering a full module solution to our partners in
this growing market.
We remain a key supplier to both US and French research
establishments seeking to achieve energy generation from inertial
confinement fusion. Demand from these customers for our crystal
growth capabilities is growing and we are investing in additional
growth stations to support this revenue stream.
The additional volume achieved in this segment helped deliver a
29% growth in adjusted operating profit compared with H1 2022, to
GBP5.3m. In common with the reported return on sales figures in the
Group's other two markets, the effect on revenues of both
favourable currency movements compared with H1 2022 and the pass
through of inflationary cost increases in the form of higher
pricing suppressed the reported return on sales percentage which
was 14.1% for this segment in the first half. (H1 2022: 14.9%).
Removing the effects of currency movement and pricing adjustments
the reported return on sales for this segment for the half year was
15.1%.
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 through our wide photonics technical
capabilities. 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. We are
working with our partners on the development of new directed energy
weapon systems that are increasingly specified as part of the
defensive suites of both naval and land platforms.
The trend in funding priorities in both the US and Europe
continues to favour G&H products and capabilities. The need for
all weather precision guidance and targeting generates the demand
for the product capabilities that G&H can offer. The conflict
in the Ukraine is also generating a recognition of the continuing
importance of armoured vehicles in the modern military environment,
and in that area G&H provides some of the most advanced optical
sighting systems as evidenced by our participation on the UK MOD's
programme to upgrade the Challenger MBT platform. During the period
the recent increase in quotations we have provided for programmes
to replenish military vehicles deployed by NATO members in Ukraine
is now starting to result in orders for G&H, and there are good
prospects for further significant orders to be secured.
Our A&D revenues were up 33.6% on the comparator period, or
24.6% on a constant currency basis. Deliveries to our customers'
imaging systems programmes, typically used on manned and unmanned
aircraft platforms, grew during the period. Our camera systems are
also used for the identification of targets including drones and
there is an encouraging level of interest from our OEM customers
for our advanced infra-red products that can address their emerging
needs in this area.
Our Boston business has delivered good growth in output compared
with the first half of FY2022 thanks to its success in recruiting
and training new team members. Several of the site's programmes
have transitioned from the development to the production phase
although the site continues to seek to improve its production
yields.
We continue to participate in our customers' programmes seeking
to develop laser based communication in the space market, both for
satellite to satellite and satellite to ground application. Our
hi-reliability fibre couplers are used in these space applications
and we are also developing very high power amplifiers that will be
used in both satellite and ground station applications. We believe
we are well placed to benefit from this market as it progressively
replaces the current RF based technologies.
Additional volumes in this market helped to reduce the adjusted
operating loss of this segment to GBP1.9m (H1 2022: GBP(2.2)m). In
the period production yields on some programmes in both our
Moorpark and Boston facilities were poor reflecting the continuing
training programmes that need to be completed for new employees
recruited to service our higher order book levels. We are also
reviewing closely some of the product lines within this sector to
assess whether we have sufficiently differentiated capabilities to
allow us to secure an acceptable return.
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 revenues were up 19.3% (13.6% on a constant
currency basis) in the six months to 31 March 2023, compared with
the first half of FY2022. We have seen further recovery in demand
for our components used in laser surgery, especially elective
cosmetic surgery. Revenues from the sale of our medical diagnostic
equipment were slightly down compared with H1 2022. This was due to
two of our significant customers migrating to next generation
equipment programmes and ramping down demand for their current
generation products. We have secured the manufacture of their next
generation systems and volumes from these programmes are expected
to ramp up in the second half of the financial year. These systems
assist in the targeted delivery of treatments for cancers. We are
also manufacturing a range of customer diagnostic instruments
designed to assist in the more precise diagnosis of conditions and
prescription of treatments for patients.
Our design team based in our medical equipment solutions
business in Ashford are fully engaged on the development of our
customers' next generation systems and these will typically migrate
to production over the coming two/three years. Plans are also in
place to invest in expanding this area in the US in order to
provide a US based design and manufacturing offering to our
customers in that market, and we are in the final stages of
contract negotiation with a "launch" customer for the build of
their diagnostic instrument in one of our US facilities.
Adjusted operating profit in the segment grew by 8% to GBP2.3m
(H1 2022: GBP2.1m). Adjusted operating profit margin stood at 14.3%
(H1 2022: 15.8%). After eliminating the effects of currency and
pricing H1 2023 return on sales stood at 15.1%. We expect the
Group's re-pricing activities to disproportionately benefit this
segment in the second half of the financial year, in particular our
ITL business as it starts to deliver one of our customer's
important next generation products. We intend to invest in the
business's US operations in order to secure a greater share of the
very significant US medical diagnostic market.
Strategy
Under the leadership of our new CEO, who joined the Group in
September 2022, the executive leadership team has carried out a
strategy review during the first half of the financial year. Many
elements of the Company's existing strategy over the last seven
years, aimed at diversification into new markets, focused R&D
investment, operational excellence and value enhancing
acquisitions, were valid but execution and implementation had
stalled and a refresh was required.
Following the review, the Board is confident in the exciting
prospects of combining our photonics products and unique technical
capabilities with the next wave of growth forecast in the global
photonics industry. Despite the photonics components landscape
becoming increasingly competitive, the end-markets are large and
growing at pace with closer integration of lasers, optics and
sensors creating new sources of value.
This is underpinned by many of the world's mega-trends from
advancing technologies like IoT, 5G/6G, AI, machine learning, VR,
remote patient monitoring and non-intrusive healthcare. The drive
towards global sustainability and geopolitical tensions also
provides positive demand momentum for our industry. Photonics is at
the heart of global innovation and the new frontiers of
technology.
Our new strategy for delivering sustainable margin growth in the
medium term, is focused on transforming G&H to become an
'innovative customer focused technology company' delivering
responsibly and making a 'better world with photonics'. We will
seek to ensure that G&H becomes and remains the 'first choice'
for all our stakeholders whether that's our employees, our
customers, our shareholders, our eco-system partners or the
communities in which we operate. We will offer differentiated
performance through four key strategic priorities.
New Strategy: Delivering sustainable margin growth
1. People - Through harnessing the best talent across our whole
organisation, we will establish dynamic high-performance teams and
create a purpose-led culture that ensures G&H is a safe,
engaging, diverse and inclusive place to work and thrive.
2. Self-Help - By delivering an exceptional customer experience
and making it 'easier to do business with G&H' we will build
long-term customer partnerships and deliver profitable growth. We
will achieve this by disciplined focus on superior operational
execution along with the agility and wisdom to avoid repeating the
manufacturing and supply chain problems of the recent past.
3. Technology - We will deliver a better return from our
advanced technical expertise in photonics. We will create enhanced
value from carefully selected R&D projects for the right
applications including developing platform solutions to accelerate
our time to market for new technology and existing technology into
new applications. This will unlock greater value through increased
G&H photonics system content in new products.
4. Investment - We will apply a more disciplined approach to the
allocation of resources to deliver value and accelerate accretive
growth, both organically and inorganically. We will refocus the
business to invest in higher margin products and sectors at the
same time as addressing non-performers, in combination with
pursuing 'speed to value' acquisitions strategically rather than
opportunistically.
There are parts of the existing strategy that are being
retained, but with better execution and greater focus on delivering
the desired outcome. The Group will continue to look at
diversification within limits and with greater emphasis on
synergies and simplification. The new strategy continues to seek
opportunities to enhance value by moving up the value chain, but
the focus will be more specific to coating, sub-systems and in Life
Sciences through to full systems where we can embed our
bio-photonics technology into the medical or IVD device. Our
commitment to being customer-led remains but this will require
changes in behaviours as well as to our processes and systems to
ensure better results. We will also continue to offer a balanced
portfolio around Industrial, A&D and Life Sciences but with an
increased emphasis on capturing the opportunities in Life Sciences,
especially in North America, and Industry 4.0 from the next
generation global semiconductor infrastructure build out. We will
also establish greater clarity on our value proposition into the
A&D market aligning resources to turn this business unit around
and deliver accretive performance for the Group.
The leadership team's review of the Group's strategy has
identified areas where we need a different emphasis and new
direction. We have identified that a different approach is required
in how we invest in our people, our core technology and in our
product platforms in collaboration with our customers. The Group
has also carried out an assessment of its manufacturing strategy
and as a result will more proactively outsource certain stable
product lines to our contract manufacturing partners at an earlier
stage in the product life cycle where technological sovereignty is
not a differentiator. During the cycle of the new plan the Group
expects the proportion of its revenues sourced from product built
by its contract manufacturing partners to increase from less than
10% to circa 25%.
The new strategy will address non-performance and the process to
assess and rationalise non-core product lines has begun. This will
be carried out in combination with pursuing strategic 'speed to
value' acquisitions that enhance value creation through delivering
commercial and operational synergies, and which fill a gap in our
existing portfolio.
End-Market Technology Focus
In the first six months of the current financial year, G&H
invested GBP4.5m in targeted R&D across our end markets. This
was a 9.3% increase on the same period last year demonstrating
G&H's continued commitment to investing in targeted R&D
programmes. As part of the new strategy, we are reviewing our
technology roadmaps and looking at where we can deploy a 'platform
design' solution to accelerate time to market and enhance our value
proposition.
Industrial
G&H will continue to develop and supply photonics solutions
for some of the most advanced precision products on the planet.
With a core part of our demand driven by the relentless pursuit of
greater functionality from devices on an ever-shrinking footprint,
G&H is well positioned to address the key growth drivers from
mega-trends, such as IoT, AI, 5G, net zero and the Cloud, that are
transforming the way we do business, live our lives and interact
with others. Our product developments are focused in the following
areas:
-- Semiconductor and advanced microelectronics manufacturing
-- Advanced photolithography systems especially supporting the
DUV and EUV eco-system for our acousto-optics, fibre optics and
precision optics
-- Undersea hi-reliability communications. G&H's products
can be found at the bottom of our deepest oceans coupling the
fibre-optic cables that carry 95% of the world's international
internet traffic. We will continue to focus on addressing this
growing market with components and modules
-- Sensing systems for machine vision and asset monitoring systems
-- Green energy for net zero such as the laser modules in Lidar
systems used on wind turbines for remote sensing to optimise
efficiency and maintainability of sustainable energy generation
from windfarms
Aerospace and Defence
G&H supplies many of the leading A&D contractors around
the world and in many areas is seen as a leader in supporting
mission critical applications with high performance optical
components, modules and subassemblies. However, over the last few
years this business unit has not delivered the performance
expected. Successful deployment of the new strategy will require
greater discipline and clarity in our A&D business to ensure we
align investment and resources to deliver value from the product
lines and the parts of the businesses where G&H offers
differentiated technology, products and know-how. Therefore, we
will be focusing on the following areas:
-- Infrared electro-optic imaging and counter-unmanned aircraft systems
-- Communications and sensors for surveillance, reconnaissance and intelligence applications
-- Space photonics and geostationary satellite to ground communications
-- Directed energy systems through fibre-optics, electro-optics and precision optics
-- Coatings - anti-reflective and electro-optical protection
-- Embedded image periscopes for armoured fighting vehicles
Life Sciences
G&H optical components help advance the performance and
reliability of life sciences and scientific research
instrumentation for a variety of applications from medical
microscopy, diagnostic imaging and laser surgery. We are recognised
as a global leading provider of advanced optics, fibre optics,
acousto-optics and Pockels cells for medical research, diagnostics
imaging and specifically optical coherence tomography applications.
We will continue to focus on developing our world leading position
in these areas.
Since the acquisition of Integrated Technologies Ltd (ITL) in
2018, we also provide world class end-to-end design, regulatory
approval support and manufacturing services for medical devices and
in-vitro diagnostics (IVD) and laboratory instruments. As part of
our new strategy, as well as developing this offering into North
America, we intend to expand our value proposition through better
combining the capabilities of these two parts of our Life Science
business to provide our customers unique value. We can help reduce
time to market through the medical design cycle and regulatory
approval process and achieve greater systems content where our
bio-photonics capabilities are embedded into the sub-system or full
system.
Some key areas of focus for our Life Sciences business will
be:
-- In-vivo imaging with focus on multi-modal, functional and fluorescence imaging
-- In-vitro imaging with focus on confocal microscopy
-- Medical aesthetic lasers
-- Medical devices and IVD equipment with G&H bio-photonics and optical content
As part of the strategic review the leadership team will be
reviewing organic and inorganic investment to accelerate the
delivery of the strategy and deliver improved earnings for the
business. The Group's M&A strategy is being refocused
accordingly to align investment with the desired outcomes from the
strategic review. We are now focused on adding greater value
through the transition from complex photonics components to a
sub-system or full system solution. We are targeting businesses
that enhance our fuller photonics systems offering in Life
Sciences, A&D and advanced Industrial with a focus on some of
the gaps that have been identified in our portfolio offering (e.g.
advanced coatings, complex systems assembly, new materials and
embedded electronics) to deliver speed to value and accelerate
delivery of our new strategy.
Corporate Values
The transformation of the Company through the successful
implementation of the Group's new strategy will be achieved by
following G&H's corporate values that guide the way we do
business, consisting of customer focus, integrity, action, unity
and precision to deliver fundamental and lasting improvement for
our employees, for the profitability of the Company and for the
sustainability of our planet.
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 Profit before Taxation Profit after Earnings
profit costs tax tax per share
--------------- --------------- ---------------- --------------- ---------------- --------------
Half Year to 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
31 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 pence pence
March
--------------- ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ------ ------
Reported 3,974 1,574 (712) (353) 3,262 1,221 (535) 504 2,727 1,725 10.9 6.9
--------------- ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ------ ------
Amortisation
of
acquired
intangible
assets 833 927 - - 833 927 (174) (217) 659 710 2.6 2.8
Restructuring
costs 438 1,445 - - 438 1,445 (96) (252) 342 1,193 1.4 4.8
Deferred tax
on
goodwill - - - - - - - (675) - (675) - (2.7)
Adjusted 5,245 3,946 (712) (353) 4,533 3,593 (805) (640) 3,728 2,953 14.9 11.8
--------------- ------ ------- ------ ------- ------- ------- ------ ------- ------- ------- ------ ------
Adjusted profit before tax was GBP4.5m, an increase of 26.2% on
the prior year (H1 2022: GBP3.6m). This increase in profit reflects
higher revenues as a result of the addition of productive capacity
during the second half of FY2022 and the first months of the
current financial year.
Cash Flow and Financing
In the six months ended 31 March 2023, G&H generated cash
from operations of GBP6.0m, compared with GBP3.2m in the same
period of 2022. Inventory levels were increased by GBP5m to support
growing production volumes as well as to ensure we continue to
protect our customers' delivery schedules in the face of continuing
inconsistency in on time delivery from some areas of our supply
chain. There was a net inflow of GBP1.5m from the movement on
receivables and payables.
Capital expenditure on property, plant and equipment was GBP3.4m
in the period (2022: GBP3.0m). Further investments have been made
in our precision optic facilities to add further capacity to our
surface finishing stations and to increase automation in areas of
the production process. We have also procured new equipment used in
the production of our fibre optic products which is now located at
our contract manufacturing partner in Asia and which support their
transition from product qualification into the production phase.
During the period we transitioned our ITL business in Ashford on to
the Group's enterprise resource planning tool, and that business'
US facility will be migrated in Q3 FY2023. This means that all of
the Group's operating locations outside of China will be using this
common system providing our managers with a single and consistent
set of business reports to better manage the business.
As at 31 March 2023 the Group had drawn $23.8m on its revolving
credit facility (September 2022: $21.3m). The Group has access to a
total committed facility of $40m with a further $30m available from
an uncommitted accordion facility.
At 31 March 2023 the Group's net debt totalled GBP19.2m (30
September 2022 - GBP19.1m) including lease liabilities of GBP6.3m
(30 September 2022 - GBP6.3m). Consistent with the Group's
borrowing agreements, which exclude the impact of IFRS 16, Leases,
our leverage ratio was 0.8 times at 31 March 2023 (30 September
2022: 0.7 times).
Environmental, Social and Governance
In the first half of the year the Group achieved a like for like
reduction of 13.4% in its greenhouse gas emissions intensity figure
to 29.1 tCO2/GBP1m of revenue compared with the comparator period
thanks to our investment to generate our own electricity from solar
sources and from our programme to progressively increase the
proportion of our purchased electricity coming from renewable
sources. In the UK all of our purchased electricity is generated
from renewable sources. In the US as we renew our contracts for the
purchase of electricity we are choosing to migrate to renewable
energy sources wherever they are available. We are on track to
achieve our target of net zero scope 1 and 2 emissions by 2035.
We have used the structure of ISO 50001 - Energy Management
Systems - to put in place plans for each of our sites to reduce
energy consumption. For example we are in the process of installing
a new voltage optimisation system at our Ilminster site which is
expected to reduce its energy consumption by around 10% when
operational.
Early in the third quarter of FY2023 we are delighted to have
ISO 14001 - Environmental Management -accreditation at our
Ilminster and Torquay facilities We will now extend the
accreditation programme, and its US equivalent, to the remainder of
the Group.
We are proud to be able to support our local communities by
offering highly skilled roles in a broad range of production and
business functions. We operate programmes to employ school leaver
apprentices supporting their first steps in employment with
structured day release college courses and we are pleased to see
many of the team members taking on more senior roles as they
quickly progress in their careers with the Group.
Dividends
Given the positive outlook for the Group, the Board has declared
an interim dividend of 4.8p per share (2022: 4.7p). This dividend
will be payable to shareholders on the register as at 23 June 2023
on 28 July 2023.
Prospects and outlook
We are seeing sustained demand across the Company's target
markets and our order book remains strong at GBP124.4m (H1 2022
GBP119.9m) despite a trend towards more normalised levels. The
order book includes significant new programme wins for next
generation products in the field of acousto-optic modulators,
hi-reliability fibre optic coupling technology, electronic optical
sighting systems and medical lasers.
The investments that were made in adding additional capacity, in
our site in Fremont, CA for the semiconductor market, Cleveland, OH
for the medical laser market and Ilminster, Somerset which services
the A&D optics market, along with the improved operational
focus of the leadership team have resulted in a significant
increase in productive capacity and a steady reduction in overdue
backlog during the first half of the financial year. We expect to
continue to see improved operational performance in the second half
of the year to meet customer demand and improve G&H's service
levels to our customers. We have also seen some positive
improvement in our ability to hire talent into the organisation
both in UK and USA and we are now close to being fully staffed in
both regions. Due to the highly technical nature of our activities
training new employees is a critical and lengthy part of the
onboarding process and an area the upgraded HR team are focused on
improving.
We continue to invest in our highly productive R&D team. Our
engineering resources are focused on working with our customers on
their next generation development programmes. There are a number of
near term opportunities which include developing the next
generation of extreme ultraviolet lasers for the manufacture of
nanoelectronics; designing advanced embedded imaging periscopes for
armoured vehicle platform upgrades and replenishment for the
Ukraine conflict, exploiting our optical coherence tomography
capability in cardiovascular disease detection and expanding our
Life Sciences system offering with G&H optical technology.
Our balance sheet is strong, our net debt is low and we are in a
good position to continue to invest in our target sectors. The
Board's confidence in the trading prospects of the Group is
reflected in an increased interim dividend for the period.
We have completed a thorough review of the Group's strategy and
have developed a plan that provides a clear route to mid-teens
returns in the medium term. This new strategy is being communicated
and deployed across the Company over the next six weeks and we will
provide regular updates on progress on the plan's execution as we
move forward. The Board and wider senior leadership are committed
to transforming G&H to become an 'innovative customer focused
technology company' that delivers responsibly making a 'better
world with photonics'. We intend that the Group becomes and remains
the 'first choice' for all our stakeholders whether that is our
employees, our customers, our shareholders, our eco-system partners
or the communities in which we operate.
Full year expectations are unchanged and the long-term outlook
for our technologies and capabilities in all our target sectors
remains strong enhanced by the clarity of focus from the Group's
new strategy.
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 50 of our 2022 Annual Report available on
our website. Whilst we have made good progress in reducing the risk
associated with the management of our production capacity, and
inflationary impacts on the business are easing, we continue to
monitor these two areas closely.
Maintaining fully resourced teams is critical to the success of
our business. Competition for skilled employees remains fierce and
we have continued to quickly take action where it has been
necessary to retain and attract employees in addition to the
general company-wide salary awards made to our staff at the
beginning of the calendar year.
Our suppliers continue to seek to pass on their own cost input
inflation in the form of higher prices to us. We seek to mitigate
this through the use of long-term agreement with our suppliers that
lock in pricing in exchange for volume commitments. We can also
help our suppliers, and especially our contract manufacturing
partners, by providing improved medium term demand forecasts to
allow them to better plan their supply to us. As a further measure
to maintain competitive tension in our supply chain our procurement
team works with our engineering team to identify and qualify
alternative sources of supply to mitigate the risk from sole source
suppliers. Finally, we are also maintaining higher levels of safety
stock to provide some protection from incomplete supply. These
additional inventory holdings will be eliminated as we gain greater
confidence in the ability of our suppliers to ensure full
supply.
We remain alert to the risk of economic slowdown, especially in
our Industrial markets. We have seen signs of destocking by some of
our customers in those markets. We believe that by close engagement
with them on the development of their next generation products we
can both secure additional market share as well as receive early
indication of any demand slow down thereby allowing us to better
plan our production capacity. We believe we remain well position in
long term growth market such as semiconductor manufacture, laser
based space communication and directed energy systems which will
protect the business through the economic cycle.
We are mindful of some recent failures among financial
institutions and concerns about the viability of others. We have
reviewed the institutions that we are working with and have
satisfied ourselves as to their viability by reference to the
latest reports from credit rating agencies.
Group Income Statement
Unaudited interim results for the 6 months ended 31 March
2023
Half Year to 31 March Half Year to 31 March Full Year
2023 (Unaudited) 2022 (Unaudited) to 30 September
2022
(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 71,288 - 71,288 54,134 - 54,134 124,802
Cost of revenue (50,674) - (50,674) (36,791) - (36,791) (85,741)
---------- -------------- -------- ---------- -------------- -------- ----------------
Gross profit 20,614 - 20,614 17,343 - 17,343 39,061
Research and
development (4,499) - (4,499) (4,118) - (4,118) (9,181)
Sales and
marketing (5,007) - (5,007) (3,994) - (3,994) (8,697)
Administration (6,179) (1,271) (7,450) (5,554) (2,372) (7,926) (16,574)
Impairment
of goodwill
and acquired
intangible
assets - - - - - - (6,726)
Other income
and expenses 316 - 316 269 - 269 560
---------- -------------- -------- ---------- -------------- -------- ----------------
Operating profit 4 5,245 (1,271) 3,974 3,946 (2,372) 1,574 (1,557)
Net finance
costs (712) - (712) (353) - (353) (717)
---------- -------------- -------- ---------- -------------- -------- ----------------
Profit before
income tax
expense 4,533 (1,271) 3,262 3,593 (2,372) 1,221 (2,274)
Income tax
expense 6 (805) 270 (535) (640) 1,144 504 264
---------- -------------- -------- ---------- -------------- -------- ----------------
Profit for
the year 3,728 (1,001) 2,727 2,953 (1,228) 1,725 (2,010)
---------- -------------- -------- ---------- -------------- -------- ----------------
Basic earnings
per share 7 14.9p (4.0p) 10.9p 11.8p (4.9p) 6.9p (8.0p)
Diluted earnings
per share 7 14.8p (4.0p) 10.8p 11.7p (4.8p) 6.9p (8.0p)
---------- -------------- -------- ---------- -------------- -------- ----------------
Group Statement of Comprehensive Income
Group Statement of Comprehensive Half Year Half Year Full Year
Income to to to
31 Mar 31 Mar 2022 30 Sep 2022
2023
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- --------------
Profit / (loss) for the period 2,727 1,725 (2,010)
Other comprehensive (expense)
/ income
Gains / (losses) on cash flow
hedges 1,279 (33) (1,137)
Currency translation differences (6,152) 1,104 9,774
-------------- -------------- --------------
Other comprehensive (expense)
/ income for the period (4,873) 1,071 8,637
Total comprehensive (expense)
/ income for the period (2,146) 2,796 6,627
-------------- -------------- --------------
Group Balance Sheet
Unaudited interim results for the 6 months ended 31 March
2023
Group Balance Sheet 31 Mar 2023 31 Mar 2022 30 Sep 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Non-current assets
Property, plant and equipment 40,608 38,446 42,447
Right of use assets 5,283 4,908 5,063
Intangible assets 44,248 51,098 47,939
Deferred tax assets 1,640 1,861 1,969
-------------- -------------- ------------
91,779 96,313 97,418
Current assets
Inventories 39,961 31,816 37,073
Trade and other receivables 31,128 24,466 35,598
Cash and cash equivalents 6,141 8,951 5,999
77,230 65,233 78,670
Current liabilities
Trade and other payables (19,513) (15,618) (22,765)
Borrowings (43) (66) (64)
Lease liabilities (1,247) (1,485) (1,732)
Tax liabilities (1,102) (1,229) (578)
(21,905) (18,398) (25,139)
Net current assets 55,325 46,835 53,531
-------------- -------------- ------------
Non-current liabilities
Borrowings (18,970) (14,813) (18,730)
Lease liabilities (5,089) (4,575) (4,539)
Provision for other liabilities
and charges (804) (1,444) (848)
Deferred tax liabilities (7,632) (7,132) (8,291)
(32,495) (27,964) (32,408)
Net assets 114,609 115,184 118,541
-------------- -------------- ------------
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 9,676 7,158 15,828
Hedging reserve 7 (168) (1,272)
Retained earnings 76,656 79,924 75,715
-------------- -------------- ------------
Equity Shareholders' Funds 114,609 115,184 118,541
-------------- -------------- ------------
Statement of Changes in Equity
Unaudited interim results for the 6 months ended 31 March
2023
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 2021 5,008 16,000 7,262 80,087 (135) 6,054 114,276
Profit for the period - - - 1,725 - - 1,725
Other comprehensive
expense for the period - - - - (33) 1,104 1,071
-------- -------- -------- --------- -------- ------------ -------
Total comprehensive
income / (expense)
for the period - - - 1,725 (33) 1,104 2,976
-------- -------- -------- --------- -------- ------------ -------
Dividends - - - (1,928) - - (1,928)
Share based payments - - - 40 - - 40
At 31 March 2022 (unaudited) 5,008 16,000 7,262 79,924 (168) 7,158 115,184
-------- -------- -------- --------- -------- ------------ -------
At 1 October 2022 5,008 16,000 7,262 75,715 (1,272) 15,828 118,541
Profit for the period - - - 2,727 - - 2,727
Other comprehensive
income / (expense)
for the period - - - - 1,279 (6,152) (4,873)
-------- -------- -------- --------- -------- ------------ -------
Total comprehensive
income / (expense)
for the period - - - 2,727 1,279 (6,152) (2,146)
-------- -------- -------- --------- -------- ------------ -------
Dividends - - - (1,978) - - (1,978)
Share based payments - - - 192 - - 192
At 31 March 2023 (unaudited) 5,008 16,000 7,262 76,656 7 9,676 114,609
-------- -------- -------- --------- -------- ------------ -------
Group Cash Flow Statement
Unaudited interim results for the 6 months ended 31 March
2023
Group Cash Flow Statement Half Year Half Year Full Year
to 31 Mar to 31 Mar to 30 Sep
2023 (Unaudited) 2022 (Unaudited) 2022 (Audited)
GBP'000 GBP'000 GBP'000
------------------ ------------------ ----------------
Cash flows from operating activities
Cash generated from operations 5,996 3,216 6,084
Income tax refunded 78 823 456
------------------ ------------------ ----------------
Net cash generated from operating
activities 6,074 4,039 6,540
------------------ ------------------ ----------------
Cash flows from investing activities
Purchase of property, plant and equipment (3,439) (3,004) (6,669)
Sale of property, plant and equipment - 3 -
Purchase of intangible assets (728) (966) (1,899)
Interest received 4 2 -
Interest paid (775) (295) (717)
Net cash used in investing activities (4,938) (4,260) (9,285)
------------------ ------------------ ----------------
Cash flows from financing activities
Drawdown of borrowings 2,748 4,258 6,300
Repayment of borrowings (687) (758) (1,312)
Repayment of lease liabilities (796) (796) (1,584)
Dividends paid to ordinary shareholders (1,978) (1,928) (3,105)
Net cash (used in) / generated by
financing activities (713) 776 299
------------------ ------------------ ----------------
Net increase / (decrease) in cash 423 555 (2,446)
Cash at beginning of the period 5,999 8,352 8,352
Exchange (losses) / gains on cash (281) 44 93
------------------ ------------------ ----------------
Cash at the end of the period 6,141 8,951 5,999
------------------ ------------------ ----------------
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
2023 (Unaudited) 2022 (Unaudited) 2022 (Audited)
GBP'000 GBP'000 GBP'000
Profit / (loss) before income
tax 3,262 1,221 (2,274)
Adjustments for:
- Amortisation of acquired
intangible assets 833 927 1,903
- Amortisation of other intangible
assets 753 593 1,438
- Impairment of intangible
assets - - 6,726
- Loss on disposal of property,
plant and equipment - 12 71
- Write back of lease creditor
on early termination of lease - - (96)
- Depreciation 3,814 3,396 7,102
- Share based payments 192 40 743
- Amounts claimed under the
RDEC (100) (113) (200)
- Finance income (4) (2) -
- Finance costs 716 355 717
------------------ ------------------ ----------------
Total adjustments 6,204 5,208 18,404
Changes in working capital
- Inventories (4,957) (3,294) (5,557)
- Trade and other receivables 3,344 4,427 (5,707)
- Trade and other payables (1,857) (4,346) 1,218
Total changes in working capital (3,470) (3,213) (10,046)
Cash generated from operating
activities 5,996 3,216 6,084
------------------ ------------------ ----------------
Reconciliation of net cash flow to movements in net debt
Half Year Half Year to Full Year
to to 30 Sep
2022
31 Mar 2023 31 Mar 2022 (Audited)
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------- -------------- ------------
Increase / (decrease) in cash
in the period 423 555 (2,446)
Drawdown of borrowings (2,748) (4,258) (6,300)
Repayment of borrowings 1,623 1,678 3,144
Changes in net debt resulting
from cash flows (702) (2,025) (5,602)
New leases (13) (12) (25)
Non cash movements (1,652) (261) (4,031)
Translation differences 2,225 (447) (165)
-------------- -------------- ------------
Movement in net debt in the
period / year (142) (2,745) (9,823)
Net debt at start of period (19,066) (9,243) (9,243)
Net debt at end of period (19,208) (11,988) (19,066)
-------------- -------------- ------------
Analysis of net debt
At 1 Oct New leases Cash flow Exchange Non-cash At 31
2022 movement movement Mar
2023
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ----------- ---------- ---------- ---------- ---------
Cash at bank and
in hand 5,999 - 423 (281) - 6,141
Debt due within one
year (64) - 32 - (11) (43)
Debt due after one
year (18,730) - (2,093) 1,891 (38) (18,970)
Lease liabilities (6,271) (13) 936 615 (1,603) (6,336)
Net debt (19,066) (13) (702) 2,225 (1,652) (19,208)
--------- ----------- ---------- ---------- ---------- ---------
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.
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 on 5
June 2023. 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 2022 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 2022 are unaudited.
The Interim Report will be announced to all shareholders on the
London Stock Exchange and published on the Group's website on 6
June 2023. 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 2022,
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
2022.
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 2022. 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
2023
Revenue
Total revenue 18,293 16,938 39,732 - 74,963
Inter and intra-division (758) (1,113) (1,804) - (3,675)
---------------------------------- ---------- --------------- ---------- --------- --------
External revenue 17,535 15,825 37,928 - 71,288
Divisional expenses (18,294) (13,034) (31,052) 466 (61,914)
---------------------------------- ---------- --------------- ---------- --------- --------
EBITDA(1) (759) 2,791 6,876 466 9,374
EBITDA % (4.3)% 17.6% 18.1% - 13.1%
Depreciation and amortisation (1,227) (597) (1,808) (935) (4,567)
---------------------------------- ---------- --------------- ---------- --------- --------
Operating (loss) / profit
before amortisation of
acquired intangible assets (1,986) 2,194 5,068 (469) 4,807
Amortisation of acquired
intangible assets - - - (833) (833)
---------------------------------- ---------- --------------- ---------- --------- --------
Operating (loss) / profit (1,986) 2,194 5,068 (1,302) 3,974
Operating (loss) / profit
margin % (11.3%) 13.9% 13.4% - 5.6%
---------------------------------- ---------- --------------- ---------- --------- --------
Add back non-recurring
items 99 72 267 833 1,271
Operating (loss) / profit
excluding non-recurring
items (1,887) 2,266 5,335 (469) 5,245
---------------------------------- ---------- --------------- ---------- --------- --------
Adjusted operating (loss)
/ profit
margin % (10.8)% 14.3% 14.1% - 7.4%
---------------------------------- ---------- --------------- ---------- --------- --------
Aerospace Life Sciences Industrial Corporate Total
& Defence / Biophotonics
For half year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
Revenue
Total revenue 14,554 14,964 30,206 - 59,724
Inter and intra-division (1,427) (1,700) (2,463) - (5,590)
---------------------------------- ---------- --------------- ---------- --------- --------
External revenue 13,127 13,264 27,743 - 54,134
Divisional expenses (14,603) (10,569) (22,937) 465 (47,644)
---------------------------------- ---------- --------------- ---------- --------- --------
EBITDA(1) (1,476) 2,695 4,806 465 6,490
EBITDA % (11.2)% 20.3% 17.3% - 12.0%
Depreciation and amortisation (1,234) (784) (1,457) (514) (3,989)
---------------------------------- ---------- --------------- ---------- --------- --------
Operating (loss) / profit
before amortisation of
acquired intangible assets (2,710) 1,911 3,349 (49) 2,501
Amortisation of acquired
intangible assets - - - (927) (927)
---------------------------------- ---------- --------------- ---------- --------- --------
Operating (loss) / profit (2,710) 1,911 3,349 (976) 1,574
Operating (loss) / profit
margin % (20.6)% 14.4% 12.1% - 2.9%
---------------------------------- ---------- --------------- ---------- --------- --------
Add back non-recurring
items 469 188 788 927 2,372
Operating (loss) / profit
excluding non-recurring
items (2,241) 2,099 4,137 (49) 3,946
---------------------------------- ---------- --------------- ---------- --------- --------
Adjusted operating (loss)/profit
margin % (17.1)% 15.8% 14.9% - 7.3%
---------------------------------- ---------- --------------- ---------- --------- --------
(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 2023 31 Mar 2022
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------- -------------
United Kingdom 12,056 13,267
North and South America 26,383 19,224
Continental Europe 16,927 11,910
Asia-Pacific 15,922 9,733
71,288 54,134
------------- -------------
5. Non-recurring items
Half Year Half Year Full Year
to to to
31 Mar 2023 31 Mar 2022 30 Sep 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- --------------
Profit before tax 3,262 1,221 (2,274)
Amortisation of and impairment
of acquired intangible assets 833 927 8,629
Restructuring and other costs 438 1,445 1,792
Adjusted profit before tax 4,533 3,593 8,147
-------------- -------------- --------------
The restructuring costs in the period ended 31 March 2023 relate
to non-recurring costs arising from our manufacturing streamlining
activities.
6. Tax expense
Analysis of tax charge in the period
Half Year Half Year Full Year
to to to 30 Sep
2022 (Audited)
31 Mar 2023 31 Mar
2022
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------
Current taxation
UK Corporation tax 140 356 399
Overseas tax 404 (100) (3)
Adjustments in respect of prior
year tax charge - (250) (678)
Total current tax 544 6 (282)
Deferred tax
Origination and reversal of temporary
differences (9) (118) (422)
Adjustments in respect of prior
years - (392) 313
Change to UK tax rate - - 127
Total deferred tax (9) (510) 18
Tax expense per income statement 535 (504) (264)
The tax charge for the six months ended 31 March 2023 is based
on the estimated effective rate of the tax for the Group for the
full year to 30 September 2023. The estimated rate is applied to
the profit before tax.
The adjusted effective tax rate is 17.8% (H1 2022: 17.8%).
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
2022
31 Mar 2023 31 Mar 2022 (Audited)
(Unaudited) (Unaudited)
No. No. No.
-------------- -------------- ------------
Number of shares used for basic
earnings per share 25,040,919 25,040,919 25,040,919
Dilutive shares 199,101 127,937 211,603
Number of shares used for dilutive
earnings per share 25,240,020 25,168,856 25,252,522
-------------- -------------- ------------
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 2023 31 Mar 2022 30 Sep 2022
(Unaudited)
(Unaudited) (Audited)
p per p per p per
GBP'000 share GBP'000 share GBP'000 share
-------- ------- -------- ------- -------- -------
Basic earnings / (losses)
per share 2,727 10.9p 1,725 6.9p (2,010) (8.0p)
Adjustments net of income
tax expense:
Amortisation of acquired intangible
assets (net of tax) 659 2.6p 710 2.8p 1,491 6.0p
Impairment of goodwill and
acquired intangible assets
(net of tax) - - - - 6,438 25.7p
Restructuring costs (net of
tax) 342 1.4p 1,193 4.8p 944 3.8p
Other non-underlying items
(net of tax) - - - - 526 2.0p
Release of deferred tax on
goodwill - - (675) (2.7p) (695) (2.8p)
Restatement of UK deferred
tax - - - - 127 0.5p
Total adjustments net of
income tax expense 1,001 4.0p 1,228 4.9p 8,831 35.2p
Adjusted basic earnings per
share 3,728 14.9p 2,953 11.8p 6,821 27.2p
-------- ------- -------- ------- -------- -------
Basic diluted earnings / (losses)
per share 2,727 10.8p 1,725 6.9p (2,010) (8.0p)
-------- ------- -------- ------- -------- -------
Adjusted diluted earnings
per share 3,728 14.8p 2,953 11.7p 6,821 27.0p
-------- ------- -------- ------- -------- -------
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 4.8p per
share for the half year ended 31 March 2023 (2022: 4.7p).
Half Year Half Year Full Year
to to to
31 Mar 2023 31 Mar 2022 30 Sep 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
-------------- -------------- --------------
Final 2022 dividend paid in 2023:
7.9p per share (Final 2021 dividend:
7.7p per share) 1,978 1,928 1,928
Interim dividend of: 4.7p per share - - 1,177
1,978 1,928 3,105
-------------- -------------- --------------
9. Borrowings
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP'000
--------- --------- -------------
Current:
Bank borrowings 43 66 64
Leases 1,247 1,485 1,732
--------- --------- -------------
1,290 1,551 1,796
--------- --------- -------------
Non-current:
Bank borrowings 18,970 14,813 18,730
Leases 5,089 4,575 4,539
24,059 19,388 23,269
--------- --------- -------------
Total borrowings 25,349 20,939 25,065
--------- --------- -------------
G&H's primary lending bank is NatWest Bank. The Group's
facilities comprise a $40m (GBP32.4m) dollar revolving credit
facility and a $30m (GBP24.3m) flexible acquisition facility. At 31
March 2023, the balance drawn on the revolving credit facility was
$23.8m (GBP19.3m) (September 2022: $21.3m (GBP19.1m)) and on the
flexible acquisition facility nil (September 2022: nil).
The facilities above are committed until 31 March 2027 and
attract an interest rate of between 1.6% and 2.1% above rates
specified by the bank 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
2023 2022 2022
GBP000 GBP000 GBP'000
---------
Within one year 43 66 64
Between one and five years 18,970 14,813 18,730
19,013 14,879 18,794
--------- --------- -------------
Maturity profile of lease liabilities
31 March 31 March 30 September
2023 2022 2022
GBP000 GBP000 GBP'000
---------
Within one year 1,469 1,697 1,944
Between two and five years 3,924 3,605 3,500
After five years 1,773 1,505 1,555
--------- --------- -------------
7,166 6,807 6,999
--------- --------- -------------
10. Called up share capital
31 Mar 2023 30 Sep 2022 31 Mar 2023 30 Sep 2022
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
------------- ------------- ------------ ------------
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END
IR FLFLDRIIEIIV
(END) Dow Jones Newswires
June 06, 2023 02:00 ET (06:00 GMT)
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