After a poor start, Gooch & Housego's (GHH) managed an encouraging full-year performance. Significantly, the net debt pile has almost disappeared and there were no further deferred acquisition-related payments - these reached £2.06m last year.
Gooch's trading improved steadily following a tough first quarter and adjusted pre-tax profit fell 24 per cent year-on-year at £8.2m - rather better than with the 40 per cent profit slide reported at the half-year stage. In particular, performance suffered from lower sales of higher margin Q-switches - these control lasers that are used to make sophisticated consumer goods. In fact, Q-switch sales fell from 21 per cent of total turnover to 14 per cent.
Still, Gooch was cushioned from this to an extent because of acquisition-led diversification efforts - especially those focused on the aerospace and defence sectors. These have helped Gooch to move up the value chain which, in time, should boost profit margins - management says the next acquisition may not be far away, either. Indeed, instead of being merely a components manufacturer, subject to the whims of customer stocking and de-stocking, the group is looking increasingly focused on higher value sub-systems. These generated around 20 per cent of sales last year and that's expected to rise to over 50 per cent in five years.
Broker Investec Securities expects adjusted pre-tax profit of of £9.4m, giving EPS of 29.3p (2012: £8.3m/26.4p).
GOOCH & HOUSEGO (GHH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 450p | MARKET VALUE: | £98.6m | |
| TOUCH: | 445-450p | 12-MONTH HIGH: | 480p | LOW: 330p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 267p* | NET DEBT: | 0.5% | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 33.4 | 5.14 | 18.5 | 4.50 |
| 2009 | 36.4 | 1.42 | 5.0 | nil |
| 2010 | 44.7 | 5.10 | 24.4 | 2.00 |
| 2011 | 61.0 | 8.81 | 35.5 | 5.00 |
| 2012 | 60.9 | 7.08 | 24.4 | 5.20 |
| % change | -0 | -20 | -31 | +4 |
Ex-div: 23 Jan Payment: 1 Mar *Includes intangible assets of £20.7m intangibles, or 95p a share Aim: electronic & electrical equipment | ||||
