REG - Gooch & Housego PLC - Interim Results
03/06/2025 07:00
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RNS Number : 1092L Gooch & Housego PLC 03 June 2025
3 June 2025
GOOCH & HOUSEGO PLC
("G&H", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2025
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 2025.
Key Financials
Period ended 31 March (Continuing operations)^ H1 2025 H1 2024 Change
Revenue £70.9m £63.6m 11.4%
Adjusted profit before tax* £5.1m £2.6m 91%
Adjusted basic earnings per share* 15.0p 8.3p 6.7p
Net debt excluding IFRS 16 £24.1m £22.2m £1.9m
Net debt including IFRS 16 £35.5m £30.4m £5.1m
Statutory profit before tax £2.9m £0.3m £2.6m
Statutory basic earnings per share 8.1p (34.8p) 42.9p
Interim dividend per share 4.9p 4.9p -
^H1 2024 figures exclude the divested EM4 business
*Adjusted for amortisation of acquired intangible assets and non-recurring
items.
Key Highlights
§ Portfolio - integration of Phoenix Optical is proceeding to plan and
helping to secure significant new customer orders. May 2025 agreement to
acquire of Global Photonics will extend G&H's A&D capability and
offering into the US market.
§ Revenue - grew 11.4% or 7.5% on an organic, constant currency basis.
§ Profit - adjusted operating profit increased by 60.5% with operating profit
margins improving to 8.7% (2024: 6.0%). A&D segment turnaround to
profitability.
§ Order book - Group order book grew to £121.5m (Sept 2024: £104.5m), with
Phoenix Optical contributing approximately £7m of this increase, and
continues to grow.
§ Net debt - Leverage comfortable at 1.3x. Debt facility extension to March
2030 with an improved margin grid.
§ Outlook - unchanged full year expectations; >95% order cover, though
increased execution risks due to increased global uncertainty. Strong
prospects for further profitable growth in the coming years. Mid-teens return
on sales by 2028.
Charlie Peppiatt, Chief Executive Officer of Gooch & Housego, commented:
"The strong performance achieved in the first half of the year, against a
challenging macroeconomic background, is a testament to the positive progress
the Group is making with the deployment of our new strategy and the resilience
and depth of experience across our leadership team in navigating complex
market dynamics.
"Our expectations for FY2025 are unchanged; trading has continued well post
the period end and we have >95% cover for full year expected revenue,
though there are increased execution risks due to increased global
uncertainty.
"With our growing order book, strengthening market positions and
differentiated photonics expertise aligned to structural growth drivers from
megatrends, we remain confident in our ability to deliver further progress on
our journey to mid-teens returns by 2028 and generate value for all our
stakeholders."
Analyst meeting
A meeting for analysts will be held at 10.30 a.m. today at the offices of
Burson Buchanan, 107 Cheapside, London EC2V 6DN. To register attendance,
please contact Burson Buchanan at G&H@buchanan.uk.com
(mailto: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/681e1301c4d6000013235e61
(https://webcasting.buchanan.uk.com/broadcast/681e1301c4d6000013235e61)
Following the meeting, a recording of the webcast will be made available for
replay at the Group's website at https://gandh.com/investors/
(https://gandh.com/investors/) .
For further information please contact:
Charlie Peppiatt, Chief Executive Officer Gooch & Housego PLC +44 (0) 1460 256440
Chris Jewell, Chief Financial Officer
Mark Court / Sophie Wills / Abigail Gilchrist Burson Buchanan +44 (0) 20 7466 5000
G&H@buchanan.uk.com (mailto:G&H@buchanan.uk.com)
Christopher Baird / David Anderson Investec Bank plc +44 (0) 20 7597 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
The Group's revenue for the six-month period totalled £70.9m (2024: £63.6m)
representing an 11.4% growth over the prior year comparator period, or 7.5% on
an organic, constant currency basis. Demand from the Group's Aerospace &
Defence and Life Sciences markets was strong and revenues from the Group's
fibre optic products used in subsea data cable networks also grew strongly but
activity levels in the Group's industrial laser and semiconductor markets
remained subdued. Uncertainty generated by the rapidly evolving tariff
environment is damaging confidence amongst many of our customers to make
capital investment decisions.
Revenue into our A&D markets grew strongly, by 30% on an organic, constant
currency basis. All of the Group's submarkets in this segment experienced
growth but components supplied by G&H for navigation instruments used in
air platforms led the way. This was thanks to strong underlying demand for our
customers' end applications but also due to improvements made in our Moorpark,
CA facility to increase yield and throughput thereby allowing us to satisfy a
greater share of our customers' overall demand.
Revenue in our Life Sciences segment grew by just over 14% on an organic,
constant currency basis. The accelerating demand for a new instrument supplied
to one of our significant Life Sciences customers allowed us to grow our
revenues in our medical diagnostic market over the prior year. This growth was
supported by our newly established medical diagnostic design, development and
production facility based in our Rochester, NY site which transitioned two
medical diagnostic instrument programmes into volume production. allowing us
to start generating payback on the investment we have made in the facility
over the last couple of years.
Our strong performance in the medical diagnostic market was supported by some
recovery in our medical lasers markets compared with the first half of FY2024
when customer destocking activity significantly slowed demand for our
components used in medical laser programmes. However, margins from our medical
laser markets are under pressure as a result of lower cost Chinese competitors
and we have concluded that we will end-of-life the majority of our product
lines in this area. Our customers have been given the opportunity to place
last time buy orders with our Cleveland, Ohio facility which we will deliver
over the coming eighteen months. These products have contributed on average
between £4-5m per annum of revenue.
In our Industrial segment revenue into our subsea data cable market grew
strongly thanks to the ramp up of deliveries of our complex fibre optic module
assemblies to our customers. However, deliveries into the semiconductor market
fell as our end customer trimmed build rates of their photo lithography
systems. Demand from our customers for our components that are incorporated
into PCB production systems and industrial lasers was also lower than the
comparator period. Our customers' products that are used in a wide range of
consumer electronics and the automotive industries have been impacted by the
increased uncertainty around global trading relationships and rising costs for
consumers from the newly imposed tariffs. This is holding back confidence in
investing in new capital equipment and other major infrastructure projects.
Overall, thanks to the volume growth and the benefits of our operational
efficiency and supply chain actions underlying operating profit increased by
60.5% to £6.2m (2024: £3.8m). This represents a return on sales of 8.7%
(2024: 6.0%).
On 30 October 2024 the Group acquired Phoenix Optical ("Phoenix"). From its
facilities in St. Asaph, North Wales, Phoenix supplies polished, coated and
assembled precision optics to customers around the world. The acquisition
provides the Group with the opportunity to expand and accelerate its reach in
the UK and European Aerospace & Defence markets.
The integration of the Phoenix Optical business has proceeded to plan and the
Group has already secured new customer orders as a result of our newly
combined capabilities. We are also seeing the benefits of the planned
operational synergies thanks to combined facility capacity planning between
Phoenix and the Group's other precision optics sites.
The Group's order book increased to £121.5 million (30 September 2024:
£104.5 million) with the acquired Phoenix business bringing approximately £7
million of this increase. The growth on an organic constant currency basis was
4%. The level of enquiries for the Group's products and services remains high,
especially from both existing and new defence equipment customers, supported
by the broader capability and capacity now available to the Group as a result
of the acquisition of the Phoenix business.
We expect to secure additional business for our advanced optics used in
military vehicles and we are engaged with our medical diagnostic instrument
customers on their next generation instrument programmes which we expect will
convert into future orders for the Group. In our Industrial segment our
customers continue to express optimism about the medium-term prospects for
their end markets but the timing of recovery from these markets remains
difficult to predict.
The background is rapidly evolving, with tariff arrangements implemented by
the US administration and retaliatory actions of other nations. G&H's
direct exposure to those countries that have been subjected to the most
significant tariff increases on imports to the US is limited, but we remain
vigilant to the more general market instability, potential for order delays
and inflationary impacts of increasing global tariffs. We are also actively
re-sourcing our supply of certain raw materials required in our production
processes where availability has been restricted by some nations retaliating
against the newly imposed tariffs which is putting pressure on non-Chinese
sources of supply and actively choosing to have higher stock levels. We intend
to pass on cost base increases arising from these developments through higher
pricing where possible. Given the Group's considerable US-based manufacturing
presence, the new tariffs could over time be a benefit to some parts of our
business against their non-US competitors.
On 14 May 2025, the Group announced that it had entered into an agreement to
acquire US based Global Photonics. The business, which is based near Tampa,
Florida, supplies optical systems for military land applications, including
periscopes and fire-control systems, as well as instrumentation for air
platforms and other advanced precision optics. Its expertise in cleanroom
lithography, photolithographic reticle fabrication, ion beam etching and
advanced thin film coatings will complement G&H's existing manufacturing
capabilities and enhance the Group's offering into the North American market.
The transaction represents another 'speed to value' acquisition by G&H. We
will be able to support the Global Photonics team with the wider capabilities
of G&H, particularly in the areas of laser protection filtering and
complex optical system design allowing them to secure further business through
their existing strong reputation and well-established relationships with US
defence prime contractors.
Revenue
Six months ended 31 March 2025 2024
From continuing operations £'000 £'000 % Change
Industrial 30,122 31,674 (4.9%)
Aerospace & Defence 23,466 16,595 41.4%
Life Sciences 17,290 15,348 12.7%
Group Revenue 70,878 63,617 11.4%
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 by the Group into our industrial markets in the six
months ended 31 March 2025 declined by 4.9%, or 6.5% when measured on an
organic, constant currency basis, compared with the equivalent period last
year which itself was a relatively weak comparator. Recovery in the
semiconductor and industrial laser markets continues to be delayed and indeed
production call off of our products used in the latest deep and extreme ultra
violet photolithography machines fell as our end customer reduced build rates.
Offsetting to some extent these reductions we saw further growth in revenue
from the subsea data cable market. Deliveries of our newly developed complex
amplifier assemblies grew as we supported our end customers' delivery of their
new cable networks. The ramp up in build rates of these more complex fibre
optic assemblies has been enabled by the full transfer to our contract
manufacturing partners of the build of our hi-reliability fibre couplers which
has meant our production space and skilled operators can be transitioned to
this new, more complex work.
Despite the reduced revenue in this segment, adjusted operating profit grew by
10.2% compared with H1 2024, to £3.8m and the adjusted return on sales
percentage moved up to 12.6% (H1 2024: 10.9%). This is thanks to the benefits
of a higher proportion of complex assemblies which command better margins
within the revenue, together with the margin accretion benefit from the
transfer of hi-reliability fibre coupler and other acousto-optic product
manufacture to our low cost contract manufacturing partner.
Products and Markets - Aerospace & Defence (A&D)
In this segment the Group has well-established positions in periscopes and
sighting systems, target designation and range finding, ring laser gyroscope
navigational systems, opto-mechanical subsystems used in unmanned aerial
vehicles (UAVs) and space satellite communications. We are working with our
partners on the development and early stage prototypes of new directed energy
weapon systems that will become an increasingly important element of defensive
suites for both naval and land platforms.
The conflict in Ukraine together with a recognition by many Western NATO
countries that they need to increase their defence budgets is generating
higher levels of enquiries for the Group's precision optic systems which are a
critical element within most modern defence systems. The combination of our
recently acquired Artemis and Phoenix businesses with the existing
capabilities of the G&H Group means that we are now able to offer more
comprehensive product offerings to our customers.
We have completed initial deliveries of our advanced periscope systems for the
UK MOD's programme to upgrade the Challenger MBT platform and for a very
similar periscope to an eastern European NATO country for a new amphibious
armoured vehicle programme. These deliveries allow both vehicles to progress
in their trials programmes before transitioning into volume production in the
coming years.
Group revenue into the A&D market grew by 41.4%, or 30.0% on an organic
constant currency basis compared with the first half of FY2024. Deliveries of
our super polished optical components used in ring laser gyroscopes increased
again thanks to our end customers' programmes growing but also as a result of
the improvements that have been made at our Moorpark, CA facility to increase
production throughput and yield thereby allowing us to satisfy more of our
customers overall demand.
Additional volumes in this segment together with our operational efficiency
improvements resulted in the segment generating a profit in the period of
£0.6m (H1 2024: loss of £1.6m). We believe further production efficiency
improvements together with a greater proportion of the segment's revenues
being derived from sub systems that contain more G&H content will mean
that the segment can move towards high single digit returns in the coming
years.
The integration of the Phoenix business is proceeding to plan. This
acquisition has already allowed the Group to secure new customer orders and
combined facility capacity planning between Phoenix and the Group's other
precision optics sites is supporting the Phoenix business in delivering its
record order book. The Group has moved quickly to identify alternative sources
of Germanium following the Chinese government's decision to restrict supply to
Western countries. Germanium is used in many of our products supplied into the
defence market and we believe our newly established supply chain relationships
for the provision of this material provide us with a competitive advantage.
Products and Markets - Life Sciences
Revenues from our medical diagnostic markets grew compared with the first half
of FY2024 due to a ramp up in one of our end customer programmes. We were also
pleased to see the first two instrument production programmes launching in our
Rochester, NY facility during the period. Our Life Sciences R&D team are
working on a customer's programme to develop a new point of care instrument
which we are optimistic will generate significant revenues for the Group.
G&H is also able to offer the customer the manufacture of the disposable
cartridge which is required in the operation of the instrument from our GS
Optics business, demonstrating the synergy that comes from having this polymer
optic capability within the Group.
Revenues from our Pockels cells that are used in medical lasers also saw some
recovery from their very low levels in the first half of FY2024 but given the
increasing competition we are facing from low-cost Chinese suppliers we have
made the decision to end-of-life the majority of our product lines in this
market. We have invited our customers to place last time buy orders with us
which we will deliver over the coming eighteen months at which point our
Cleveland, OH facility will transition to further develop its capacity for the
growth of crystals used both within our Group and directly by end customers
for optical applications.
Revenue from our Life Sciences market grew by 12.7% or 14.2% on an organic,
constant currency basis in the six months to 31 March 2025, compared with the
first half of FY2024. Despite the growth in revenue operating profit returns
in this segment declined to 12.0% (H1 2024: 14.7%). In our medical diagnostic
market pre negotiated price reductions for volume production came into effect
on one of the instrument programmes as volumes increased while pricing for our
Pockels cells came under pressures as a result of the increased competition
from low cost suppliers noted above. We expect margins in this segment to
recover as we secure the benefit of further revenue through our recently
established Life Sciences facility in Rochester, NY and some selective
outsourcing of other product lines to our own lower cost suppliers.
Strategy
G&H's strategy to become an 'innovative customer focused technology
company' delivered responsibly by making a 'better world with photonics',
continues to progress positively and the foundational building blocks are now
in place to support the delivery of sustainable margin growth in the medium
term. The successful execution of this strategy will ensure that G&H
becomes and remains the 'first choice' for all our stakeholders whether that's
for 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.
1.
1. PEOPLE - Establish High Performance Teams
This will be achieved by following G&H's corporate values that guide the
way we endeavour to do business, consisting of customer focus, integrity,
action, unity and precision to deliver fundamental and sustainable improvement
for our employees, for the profitability of the company and for the
sustainability of our planet.
Priorities
• Embed our Vision, Mission, Values and Behaviours through every step of
our employees' work experience.
• Invest in appropriate HR enablement tools to better support our
employees.
• Apply greater rigour and structure to talent reviews and invest in
employee development and succession planning.
• Review our benefits and incentive plans to ensure they remain market
competitive and appropriately motivate and reward our employees for the right
behaviours.
• Promote greater diversity amongst our team especially at management
levels.
• Drive further improvements in our safety performance targeting zero
harm in all of our facilities.
Progress
• The upskilling of the HR function through personal development and
where appropriate replacement of a number of our site HR business partners
continues to proceed in line with plan.
• A new Group-wide HR Information System has been implemented across the
Group providing our HR leaders with a single source of secure interactive
information on each of our employees.
• Revised incentive scheme implemented for our sales force ensuring they
are appropriately motivated to grow the business and secure profitable new
customer and programme positions.
• Completed full Groupwide employee engagement survey to help focus and
align our activities to become a world class employer.
• Zero reportable accidents (RIDDOR) in the first half of FY2025.
• Environmental management certification to ISO 14001 for all sites over
the next 3 years. Since launching the new strategy, we now have five of our
ten worldwide sites encompassed by ISO14001, with Plymouth (UK) and Rochester
(US) on target to join them and receive certification in CY2025.
• The successful integration of Phoenix and its smooth transition into
G&H has fostered a sense of unity and shared purpose among our employees
and encouraged a greater willingness to harness and capitalise on the
complementary expertise that Phoenix Optical brings to G&H.
• The Sustainability Committee successfully continues to provide
leadership and focus on driving the Group's equality, diversity and inclusion
agenda.
Future Priorities
• We will continue to develop a more focused approach to career planning
and succession providing our high potential employees with structured
development activities.
• We will continue to focus on ensuring our HR function is organised
with the right talent to enable the delivery of the key 'people' element of
our strategy aligned to a more customer focused structure.
• Renewed focus on how we attract, recruit, promote and retain a diverse
group of talented people who share our values.
• Our incentive plans for management will be updated to allocate a
greater reward for cash generation thereby supporting the Group's goal to
further improve the efficiency with which it deploys its capital.
• Proactive follow-up to the actions and improvement opportunities
raised in the last employee engagement survey to deliver further improvements
in employee engagement, performance and well-being.
• Our Sustainability Committee and Sub-Committee will continue to
establish a series of supporting working groups to help drive the Group agenda
and accelerate our efforts in this area.
• We will continue our site health and safety inspections to achieve
further improvement in our safety at work metrics. We are targeting zero
workplace harm in our facilities.
2. SELF-HELP - Deliver an exceptional customer experience and superior operational execution
Priorities
• Leverage our Customer Relationship Management tools to improve the
effectiveness of our Business Winning activities.
• Reorganise our commercial teams to clearly separate our product line
management activities from our other selling activities.
• Support our product line and business development teams in selling
more complex solutions that incorporate more of the Group's components and
capabilities.
• Cross selling capabilities and products from newly integrated
acquisitions through our global divisional sales team.
• Through strategic engagements with our customers ensure we are
developing joint product and technology roadmaps that inform our R&D
priorities.
• Disciplined focus on superior operational execution through
productivity, quality, inventory management, delivery and new product
introduction improvements
• Proactive outsourcing of carefully selected products earlier in life
cycle where technological sovereignty is not a differentiator.
• Use our operations planning processes to improve our on-time delivery
performance and reduce our lead times.
Progress
• Our sales, business development and commercial teams have been
successfully reorganised to allow a better focus on our medium-term product
management strategies and aligned more closely to the specialist end markets
we serve in Aerospace & Defence optics, Industrial photonics and Life
Sciences lasers and diagnostics.
• The Group's on time delivery performance further improved during the
first half of year. G&H Moorpark, which was struggling to meet required
performance levels a year ago, has led the way with the significant turnaround
in operational performance at this site.
• We have strengthened our Supply Chain team with enhanced focus on
driving process improvement and low-cost region manufacturing from our global
supply chain. To support this we have expanded the talented local G&H team
in Thailand.
• Following the qualification of our Asian contract manufacturing
partner for FO products last year, we have successfully delivered the full
ramp-up of the production of fused fibre couplers as a third source for the
supply of those products to our customers in volume.
• After completing the transfer of our North American medical diagnostic
manufacturing activity from its former site in Virginia into our newly
acquired GS Optics facility in Rochester we have achieved ISO 13485
certification and FDA approval for the manufacture of medical devices at this
location and completed the phase one build out of the expanded production area
at the site.
• Several talented optical and mechanical engineers have been recruited
for the Life Sciences business unit in Rochester, NY successfully tapping into
the large pool of optics talent in that area.
Future Priorities
• We have developed our Customer Relationship Management tool to allow
us to further integrate it with our core ERP systems. This is enabling us to
reduce our time to prepare customer quotes and give our sales team a more
complete dashboard of our overall interactions with our customers.
• We will continue to identify further products to outsource to our
Asian contract manufacturing partner. We intend to transfer products earlier
in their product life cycle to enable us to secure the margin accretion and
the additional capacity flexibility that can result from these transfers.
• We have identified further second source suppliers to mitigate the
risk associated with some of our sole source suppliers, especially those that
are assessed as being of higher risk following the recent US tariff actions
and retaliatory measures from China and other nations.
• We will continue to focus on delivering the planned productivity and
cost-of-poor-quality improvements over the period of the strategic plan.
• We will deliver further improvement of safety, quality, delivery,
inventory and productivity across our operations through Lean and other
continuous improvement tools.
3. TECHNOLOGY - Create value through our technology
Priorities
• Technology roadmaps that focus our investment on those areas
identified as offering the greatest returns.
• A smaller number of development projects but with same level of
overall Group investment thereby allowing an acceleration of time to market.
• On time and on budget delivery of our new product development
programmes.
• An increasing proportion of the Group's revenue derived from products
introduced in the last three years.
• A greater proportion of our engineers' time spent on new product
development activities.
• A greater interaction between our business development and engineering
teams to maximise our influence on our customers as well as ensuring our
technology roadmaps reflect our customers latest plans,
Progress
• Spend on R&D in H1 FY2025 totalled £3.5m (H1 FY2024: £3.6m).
• We have identified, resourced and established actions plans for the
vital few research programmes which will receive priority given their
potential to deliver material accretion to the Group's revenues and
profitability.
• The strengthened acousto-optic engineering and product line management
team continues to focus on the commercialisation and ramp-up of further
optimised Germanium-based modulators for CO(2) lasers used in semiconductor
fabrication and micro-machining.
• Fibre optic: Design, development and award of new generation of
fibre-optic components for semiconductor fabrication, submarine hi-reliability
network coupler and medical diagnostics.
• Precision optic systems: Design, qualification and manufacture of
novel imaging sighting systems for the UK's main battle tank and the
application of unique advanced laser protection filters into A&D
applications.
• Precision optics: Design and transfer to production of coating
technology in the Deep Ultraviolet, opening up new business opportunities in
advanced semiconductor laser tools.
• Life Sciences: Opening of the new Rochester, NY, Life Sciences
Innovation Hub and Centre of Excellence in North America for the design and
development point of care, user interface and apps development, AI, machine
learning, cyber security of patient data.
Future Priorities
• Continued focused investment in the vital few development projects.
• Become a global hub and centre of excellence to develop our advanced
thin film coating offerings and to capture a greater share of our customers'
spend offering manufacture in region (US for US and UK for Europe).
• Win additional armoured fighting vehicle advanced periscope, sighting
systems and fire control optical systems.
• Organically grow our high-value add optics business by leveraging the
acquired polymer technology with in-house and newly acquired expertise in
coatings, coupled with our capability to system integrate and offer
optomechanical assemblies.
• Develop and expand our AO regional design centre in Fremont US to
support strong pipeline for next generation product developments and
customer-led R&D.
• Secure and launch US Medical Diagnostic R&D programmes.
4. INVESTMENT - Apply focused investment across the business
Priorities
• Ensure acquired businesses are successfully integrated into the Group
and that the expected commercial and operational synergies are achieved.
• Tight management and reduction of the Group's investment in its
working capital, through efficient operations planning and inventory
procurement policies.
• Ensure Group investment in new capital equipment is optimised and
appropriately prioritised into the areas of the business that offer the most
attractive potentials for returns and aligned to new strategic priorities.
• Regularly review the portfolio to ensure we have in all cases a
differentiated offering capable of delivering attractive returns.
• Assess and execute suitable accretive and strategic acquisitions to
deliver 'speed to value'.
• End of life or divest those elements of the portfolio that are not
differentiated or non-core.
• Invest in our supply chain partners with our capital equipment and our
on-site supply chain staff to help drive superior returns for the Group and
improved responsiveness for our customers.
Progress
• After completing the acquisition of Phoenix, the integration of the
business proceeds in line with plan. Additional commercial synergies for
Phoenix have been identified and the establishment, fit-out and opening of our
North American Life Sciences hub was completed in the first half of the year.
• As our supply chain is able to increasingly improve on-time delivery
performance we have been able to further reduce the levels of our safety stock
holding.
• Where our customers request us to carry safety stocks to protect their
programmes we ensure that they provide us with advanced funding to cover the
working capital investment. This is being successfully implemented.
• We entered into an agreement to acquire Global Photonics, an optical
systems specialist, based in Tampa FL, in May 2025.
• We continue to monitor the market for potential acquisition targets.
We are supported in this activity by a network of advisors with whom we have
shared our acquisition criteria.
Future Priorities
• We will continue to identify and deliver commercial synergies from the
acquisitions of GS Optics, Artemis, Phoenix and Global Photonics as part of
the G&H Group.
• We continue to see the benefits from substituting previously third
party spend in both G&H and the newly acquired businesses with internal
supply.
• Our customers remain positive about the combined offerings that
G&H is now able to provide with the addition of the businesses acquired
over the last couple of years. We expect this to be converted into additional
new business awards.
• We will continue to explore acquisition opportunities that may be a
match to our acquisition criteria and deliver speed to value creation for the
Group as well as continue to review our portfolio related to further
divestment or end of life of non-core or non-performing product lines.
• Our capital equipment spend will be optimised and focused tightly on
those areas of the business that offer the greatest potential return.
• We are targeting further reduction in our inventory holdings.
Financial Review
Group revenue grew by 11.4% or 7.5% on an organic, constant currency basis.
Gross margins progressed to 30.4% from 29.1% in the first half of FY2025 due
to the additional volume and the delivery of the strategic actions we are
implementing.
Whilst the new US tariff regime did not take effect until after the end of the
reporting period we have notified our customers that we intend to pass on any
incremental costs to them. We have developed new reporting tools to enable us
to quickly assess the impact on existing customer orders so that we can apply
a tariff surcharge where required and protect the Group's margins.
The Group's spend on R&D totalled £3.5m, broadly consistent with the
first half of FY2024 (H1 2024: £3.6m). Primary areas of focus for the Group's
R&D teams in the period were fibre optic module assemblies used for both
telecoms and sensing applications and further complex electro/optic assemblies
for military land and air platforms.
The growth in the Group's overheads to £11.9m (2024: £11.1m) was principally
as a result of the acquisition of the Phoenix business within the Group's
reported numbers. Excluding this effect overheads grew by 2.6% reflecting wage
inflation. The Group has also continued to invest in its supply chain team in
Asia in order to support the transition of more of the Group's product lines
to our low-cost region partners.
Underlying operating profit increased by 60.5% to £6.2m (2024: £3.8m).
Reported operating profit grew to £4.2m (2024: £1.6m). Further details of
the adjustments made between underlying and reported profit measures are set
out below.
The Group's interest charges totalled £1.3m (2024: £1.2m). The charge
reflected additional borrowing taken to fund the acquisition of the Phoenix
business at the end of October 2024.
The Group's adjusted effective tax rate was 22.9% (2024: 19.2%). Adjusted
earnings per share was 15.0p (2024:8.3p)
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 Directors believe the latter 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 profit Net finance costs Profit before tax Taxation Profit after tax from continuing operations Earnings per share
Half Year to 31 March 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 Pence pence
Reported 4,156 1,571 (1,288) (1,247) 2,868 324 (776) (168) 2,092 156 8.1p 0.7p
Amortisation of acquired intangible assets 1,097 1,074 - - 1,097 1,074 (234) (224) 863 850 3.3p 3.3p
Restructuring and other costs 412 649 - - 412 649 (80) (59) 331 590 1.3p 2.2p
Acquisition costs 426 116 - - 426 116 (17) (54) 410 62 1.6p 0.3p
Site closure costs 64 425 - - 64 425 - (2) 64 423 0.2p 1.6p
Interest on deferred consideration - - 184 57 184 57 (50) - 134 57 0.5p 0.2p
Adjusted 6,155 3,835 (1,104) (1,190) 5,051 2,645 (1,157) (507) 3,894 2,138 15.0p 8.3p
Cash Flow and Financing
In the six months ended 31 March 2025, G&H generated net cash from
operations of £2.6m, compared with £2.5m in the same period of 2024. Working
capital levels increased by £6.7m from the end of FY2024. This was driven by
growth in receivables given high levels of invoicing in March which have since
been converted to cash. The Group's inventory also grew by £5.3m although
this was to some extent offset by higher trade creditor balances at the end of
March. The Group has chosen to increase its inventory of some materials such
as Germanium in response to new uncertainties in the availability of these
materials as a result of export restrictions imposed by the Chinese
government.
The net cash outflow on the acquisition of the Phoenix business totalled
£2.7m. This comprised consideration paid of £2.9m less cash received with
the business of £0.2m. Transaction fees totalled £0.3m. Deferred contingent
consideration of up to £3.35m is payable based upon the financial performance
of the business in the three years ended 30 June 2027. We have assessed the
present value of the deferred consideration liability at 31 March 2025 to be
£1.7m.
Capital expenditure on property, plant and equipment was £2.5m in the period
(2024: £1.8m). The principal areas of investment in H1 FY2025 were in our
fibre optic facility in Torquay where we continued our investment in new fibre
optic module assembly lines as programme migrate to their production phase. We
also invested in additional heavy water for our Cleveland facility in order to
increase their crystal growth capacity. This investment was accelerated in
order to take receipt in advance of the new tariff regime coming into effect
at the beginning of April.
Our investment in intangible fixed assets totalled £1.2m (2024: £1.2m). We
have started the transition of the Phoenix business onto the Group's ERP
system and expect them to go live on the system in Q3 of this financial year
allowing them to be fully integrated with the Group's business management and
reporting systems. In the period we also implemented a new G&H-wide HR
Information System that provides a one stop shop for all employee performance
management activities as well as the administration of the Group's payroll.
As at 31 March 2025 the Group had drawn $38.4m on its revolving credit
facility (September 2024: $30.4m). On 1 April 2025 the Group extended its
facility to 31 March 2030 with an increased committed facility of $55m and an
uncommitted accordion facility of $15m. On completion of the Global Photonics
acquisition, $5m will be converted from the accordion to the committed
facility resulting in a committed facility of $60m and an accordion of $10m.
At 31 March 2025 the Group's net debt totalled £35.5m (30 September 2024 -
£25.8m) including lease liabilities of £11.5m (30 September 2024 - £9.9m).
Consistent with the Group's borrowing agreements, which exclude the impact of
IFRS 16, Leases, our leverage ratio was 1.3 times at 31 March 2025 (30
September 2024: 0.9 times).
Environmental, Social and Governance
In the first half of the year the Group achieved a like for like reduction of
13.9% in its carbon intensity measure. During the period we transitioned our
Artemis site in Plymouth and our site in Cleveland, Ohio to purchasing all of
their electricity from renewable sources.
We are continuing to invest to support our target of being net zero for scope
1 and 2 emissions by 2035. We are working with the landlord of our facility in
Plymouth to explore the installation of solar panels for the onsite generation
of electricity.
Our programme to extend ISO 14001 - Environmental Management - to all of the
Group's sites continues. We expect our Plymouth and Rochester, NY sites to
achieve accreditation in the second half of this financial year and to have
all Group's facilities accredited by the end of FY2027.
The Group manages its activities in this area through the Sustainability
Committee of the Board. This Committee is chaired by our non-executive
director, Susan Searle. This Committee is supported in its work by a
Sustainability subcommittee staffed with representatives from across the
Group. The remit of the Sustainability Committee includes oversight of the
Group's activities to ensure appropriate adherence to the Group's Ethics &
Anti-Corruption, Equality, Diversity & Inclusion, Trade Compliance and
Cyber Security policies. We are using the Group's new HR Information System to
deliver training content electronically and to use the system to record course
completion by employees.
Dividends
An interim dividend of 4.9p per share (2024: 4.9p) has been declared. This
dividend will be payable to shareholders on the register as at 20 June 2025 on
25 July 2025. The Board intends to review its dividend policy in the second
half of the financial year, in order to assess whether some element of the
dividend if reinvested in the business, may generate a better return for our
shareholders.
Prospects and outlook
The strong performance achieved in the first half of the year, against a
challenging macroeconomic background, is a testament to the positive progress
the Group is making with the deployment of our new strategy and the resilience
and depth of experience across our leadership team in navigating complex
market dynamics. With our growing order book, strengthening market positions
and differentiated photonics expertise aligned to structural growth drivers
from megatrends, we remain confident in our ability to deliver further
progress on our journey to mid-teens returns over the medium term and generate
value for all our stakeholders.
Following the implementation of changing global trading policies from the new
US administration and the consequent retaliatory measures from China and other
nations we are seeing near-term uncertainty increase, especially in our
Industrial, semiconductor and Life Sciences markets. This has resulted in
reduced demand levels from our industrial market persisting longer than we
expected and delays with infrastructure, semiconductor and Life Sciences
projects, including increased regulatory approved lead times However, we
are well positioned to benefit from recovering demand levels in these
markets.
In our A&D business we are seeing strong demand, especially for our
optical systems, advanced coatings, ring laser gyros, armour vehicle periscope
and our imaging solutions for air, sea and land equipment.
The overhaul and turnaround of the Group's A&D business unit supported by
operational improvements, the refocusing of our R&D resources and
complementary 'speed to value' acquisitions have positioned us well to meet
increased demand from existing customers, capture new business opportunities
and become a full optical systems solutions provider for prime defence
contractors in the US, Europe and RoW. At the same time the integration of
Phoenix is proceeding to plan and we are seeing significant commercial synergy
opportunities arising from our combined value proposition.
Global Photonics will be a strong strategic and operational fit for G&H,
bringing deep application expertise, strong relationships with U.S. defence
primes and complementary manufacturing capabilities to our growing Optical
Systems division. This acquisition accelerates our plan to become the partner
of choice for high-precision optical systems in both the UK and the U.S. and
opens exciting new growth channels in North America. The establishment of a
full optical systems engineering and manufacturing capability in the U.S. for
the Aerospace & Defence market mirrors our successful strategy for the
U.S. healthcare sector with the recent opening of our G&H Innovation Hub
for Life Sciences in Rochester NY.
Our order book remains at a healthy and growing level and we have over 95%
cover needed to support expected FY2025 revenue. At the same time, we have
entered a period of unprecedented global macroeconomic uncertainty and
fluidity which has increased near-term risk. The Group is proactively managing
this increased complexity and uncertainty in the global supply chain since the
imposition of the new and constantly changing US tariff regime and the
associated counter measures from other countries. G&H is also involved in
advanced hi-tech development and production programmes some of which are
dependent upon inputs from our customers, regulators and suppliers in order to
progress to their expected timescales. Nevertheless, our expectations for
FY2025 are unchanged and the Group has strong prospects for further profitable
growth in the coming years. We expect to achieve mid-teens return on sales by
2028.
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
98 of our 2024 Annual Report available on our website. At the end of 2024 we
identified geopolitical risks as the most significant for the Group and we
have indeed seen the impact of this in the new tariff regime imposed by the US
and consequent retaliatory measures from other countries. Our mitigation plan
has been to limit as much as possible our direct exposure to supply from China
and that has helped us significantly in the reporting period. To the extent
our US sites do experience higher import costs we have communicated to our
customers that we intend to pass those costs on to them in the form of a
tariff surcharge. Our US manufacturing presence may also in the medium term
bring additional business to the Group but the uncertainty the tariffs bring
has impacted our customers' confidence, particularly in our Industrial
markets, to make investment decision that drive demand for our products.
We identified security of material supply as an important risk for the Group.
Recent export restrictions imposed by the Chinese government on certain raw
materials important in the production of precision optics had the potential to
impact the Group severely. Our supply chain team are moving quickly to
identify and secure alternative non-Chinese source of supply. Nevertheless,
the Group remains dependent to some degree on the continued availability of
these materials in many cases to supplement and enable our own in-house
production.
The Group's development and production programmes frequently depend upon the
timely performance of our suppliers, regulatory authorities and our customers.
Delays experienced by these partners can have an adverse impact on the Group's
revenue and profitability. We seek to work closely with these partners to
mitigate these risks but they are not fully within the Group's control.
There is an ever present risk from the emergence of new competitors in our
markets, especially from lower cost regions. This is a constant phenomenon and
risks lowering the price points for the Group's products. Whilst we seek to
mitigate this risk by continuing to develop advanced product solutions for our
customers that can address their most complex needs, thanks to our investment
in our product line management teams we are better able to quickly identify if
it is preferable to end of life product lines. This was the case for many of
the Pockels cell product lines manufactured by our Cleveland facility. We
identified the emerging threat quickly and proactively offered customers the
chance to make a last time buy in advance of seeing the price points for those
products eroded by low cost competitors. We will now focus that site on
those areas where we have a differentiated offering, namely the growth of high
quality crystals for the optics market.
Group Income Statement
Unaudited interim results for the 6 months ended 31 March 2025
Half Year to 31 March 2025 (Unaudited) Half Year to 31 March 2024 (Unaudited) Full Year to 30 September 2024
(Audited)
Note Underlying Non-underlying Total Underlying Non-underlying Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 4 70,878 - 70,878 63,617 - 63,617 135,990
Cost of revenue (49,310) - (49,310) (45,115) - (45,115) (94,341)
Gross profit 21,568 - 21,568 18,502 - 18,502 41,649
Research and development (3,535) - (3,535) (3,554) - (3,554) (7,828)
Sales and marketing (4,344) - (4,344) (4,572) - (4,572) (8,474)
Administration (7,857) (1,999) (9,856) (6,815) (2,264) (9,079) (19,364)
Other income and expenses 323 - 323 274 - 274 829
Operating profit / (loss) 4 6,155 (1,999) 4,156 3,835 (2,264) 1,571 6,812
Net finance costs (1,104) (184) (1,288) (1,190) (57) (1,247) (2,604)
Profit / (loss) before income tax expense 5,051 (2,183) 2,868 2,645 (2,321) 324 4,208
Income tax expense 6 (1,157) 381 (776) (507) 339 (168) (931)
Profit / (loss) for the period from continuing operations 3,894 (1,802) 2,092 2,138 (1,982) 156 3,277
Loss for the period from discontinued operations - - - - (9,262) (9,262) (9,654)
Profit / (loss) for the period 3,894 (1,802) 2,092 2,138 (11,244) (9,106) (6,377)
Earnings / (loss) per share
From continuing operations
Basic earnings per share 7 15.0p (6.9p) 8.1p 8.3p (7.6p) 0.7p 12.7p
Diluted earnings per share 7 14.8p (6.8p) 8.0p 8.2p (7.5p) 0.7p 12.5p
From continuing and discontinued operations
Basic earnings per share 15.0p (6.9p) 8.1p 8.3p (43.1p) (34.8p) (24.7p)
Diluted earnings per share 14.8p (6.8p) 8.0p 8.2p (43.0p) (34.8p) (24.7p)
Group Statement of Comprehensive Income
Group Statement of Comprehensive Income Half Year to Half Year to Full Year to
31 Mar 2025
31 Mar 2024
30 Sep 2024
(Unaudited)
(Unaudited)
(Audited)
£'000 £'000 £'000
Profit / (loss) for the period 2,092 (9,106) (6,377)
Other comprehensive income / (expense)
Gains on cash flow hedges 18 104 126
Currency translation differences 1,737 (2,064) (4,712)
Other comprehensive income / (expense) for the period 1,755 (1,960) (4,586)
Total comprehensive income / (expense) for the period 3,847 (11,066) (10,963)
Group Balance Sheet
Unaudited interim results for the 6 months ended 31 March 2025
Group Balance Sheet 31 Mar 2025 31 Mar 2024 30 Sep 2024
(Unaudited)
(Unaudited)
(Audited)
As restated
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 38,370 37,799 37,915
Right of use assets 10,395 8,956 9,180
Intangible assets 55,495 54,297 51,051
104,260 101,052 98,146
Current assets
Inventories 37,597 32,022 30,631
Trade and other receivables 37,860 31,661 30,908
Cash and cash equivalents 5,546 4,816 6,622
81,003 68,499 68,161
Current liabilities
Trade and other payables (22,010) (16,933) (18,075)
Borrowings - (10) (10)
Lease liabilities (1,881) (913) (1,289)
Tax liabilities (1,992) (866) (2,005)
Deferred consideration (2,074) - -
(27,957) (18,722) (21,379)
Net current assets 53,046 49,777 46,782
Non-current liabilities
Borrowings (29,604) (26,971) (22,563)
Lease liabilities (9,591) (7,282) (8,570)
Provision for other liabilities and charges (1,100) (1,398) (1,429)
Deferred consideration (1,682) (927) -
Deferred tax liabilities (4,809) (4,992) (3,978)
(46,786) (41,570) (36,540)
Net assets 110,520 109,259 108,388
Shareholders' equity
Called up share capital 5,159 5,159 5,159
Share premium account 16,051 16,051 16,051
Merger reserve 11,561 11,561 11,561
Cumulative translation reserve 6,838 7,749 5,101
Hedging reserve 159 119 141
Retained earnings 70,752 68,620 70,375
Equity Shareholders' Funds 110,520 109,259 108,388
Statement of Changes in Equity
Unaudited interim results for the 6 months ended 31 March 2025
Statement of Changes in Equity Share capital account Share premium account Merger reserve Retained earnings Hedging reserve Cumulative translation reserve Total equity
£000 £000 £000 £000 £000 £000 £000
At 1 October 2023 5,159 16,051 11,561 76,920 15 10,027 119,733
Restatement - - - 2,495 - (214) 2,281
As restated 5,159 16,051 11,561 79,415 15 9,813 122,014
Loss for the period - - - (9,106) - - (9,106)
Other comprehensive income / (expense) for the period - - - - 104 (2,064) (1,960)
Total comprehensive (expense) / income for the period - - - (9,106) 104 (2,064) (11,066)
Dividends - - - (2,114) - - (2,114)
Share based payments - - - 425 - - 425
At 31 March 2024 (unaudited) 5,159 16,051 11,561 68,620 119 7,749 109,259
At 1 October 2024 5,159 16,051 11,561 70,375 141 5,101 108,388
Profit for the period - - - 2,092 - - 2,092
Other comprehensive income for the period - - - - 18 1,737 1,755
Total comprehensive income for the period - - - 2,092 18 1,737 3,847
Dividends - - - (2,140) - - (2,140)
Share based payments - - - 425 - - 425
At 31 March 2025 (unaudited) 5,159 16,051 11,561 70,752 159 6,838 110,520
Group Cash Flow Statement
Unaudited interim results for the 6 months ended 31 March 2025
Group Cash Flow Statement Half Year to 31 Mar 2025 (Unaudited) Half Year to 31 Mar 2024 (Unaudited) Full Year to 30 Sep 2024 (Audited)
£'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 3,590 2,220 14,247
Income tax (paid) / refunded (1,040) 315 (62)
Net cash generated from operating activities 2,550 2,535 14,185
Cash flows from investing activities
Disposal of subsidiary, net of cash disposed - 2,380 1,665
Acquisition of subsidiaries, net of cash acquired (2,716) - (351)
Purchase of property, plant and equipment (2,463) (1,789) (3,526)
Sale of property, plant and equipment 325 12 -
Purchase of intangible assets (1,218) (1,217) (1,716)
Interest received 8 28 40
Net cash used in investing activities (6,064) (586) (3,888)
Cash flows from financing activities
Drawdown of borrowings 7,874 2,789 4,731
Repayment of borrowings (1,585) (2,988) (8,046)
Repayment of lease liabilities (794) (904) (1,715)
Interest paid (1,112) (1,220) (2,487)
Dividends paid to ordinary shareholders (2,140) (2,114) (3,378)
Net cash generated by / (used in) financing activities 2,243 (4,437) (10,895)
Net decrease in cash (1,271) (2,488) (598)
Cash at beginning of the period 6,622 7,294 7,294
Exchange gains / (losses) on cash 195 10 (74)
Cash at the end of the period 5,546 4,816 6,622
Notes to the Group Cash Flow Statement
Notes to the Group Cash Flow Statement Half Year to 31 Mar 2025 (Unaudited) Half Year to 31 Mar 2024 (Unaudited) Full Year to 30 Sep 2024 (Audited)
£'000 £'000 £'000
Profit before income tax from continuing operations 2,868 324 4,208
Loss before income tax from discontinued operations - (9,465) (9,876)
Adjustments for:
- Amortisation of acquired intangible assets 1,097 1,074 2,002
- Amortisation of other intangible assets 758 905 1,755
- Loss on disposal of subsidiary - 8,261 8,910
- Loss on disposal of property, plant and equipment - 128
- Depreciation 4,046 4,052 7,732
- Share based payments 425 425 715
- Amounts claimed under the RDEC (200) (100) (392)
- Finance income (8) (28) (40)
- Finance costs 1,112 1,275 2,696
- Non cash interest charge included in finance costs 184 (57) -
Total adjustments 7,414 15,807 23,506
Changes in working capital
- Inventories (5,299) 380 257
- Trade and other receivables (4,884) 849 863
- Trade and other payables 3,491 (5,675) (4,711)
Total changes in working capital (6,692) (4,446) (3,591)
Cash generated from operating activities 3,590 2,220 14,247
Reconciliation of net cash flow to movements in net debt
Half Year to Half Year to Full Year to 30 Sep 2024
31 Mar 2025
31 Mar 2024
(Audited)
(Unaudited)
(Unaudited)
£'000 £'000 £'000
Decrease in cash in the period (1,271) (2,488) (598)
Drawdown of borrowings (7,874) (2,789) (4,731)
Repayment of borrowings 2,647 4,158 10,243
Changes in net debt resulting from cash flows (6,498) (1,119) 4,914
New leases (414) (218) (3,116)
Acquired leases (1,631) - -
Translation differences (830) 1,286 2,913
Non cash movements including leases disposed (347) 1,401 1,189
Movement in net debt in the period / year (9,720) 1,350 5,900
Net debt at start of period (25,810) (31,710) (31,710)
Net debt at end of period (35,530) (30,360) (25,810)
Analysis of net debt
At 1 Oct 2024 New leases Cash flow Exchange movement Acquisition of subsidiary Non-cash movement At 31 Mar
2025
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 6,622 - (1,429) 195 158 - 5,546
Debt due within one year (10) - 10 - - - -
Debt due after one year (22,563) - (6,299) (695) - (47) (29,604)
Lease liabilities (9,859) (414) 1,062 (330) (1,631) (300) (11,472)
Net debt (25,810) (414) (6,656) (830) (1,473) (347) (35,530)
Notes to the Interim Report
1. Basis of Preparation
The unaudited Interim Report has been prepared under the historical cost
convention as modified by financial assets and financial liabilities at fair
value and in accordance with UK adopted International Accounting Standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The Interim Report was approved by the Board of Directors on 3 June 2025. 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 2024
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 2024 are unaudited.
These figures have been restated to reflect the recognition of a deferred tax
asset in respect of accumulated trading losses in our US tax Group, further
details of which are provided on page 147 of the Group's 2024 Annual Report.
The effect of this restatement was to increase net assets as at 31 March 2024
by £2.3m. We have also netted deferred tax assets and deferred tax
liabilities where they relate to taxes levied by the same taxation authority
on the same taxable entity. The effect of this was to net deferred tax
assets of £4.1m against the deferred tax liabilities as at 31 March 2024.
There was no effect on the income statement for the period ended 31 March 2024
arising from either adjustment.
The Interim Report will be announced to all shareholders on the London Stock
Exchange and published on the Group's website on 3 June 2025. Copies will be
available to members of the public upon application to the Company Secretary
at Dowlish Ford, Ilminster, Somerset, TA19 0PF.
There were no changes to accounting policies described in the annual financial
statements for the year ended 30 September 2024 that had a material effect on
the financial statements.
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.
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 2024.
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 2024. There have been no
changes to the risk management policies since the year end.
4. Segmental analysis - continuing operations
Aerospace & Defence Life Sciences / Biophotonics Industrial Corporate Total
For half year to 31 March 2025 £'000 £'000 £'000 £'000 £'000
Revenue
Total revenue 25,147 17,760 31,463 74,370
Inter and intra-division (1,681) (470) (1,341) - (3,492)
External revenue 23,466 17,290 30,122 - 70,878
Divisional expenses (21,385) (14,529) (25,325) 418 (60,821)
EBITDA¹ 2,081 2,761 4,797 418 10,057
EBITDA % 8.9% 16.0% 15.9% 14.2%
Depreciation and amortisation (1,748) (927) (1,382) (747) (4,804)
Operating profit / (loss) before amortisation of acquired intangible assets 333 1,834 3,415 (329) 5,253
Amortisation of acquired intangible assets - - - (1,097) (1,097)
Operating profit / (loss) 333 1,834 3,415 (1,426) 4,156
Operating profit / (loss) margin % 1.4% 10.6% 11.3% - 5.9%
Add back non-recurring items 266 245 391 1,097 1,999
Operating profit / (loss) excluding non-recurring items 599 2,079 3,806 (329) 6,155
Adjusted operating profit / (loss) 2.6% 12.0% 12.6% - 8.7%
margin %
Aerospace & Defence Life Sciences / Biophotonics Industrial Corporate Total
For half year to 31 March 2024 £'000 £'000 £'000 £'000 £'000
Revenue
Total revenue 18,041 16,212 33,002 - 67,255
Inter and intra-division (1,446) (864) (1,328) - (3,638)
External revenue 16,595 15,348 31,674 - 63,617
Divisional expenses (16,932) (12,506) (27,058) 481 (56,015)
EBITDA¹ (337) 2,842 4,616 481 7,602
EBITDA % (2.0%) 18.5% 14.6% - 11.9%
Depreciation and amortisation (1,423) (889) (1,778) (867) (4,957)
Operating (loss) / profit before amortisation of acquired intangible assets (1,760) 1,953 2,838 (386) 2,645
Amortisation of acquired intangible assets - - - (1,074) (1,074)
Operating (loss) / profit (1,760) 1,953 2,838 (1,460) 1,571
Operating (loss) / profit margin % (10.6%) 12.7% 9.0% - 2.5%
Add back non-recurring items 205 296 617 1,146 2,264
Operating (loss) / profit excluding non-recurring items (1,555) 2,249 3,455 (314) 3,835
Adjusted operating (loss)/profit (9.4%) 14.7% 10.9% - 6.0%
margin %
¹EBITDA = 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 from continuing operations by destination
Half year to Half year to
31 Mar 2025 31 Mar 2024
(Unaudited) (Unaudited)
£'000 £'000
United Kingdom 24,064 17,219
North and South America 22,864 22,614
Continental Europe 13,107 13,921
Asia-Pacific 10,843 9,863
70,878 63,617
5. Non-underlying items
Half Year to Half Year to Full Year to
31 Mar 2025
31 Mar 2024
30 Sep 2024
(Unaudited)
(Unaudited)
(Audited)
£'000 £'000 £'000
Profit before tax from continuing operations 2,868 324 4,208
Amortisation of and impairment of acquired intangible assets 1,097 1,074 2,002
Restructuring and other costs 412 649 911
Acquisition costs 426 116 228
Site closure costs 64 425 549
Interest on deferred consideration 184 57 209
Adjusted profit before tax 5,051 2,645 8,107
The restructuring costs in the period ended 31 March 2025 relate to
non-recurring costs arising from our manufacturing streamlining activities.
6. Tax expense
Analysis of tax charge in the period
Half Year to Half Year to Full Year to 30 Sep 2024 (Audited)
31 Mar 2024
31 Mar 2025
(Unaudited)
(Unaudited)
£'000 £'000 £'000
Current taxation
UK Corporation tax 1,368 93 1,963
Overseas tax (181) (28) (212)
Adjustments in respect of prior year tax charge - - 107
Total current tax 1,187 65 1,858
Deferred tax
Origination and reversal of temporary differences (411) (272) (321)
Adjustments in respect of prior years - 173 (606)
Total deferred tax (411) (99) (927)
Tax expense / (credit) per income statement 776 (34) 931
Tax (credit) / charge on loss from discontinued operations - (203) (222)
The tax charge for the six months ended 31 March 2025 is based on the
estimated effective rate of the tax for the Group for the full year to 30
September 2025. The estimated rate is applied to the profit before tax.
The adjusted effective tax rate on profit from continuing activities is 22.9%
(H1 2024: 19.2%).
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 to Half Year to Full Year to 30 Sep 2024
31 Mar 2025
31 Mar 2024
(Audited)
(Unaudited)
(Unaudited)
No. No. No.
Number of shares used for basic earnings per share 25,786,397 25,786,397 25,786,397
Dilutive shares 487,379 330,799 394,682
Number of shares used for dilutive earnings per share 26,273,776 26,117,196 26,181,079
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 2025 (Unaudited)
31 Mar 2024
30 Sep 2024
(Unaudited)
(Audited)
£'000 p per £'000 p per £'000 p per
share
share
share
Basic earnings per share from continuing operations 2,092 8.1p 156 0.7p 3,277 12.7p
Adjustments net of income tax expense:
Amortisation of acquired intangible assets (net of tax) 863 3.3p 850 3.3p 1,540 5.9p
Acquisition costs 410 1.6p 62 0.3p 195 0.8p
Site closure costs 64 0.2p - - 658 2.6p
Restructuring costs (net of tax) 331 1.3p 1,013 3.8p 743 2.9p
Unwind of discount on deferred consideration 134 0.5p 57 0.2p 157 0.6p
Total adjustments net of income tax expense 1,802 6.9p 1,982 7.6p 3,293 12.8p
Adjusted basic earnings per share 3,894 15.0p 2,138 8.3p 6,570 25.5p
Basic diluted earnings per share 2,092 8.0p 174 0.7p 3,277 12.5p
Adjusted diluted earnings per share 3,894 14.8p 2,138 8.2p 6,570 25.1p
Basic and diluted loss per share from discontinuing operations - - (9,152) (35.5p) (9,654) (37.4p)
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 4.9p per share for the half
year ended 31 March 2025 (2024: 4.9p).
Half Year to Half Year to Full Year to
31 Mar 2025
31 Mar 2024
30 Sep 2024
(Unaudited)
(Unaudited)
(Audited)
£'000 £'000 £'000
Final 2024 dividend: 8.3p per share (Final 2023 dividend paid in 2024: 8.2p) 2,140 2,114 2,114
2024 Interim dividend of 4.9p per share (2023: 4.8p per share) - - 1,264
2,140 2,114 3,378
9. Borrowings
31 March 2025 31 March 2024 £000 30 September 2024
£000
£'000
Current:
Bank borrowings - 10 10
Leases 1,881 913 1,289
1,881 923 1,299
Non-current:
Bank borrowings 29,604 26,971 22,563
Leases 9,591 7,282 8,570
39,195 34,253 31,133
Total borrowings 41,076 35,176 32,432
G&H's primary lending bank is NatWest Bank. The Group's facilities were
amended and extended on 1 April 2025 and they now comprise a $55m (£42.6m)
dollar revolving credit facility and a $15m (£11.6m) flexible acquisition
facility. At 31 March 2025, the balance drawn on the revolving credit facility
was $38.4m (£29.6m) (September 2024: $30.4m (£22.7m)) and on the flexible
acquisition facility nil (September 2024: nil).
The revolving credit facility is committed until 31 March 2030 and attract an
interest rate of between 1.45% and 1.95% 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 2024
£'000
2025 2024
£000
£000
Within one year - 10 10
Between one and five years 29,604 26,971 26,670
29,604 26,981 26,680
Maturity profile of lease liabilities
31 March 31 March 30 September 2024
£'000
2025 2024
£000
£000
Within one year 2,442 1,934 1,929
Between two and five years 7,602 5,489 7,674
After five years 3,263 3,380 2,129
13,307 10,803 11,732
10. Called up share capital
31 Mar 2025 30 Sep 2024 31 Mar 2025 30 Sep 2024
No. No. £'000 £'000
Allotted, issued and fully paid
Ordinary share of 20p each 25,786,397 25,786,397 5,159 5,159
11. Acquisition of subsidiary
Phoenix Optical Technologies Limited
On 30 October 2024, Gooch & Housego PLC acquired the entire issued share
capital of Phoenix Optical Technologies Limited ("Phoenix"), a
precision-optics company. This acquisition extends G&H's precision optics
capabilities in its A&D markets.
Details of the purchase consideration, the net assets acquired and goodwill
are as follows:
£000
Purchase consideration
Cash paid 2,874
Contingent consideration 2,244
Deferred consideration 150
Discount on contingent consideration net of deferred tax (489)
Total purchase consideration 4,779
Acquisition costs of £313,000 are included within administration expenses in
the income statement.
11. Acquisition of subsidiary (continued)
The provisional fair value of the assets and liabilities recognised as a
result of the acquisition were as follows:
Final fair value
£000
Cash 158
Trade and other receivables 1,439
Inventories 825
Plant and equipment 864
Right of use assets 1,567
Current tax liabilities (1)
Lease liabilities (1,632)
Intangible assets - customer relationships 2,941
Intangible assets - brand 531
Trade and other payables (1,477)
Deferred tax liabilities (1,046)
Add: goodwill 610
Net assets acquired 4,779
The goodwill is attributable to the workforce and the future profitability of
the acquired business. It will not be deductible for tax purposes.
In the event that certain pre-determined EBITDA targets are achieved by
Phoenix in the three 12 month periods ended 30 June 2025, 2026 and 2027,
additional consideration of up to £3.35m is payable in cash on or around 31
October 2025, 2026 and 2027 respectively.
The fair value of the remaining contingent consideration of £1,600,000 was
estimated by calculating the present value of the future expected cash
flows. The estimates are based on a discount rate of 14.3%.
The acquired business contributed revenues of £3m and a net loss before tax
of £200,000 to the Group for the period from acquisition to 31 March 2025.
2025
£000
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration 2,874
Less cash acquired (158)
Net outflow of cash - investing activities 2,716
12. Post balance sheet events
Global Photonics
On 14 May 2025, Gooch & Housego PLC entered in to an agreement to acquire
U.S.based Global Photonics for a total consideration of $17.5 million.
This acquisition significantly extends G&H's presence in the U.S.
Aerospace & Defence market and marks an important step towards replicating
the success of the Group's optical systems hub in the UK by establishing a
full optical systems engineering and manufacturing capability in the United
States. Global Photonics, which is based near Tampa, Florida, supplies optical
systems for military land applications, including periscopes and fire-control
systems, as well as instrumentation for air platforms and other advanced
precision optics. Its expertise in cleanroom lithography, photolithographic
reticle fabrication, ion beam etching and advanced thin film coatings will
complement G&H's existing manufacturing capabilities and enhance the
Group's offering into the North American market.
The consideration comprises cash consideration of $8.75 million, funded from
existing resources, together with $8.75 million of new G&H shares to be
satisfied by the issue of new G&H ordinary shares.
In its financial year ended 31 December 2024, Global Photonics' revenue was
c.$11.1 million and its adjusted EBITDA was c.$1.8 million. As at the end of
December 2024 Global Photonics had gross assets of c $4.1 million.
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