Gooch & Housego (GHH) posted a 9.7 per cent increase in adjusted pre-tax profit to £14.2m for its September year-end, capping a financial year in which the photonics (light sciences) specialist made further strides into the aerospace and defence market. Adjusted operating margins at 16.6 per cent were flat from a year ago, reflecting pricing pressures within the navigation and fibre laser components businesses, counterbalanced by good volumes in its fibre products.
The industrial segment, which accounts for three out of every five pounds of group revenue, saw top-line growth of 18 per cent, while adjusted operating profit was 12 per cent to the good at £10.8m. Revenue at the aerospace and defence segment were flattered by the contribution of the newly acquired Kent Periscopes and Alfalight businesses, but we feel that their integration enhances an already strong commercial proposition, allowing the group to move up the value chain and boost margins.
To do that, the group increased R&D spending by 15.4 per cent to £7.4m, a portion of which was funded through central government and European funding. The whole issue of the post-Brexit trade deal isn't terribly relevant to Gooch & Housego, in that the group is effectively hedged through the extent of its non-sterling receipts - a £5.95m translation gain this time around - and often by the singularity of its product offering.
Broker finnCap foresees adjusted cash profit of £19m for the September 2017 year-end, giving EPS of 45.6p, against £17.7m and 41.7p in FY2016.
| GOOCH & HOUSEGO (GHH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 971p | MARKET VALUE: | £236m | |
| TOUCH: | 968-972p | 12-MONTH HIGH: | 1,105p | LOW: 825p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 371p* | NET CASH: | £11.7m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 60.9 | 7.1 | 24.4 | 5.2 |
| 2013 | 63.3 | 8.3 | 27.7 | 6.3 |
| 2014 | 70.1 | 7.9 | 22.5 | 7.2 |
| 2015 | 78.7 | 10.1 | 30.9 | 8.2 |
| 2016 | 86.1 | 10.1 | 29.1 | 9.0 |
| % change | +9 | -0.1 | -6 | +10 |
Ex-div: 15 Dec Payment: 3 Mar *Includes intangible assets of £29.9m, or 123p a share | ||||
