Gooch & Housego PLC Interim Results Half Year Ended 31 March - PowerPoint PPT Presentation

Gooch & Housego PLC Interim Results Half Year Ended 31 March 2015 Chairman: Gareth Jones CEO: Mark Webster CFO: Andrew Boteler PAGE 1 Interim Presentation June 2015

Highlights Operational & Financial Highlights  Strong performance from industrial laser & telecommunications products underpinned 13% increase in revenue to a record £38.9 million for the first six months of FY2015  Adjusted profit before tax up 23.5% to £6.3m from £5.1m  Investment in R&D up 10%  Melbourne site closure completed and products transferred to other G&H sites  Solid order book of £34.6 million, up 5.8% since the year end  Initiatives to drive performance improvement programme across G&H launched  Strong cash inflow supporting 15.4% increase in the interim dividend of 3.0p “Gooch & Housego has performed well in the first six months of the financial year against a background of generally improving market conditions. We remain focused on delivering our financial goals and continued growth in FY15 and beyond. ” Mark Webster- CEO PAGE 2 Interim Presentation June 2015

Highlights Results at a glance Half Year Ended 31 March HY 2015 HY 2014 Change Revenue 13.1% £38.9m £34.4m Adjusted profit before tax 23.5% £6.3m £5.1m Adjusted basic earnings per share 21.4% 19.3p 15.9p Interim dividend per share 15.4% 3.0p 2.6p Net cash £11.9m £2.3m £9.6m Revenue £’m Adjusted PBT £’m 14 80 12 70 60 10 50 8 40 6 30 4 20 10 2 0 0 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 HY2015 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 HY2015 “ The business has delivered sales growth and improving margins driven by a strong performance in our Industrial division ” Andrew Boteler - CFO PAGE 3 Interim Presentation June 2015

Financial Overview Income Statement Key points: Period Ended 31 March 2015 % 2014  Group revenue for the half year was a £’000 £’000 Change record £38.9 million, 13% higher Revenue 38,945 13.1% 34,422  Excluding the impact of foreign exchange, Gross profit 15,560 15.6% 13,462 revenue increased by 10% Operating expenses (9,093) 12.8% (8,060)  Gross margin increased by 1 percentage Adjusted operating profit 6,467 19.7% 5,402 point to 40% driven by the increased volumes Adjusted operating profit % 16.6% 15.7% Acquired intangible assets amortisation (1,219) (1,446)  Adjusted operating margins increased to and exceptional items 16.6% (2014 : 15.7%) Operating profit 5,248 32.7% 3,956  G&H invested £3.2 million in R&D. This Net finance costs (148) (49.5%) (293) represents 8.2% of revenue and is 10% Profit before income tax 5,100 39.2% 3,663 higher than H1 ‘14 (2014: £2.9m) Income tax expense (32.2%) (1,363) (1,031)  Net finance costs reduced by almost half as a result of the company’s continued strong Profit for the period 3,737 42.0% 2,632 cash generation and re-financing its debt Basic earnings per share 15.6p 41.8% 11.0p  Effective tax rate, after taking account of Adjusted profit before tax 6,319 23.7% 5,109 goodwill movements, was 26.5% (2014 : 25.6%) Adjusted basic earnings per share 19.3p 21.4% 15.9p PAGE 4 Interim Presentation June 2015

Financial Overview Cash Flow Statement Period Ended 31 March 2015 2014 £’000 £’000 Key points: Net cash flows from operating activities 5,079 4,323 Cash flows from investing activities  Gross cash from operations generated £5.8 million, compared to Acquisition of subsidiaries - (5,532) £4.9 million in H1 ’14 Capital expenditure & other investing activities (785) (836) (785) (6,368)  The closure of the Melbourne site entailed a cash cost of $0.8 million. Cash flows from financing activities All costs and cash burdens Repayment of borrowings (8,731) (1,704) associated with this closure have now been satisfied Drawdown of borrowings 5,168 4,971 Proceeds from issuance of share capital 98 123  Gross capital expenditure on Interest paid (178) (230) property, plant and equipment was £1.1 million in H1 ‘15 (H1 ‘14: £0.9 Dividends paid to ordinary shareholders (1,101) (950) million). (4,744) 2,210 Net (decrease)/increase in gross cash (450) 165 Gross cash at the beginning of the period 17,094 12,088 Exchange gains/(losses) 596 (237) Gross cash at the end of the period 17,240 12,016 PAGE 5 Interim Presentation June 2015

Financial Overview Balance Sheet Key points: 2015 2014 £’000 £’000  Net cash increased to £11.9 million (September 2014 : £8.7 million) Non-current assets Tangible assets 24,031 24,339 Intangible assets 21,312 20,697  Working capital has increased by Other 2,797 3,462 £1.9 million since the year end. This Total 48,140 48,498 is a function of the planned inventory build and a favourable Current assets Inventories 16,304 13,976 trading environment. Trade & other receivables 16,091 14,614 Cash & cash equivalents 17,240 12,016  Inventory increase of £1.6 million to £16.3 million since the year end, Total 49,635 40,606 due to planned inventory build, FX Current liabilities Trade & other creditors (13,591) (10,060) and positive trading. Borrowings (5,349) (7,972) Other (485) (272)  Debt re-financed during the period. G&H now has a committed revolving Total (19,425) (18,304) credit facility with RBS of $15 million Non current assets Borrowings - (1,698) and an uncommitted flexible acquisition facility of $20 million Other (2,478) (2,568) available until 30 April 2019. Total (2,478) (4,266) Net assets 75,872 66,534 PAGE 6 Interim Presentation June 2015

Technology, Products & Markets Markets & Applications Markets Applications Industrial Fibre lasers Revenue: Solid state lasers  Micro-electronics & light £22.3m Other laser sources manufacturing (2014: £18.9m) Semi-conductor equipment Inspection equipment Adjusted Operating Profit: £4.7m (2014: £3.6m) Perimeter sensing  Fibre optic sensing Laser scanners Wind turbines : 57% Undersea amplifiers Specialist networks  Telecommunications • strong demand for 40G & 100G Modulation acousto-optic systems components for solid state and fibre lasers • telecommunications business strong, driven by undersea fibre components and crystals  Laser interferometers Metrology for modulation systems PAGE 7 Interim Presentation June 2015

Technology, Products & Markets Markets & Applications Markets Applications Aerospace & Defence Revenue: Aircraft platforms  Target designation & £10.3m Missile systems range finding Land based military (2014: £10.2m) platforms Adjusted Operating Profit: £1.0m Ring laser gyroscopes  (2014: £1.5m) Navigation systems Fibre gyroscopes : 27% Telco satellites GPS satellites  Space Photonics Research satellites Space navigation • A&D business flat in the first six months of FY2015 • business remains Infra-red countermeasures optimistic about the  Countermeasures growth potential for this RF countermeasures market in the short term PAGE 8 Interim Presentation June 2015

Technology, Products & Markets Markets & Applications Markets Applications Life Sciences Revenue: Ophthalmic imaging  Optical Coherence £4.3m Cardiovascular Tomography Oesophageal imaging (2014: £3.6m) Adjusted Operating Profit: £0.6m (2014: £0.5m) Prostate surgery  Laser Surgery Ophthalmic surgery : Cosmetic surgery 11% Tattoo removal • strong growth driven by demand for components  Microscopy Confocal microscopes for laser surgery and laser treatment applications PAGE 9 Interim Presentation June 2015

Technology, Products & Markets Markets & Applications Markets Applications Scientific Research Revenue: £2.0m National Ignition (2014: £1.7m)  Internal Confinement Facility Fusion Adjusted Operating Profit: Laser Mega Joule £0.4m (2014: £0.0m) : 5%  Scientific Research institutes Instrumentation Universities • good growth albeit from a low comparative base • business mainly coming from nuclear fusion research applications PAGE 10 Interim Presentation June 2015

Strategy & Preparing for the Future Diversification The newer markets of Aerospace & Defence and Life Sciences, together with new application areas within our Industrial market, offer the potential for significant growth through their rapid adoption of photonic technologies INDUSTRIAL AEROSPACE & DEFENCE 2014 2008 £70.1m £33.3m LIFE SCIENCES SCIENTIFIC RESEARCH Six Year CAGR By Market 45% 33% 8% Flat PAGE 11 Interim Presentation June 2015

Strategy & Preparing for the Future Moving up the Value Chain Diversify Exploit high-growth opportunities for photonics technology  Fibre Optic lasers  Fibre Optic sensing  Laser surgery  A&D sub- systems and systems  Medical Diagnostics  Space/ Satellite communications  Move up the value chain Leverage excellence in components to become a solutions provider Optics + electronics + software + mechanics = added value Materials => components => modules => systems PAGE 12 Interim Presentation June 2015