These half-year figures reveal that Gooch & Housego's (GHH) investment in new products and subsidiaries is already delivering across the group. The photonics (light sciences) specialist revealed a 38 per cent increase in operating profit to £4.9m, although shareholders will probably be all the more pleased by a 71 per cent rise in the order book to £67m at the period-end.
The rise in intangibles shows the group has been on the acquisition trail, bringing in businesses including Kent Periscopes, Alfalight and StingRay Optics to increase exposure to higher-margin sub-sectors. This is reflected in a surge in revenues and strengthening adjusted operating margins for both the aerospace & defence and industrial divisions. The operating margin at the life sciences division pulled back, but the group has been investing heavily to achieve "critical mass" in this growth sector. Revenue there were up by over a fifth, driven by sales of retinal imaging systems.
The group is on the hook for a deferred contingent consideration of up to $10m (£7.7m) relating to the StingRay deal, but despite the spate of acquisitions, the balance sheet remains in good trim. G&H generated cash from operations of £7.9m, compared with £2.9m in the same period of 2016.
Broker finnCap expects adjusted pre-tax profit of £15.8m for the year to September 2018, leading to EPS of 46.4p, against £14.2m and 41.7p in FY2017.
| GOOCH & HOUSEGO (GHH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,453p | MARKET VALUE: | £355m | |
| TOUCH: | 1,426-1,460p | 12-MONTH HIGH: | 1,463p | LOW: 834p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 45 | |
| NET ASSET VALUE: | 395p* | NET CASH: | £7.8m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 38.4 | 3.5 | 10.8 | 3.3 |
| 2017 | 52.2 | 4.7 | 14.1 | 3.7 |
| % change | +36 | +33 | +31 | +12 |
Ex-div: 22 Jun Payment: 17 Jul *Includes intangible assets of £44.4m, or 182p a share | ||||
