ANNUAL REPORT + ACCOUNTS 2012 www.goochandhousego.com GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 1
WELCOME
Contents
Directors
Dr Julian Blogh
Non Executive Chairman
Gareth C W Jones
Chief Executive Ofﬁcer
Terry Scribbins
Chief Operating Ofﬁcer
Andrew N Boteler
Chief Financial Ofﬁcer
Paul Heal
Non Executive Director 
Dr Peter Bordui
Non Executive Director
Mark Webster
Non Executive Director 
Secretary and  
Registered Ofﬁce
Andrew N Boteler
Dowlish Ford
Ilminster
Somerset TA19 0PF
Registered Number: 00526832
Nominated Adviser 
and Broker
Investec Bank plc
2 Gresham Street
London EC2V 7QP
Legal Advisers
Burges Salmon LLP
One Glass Wharf
Bristol BS2 0ZX
Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants and 
Statutary Auditors
31 Great George Street
Bristol BS1 5QD
Registrars
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Financial Highlights 2
Chairman’s Statement 2012 6
Chief Executive Ofﬁcer’s Statement 2012 8
Market Overview 10
Financial and Operating Review 18
Strategy Overview 22
Board of Directors 24
Directors’ Report 26
Remuneration Committee Report 32
Independent Auditors’ Report - Group 34
Group Income Statement 35
Group Statement of  
Comprehensive Income 35
Group Balance Sheet 36
Group Statement of Changes in Equity 37
Group Cash Flow Statement 38
Notes to the Group Cash Flow Statement 39
Notes to the Financial Statements 40
Independent Auditors’ Report - Company 58
Company Balance Sheet 59
Notes to the Company Balance Sheet 60
Notice of Annual General Meeting 66
Annual General Meeting 
Final dividend for the year ended 30 September 
2012 to shareholders on the register at close of 
business 25 January 2013. Subject to approval 
by shareholders at the Annual General Meeting
Interim Results announced
Financial Year End 
Preliminary announcement of results for
the year ended 30 September 2013
27 February 2013
01 March 2013
June 2013
30 September 2013
November 2013
Expected Financial Calendar
Directors and Advisers
Gooch & Housego PLC  
01460 256440
Gareth Jones / Andrew Boteler
Investec Bank PLC  
020 7597 5970
Patrick Robb
For Further Information GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 2
HIGHLIGHTS
 2012 2011 Change
 Revenue (£m) 60.9 61.0 0%
 Adjusted proﬁt before tax (£m)* 8.2 10.8 -24%
 Adjusted basic earnings per share (pence)* 28.2 38.0 -26%
 Dividend per share (pence) 5.2 5.0 +4%
 Net debt (£m) 0.3 1.9 -83%
Statutory   
 Proﬁt before tax (£m) 7.1 8.8 -20%
 Basic earnings per share (pence) 24.4 35.5 -31%
*  adjusted ﬁgures are stated after excluding the amortisation of acquired intangible assets and exceptional items being acquisition costs, restructuring 
costs, goodwill impairment, the recognition of deferred tax assets, debt reﬁnancing costs  and the write back of the EM4 earn out provision.
08 09 10 11 12
65
60
55
50
45
40
35
30
25
20
15
10
5
0
Revenue
(£ million)
08 09 10 11 12
12
11
10
9
8
7
6
5
4
3
2
1
0
Adjusted proﬁt
before tax (£ million)
08 09 10 11 12
45
40
35
30
25
20
15
10
5
0
Adjusted basic  
earnings per share 
(pence)
08 09 10 11 12
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Dividend per share 
(pence)
5.0
2.0
1.5
nil
5.2
38.0
23.0
11.5
20.0
28.2
10.8
6.0
3.1
5.4
8.2
61.0
44.7
36.4
33.4
60.9
Financial Highlights GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 3
HIGHLIGHTS
“
We have made good progress  
in executing our strategy of 
establishing a more diversiﬁed, 
resilient and broadly-based  
business.  After a difﬁcult ﬁrst  
half we have delivered results  
in line with our revised  
expectations in a difﬁcult  
trading environment.”
Gareth Jones
Operating and Strategic 
Highlights
Satisfactory result for the year following a stronger  
second half performance
Net debt reduced, with continued focus on cash generation
Investment in key management to deliver growth  
and strategic objectives
Acquisitions now fully assimilated into the business
Strategy of diversiﬁcation adds resilience GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 4
HIGHLIGHTS
A Global Business
HISTORIC REVENUE BY GEOGRAPHIC REGION (£ millions)
09     10     11     12
30
25
20
15
10
5
0
North America
26.3
22.3
21.8
28.4
09     10     11     12
30
25
20
15
10
5
0
Continental Europe
14.3
5.8
7.3
13.7
09     10     11     12
30
25
20
15
10
5
0
Asia Paciﬁc and Other
13.0
8.9
4.7
9.4
09     10     11     12
30
25
20
15
10
5
0
United Kingdom
8.1
6.2
4.2
8.6
 Research and Development
Lakewood, New Jersey, US
 
 Manufacturing
Ilminster , UK (Head Ofﬁce)
T orquay, UK 
Boston, Massachusetts, US
Cleveland, Ohio, US
Melbourne, Florida, US
Moorpark, California, US
Orlando, Florida, US
P alo Alto, California, US
 Sales Ofﬁces
Hong Kong, China
Paris, France 
Hamburg, Germany
Munich, Germany
Seattle, W ashington, US
Washington DC, US
TOT AL GROUP REVENUE
£60.9m
(2011 £61.0m)
North America   £28.5m /  46. 7%
Continental Europe  £14.3m /  23.6%
Asia Paciﬁc and Other  £9.4m / 15.5%
United Kingdom  £8.7m / 14.2% GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 5
“
A global technology  
business”
HIGHLIGHTS
“
The medium we  
work with is light”
“
Gooch & Housego  
provides enabling  
optical technologies”
“
The technology  
is photonics”
REVENUE BY CURRENCY
GBP  21% (2011 23%)
USD  75% (2011 70%)
EURO 4% (2011 7%)
£
$
Industrial
£35.8m / 59%
Scientiﬁc Research
£3.9m / 6%
Aerospace and Defence
£15.4m / 25%
Life Sciences
£5.7m / 10%
REVENUE BY SECTOR GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 6
CHAIRMAN’S STATEMENT
Despite a slower than expected start to the year, your company has delivered a 
satisfactory full year result, helped by a combination of internal cost control measures and 
an encouraging increase in activity in the second half. We have also made good progress 
in delivering our strategic objectives to diversify the earnings of your company and to 
make us more resilient in the face of on-going macroeconomic difﬁculties.
Headline revenues were ﬂat year on year, with approximately 55% of total sales in the second 
half. Due to a change to the product mix and the lower volumes in the ﬁrst quarter, there was 
a reduction in adjusted proﬁt before tax. We continued to focus on cash generation resulting 
in reduced net debt at the year end. Our banking facilities remain committed until April 2015.
Signiﬁcant progress was made in the year towards our strategic aim of broadening our product 
offerings and diversifying our markets. We are investing in new capabilities and have 
strengthened our management team considerably, to provide signiﬁcantly higher value 
sub-systems, rather than just components, for our customers. In 2011 we acquired EM4 and 
Crystal Technology; both businesses have now been fully integrated and are starting to deliver 
opportunities, not only by strengthening our position and expertise in our chosen markets, 
but also through cross selling value added products, particularly in the defence market.
During the year, we undertook a programme of rationalising some of our facilities. We will 
continue to look for opportunities to make the business more efﬁcient.
As we start our new ﬁnancial year, uncertainty continues in world markets. In Europe, the 
Eurozone difﬁculties are affecting both Government and other spending. In the US, the “ﬁscal 
cliff” remains which, if not resolved, will result in signiﬁcantly reduced Government spending 
impacting defence expenditure in particular. Whilst your company relies on a tiny part of 
these budgets and is focused on areas where expenditure is least likely to be reduced, the 
Group is not immune to tightening ﬁscal measures. As a result visibility is limited but we 
begin the new ﬁnancial year with a number of encouraging opportunities, as a more 
resilient Group and with a broader range of products.
At the end of October, Mr Jan Melles, one of Gooch & Housego’s Non-executive Directors, 
stepped down from the Board after 15 years. The Directors wish to thank Jan for his constructive 
advice and contribution during his tenure. I am pleased to welcome to the Board, Dr Peter 
Bordui and Mr Mark Webster who bring with them important sector experience. The Board 
and I would also like to thank all our valued employees for their important contributions to 
the success of the company during the year.
Dr Julian Blogh
 
Chairman’s 
Statement
2012 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 7
“
With a broader market 
and product portfolio, 
the business’s strategy 
of diversiﬁcation has 
put it on a more 
resilient footing”
CHAIRMAN’S STATEMENT
Dr Julian Blogh GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 8
CHIEF EXECUTIVE OFFICER’S STATEMENT
Chief 
Executive 
Ofﬁcer’s 
Statement
2012
For Gooch & Housego, 2012 was a year in which we made good progress in executing 
our strategy of establishing a more diversiﬁed, resilient and broadly-based business 
which enabled us to deliver results in line with our revised expectations despite a 
difﬁcult trading environment.
After a slower than expected start to the year, we saw a steady recovery in the second 
quarter and experienced sustained demand for our products and services throughout the 
second half of the year. This variability, exempliﬁed by a two fold increase in order intake 
between the ﬁrst and third quarters, presented signiﬁcant challenges for our manufacturing 
operations. Despite this we were able to achieve revenues only marginally lower than 
those of 2011, which was a record year for the company. Margins were impacted by the 
changing product mix, with lower, but more sustainable, levels of Q-switch sales in 2012 
compared to the year ended 30 September 2011.
Trading conditions at the start of the 2012 ﬁnancial year were challenging as adverse 
macro-economic factors together with a down turn in the semiconductor equipment and 
microelectronics sectors combined to create a difﬁcult business environment in our Industrial 
sector. In the Aerospace and Defence sector there were delays in placing a number of 
large contracts, which despite subsequently being awarded later in the year, combined 
with the business dynamics of our Industrial sector to create a difﬁcult ﬁrst quarter.
The second half of the 2012 ﬁnancial year was characterised by generally favourable 
market conditions. In the Industrial sector, the recovery experienced during the second 
quarter was followed by steady demand throughout the ﬁnal six months. Although there 
was probably a degree of restocking, the market has been reasonably measured without 
the ﬂuctuations experienced in the past. In the Aerospace and Defence sector, as reported 
in July, we received a number of previously delayed orders some of which were for the 
supply of higher-value sub-system products against what are forecast to be longer term 
programmes, in line with our strategic objectives.
We have made good progress with our strategy of diversiﬁcation into new markets and 
the move to sub-system products, evidenced by the reduction of Q-switch revenue 
contribution from 21% in 2011 to 14% this ﬁnancial year, on broadly ﬂat total Group 
revenues year on year. At this level of sales the Q-switch is close to the long term average 
in absolute revenue terms.
Having consolidated our leadership positions in core technologies and markets with the 
two acquisitions made in 2011, Gooch & Housego was ready to take the next step in 
2012. By leveraging our portfolio of world-class photonic products we have already 
demonstrated our ability to move up the value-chain into sub-system and system level 
products, especially in Aerospace and Defence and Life Sciences applications. The next 
step is to accelerate this process as we make the transition from components supplier to 
solutions provider.
Through the provision of design and engineering services that feed into highly vertically 
integrated manufacturing, Gooch & Housego aims to deliver sustained growth even in 
times of reduced economic activity. As an example, our largest contract in 2012 was the 
second phase of a design and engineering project that is forecast to transition to the 
manufacturing phase from 2014. While contracts of this type are still the exception today, 
we are engaged at an early stage in an increasing number of such programmes and we 
believe that they will account for more than half our revenues within ﬁve years. 
To achieve this will require fundamental changes throughout the business. The ﬁrst of 
these changes were implemented in 2012 with the appointment of a Chief Technology 
Ofﬁcer (CTO) and the creation of a business development team focused on the Aerospace 
and Defence sector. The CTO position was created in order to bring all research and 
development (R&D) and engineering functions across nine locations under common 
leadership to ensure that their focus and priorities are fully aligned with the Company’s 
strategic objectives. We were fortunate to be able to recruit Dr Murray Reed, a highly 
experienced and commercially focused photonics technologist for this key role. The 
Aerospace and Defence business development team was established to develop enhanced 
sector expertise in order to engage at a higher level with “tier 1” defence contractors on 
complex, high-value, sub-system and system level programmes. The Chief Executive 
Ofﬁcer (CEO) of EM4, Inc., acquired by Gooch & Housego in 2011, has been appointed to  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 9
“
Gooch & Housego 
has made substantial 
progress towards its 
goal of becoming a 
photonics solutions 
provider while 
delivering solid 
results in challenging 
trading conditions”
Gareth Jones
CHIEF EXECUTIVE OFFICER’S STATEMENT
head up this team, and a new General Manager has been recruited (from 
the Aerospace and Defence sector) to run our operations in Boston.
Our initiatives to drive organic growth via re-focused R&D and engineering 
are already bringing a new focus to our most important product development 
initiatives. An example is our development of diagnostic systems for 
screening applications. We have recently appointed a senior executive with 
extensive experience in the life sciences and diagnostics sectors to lead the 
commercialisation of the technology. In parallel, we are engaging additional 
hospital research laboratory partners to accelerate our initial trials.
Looking forward, we will be exploring opportunities to strengthen further 
our capabilities in optical, mechanical, electronic, ﬁrmware and software 
design and engineering, as well as project management expertise, to 
support our strategy of moving up the value-chain.  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 10
Revenue
£35.8m
(2011 £36.3m)
Operating Proﬁt
£6.6m
(2011 £9.6m)
Percentage of Company Revenue
          59% (2011 60%)
MARKET OVERVIEW
Industrial
APPLICATIONS, PRODUCTS AND MARKETS
Industrial Lasers for materials processing applications. Gooch & Housego supplies 
Q-switches and other acousto-optic, electro-optic and ﬁbre optic products. The end users 
for industrial lasers are extensive due to the ubiquitous adoption of this technology in 
manufacturing. The microelectronics industry represents the largest end market.
 Telecommunications speciﬁcally for high reliability and high performance applications.  
The products supplied into this market are based upon the Group’s ﬁbre optic, crystal 
growth and precision optics technologies. The end users of these products are typically 
global telecommunication systems companies for applications such as undersea 
telecommunication networks and tuneable lasers.
 Metrology for laser-based, high-precision, non-contact measurement systems. The Group 
principally supplies its precision optics and acousto-optics into this market, where its 
customers are typically blue-chip OEMs.
Sensing for applications including strain, temperature and pressure sensing. Gooch & 
Housego supplies ﬁbre optic and acousto-optic components and sub-assemblies, including 
the recently developed Fibre-Q. Manufacturers of these systems address diverse end 
markets such as wind energy and oil and gas.  
Semiconductor for lithography and test and measurement applications. The products 
supplied into this market are precision optics and acousto-optics. Customers are typically 
global semi-conductor equipment manufacturers. This market is closely aligned to the 
micro-electronics industry. 
GROWTH STRATEGY
•  Continued investment in R&D and engineering to bring new products to existing markets 
and to keep products at the cutting edge of their technology. This has been demonstrated 
through the success this year of the non-hermetic Fibre-Q.
•  To focus on niche markets that play to the strengths of Gooch & Housego. These are 
principally those that demand high levels of quality, reliability and survivability in harsh 
environments.
•  To expand into and develop, new geographical markets that offer high growth 
opportunities, through leveraging and expanding the Group’s global sales organisation.
•  To continue to focus energies and investment to make the transition from a components 
supplier to a manufacturer of sub-assemblies, instruments and systems. In the wider 
industrial space, the sensing market presents opportunities for our instrumentation business.
•  The Group continues to invest in longer term R&D projects. Within the industrial sector 
there are opportunities in agriculture, food processing and food safety.
A FOCUS ON…
Fibre Optic Sensing
Gooch & Housego is a market leader in the provision of ﬁbre-optic components and  
sub-assemblies into the Sensing market. Fibre-optics are used in a variety of sensing 
applications. These range from measuring strain, pressure, temperature and even 
wind-sheer. In 2012 Gooch & Housego were successful in supplying novel ﬁbre-optic 
sub-assemblies into Qinetiq’s OptaSense product. This is a ﬁbre-optic listening device 
which is deployed to monitor remote, long distance assets such as oil and gas pipelines, 
railway lines as well as roads. These systems are already deployed in Iraq, and 
OptaSense, with Gooch & Housego’s help, have secured contracts in India and Iraq and 
have successful ﬁeld trials in Canada.
 Image courtesy of Andrew Molyneux GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 11
MARKET OVERVIEW GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 12
Revenue
£15.4m
(2011 £15.4m)
Operating Proﬁt
£2.2m
(2011 £2.6m)
Percentage of Company Revenue
          25% (2011 25%)
MARKET OVERVIEW
Aer ospac e  
and Defence
APPLICATIONS, PRODUCTS AND MARKETS
Target designation and range ﬁnding used on both land-based and airborne systems.  
The products supplied into this market are based upon our precision optics and electro-
optics technologies. Our customers are US and European defence contractors.   
Guidance and navigation components for ring laser gyroscope and ﬁbre optic gyroscope 
inertial navigation systems. The products supplied into this market are based upon our ﬁbre 
optic and precision optics technologies. Gooch & Housego navigation components are used 
in a variety of end markets, including civil and military aircraft, missiles, satellites and space 
exploration. The customers are US and European avionic, defence and space organisations.  
Countermeasures for ground based systems and airborne platforms. The products supplied 
into this market are based upon ﬁbre optic, acousto-optic and non-linear optics 
technologies. The customers are US and European defence contractors.
Directed energy weapons this is an area of considerable research interest, requiring the 
most sophisticated precision optics, thin-ﬁlm coatings and ﬁbre-optic components.
GROWTH STRATEGY
•  Aerospace and Defence represents a large potential market for Gooch & Housego. 
Following recent investment and acquisitions the Group now has a unique range of 
world leading photonic products and is beginning to be recognised as a key supplier to 
the Aerospace and Defence industry.
•  To continue to focus energies and investment to move from being a components 
supplier to a sub-systems provider. Our Aerospace and Defence customers are moving 
their own business models away from sub-system manufacture and are looking for 
companies such as Gooch & Housego that are capable of moving into this space.
•  The Group continues to invest in the engineering, quality systems and programme 
management resources required to service the demanding Aerospace and Defence 
customer base.
•  Whilst Gooch & Housego is not planning any acquisitions in the short term, the Company 
is not discounting high quality acquisitions as a route to grow its Aerospace and Defence 
business should the opportunity arise.
A FOCUS ON…
Space optics
Gooch & Housego has a heritage of supplying its products into space applications. 
Super polished mirrors supplied by Gooch & Housego played critical roles in the 
guidance systems of the Mars Lander which delivered the Curiosity Rover to a successful 
landing on Mars. The business also supplies space qualiﬁed, semi-conductor lasers to 
NASA and has many components ﬂying today on satellites. Fibre-optic systems on 
satellites offer beneﬁts in terms of weight, bandwidth and immunity for electro-
magnetic interference. Gooch & Housego offers a unique “end to end” ﬁbre optic 
systems capability that is ideally suited to exploit the growth of space satellite business. 
  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 13
MARKET OVERVIEW
Images on pages 14 & 15 courtesy of NASA/JPL-Caltech  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 14
Revenue
£5.7m
(2011 £5.7m)
Operating Proﬁt
£1.2m
(2011 £0.9m)
Percentage of Company Revenue
          10% (2011 9%)
MARKET OVERVIEW
Life Sciences
APPLICATIONS, PRODUCTS AND MARKETS
Optical Coherence Tomography (OCT) primarily used in retinal imaging for the diagnosis 
of glaucoma and macular degeneracy. Gooch & Housego provides a family of ﬁbre optic 
products into this market, ranging from discrete components to full optical systems. The 
customers are all the world’s leading manufacturers of OCT retinal imaging systems.
Laser surgery used in a wide range of applications including prostate surgery, scar 
correction, cataract surgery, freckle, mole and tattoo removal as well as wrinkle reduction 
and teeth whitening. The products supplied into this market are based upon ﬁbre optic 
and acousto-optic technologies. The customers in this market include both laser system 
manufacturers and biomedical equipment manufacturers.
Microscopy modern, laser-based techniques are revolutionising the ﬁeld of microscopy. 
Gooch & Housego’s acousto-optic devices and hyperspectral imaging systems are used to 
control the multiple laser sources and analyse complex images. The end markets are 
typically medical equipment manufacturers.
Pathology as pathology migrates from archiving glass slides into the digital age, Gooch & 
Housego’s hyperspectral imaging systems are able to capture the information present on 
the slide and make it available for sharing and storage for long term reference.
GROWTH STRATEGY
•  The growth strategy for Life Sciences mirrors that for Aerospace and Defence in many 
respects. This is particularly true in terms of the size of the available market and the 
desire of the customer base to “pull” Gooch & Housego up the value chain.
•  The Group continues to invest in longer term R&D projects. Within the Life Sciences market 
there is a particular focus in the area of cancer diagnostics. Moreover, within this technology 
sphere Gooch & Housego is not only developing optical technologies, but is also working on 
a much broader technology front in order to address these particular opportunities.
•  Whilst Gooch & Housego is not planning any acquisitions in the short term, the Group is 
not discounting high quality acquisitions as a route to grow its Life Sciences business 
should the opportunity arise.
A FOCUS ON…
Laser Surgery
Gooch & Housego’s Q-switch technology is a key enabling technology in many laser surgery 
applications. Today Gooch & Housego supplies components into many of the world’s leading 
surgical laser equipment manufacturers, addressing applications that range from BPH (benign 
prostatic hyperplasia) to laser eye surgery . Gooch & Housego are proud to be a trusted 
supplier into the arena of Health and Life Sciences where such applications described above 
require extremely high levels in reliability and performance. With the recent development of 
femtosecond laser technology for use in ophthalmic surgery, the group is ideally situated to 
exploit the imminent wave of laser system requirements that will come from an extremely 
ﬂexible technique that can be used to address large markets such as refractive correction 
surgery (e.g. LASIK) as well as laser cataract surgery . GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 15
MARKET OVERVIEW
Images on pages 14 & 15 courtesy of American Medical Systems, Inc. Minnetonka, Minnesota USA www.AmericanMedicalSystems.com GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 16
MARKET OVERVIEW
Revenue
£3.9m
(2011 £3.6m)
Operating Proﬁt
£0.2m
(2011 £0.2m)
Percentage of Company Revenue
          6% (2011 6%)
Scientiﬁc
Research
APPLICATIONS, PRODUCTS AND MARKETS
Nuclear fusion research and energy laser technology is being used to recreate the 
conditions found in the core of the sun. At these temperatures and pressures isotopes of 
hydrogen fuse to form helium and in doing so release huge amounts of energy – the 
energy that powers the sun and stars. One of the most exciting potential applications of 
this research is using laser fusion to provide limitless quantities of clean, carbon-free 
energy to meet the world’s growing needs. The products supplied into this market utilise 
a wide range of the Company’s technologies including crystal growth, precision optics, 
thin-ﬁlm coatings and ﬁbre optics. Gooch & Housego supplies many of the world’s leading 
nuclear fusion energy research facilities. Gooch & Housego is sole supplier of many critical 
optical components used in the world’s most powerful laser system at the National 
Ignition Facility (NIF) at Lawrence Livermore National Laboratory.
Instrumentation for applications in agricultural, solar, marine and industrial research. An 
example of an industrial research application is the development of Light Emitting Diode 
(LED) illumination systems. Instrumentation products are supplied from our Orlando facility 
and include photometers, radiometers, spectroradiometers and their associated calibration 
services. The customer base ranges from universities and research institutes to 
Government agencies and national standards laboratories.
Growth Strategy
•  To maintain and develop the business’s capabilities in crystal growth and ultra precision 
optics for nuclear fusion research & energy. If NIF fulﬁls its research objectives in the next 
12 months it could pave the way for two further facilities in the US (LIFE) and Europe 
(HiPER) whose objective is to demonstrate the viability of the technology for large scale 
power generation. Gooch & Housego has participated in preparatory analyses and would 
expect to be a major supplier to these projects.
•  • University research and “Big Science” projects… Gooch & Housego is the custodian of 
some of the world’s most advanced optical technologies. It is not therefore surprising 
that there is a constant and signiﬁcant demand for such products and technologies from 
some of the world’s foremost universities and research institutes. The products supplied 
into this market span the complete breadth of the Company’s technology portfolio. Many 
of Gooch & Housego’s current products have evolved from early stage collaborations 
with universities and it is an area the Company continues to focus on.
•  The Company continues to invest in R&D to develop and commercialise the next 
generation of Instrumentation products.
A FOCUS ON…
Star power on earth… Laser Inertial Fusion Energy (LIFE) 
LIFE is an advanced energy concept under development at Lawrence Livermore National 
Laboratory. Based on physics and technology developed for the National Ignition Facility, 
a LIFE power plant has the potential to meet future worldwide energy needs in a safe, 
sustainable manner without carbon dioxide emissions. This is a project to focus the 
intense energy of 192 giant laser beams on a 3mm-sized target ﬁlled with hydrogen 
fuel to fuse or ignite the hydrogen atoms’ nuclei.
Providing for the world’s energy demands is one of the most urgent – and difﬁcult 
– challenges facing our society. Gooch & Housego supply high speciﬁcation optical 
components into the world’s most powerful laser systems that are used to recreate the 
forces fuelling the sun. These components, which include large laser crystals and ﬁbre 
optic components, are critical enablers to realise safe, carbon neutral, inexhaustible 
energy in the form of laser inertial conﬁnement fusion. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 17
MARKET OVERVIEW
Images on pages 16 & 17 courtesy of Lawrence Livermore National Laboratory  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 18
FINANCIAL  AND OPERATING REVIEW
Performance 
Overview
REVENUE   
Year ended 30 September 2012 2011 2010
 £000 £000 £000
Industrial 35,789 36,294 23,383
Aerospace and Defence 15,440 15,412 11,304
Life Sciences 5,731 5,655 4,890
Scientiﬁc Research 3,891 3,648 5,106
Group Revenue 60,851 61,009 44,683
Total Group revenue for the year was £60.9m compared to £61.0m in 2011. Excluding the 
impact of acquisitions and on a constant currency basis, revenues fell by 12% in 2012 
compared to the record year of 2011.  
GROUP EARNINGS PERFORMANCE    
All amounts in £’000      Adjusted    Reported
Year ended 30 September 2012 2011 2012 2011
Operating proﬁt 8,973 11,558 7,852 9,676
Net ﬁnance costs (776) (804) (776) (868)
Proﬁt before taxation 8,197 10,754 7,076 8,808
Taxation (2,032) (2,695) (1,753) (1,285)
Proﬁt for the year 6,165 8,059 5,523 7,523
Basic earnings per share (p) 28.2p 38.0p 24.4p 35.5p
Adjusted proﬁt before tax for the year was £8.2m (2011: £10.8m). Adjusted basic earnings 
per share were 28.2p (2011: 38.0p) a fall of 26%. Reported basic earnings per share were 
24.4p (2011: 35.5p).
RECONCILIATION OF ADJUSTED PERFORMANCE MEASURES
 Operating Proﬁt Net ﬁnance costs Taxation Earnings per share
Year ended 30 September 2012 2011 2012  2011 2012 2011 2012 2011
 £000 £000 £000 £000 £000 £000 pence pence
Reported 7,852 9,676 (776) (868) (1,753) (1,285) 24.4p 35.5p
Amortisation of acquired intangible assets 881 1,427 – – (219) (344) 3.0p 5.1p
Acquisition costs – 571 – – – (137) – 2.1p
Restructuring costs 240 – – – (60) – 0.8p –
Release of accrued contingent consideration – (2,085) – – – – – (9.9p)
Impairment of goodwill – 1,969 – – – (670) – 6.1p
Debt reﬁnancing costs – – – 64 – (27) – 0.2p
Recognition of deferred tax assets – – – – – (232) – (1.1p)
Adjusted 8,973 11,558 (776) (804) (2,032) (2,695) 28.2p 38.0p
NON GAAP MEASURES
The Company uses a number of non GAAP measures which are shown in the table above and 
in the segmental analysis. These measures are used to illustrate the impact of non-recurring 
and non-trading items on the Company’s ﬁnancial results. These are the impact of the 
amortisation of acquired intangible assets, acquisition costs, the one off gain resulting from 
the write back of the 2011 acquisition of EM4 earn-out provision, the impairment of 
goodwill, costs associated with restructuring activities and debt reﬁnancing and the one 
off impact associated with the recognition of deferred tax assets. In addition, the Company 
uses the term EBITDA (Earnings before interest, taxation, depreciation and amortisation). 
This is a commonly used measure of operating performance and cash ﬂow.
SEGMENTAL ANALYSIS
Industrial
Our Industrial business fell marginally during the year, with revenues of £35.8m, compared 
with £36.3m last year. Much lower year-on-year sales of Q-switches for industrial applications 
were offset by a full year of trading from our Crystal Technology acquisition and strong 
performances in our Sensing and Semiconductor sub-markets within the Industrial sector. 
During the year the Company consolidated its electronics capabilities into other existing 
facilities and closed its site in Norderstedt, Germany. Operating proﬁt for this sector was 
32% lower at £6.6m, compared with £9.6m last year, reﬂecting a change in product mix. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 19
Aerospace and Defence
Our Aerospace and Defence business saw revenue consistent with last year at £15.4m 
(2011: £15.4m). Following a slow start to the year in this sector as a result of delays in 
the receipt of defence related contracts, order intake picked up as the year progressed, 
with many delayed contracts being awarded.  Operating margins in this sector fell during 
the year due to investment in people and capabilities in our EM4 business. 
Life Sciences
Gooch & Housego consolidated its presence in the Life Sciences sector in 2012 with revenues of 
£5.7m (2011: £5.7m). Operating margin improved, reﬂecting a maturity in our manufacturing 
processes. Our optical coherence tomography (OCT) sub-assembly products still lead the 
world in this market segment, producing a 10% growth rate in 2012. Our development of 
hyperspectral imaging systems for applications in diagnostics and microscopy continues to 
make encouraging progress.
Scientiﬁc Research
Our activities in the Scientiﬁc Research market are dominated by a small number of large, 
long term programmes. This market saw some modest growth in 2012, and is a focus for 
our business development activities going forward as we seek to engage with a wider 
range of “big science” projects. 
PERFORMANCE OF PRIOR YEAR ACQUISITIONS
Following the acquisition of EM4 in January 2011, the Group has invested in people and 
equipment at this site to support its signiﬁcant potential and to replicate the Group’s ﬁbre 
optic capabilities in Europe and the US in order to meet the requirements of the Aerospace 
and Defence markets in these regions. This replication process is now well progressed, with 
the ﬁrst passive fused components made in Boston currently proceeding through internal 
qualiﬁcation. As an illustration of the strategic beneﬁts of the acquisition, during 2012 Gooch 
& Housego established a leading position in the supply of space qualiﬁed lasers for applications 
in the growing market for satellite optical communications systems.
This acquisition is now fully integrated into the Group’s Information Technology (IT) and 
Enterprise Resource Planning (ERP) systems and in the year to 30 September 2012 EM4 
contributed $1.1m in EBITDA.
The acquisition of Crystal Technology, a manufacturer of acousto-optic and electro-optic 
devices and a grower of optical crystals, was completed at the end of March 2011. Crystal 
Technology is also now fully integrated into the Group’s IT and ERP systems and since 
acquisition has contributed $5.4m in EBITDA.
Following the acquisition, the decision was made to integrate Crystal Technology’s crystal 
growth facility into the Group’s main crystal Growth facility in Cleveland, Ohio. This process 
was completed in 2012 with all of the Group’s crystal growth capabilities now being housed 
in one purpose built facility. Consolidating the Group’s optical crystal growth has enabled Gooch 
& Housego to beneﬁt from a concentration of expertise and operational economies of scale.
RESEARCH & DEVELOPMENT (R&D)
Gooch & Housego continues to invest in R&D in all areas of the business and regards this as 
fundamental to the continued growth of the company. Gooch & Housego developed and 
launched a number of new products in 2012 including a next generation hyperspectral 
imaging system, the HSi-440C, with real-time spectral unmixing, aimed at medical researchers, 
the EM655 integrated RF-over-ﬁbre transmitter module, and a line of high-power ﬁber-in, 
ﬁber-out (FIFO) isolators for the pulsed ﬁber laser market. Moreover, the acquisitions made in 
2011 have enhanced the technical capabilities of the Group as a whole, with the introduction 
of lithium niobate and tellurium dioxide crystal growth and laser welding technologies. The 
appointment of a CTO and the reorganisation of our R&D and engineering teams during 2012 
have substantially strengthened Gooch & Housego’s capabilities and will improve the return 
on our R&D expenditure going forward.
Gross expenditure on R&D in the year to 30 September 2012 was £4.3m (2011: £3.7m), 
which represented 7.0% of revenue (2011: 6.1%).  
FINANCIAL  AND OPERATING REVIEW
“
This year net debt 
has again fallen 
signiﬁcantly, down 
83% to £0.3m at 30 
September 2012.”
Andrew Boteler GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 20
KEY PERFORMANCE INDICATORS (KPIS)
The Group’s objective is to deliver sustainable, long-term growth in revenue and proﬁts. This 
is to be achieved through the execution of the Board’s strategies of market diversiﬁcation, 
the continued investment in R&D to support organic growth, the acquisition of strategically 
complementary businesses and the on-going drive to move up the value chain.
In striving to achieve these strategic objectives, the main ﬁnancial performance measures 
monitored by the Board are: - 
Total revenue growth 2012 2011 2010
At actual exchange rates 0% 37% 23%
At constant exchange rates (1%) 40% 23%
The Board is focused on delivering revenue growth by investing both organically and 
through acquisitions. Weak growth in 2012 reﬂects the difﬁcult trading conditions in the 
ﬁrst quarter of this ﬁnancial year when compared to the record Q switch sales in 2011.
Target market revenue growth 2012 2011 2010
Aerospace and Defence (£m) 15.4 15.4 11.3
Life Sciences (£m) 5.7 5.7 4.9
The Group’s target markets of Aerospace and Defence and Life Science provide a route to 
sustainable growth, and a more diversiﬁed revenue base. These markets also provided 
signiﬁcant opportunities for Gooch & Housego to migrate up the value-chain from materials 
and components to higher value sub-assemblies, modules and systems in response to the 
trend for our larger customers to outsource increasingly complex parts of their business. Whilst 
the evidence of progress to date is limited in our ﬁnancial results, Gooch & Housego made 
considerable progress in the year both in terms of how it addresses its customers, through 
the establishment of a dedicated Aerospace and Defence business development organisation 
and how it addresses its geographic markets, through its technology replication programmes.
Net debt analysis 2012 2011 2010
Net debt (£m) 0.3 1.8 5.2
In order to balance business risk with the investment needs of the Company, Gooch & Housego 
closely monitors and manages its net debt. This year net debt has again fallen signiﬁcantly, 
putting the business in a strong position both in terms of headroom for further investment 
and from the perspective of managing its business risk.
Earnings per share 2012 2011 2010
Adjusted basic earnings per share (pence) 26.4 36.0 22.5
Includes the dilutive effect of the current Value Creation Plan based upon the year end share 
price of £4.35 per share.
BALANCE SHEET
The Group spent a total of £3.4m on property, plant and equipment during the year  
(2011: £2.8m).
Following the acquisition of Crystal Technology LLC on 31 March 2011, Gooch & Housego 
took the strategic decision to consolidate its three crystal growth operations into a single, 
state-of–the-art facility at the main Cleveland site, thereby establishing a centre of 
excellence for crystal growth and enabling the Company to beneﬁt from economies of scale. 
This necessitated the relocation of crystal growth operations from the Crystal Technology 
facility in Palo Alto, California and from the Group’s secondary growth facility in Cleveland.
As at 30 September 2012, the new facility had been completed and all of the Crystal 
Technology crystal growth had been transferred to Cleveland. During the year £1.1m was 
capitalised as part of this project.
A £0.5m investment was also made in the Group’s ﬁbre optic technology replication 
programmes. These programmes will enable the business to better address the geographically 
distinct Aerospace and Defence markets of Europe and the US.
The Group has invested in working capital during the year.  Inventories have increased by 
£1.5m, as the Group has sought to ensure adequate stock to meet customer requirements 
for shorter lead times and secure strategically important supplies of key components. At 30 
September 2012, inventories were £12.8m compared with £11.3m at 30 September 2011.
10 11 12
6
5
4
3
2
1
0
Net debt analysis (£m)
0.3
5.2
1.8
10 11 12
45
40
35
30
25
20
15
10
5
0
Earnings per share (pence)
26.4
22.5
36.0
10    11     12
40
35
30
25
20
15
10
5
0
T otal revenue growth (%)
 at actual exchange rates
 at constant exchange rates
40
37
37
23
23
40
20
15
10
5
0
Emerging market revenue growth (£m)
 Aerospace and Defence
 Life Sciences
5.7
15.4
15.4
11.3
4.9
5.7
nil
-1
10    11     12
FINANCIAL  AND OPERATING REVIEW GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 21
In the year ended 30 September 2012 Gooch & Housego generated net cash from 
operating activities of £8.9m, compared to £11.9m in 2011.  
On 26 March 2012, Gooch & Housego paid $3.25m as the ﬁnal tranche of the deferred 
consideration in respect of its 2011 Crystal Technology acquisition. There is no more deferred 
consideration to pay in respect of our previous acquisitions.
Cash, cash equivalents and bank overdrafts as at 30 September 2012 amounted to a 
positive cash position of £9.2m (2011: £11.3m). This compares to £5.7m at the half year.
Net debt reduced from £1.9m at 30 September 2011 to £0.3m at 30 September 2012, a 
reduction of 83%. The movement in net debt is outlined in the table below.
MOVEMENT IN NET DEBT   
All amounts in £m Gross Gross Net 
 Cash Debt Debt
At 1 October 2011 13.8 (15.7) (1.9)
Cash ﬂow from operating activities 11.6 – 11.6
Debt repayment (3.4) 3.4 –
Acquisitions (deferred consideration) (2.1) – (2.1)
Capital expenditure (3.7) – (3.8)
Working capital (0.9) – (0.9)
Interest, tax, share options and dividends (3.5) – (3.4)
Exchange movement (0.1) 0.3 0.2
At 30 September 2012 11.7 (12.0) (0.3)
Gooch & Housego’s bank is The Royal Bank of Scotland plc. The Company’s facilities comprise 
an $18 million US Dollar denominated term loan (of which $11.3m is still outstanding), a 
£3.1 million Sterling denominated term loan (of which £2.4m is still outstanding), an $8 
million revolving credit facility (drawn to $4 million as at 30 September 2012) and an undrawn 
capital expenditure facility of $8 million. All facilities are committed until April 2015, 
subject to certain covenant provisions.
ORDER BOOK
As at 30 September 2012, the Group order book stood at £24.9m, compared to £28.5m at 
the end of the 2011 ﬁnancial year, a 13% fall. On a like for like basis, excluding the impact 
of foreign exchange, the order book is 11% lower. Book to bill ratios for the business as a 
whole were 1.01 times (six month rolling average) as at 30 September 2012, compared to 
0.9 times for the same period last year. This is a reﬂection of the strong order performance 
over the last six months of the 2012 ﬁnancial year in which £33.3m of orders were booked.
STAFF
The Group workforce fell from 623 at 30 September 2011 to 588 at the end of September 
2012, a fall of 35. This is a net fall and therefore reﬂects both the reductions in stafﬁng 
resulting from the work the business has done in integration & rationalisation of sites and 
processes; and the additional investment that the business has made in engineering, business 
development and senior management. Most notably this has been demonstrated through 
the appointment of a Chief Technology Ofﬁcer, to drive organic new product development, 
and through the creation of a dedicated Aerospace and Defence business development team 
with the sector specialisation necessary to further exploit the potential for Gooch & Housego 
in this complex market. We would like to welcome them all to Gooch & Housego.
PROSPECTS
The global economic headwinds cause obvious uncertainty for the business as we move 
into 2012. Whilst not immune to the overall global economy, the Board believe that the 
Company is in robust health and, with a strong cash position, appropriate committed 
banking facilities and a broader spread of revenues, has increased its ability to withstand a 
 potential downturn.
In the context of the current economic conditions, Gooch & Housego’s strategy of focussing 
on organic growth in 2012 is considered to be appropriate. We aim to deliver growth 
through the commercialisation of long-term research and development projects, through the 
launch of innovative new products and by leveraging the position we have now established 
in the Aerospace and Defence sector to increase our participation in long-term programmes. 
 
Gross
cash
16
14
12
10
8
6
4
2
0
0.3
1.9
15.7
13.8
11.7
12.0
Movement in net debt (£m)
 2011
 2012
Gross
debt
Net
debt
FINANCIAL  AND OPERATING REVIEW GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 22
Gooch & Housego has developed and measures itself 
on a set of strategies to deliver long term sustainable 
growth to its shareholders. These can be categorised into 
three broad pillars: Diversiﬁcation, Moving up the Value 
Chain and Organic Research & Development. In seeking 
to achieve its strategic goals Gooch & Housego has in the 
past, and will continue to use a variety of tools, including 
investment in R&D, acquisitions and strategic partnerships.
STRATEGIES
DIVERSIFICATION
To develop, through R&D and acquisition, a presence in new markets that offer the 
potential for signiﬁcant growth as a result of their adoption of photonic technology, 
while also reducing our exposure to cyclicality in any particular sector. 
Progress
a)   Diversiﬁcation within the Industrial market. In FY2012 Gooch & Housego grew its 
business in the areas of: 
• Metrology
• Sensing
• Semi-conductor
• Telecommunications
b)  Aerospace and Defence. 
• Signiﬁcant sub-system contract wins in FY2012
• New Aerospace & Defence business development team
• Establishing a leading position in Space/Satellite applications
c)  Life Sciences 
• Market leading position in Optical Coherence Tomography (OCT)
• Strengthened market presence in Microscopy
MOVING UP THE VALUE CHAIN
To leverage our excellence in materials and components to move up the value-chain 
to more complex sub-assemblies and systems. 
Progress
•  In our Industrial market good progress has been made in providing systems level 
products into the Sensing market
•  In our Aerospace and Defence market FY2012 saw the ﬁrst meaningful revenues derived 
from Engineering Services
•  In Life Sciences we have seen both technical and commercial progress being made in 
the area of Diagnostics
ORGANIC RESEARCH & DEVELOPMENT
To leverage Gooch & Housego’s exceptional materials and component capabilities to 
develop innovative new products.
Progress
• Recruited experienced & industry respected CTO
• Engineering functions now under common leadership
• Priorities aligned to Group strategy
Strategy 
Overview
FINANCIAL  AND OPERATING REVIEW GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 23
FINANCIAL  AND OPERATING REVIEW
Image courtesy of Lawrence Livermore National Laboratory  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 24
Non-executive Directors
Julian Blogh CBE PhD CEng
Chairman
(Appointed October 2006)
Dr Julian Blogh has spent most of his working life in the electronics industry working with 
Ferranti Radar, Plessey Radar and Dowty Electronic Systems. He was Managing Director of 
Sonar & Communication Systems from 1987 to 1992, when he was appointed Managing 
Director of Dowty Avionics.
He led the management buy-out of seven Dowty defence and aerospace electronics 
businesses from the TI Group to form Ultra Electronics Holdings plc and became Chief 
Executive when it began trading in October 1993. Dr Blogh was appointed Deputy 
Chairman in April 2004 and became Chairman in April 2005. He retired as Chairman for 
Ultra Electronics in April 2011.
Paul Heal 
(Appointed January 2008)
Paul Heal retired from his position as client service Partner with PricewaterhouseCoopers 
at the end of 2007. He was based in the ﬁrm’s New York ofﬁce immediately before 
retirement. Prior to this he spent some twenty years as a Partner in the Bristol ofﬁce 
responsible for the ﬁrm’s middle market clients, ranging from listed companies generally 
with a market cap of less than £250m, to venture capital backed and privately owned 
businesses. He was client service Partner to Gooch & Housego prior to 2003 and acted as 
reporting accountant for the IPO on the Alternative Investmement Market in 2000.
 
Mr Heal has a portfolio of non-executive directorships in both the commercial and 
charitable sectors. In the commercial sector this includes The West of England Trust; parent 
company of a number of trading subsidiaries including Jordans Publishing. Also Andrews & 
Partners; a group engaged in estate agency, property management and ﬁnancial services. 
In the Charitable sector his directorships include The Theatre Royal Bath Ltd and the 
Andrews Charitable Trust.
Dr Peter Bordui 
(Appointed February 2012)
Peter Bordui has twenty ﬁve years experience in the photonics industry in senior 
leadership roles within Bookham, NewFocus, JDSU and Crystal Technology (at the time 
a subsidiary of Siemens) and has held a number of additional non-executive director 
roles. He is currently a non-executive director of BeamExpress S.A M-Squared Lasers Ltd 
and Media Lario International S.A. He is also a governing trustee of a private charitable 
foundation and a director of the non-proﬁt organisation American Citizens Abroad.
Dr Bordui has bachelors, masters and PhD degrees from MIT. 
Mark Webster 
(Appointed February 2012)
Mark Webster has twenty ﬁve years experience in the healthcare industry in senior leadership 
roles for Abbot Laboratories, Shire Pharmaceuticals, Bayer healthcare and ProStraken.
Mr Webster also holds an honours degree in Chemistry from the University of Durham.
BOARD OF DIRECTORS
Board of 
Directors
Non-executive Directors  
Dr Julian Blogh Chairman
Dr Eugene G Arthurs (retired February 2012)
Jan A Melles (retired October 2012)
Paul Heal 
Dr Peter Bordui (appointed February 2012) 
Mark Webster (appointed February 2012)
Executive Directors 
Gareth C W Jones Chief Executive Ofﬁcer 
Terry Scribbins Chief Operating Ofﬁcer 
Andrew N Boteler Chief Financial Ofﬁcer GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 25
Executive Directors
Gareth Jones
Chief Executive Ofﬁcer
(Appointed January 2003)
Gareth Jones has an honours degree in Physics from Imperial College and is a Fellow of 
the Institute of Physics. He joined Gooch & Housego in 1978 and was instrumental in the 
development of new products and capabilities that helped transform the business from a 
craft-based optical engineering company into today’s global technology business.
Mr Jones became Technical Director in 1985 and Managing Director in 1995. In 1997 he 
was a member of the team that led Gooch & Housego’s IPO on the Alternative Investment 
Market. In 2000, he left Gooch & Housego to become a Partner in a leading UK venture 
capital ﬁrm. He re-joined Gooch & Housego in 2003 as Chief Executive.
Terry Scribbins
Chief Operating Ofﬁcer
(Appointed November 2006)
Terry Scribbins originally joined Gooch & Housego in 1971 and rose to the position of Works 
Manager before leaving in 1985 to set up his own business. He re-joined Gooch & Housego 
in 2004 to lead a new management team, and has played a key role in the integration and 
reorganisation of the Group’s optoelectronic components and materials operations.
Andrew Boteler
Chief Financial Ofﬁcer
(Appointed August 2009)
Andrew Boteler is a Chartered Accountant, having trained with Ernst & Young and qualiﬁed 
in 1993. He has an honours degree from Exeter University.
In 2002 Mr Boteler was part of the team that bought out the US telecommunications 
components group JDSU’s UK ﬁbre optics business, to establish SIFAM Fibre Optics Ltd. 
There, he held the position of Finance Director until the company was acquired by Gooch 
& Housego in May 2007.
Between 2007 and 2009 Andrew held the positions of Head of Finance EMEA and Acting 
Chief Financial Ofﬁcer for Gooch & Housego, before joining the Board in August 2009.
BOARD OF DIRECTORS
Image courtesy of Fraunhofer ILT GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 26
Image courtesy of OptaSense Ltd.
DIRECTORS’ REPORT
The Directors present their report together with the audited consolidated ﬁnancial 
statements for the year ended 30 September 2012.
PRINCIPAL ACTIVITIES AND REVIEW OF THE BUSINESS
Gooch & Housego is a manufacturer of acousto-optic, electro-optic and ﬁbre-optic devices, 
precision optical components, crystals, optical instruments and imaging systems.
A review of the development and performance of the Group during the year is set out in the 
Financial Highlights on page 2 and in the Financial and Operating Review on pages 18 to 21. 
An outline of the business’s strategy and the Group’s progress in the year towards these 
strategies is given on page 22. Finally an analysis of the segmental information by market 
sector is given on pages 10 to 16.
RISKS AND UNCERTAINTIES
•  Retention of key personnel – The Group recognises the importance of retaining and 
developing its highly skilled management team and workforce in order to achieve its 
strategic objectives. As a result, the Group has and continues to establish development 
and reward schemes to encourage individuals to play a long term role in the future 
development of the Group.
•  Future trading levels and order book – Gooch & Housego PLC has seen a rapid growth 
in its business in recent years. Through its strategies of market diversiﬁcation and moving 
up the value chain, the Group seeks to provide routes to new markets and reduce the 
dependence on any one market sector. However, the continued growth in the business is 
difﬁcult to predict.
•  Financing – As at 30 September 2012 gearing was 0.6% (2011: 3.4%). The level of debt 
is considered to be appropriate and serviceable. The Group operates within certain banking 
covenants which it has reported under and complied with during the ﬁnancial year. The 
Group undertakes detailed and regular ﬁnancial planning and forecasting reviews to 
minimise any ﬁnancial risk due to changing market conditions.
•  Research and Development – The Group invests heavily in research and development, 
to develop new products and maintain the long term growth of Gooch & Housego. The 
development of new processes and products involves risks such as development 
timescales, which may take longer than originally forecast and hence involve more cost. 
There are also technical risks associated with development programmes that mean 
original expected results are not delivered. Expenditure is only capitalised once the 
commercial and technical feasibility of a product is proven. These risks are minimised by 
operating managed research and development programmes which are reviewed against 
cost and technical progress expectations.
KEY FINANCIAL PERFORMANCE INDICATORS (“KPIs”)
The Group uses a selection of KPIs to monitor and review the performance of the business.  
These are detailed from page 20 of the Financial and Operating Review.
DIVIDENDS
During the year ended 30 September 2012 a ﬁnal dividend of 3.0p per share was paid for 
the previous ﬁnancial year, the ﬁnal 2010 dividend of 2.0p per share was paid in the year 
ended 30 September 2011.. A further interim dividend of 2.0p per share was paid for the 
half year ended 31 March 2012 (2011: 2.0p).
For the year ended 30 September 2012, the Directors propose that a ﬁnal dividend of 3.2p 
per share be paid.
Substantial shareholdings
As at 15 December 2012, the following shareholders had notiﬁed the Company that they 
held an interest in 3% or more of its issued ordinary share capital:
Shareholder Number  % holding
Cazenove Capital Management 3,457,314 15.8%
BlackRock Investment Management  3,200,108 14.5%
Gooch & Virgin Family Trust 2,497,869 11.3%
Investec Wealth & Investment 1,137,278 5.2%
Standard Life 1,020,023 4.6%
Octopus Investments 700,510 3.2%
Save for these interests, the Directors have not been notiﬁed that any person is directly or 
indirectly interested in 3% or more of the issued ordinary share capital of the Company. 
Directors’
Report GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 27
DIRECTORS’ REPORT
Image courtesy of Jamie Hunter GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 28
DIRECTORS’ REPORT
DIRECTORS
The Directors in ofﬁce during the year and up to the date of signing the ﬁnancial 
statements and their beneﬁcial interests in the issued ordinary share capital of the 
Company were as follows:
  Number of shares Number of shares
  at 30 September  at 30 September
  2012  2011
Non-executive Directors 
 Dr Julian Blogh 10,000 10,000
 Dr Eugene G Arthurs (retired February 2012) – –
 Jan A Melles (retired October 2012) 10,000 10,000
 Paul Heal 21,485 21,485
 Dr Peter Bordui (appointed February 2012) – –
 Mark Webster (appointed February 2012) – –
Executive Directors
 Gareth C W Jones 8,000 8,000
 Terry Scribbins – –
 Andrew N Boteler 16,065 16,065
There were no changes in Directors’ interests between 1 October 2011 and the date of 
signing the ﬁnancial statements.
For details of Directors’ interests in options to subscribe for shares of the Company, see 
page 32.
TREASURY POLICIES
The Group’s treasury policies are designed to manage ﬁnancial risk to the Group that arises 
from operating in a number of foreign currencies and to maximise interest income on cash 
deposits, whilst maintaining the security of these deposits. As an international group of 
companies, the main exposure is in respect of foreign currency risk on the trading transactions 
undertaken by group companies and on the translation of the net assets of overseas 
subsidiaries. This exposure is principally to the US dollar.
Monthly cash management reporting and forecasting is in place to facilitate management 
of this currency risk. The operations of group treasury take place at head ofﬁce.
All balances not immediately required for group operations are placed on short-term 
deposit with leading international highly rated ﬁnancial institutions.
At a transactional level, the Group seeks to offset its exposure to foreign exchange 
movements by contracting with signiﬁcant supply partners in US Dollars and undertakes 
regular ﬁnancial reviews to assess whether it would be appropriate for the Group to enter 
into currency hedging contracts to mitigate the currency risk. During the year there were 
no forward contracts in place.
At a translational level, the Group has structured the majority of its borrowings in US 
Dollars, which acts as a hedge of a net investment against its US Dollar denominated 
companies within the Group.
QUALITY
The Group prides itself on the highest standards of product quality and customer 
satisfaction. In doing this, it recognises that a failure to maintain such standards would be 
detrimental to its future trading performance. As a result, an ongoing emphasis is placed 
on quality control and customer communication.
RESEARCH AND DEVELOPMENT
The Group has a continuing commitment to a high level of research and development. This 
commitment is to actively develop new technologies and capabilities that will become a key 
part of the Group’s future product portfolio and revenues.
SUPPLIER PAYMENT POLICY AND PRACTICE
It is the Group’s policy to comply with the payment terms agreed with suppliers providing it 
is satisﬁed that the supplier has provided the goods and services in accordance with agreed  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 29
terms and conditions. Trade payables outstanding at 30 September 2012 represent 56 days 
as a proportion of the total amount invoiced by suppliers during the year (2011: 53).
DIRECTORS’ INDEMNITIES
The Directors have the beneﬁt of an indemnity which is a qualifying third party indemnity 
provision as deﬁned by Section 234 of the Companies Act 2006. The indemnity was in force 
throughout the last ﬁnancial year and is currently in force. The Company also purchased and 
maintained throughout the ﬁnancial year Directors’ and Ofﬁcers’ liability insurance in respect 
of itself and its Directors
EMPLOYEE INVOLVEMENT
The Group is committed to including all employees in the performance and development of 
the business. An established employee appraisal and reward scheme is in operation and 
employees are appraised regularly with relevant development support provided by the Group.
The Group attaches considerable importance to informing and involving its employees on 
matters which concern them and in the achievement of its business objectives. The Group 
has a formal employee communication plan involving regular meetings between 
management and employees and the provision of a comprehensive employee handbook.
EMPLOYMENT OF DISABLED INDIVIDUALS
The Group is committed to employment policies, which follow best practice, based on equal 
opportunities for all employees, irrespective of sex, race, colour, disability or marital status. 
Full and fair consideration is given to applications for employment from disabled persons, 
having regard to their particular aptitudes and abilities. Employees who become disabled 
during their working life will be retained in employment wherever possible and will be 
provided help with any necessary rehabilitation and retraining. The Group is prepared to 
modify procedures or equipment, wherever this is practicable, so that full use can be made 
of an individual’s abilities.
CORPORATE GOVERNANCE
The Board recognises the importance of good corporate governance and has put in place 
procedures it considers appropriate.  
The Board currently comprises three executive and four non-executive Directors. The directors 
holding ofﬁce during the period of this report and their biographies are detailed from page 
24 of this report and are also available on our website; www.goochandhousego.com
The Board focuses on formulation of strategy, management of effective business controls and 
review of business performance. The Board is speciﬁcally responsible for the approval of 
annual and interim results and interim management statements, acquisitions and disposals, 
major capital expenditure, borrowings, director and company secretary appointments and 
removals, any material litigation, strategic forecasting and major development projects.
A framework of delegated authorities is in place that details the structure of delegation 
below Board level and includes matters reserved to the Board.
All the non-executive Directors are considered by the Board to be independent in character 
and judgement. Two non-executive Directors (Dr Eugene Arthurs and Jan Melles) had served 
as non-executive Directors for more than nine years. Dr Eugene Arthurs retired from the 
Board on 22 February 2012 and Jan Melles retired from the Board on 5 October 2012. On 
the 22 February 2012 the Board appointed two new independent non-executive Directors, 
Dr Peter Bordui & Mr Mark Webster.
In accordance with the Company’s Articles of Association all directors will retire at the 
Annual General Meeting and, being eligible, offer themselves for re-election.
The Board has three formally constituted committees, the Audit committee, the Remuneration 
committee and the Nomination committee.
The Audit Committee, which consists of all four non-executive Directors, is responsible for 
ensuring that the ﬁnancial performance of the Group is properly monitored, controlled and 
reported. This committee is chaired by Paul Heal, who in the opinion of the Directors has 
recent and relevant experience to fulﬁl this role, having been a partner with the audit ﬁrm, PwC 
DIRECTORS’ REPORT
“
The Group prides 
itself on the 
highest standards 
of product quality 
and customer 
satisfaction” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 30
DIRECTORS’ REPORT
until the end of 2007. The Committee has met with the external auditors on three occasions 
during the year, together with the Chief Financial Ofﬁcer and the Chief Executive Ofﬁcer, to 
review matters relating to the ﬁnancial statements and internal ﬁnancial control systems.  
The Audit Committee has primary responsibility for making the recommendation on the 
appointment, reappointment and removal of external auditors, which the Board puts to the 
shareholders for approval at the AGM. It keeps under review the scope and results of the 
audit, its cost effectiveness and the independence and objectivity of the auditors. The 
committee regards it most cost effective to use the auditors for tax advice and compliance 
since this requires an in-depth knowledge and understanding of the Group’s business.
The Remuneration Committee consists of all four of the non-executive Directors. This committee 
is chaired by Paul Heal. It has met twice during the year and a summary of the Committee’s 
report is on pages 32 to 33.
The Nomination Committee comprises all four non-executive Directors and the Chief Executive 
Ofﬁcer. This committee is chaired by Dr Julian Blogh. The Nomination Committee meets as 
required during the year. The Nomination Committee determines the structure and 
members of the Board and plans for the orderly succession of new directors to the Board. 
Board and committee membership and attendance record is presented in the following table.
 Director Board Audit Remuneration Nomination
     Committee Committee Committee
Non-executive Directors
 Dr Julian Blogh  10/10 3/3 2/2 1/1
 Dr Peter Bordui (Appointed Feb. 2012)  7/10 2/3 1/2 0/1
 Mark Webster (Appointed Feb. 2012)  7/10 2/3  1/2 0/1
 Dr Eugene G Arthurs (Retired Feb. 2012)  2/10 1/3 1/2 1/1
 Jan A Melles (Retired Oct. 2012)  7/10 3/3  2/2 1/1
 Paul Heal 10/10 3/3 2/2 1/1
Executive Directors
 Gareth C W Jones  10/10 – – –
 Terry Scribbins  10/10 – – –
 Andrew N Boteler  10/10 – – –
RISK MANAGEMENT AND INTERNAL CONTROL
The Directors acknowledge that they are responsible for the Group’s system of internal 
ﬁnancial control. The system can provide only reasonable, and not absolute, assurance 
against material misstatements and losses.
There are deﬁned lines of responsibility and delegation of authorities. There are also internal 
ﬁnancial controls in existence which are centrally maintained and documented and provide 
reasonable assurance of the maintenance of proper accounting records and the reliability 
of ﬁnancial information used within the business.
The Group does not have an internal audit department, but senior ﬁnance staff perform a 
formal, annual review of all the sites’ internal controls.
Annual budgets are prepared for each company. Financial and operational reports enable the 
Board to compare performance against budget and to take action where appropriate.
During the year the Group implemented a new risk management policy, which is reviewed 
on a regular basis. Gooch & Housego has also developed and published its policies in 
relation to the Bribery Act and fraud.
ENVIRONMENTAL POLICY
The policy of the Group is to meet the statutory environmental requirements placed upon 
it and to apply good environmental practice in its operations while recognising that it is 
contractually obliged to meet its customer requirements.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the ﬁnancial statements 
in accordance with applicable law and regulations.
Images courtesy of NASA/JPL-Caltech  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 31
Company law requires the directors to prepare ﬁnancial statements for each ﬁnancial year. 
Under that law the directors have prepared the group ﬁnancial statements in accordance with 
International Financial Reporting Standards (IFRSs) as adopted by the European Union, and 
the parent company ﬁnancial statements in accordance with United Kingdom Generally 
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 
Under company law the directors must not approve the ﬁnancial statements unless they 
are satisﬁed that they give a true and fair view of the state of affairs of the group and the 
company and of the proﬁt or loss of the group for that period. In preparing these ﬁnancial 
statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•  state whether IFRSs as adopted by the European Union and applicable UK Accounting 
Standards have been followed, subject to any material departures disclosed and explained 
in the group and parent company ﬁnancial statements respectively;
•  prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to 
presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufﬁcient to 
show and explain the company’s transactions and disclose with reasonable accuracy at any 
time the ﬁnancial position of the company and enable them to ensure that the ﬁnancial 
statements comply with the Companies Act 2006. They are also responsible for safeguarding 
the assets of the company and the group and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the company’s website. 
Legislation in the United Kingdom governing the preparation and dissemination of ﬁnancial 
statements may differ from legislation in other jurisdictions. 
So far as each Director is aware, there is no relevant audit information of which the Company’s 
and Group’s auditors are unaware. Each Director has taken all the steps that he ought to have 
taken in his duty as a Director to make himself aware of any relevant audit information and to 
establish that the Company’s and Group’s auditors are aware of that information.
GOING CONCERN
Based on Management’s operating projections and cash ﬂow forecasts, the Directors believe 
that the Group will generate sufﬁcient cash and have access to working capital facilities to 
enable it to meet its funding requirements for at least the next 12 months and comply 
with its banking covenants 
Accordingly, the Directors have formed a judgement, at the time of approving the 
ﬁnancial statements, that there is a reasonable expectation that the Company and the 
Group have adequate resources to continue in operational existence for the foreseeable 
future. For this reason, the Directors continue to adopt the going concern basis in 
preparing the ﬁnancial statements.
INDEPENDENT AUDITORS
A resolution to reappoint PricewaterhouseCoopers LLP as auditors to the Company and the 
Group will be proposed at the Annual General Meeting.
Approved and signed on behalf of the Board of Directors by:
Gareth C W Jones
Director
24 January 2013
DIRECTORS’ REPORT
“
Through its 
strategies of market 
diversiﬁcation  
and moving up the 
value chain, the 
Group seeks to 
provide routes to 
new markets” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 32
The Remuneration Committee members at the date of signing the ﬁnancial statements were Mr P Heal (Chair), Dr J Blogh, Dr P Bordui and Mr M Webster.  
Dr E G Arthurs resigned from the committee in February 2012 followed by Mr J Melles in October 2012.  
Although not a member of the committee, Gareth Jones submits a report and is usually requested to present the report to the committee. After presenting 
the report he withdraws from the meeting and does not participate in the decision making or voting processes. 
POLICY ON DIRECTORS’ REMUNERATION
It is an objective of the Group to attract and retain Directors of high calibre and reward them in a way which encourages the creation of value for 
shareholders. The Committee undertakes the determination of executive Directors’ annual remuneration packages and these are reviewed with effect 
from 1 October each year. No executive Director plays a part in the discussion about their remuneration.
Executive Directors are paid a basic salary together with annual bonus payments based on the achievement of Group proﬁtability targets. In addition, 
executive Directors participate in a share option scheme and receive beneﬁts in kind, including medical expenses and insurance. 
Non-executive directors are paid a fee to attend board meetings and to serve as members of the Audit, Nomination and Remuneration committees.  
Further payments may be made in respect of additional services provided at the request of the Company, during the year Dr Peter Bordui received 
£11,680 (2011: £Nil). No such payments were made during the previous year.
DIRECTORS’ PENSION ARRANGEMENTS
During the year the Company contributed to a money purchase pension scheme on behalf of the executive Directors. The number of Directors who are accruing 
beneﬁts under a pension scheme is 3 (2011: 3). Contributions to a scheme on behalf of continuing Directors amount to 8% of the Director’s basic salary.
DIRECTORS’ CONTRACTS
Gareth Jones currently has a rolling service contract terminable on six months’ notice. Terry Scribbins and Andrew Boteler also have rolling service 
contracts that are subject to six months’ notice. The Chairman and non-executive Directors do not have contracts of service.
DIRECTORS’ INTEREST IN SHARES OF THE COMPANY
The Directors’ interests in the shares of the Company are set out in the Directors’ Report on page 28.
DIRECTORS’ REMUNERATION 
    Basic pay  Performance  Beneﬁts Pension  Total 2012  Total 2011
     Related Bonus in kind contribution
    £000 £000 £000 £000 £000 £000
Executive      
G C W Jones   213 – 8 17 238 306
T Scribbins   151 – 3 12 166 214
A N Boteler  140 – 3 11 154 192
Non-executive    
Dr J Blogh  67 – – – 67 60
Dr E G Arthurs  5 – – – 5 15
J A Melles  16 – – – 16 19
P Heal   35 – – – 35 30
Dr P Bordui  11 – – – 11 –
M Webster   23 – – – 23 –
    661 – 14 40 715 836
Gareth Jones exercised 18,726 share options at a market price of 425.00p each and an exercise price of 133.50p on 18 September 2012. In the previous 
year, Terry Scribbins exercised 62,500 share options at market price of 505.00p each and an exercise price of 272.50p on 13 January 2011.
For the year to 30 September 2012 the Chief Executive’s basic pay plus performance related bonus represented 5.6 times (2011: 9.6 times) the average 
salary of the employees of Gooch & Housego PLC.
SHARE OPTION SCHEMES
POLICY
The Board believes that a share based incentive scheme is an important element in promoting closer alignment of the interests of shareholders and 
executive Directors. The policy is to make periodic grants of share options under appropriate schemes in place at the time of grant.
REMUNERATION COMMITTEE REPORT
Remuneration Committee Report GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 33
At 30 September 2012 Gooch & Housego had two active share based incentive schemes and one other which is dormant. These are detailed below:
GOOCH & HOUSEGO PLC 2004 COMPANY SHARE OPTION SCHEME
The Gooch & Housego PLC 2004 Company Share Option Scheme (the “2004 Scheme”) had two grants of share options, on 23 July 2004, and on 8 December 
2005. These share option awards were to three executive Directors and four senior employees. No further awards have been made under the 2004 Scheme. 
PERFORMANCE CRITERIA
The director’s share options may be exercised on the achievement of certain ﬁnancial performance criteria. 50% of each allocation of options may be 
exercised from the earliest exercise date if the earnings per share ﬁgure for the Group, based on the most recent audited annual ﬁnancial statements, has 
improved by a rate equivalent to the growth in the UK Retail Prices Index plus 3%. The remaining 50% of each allocation of options may be exercised 
from the earliest exercise date if the earnings per share ﬁgure for the Group, based on the most recent audited ﬁnancial statements, have improved by a 
rate equivalent to the growth in the UK Retail Prices Index plus 6%.
Senior employees’ share options also have performance criteria attached and can only be exercised if these conditions are met. Details of the performance 
criteria are given in Note 27 of the ﬁnancial statements.
Executive Directors’ share options are listed below:
       – Number of ordinary shares under option –   
  Date of Exercise  At Exercised Lapsed  At  – Exercise period –
  grant price 01.10.11 in year in year 30.09.12                    From                   to
G C W Jones 23.07.04 133.5p 2,394 – – 2,394 a 23.07.05 22.04.14
  23.07.04 133.5p 118,416 – – 118,416 a 23.07.06 22.04.14
  23.07.04 133.5p 118,416 – – 118,416 a 23.07.07 22.04.14
  23.07.04 133.5p 137,142 (18,726) – 118,416 a 23.07.08 22.04.14
    376,368 (18,726) – 357,642   
         
T Scribbins 08.12.05 272.5p 31,250 – – 31,250 a 08.12.08 07.12.15
  08.12.05 272.5p 31,250 – – 31,250 a 08.12.09 07.12.15
    62,500 – – 62,500   
Total   438,868 (18,726) – 420,142   
a = Performance criteria met
GOOCH & HOUSEGO 2010 VALUE CREATION PLAN
On 7 January 2010, the Company introduced a Value Creation Plan (the “2010 VCP”) as a replacement to the 2007 Long Term Incentive Plan (the “2007 
LTIP). The 2010 VCP has become the primary equity incentive vehicle to retain and incentivise key employees in the company and align their interests 
with those of shareholders.
Under the 2010 VCP , key employees were granted a one-off award of units from an agreed total. These units had no intrinsic value on grant but give 
participants an opportunity to be awarded Company shares proportionate to the value created for shareholders above the threshold value at the third 
anniversary of the plan.
In accordance with the rules of the plan, on the third anniversary, being 7 January 2013 value created during the life of the plan, over and above a pre-
determined threshold value based on a share price of £2.00, has been calculated. A share of that value (approximately 12%) will be distributed amongst 
the participating members of senior management of the Group in the form of nil-cost share options (UK participants) and share awards (US participants).  
Half of the awards made are exercisable immediately and the balance after twelve months, subject to certain conditions.
Details of the award are as follows;-
Total number of market value Company Share Option Plan (CSOP) share options awarded:   158,936 
Total number of nil-cost share options and share awarded:     1,380,566
In terms of dilutive effect, in aggregate these awards amount to 7% of the current issued share capital, although, as mentioned above, half the awards 
are not exercisable for twelve months.
Aggregate awards made to Directors of the Group are as follows:-
G C W Jones 19,867 CSOP share options  450,747 Nil-cost share options
T Scribbins 19,867 CSOP share options 265,296 Nil-cost share options
A N Boteler 19,867 CSOP share options 265,296 Nil-cost share options
During the year to 30 September 2012 £471,000 (2011: £471,000) was charged to the income statement in respect of the IFRS 2 share based payments 
charge (valued using the Monte Carlo option pricing model) and £370,000 (2011: £150,000) in respect of accrued employers national insurance 
contributions, based on a year end share price of £4.35 (2011: £3.70).
REMUNERATION COMMITTEE REPORT GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 34
INDEPENDENT AUDITORS’ REPORT to the Members of Gooch & Housego PLC
We have audited the group annual report and ﬁnancial statements of Gooch 
& Housego PLC for the year ended 30 September 2012 which comprise the 
Group Income Statement, the Group Statement of Comprehensive Income, 
the Group Balance Sheet, the Group Statement of Changes in Equity, the 
Group Cash Flow Statement and the related notes. The ﬁnancial reporting 
framework that has been applied in their preparation is applicable law and 
International Financial Reporting Standards (IFRSs) as adopted by the 
European Union.
Respective responsibilities of directors and auditors
As explained more fully in the statement of Directors’ Responsibilities set 
out on pages 30 and 31, the directors are responsible for the preparation 
of the ﬁnancial statements and for being satisﬁed that they give a true 
and fair view. Our responsibility is to audit and express an opinion on the 
ﬁnancial statements in accordance with applicable law and International 
Standards on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the 
company’s members as a body in accordance with Chapter 3 of Part 16 of 
the Companies Act 2006 and for no other purpose. We do not, in giving 
these opinions, accept or assume responsibility for any other purpose or 
to any other person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent in writing.
Scope of the audit of the ﬁnancial statements
An audit involves obtaining evidence about the amounts and disclosures 
in the ﬁnancial statements sufﬁcient to give reasonable assurance that 
the ﬁnancial statements are free from material misstatement, whether 
caused by fraud or error. This includes an assessment of: whether the 
accounting policies are appropriate to the group’s circumstances and have 
been consistently applied and adequately disclosed; the reasonableness 
of signiﬁcant accounting estimates made by the directors; and the overall 
presentation of the ﬁnancial statements. In addition, we read all the 
ﬁnancial and non-ﬁnancial information in the annual report to identify 
material inconsistencies with the audited ﬁnancial statements. If we 
become aware of any apparent material misstatements or inconsistencies 
we consider the implications for our report.
Opinion on ﬁnancial statements 
In our opinion the group ﬁnancial statements: 
•  give a true and fair view of the state of the group’s affairs as at 30 
September 2011 and of its proﬁt and cash ﬂows for the year then ended;
•  have been properly prepared in accordance with IFRSs as adopted by the 
European Union; and 
•  have been prepared in accordance with the requirements of the 
Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the 
ﬁnancial year for which the group ﬁnancial statements are prepared is 
consistent with the group ﬁnancial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the 
Companies Act 2006 requires us to report to you if, in our opinion: 
•  certain disclosures of directors’ remuneration speciﬁed by law are not 
made; or 
•  we have not received all the information and explanations we require for 
our audit. 
Other matter 
We have reported separately on the parent company ﬁnancial statements 
of Gooch & Housego PLC for the year ended 30 September 2012.   
Colin Bates (Senior Statutory Auditor)
for and on behalf of 
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
24 January 2013
 
 
Independent Auditors’ Report GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 35
FINANCIAL STATEMENTS
  2012 2011
 Note £000  £000
Revenue 7 60,851 61,009
Cost of revenue  (37,405) (34,815)
Gross proﬁt  23,446 26,194
Research & Development  (4,277) (3,746)
Sales & Marketing  (4,119) (3,733)
Administration  (8,181) (9,826)
Other income and expenses 9 983 787
Operating proﬁt 11 7,852 9,676
Finance income 12 24 30
Finance costs 12 (800) (898)
Proﬁt before income tax expense  7,076 8,808
Income tax expense 13 (1,753) (1,285)
Proﬁt for the year attributable to the owners of the parent  5,323 7,523
Basic earnings per share 15 24.4p 35.5p
Diluted earnings per share 15 22.8p 33.6p
Reconciliation of operating proﬁt to adjusted operating proﬁt:  2012 2011
  £000 £000
Operating proﬁt  7,852 9,676
Amortisation of acquired intangible assets  881 1,427
Acquisition costs  – 571
Impairment of goodwill  – 1,969
Release of accrued contingent consideration  – (2,085)
Restructuring costs  240 –
Adjusted operating proﬁt  8,973 11,558
Reconciliation of net ﬁnance costs to adjusted net ﬁnance costs:  2012 2011
  £000 £000
Net ﬁnance costs  (776) (868)
Costs associated with debt re-ﬁnancing  – 64
Adjusted net ﬁnance costs  (776) (804)
   2012 2011
 Note £000  £000
Proﬁt for the year 5,323 7,523
   
Other comprehensive income   
Fair value adjustment of interest rate swap net of tax 26 95 (80)
Currency translation differences (1,084) 312
Other comprehensive (expense)/income for the year net of tax (989) 232
   
Total comprehensive income for the year 4,334 7,755
Group Income Statement
For the year ended 30 September 2012
Group Statement of  
Comprehensive Income
For the year ended 30 September 2012 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 36
FINANCIAL STATEMENTS
    2012 2011
   Note £000 £000
Non-current assets   
Property, plant and equipment 16 21,405 20,440
Intangible assets 17 20,720 22,081
Deferred income tax assets 24 4,308 4,045
    46,433 46,566
Current assets   
Inventories 18 12,802 11,264
Trade and other receivables 19 11,062 12,596
Cash and cash equivalents 20 11,712 13,844
    35,576 37,704
Current liabilities   
Trade and other payables 21 (10,202) (12,726)
Borrowings 22 (5,774) (6,001)
Income tax liabilities  (17) (424)
Provision for other liabilities and charges 23 (357) (505)
    (16,350) (19,656)
Net current assets  19,226 18,048
Non-current liabilities   
Borrowings 22 (6,261) (9,696)
Deferred income tax liabilities 24 (698) (563)
Derivative ﬁnancial instruments 30 (134) (255)
    (7,093) (10,514)
Net assets  58,566 54,100
Equity attributable to the owners of the parent   
Called up share capital 25 4,382 4,370
Share premium account 26 14,311 14,200
Merger reserve 26 2,671 2,671
Hedging reserve 26 (169) (264)
Cumulative translation reserve 26 (496) 588
Retained earnings 26 37,867 32,535
Total equity  58,566 54,100
The ﬁnancial statements for Gooch & Housego PLC, registered number 00526832 were approved by the Board of Directors on 24 January 2013 and signed 
on its behalf by:
Gareth C W Jones Andrew N Boteler
Director Director
Group Balance Sheet
For the year ended 30 September 2012
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 37
FINANCIAL STATEMENTS
    Share capital  Share premium  Merger Hedging  Retained  Total
    account account reserve reserve earnings equity
    £000 £000 £000 £000 £000 £000
At 1 October 2010   3,853 4,105 2,671 (184) 25,608 36,053
Proﬁt for the ﬁnancial year   – – – – 7,523 7,523
Other comprehensive income for the year  – – – (80) 312 232
Total comprehensive income for the year – – – (80) 7,835 7,755
Dividends  – – – – (871) (871)
Proceeds from shares issued  517 10,095 – – – 10,612
Fair value of employee services  – – – – 471 471
Tax credit relating to share option schemes  – – – – 80 80
Total contributions by and distributions to 
owners of the parent recognised directly
in equity  517 10,095 – – (320) 10,292
At 30 September 2011  4,370 14,200 2,671 (264) 33,123 54,100
At 1 October 2011   4,370 14,200 2,671 (264) 33,123 54,100
Proﬁt for the ﬁnancial year   – – – – 5,323 5,323
Other comprehensive income for the year  – – – 95 (1,084) (989)
Total comprehensive income for the year – – – 95 4,239 4,334
Dividends  – – – – (1,093) (1,093)
Proceeds from shares issued  12 111 – – – 123
Fair value of employee services  – – – – 471 471
Tax credit relating to share option schemes  – – – – 631 631
Total contributions by and distributions to 
owners of the parent recognised directly
in equity  12 111 – – 9 132
At 30 September 2012  4,382 14,311 2,671 (169) 37,371 58,566
Group Statement of Changes 
in Equity
For the year ended 30 September 2012 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 38
FINANCIAL STATEMENTS
    2012 2011
    £000 £000
Cash ﬂows from operating activities   
Cash generated from operations  10,653 13,238
Income tax paid  (1,793) (1,386)
Net cash generated from operating activities  8,860 11,852
   
Cash ﬂows from investing activities   
Acquisition of subsidiaries, net of cash acquired  (2,061) (14,484)
Purchase of property, plant and equipment  (3,337) (2,813)
Sale of property, plant and equipment  59 93
Purchase of intangible assets  (405) (153)
Interest received  24 29
Net cash used in investing activities  (5,720) (17,328)
   
Cash ﬂows from ﬁnancing activities   
Proceeds from new borrowings  – 4,643
Repayment of borrowings  (3,397) (2,702)
Proceeds from issues of share capital  123 10,612
Dividends paid to ordinary shareholders  (1,093) (871)
Interest paid  (711) (748)
Net cash (used in)/generated from ﬁnancing activities  (5,078) 10,934
   
Net (decrease)/increase in cash, cash equivalents, revolving credit facility and bank overdraft  (1,938)  5,458
Cash, cash equivalents, working capital facility and bank overdraft at beginning of the year  11,276 5,746
Exchange losses on cash and bank overdrafts  (103) 72
Cash, cash equivalents, revolving credit facility and bank overdraft at the end of the year  9,235 11,276
Cash, cash equivalents, revolving credit facility and bank overdrafts at the end of the year comprise:
    2012 2011
    £000 £000
Cash and cash equivalents  11,712 13,844
Revolving credit facility and overdraft  (2,477) (2,568)
Cash, cash equivalents, revolving credit facility and bank overdraft at the end of the year  9,235 11,276
 
Group Cash Flow Statement
For the year ended 30 September 2012 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 39
FINANCIAL STATEMENTS
Reconciliation of cash generated from operations  2012  2011
    £000 £000
Proﬁt before income tax  7,076 8,808
Adjustments for:   
- Amortisation of acquired intangible assets  881 1,427
- Amortisation of other intangible assets  296 323
- Depreciation  2,092 2,063
- Proﬁt on disposal of property, plant and equipment  48 (20)
- Share based payment obligations  471 471
- Acquisition costs  – 571
- Impairment of goodwill  – 1,969
- Non cash release of accrued contingent consideration  – (2,085)
- Finance income  (24) (30)
- Finance costs  800 898
Total   4,564 5,587
   
Changes in working capital   
- Inventories  (1,465) (2,613)
- Trade and other receivables  1,351 (945)
- Trade and other payables  (327) 1,537
- Movement in working capital provisions  (546) 864
Total   (987) (1,157)
Cash generated from operating activities  10,653 13,238
Reconciliation of net cash inﬂow to movements in net debt
    2012  2011
    £000  £000
(Decrease)/increase in cash in the year  (1,938) 5,458
Repayment of borrowings  3,397 2,702
New borrowings  – (4,643)
Changes in net debt resulting from cash ﬂows  1,459 3,517
   
Debt acquired upon acquisition  – (104)
Translation differences  71 (25)
Movement in net debt in the year  1,530 3,388
   
Net debt at 1 October  (1,853) (5,241)
Net debt at 30 September  (323) (1,853)
Analysis of net debt 
    At 1 Oct   Cash ﬂow Exchange Non-cash At 30 Sep 
    2011  movement
 
movement 2012
    £000 £000 £000 £000 £000
Cash at bank and in hand  13,844 (1,938) (194) – 11,712
Bank overdrafts & RCF
1
   (2,568) – 91 – (2,477)
    11,276 (1,938) (103) – 9,235
      
Debt due within 1 year  (3,366) – 102 – (3,264)
Debt due after 1 year  (9,663) 3,331 71 – (6,261)
Finance leases  (100) 66 1 – (33)
Net debt  (1,853) 1,459 71 – (323)
1
 RCF = Revolving Credit Facility
Notes to the Group
Cash Flow Statement
For the year ended 30 September 2012 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 40
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
1 GENERAL INFORMATION
Gooch & Housego PLC (the ”Company”) is incorporated and domiciled in 
the United Kingdom. The Company is listed on the Alternative Investment 
Market (“AIM Market”) of the London Stock Exchange. The address of the 
registered ofﬁce of the Company is given on page 1.
The consolidated ﬁnancial statements of the Group for the year ended 
30 September 2012 comprise the Company, Gooch & Housego PLC, and 
its subsidiaries (together referred to as the “Group”). A listing of the 
Company’s major subsidiaries is set out on page 61.
The Group is a manufacturer of specialist optoelectronic components, materials 
and systems and specialist instrumentation and life sciences devices. The 
Group has facilities in the United Kingdom, Germany and the United States.
2 BASIS OF PREPARATION
These ﬁnancial statements have been prepared under the historical cost 
convention as modiﬁed by ﬁnancial assets and ﬁnancial liabilities (including 
derivative instruments) at fair value and in accordance with International 
Financial Reporting Standards (“IFRS”) as adopted by the European Union 
and interpretations in issue at 30 September 2012, and with those parts 
of the Companies Act 2006 applicable to companies preparing ﬁnancial 
statements in accordance with IFRS.  
3 APPLICATION OF IFRS
Adoption of new standards
During the current reporting period there were no new standards or 
amendments which had a material impact on the net assets of the Group.
In addition, standards or amendments issued but not yet effective are 
not expected to have a material impact on the net assets of the Group. 
However, the Group is closely monitoring the IASB projects on contract 
revenue recognition and the lease accounting overhaul as they could 
potentially have a material impact on the Group’s results.
4 ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the 
ﬁnancial statements are set out below. The policies have been consistently 
applied to all of the years presented, unless otherwise stated.
Consolidation
Subsidiaries are entities that are directly or indirectly controlled by the Group. 
Control exists where the Group has the power to govern the ﬁnancial and 
operating policies of the entity so as to obtain beneﬁts from its activities. 
In assessing control, potential voting rights that are currently exercisable 
or convertible are taken into account.
The purchase method of accounting is used to account for the acquisition of 
subsidiaries by the Group. The cost of a business combination is measured as the 
fair value of the assets given, equity instruments issued, the fair value of contingent 
or deferred consideration and liabilities incurred or assumed at the date of 
exchange. Costs directly attributable to the business combination are charged to the 
income statement. The excess of the costs of a business combination over the fair 
value of the identiﬁable net assets acquired is recorded as goodwill. If the cost of 
a business combination is less than the fair value of the net assets of the subsidiary 
acquired, the difference is recognised directly in the income statement. Should 
the fair value of contingent or deferred consideration vary from the actual value 
on settlement date, the difference is recognised directly in the income statement.
Transactions, balances and unrealised gains on transactions between 
Group companies are eliminated. Unrealised losses are also eliminated but 
considered an impairment indicator of the asset transferred. Accounting 
policies of subsidiaries have been changed where necessary to ensure 
consistency with the policies adopted by the Group.
Segment reporting
A business segment is a grouping of operations engaged in providing 
products or services that are subject to risks and returns that are different 
from those of other business segments. A market segment is engaged in 
providing products or services within a particular economic environment 
that are subject to risks and returns which are different from those of 
segments operating in other economic environments.
The chief operating decision maker in determining a business or operating 
segment is the Board of Directors.
Foreign currency translation
a.  Functional and presentational currency
The consolidated ﬁnancial statements are presented in Pounds Sterling, 
which is the Group’s presentational currency. Items included in the 
ﬁnancial statements of each of the Group’s subsidiaries are measured 
using the currency of the primary economic environment in which the 
entity operates (the “functional currency”). 
b.  Transactions and balances
Foreign currency transactions are translated into an entity’s functional 
currency using the exchange rates prevailing at the dates of the transactions. 
Foreign exchange gains and losses resulting from the settlement of such 
transactions and from the translation at balance sheet exchange rates 
of monetary assets and liabilities denominated in foreign currencies are 
recognised in the income statement, except when deferred in equity as 
qualifying cash ﬂow hedges and qualifying net investment hedges.
c.  Subsidiaries
The results and ﬁnancial position of subsidiaries that have a functional 
currency different from the presentational currency are translated into the 
presentational currency as follows: 
•  assets and liabilities for each balance sheet presented are translated at 
the closing rate at the date of that balance sheet;
•  income and expenses for each income statement are translated at 
average exchange rates (unless this average is not a reasonable 
approximation of the cumulative effect of the rates prevailing on the 
transaction dates, in which case income and expenses are translated at 
the rate on the dates of the transactions); and
•  all resulting exchange differences are recognised in other comprehensive 
income and as a separate component of equity.
On consolidation, exchange differences arising from the translation of 
the net investment in foreign operations, and of borrowings and other 
currency instruments designated as hedges of such investments, are taken 
to shareholders’ equity. When a foreign operation is partially disposed of 
or sold, exchange differences that were recorded in equity are recognised 
in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a 
foreign entity are treated as assets and liabilities of the foreign entity and 
translated at the closing rate.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. 
Historical cost includes expenditure that is directly attributable to the 
acquisition of the items.
No depreciation is charged on freehold land or capital work in progress. 
Certain plant used in the manufacturing process which is constructed from 
precious metals is not depreciated. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 41
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
Depreciation on other assets is calculated using the straight-line method to 
allocate their cost over their estimated useful lives, as follows:
• Freehold buildings         2-3% Straight line
• Leasehold property over term of lease Straight line
• Plant and machinery  10-20% Straight line
•  Fixtures, ﬁttings and 
computer hardware 10-33% Straight line
• Motor vehicles 25% Reducing balance
The assets’ residual values and useful lives are reviewed, and adjusted if 
appropriate, at each balance sheet date. Where an asset’s carrying amount 
is greater than its estimated recoverable amount, the asset’s carrying 
amount is written down immediately to its recoverable amount. The 
recoverable amount is the higher of an asset’s fair value less costs to sell 
or an asset’s value in use.
Intangible assets
a.  Goodwill
Goodwill represents the excess of the cost of a business combination over 
the fair value of the net identiﬁable assets of the acquired business. Goodwill 
arising from business combinations is included in ‘intangible assets’. 
Goodwill is tested annually for impairment and carried at cost less accumulated 
impairment losses. The impairment testing requires an estimation of the ‘value 
in use’ of the Cash-generating unit (the “CGU”) to which goodwill is allocated 
using appropriately discounted cash ﬂow projections. Any impairment is 
recognised immediately as an expense to the income statement and is not 
subsequently reversed.
For the purpose of impairment testing a CGU is deﬁned as either a business 
segment or an operating entity, as appropriate. 
Gains and losses on the disposal of an entity include the carrying amount 
of goodwill relating to the entity sold.
b.  Patents, Trademarks and Licenses
Internally incurred costs associated with the ﬁling and perfection 
of patents and trademarks are capitalised and carried at cost less 
accumulated amortisation. Amortisation is calculated using the straight 
line method to allocate the cost over their useful economic lives and are 
charged to Research and Development costs in the income statement.
Acquired patents, trademarks and licences are shown at historical cost. 
Patents, trademarks and licences have a ﬁnite useful life and are carried 
at cost less accumulated amortisation. Amortisation is calculated using the 
straight line method to allocate the cost over their useful economic lives.
c.  Computer software
Costs associated with developing or maintaining computer software 
programmes are recognised as an expense as incurred. 
Costs that are directly associated with the development of identiﬁable and 
unique software products controlled by the Group, and that will probably  
generate economic beneﬁts exceeding costs beyond one year, are capitalised 
and recognised as intangible assets. Costs include the software development 
employee costs and an appropriate portion of relevant overheads. 
Acquired computer software and licences are capitalised on the basis of 
the costs incurred to acquire and bring to use the speciﬁc software. 
Capitalised software costs are amortised using the straight line method 
over their estimated useful lives of up to 5 years and charged to 
Administration costs in the income statement.
d.  Research and development
Expenditure on research activities, undertaken with the prospect of gaining 
new scientiﬁc or technical knowledge and understanding, is recognised as 
an expense as incurred.
Development costs incurred after the point at which the commercial and 
technical feasibility of the product have been proven, and the decision to 
complete the development has been taken and resources made available, 
are capitalised. The expenditure capitalised includes the cost of materials, 
direct labour and an appropriate proportion of overheads.
Capitalised development expenditure is stated at cost less accumulated 
amortisation and impairment losses. Development costs are amortised 
using the straight line method over their estimated useful life which is 
typically 7 years and are charged to Research and Development costs in 
the income statement.
e.  Acquired intangibles
Other acquired intangible assets are stated at fair value less accumulated 
amortisation and impairment losses. 
The useful life of each of these assets is assessed based on the differing 
natures of each of the intangible assets acquired. Amortisation is charged 
on a straight-line basis over the estimated useful life of the assets acquired.
• Customer relationships     up to 3 years
• Brand names      up to 3 years
• Acquired patents, trademarks and licences    up to 3 years
Government grants
Government grants are accounted for on an accruals basis. Grants are 
credited to the income statement over the life of the project. Where 
grants are used to fund the acquisition of property, plant and equipment, 
the grant is initially credited to deferred income then credited to the 
income statement over the estimated economic life of the asset.
Impairment of non-ﬁnancial assets
The Group assesses at each balance sheet date whether an asset may be 
impaired. If any such indicator exists, the Group tests for impairment by 
estimating the recoverable amount which is the higher of the value in 
use and the fair value less costs to sell. If the recoverable amount is less 
than the carrying value of the asset, the asset is impaired and the carrying 
value is reduced to its recoverable amount. In addition to this, assets with 
indeﬁnite lives are tested for impairment annually.
Loans and receivables
Loans and receivables are non-derivative ﬁnancial assets with ﬁxed or 
determinable payments that are not quoted in an active market. They are 
included in current assets, except those with maturities greater than 12 
months from the balance sheet date. These are classiﬁed as non-current 
assets. Loans and receivables are classiﬁed as trade and other receivables 
in the balance sheet.
Inventories
Inventories are stated at the lower of weighted average cost and net 
realisable value. The cost of ﬁnished goods and work in progress comprises 
design costs, raw materials, direct labour, other direct costs and related 
production overheads (based on normal operating capacity). It excludes 
borrowing costs. Net realisable value is the estimated selling price in the 
ordinary course of business, less applicable variable selling expenses.
Long-term contract balances included in work in progress comprise costs 
incurred on long-term contracts, net of any amounts transferred to trading 
expenditure, after deducting foreseeable losses and related payments 
on account. Costs include all direct material and labour costs incurred in  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 42
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
bringing a contract to its state of completion at the year end. Provisions for 
estimated losses on contracts are made in the period in which such losses 
are foreseen. Long term contract balances do not include attributable 
proﬁt. The amount by which customer billings exceed the revenue 
recognised on a contract is shown as a payment on account.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently 
measured at amortised cost using the effective interest method, less 
provision for impairment. 
A provision for impairment of trade receivables is established when there 
is objective evidence that the Group will not be able to collect all amounts 
due according to the original terms of the receivables. Signiﬁcant ﬁnancial 
difﬁculties of the debtor, probability that the debtor will enter bankruptcy 
or ﬁnancial reorganisation, and default or delinquency in payments (more 
than 30 days overdue) are considered indicators that the trade receivable 
may be impaired. 
The amount of the provision is the difference between the asset’s carrying 
amount and the present value of estimated future cash ﬂows, discounted 
at the original effective interest rate. The carrying amount of the asset is 
reduced through the use of an allowance account, and the amount of the loss 
is recognised in the income statement within ‘Administration costs’’. When a 
trade receivable is uncollectible, it is written off against the allowance account 
for trade receivables. Subsequent recoveries of amounts previously written off 
are credited against ‘Administration costs’ in the income statement. 
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held on call with 
banks with original maturities of three months or less, and the drawn down 
balance of the $8m Revolving Credit Facility. The drawn down balance of the 
$8m Revolving Credit Facility is shown within borrowings in current liabilities 
in the balance sheet.
Trade payables
Trade payables are recognised initially at fair value and subsequently 
measured at amortised cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs 
incurred. Borrowings are subsequently stated at amortised cost; any 
difference between the proceeds (net of transaction costs) and the 
redemption value is recognised in the income statement over the period 
of the borrowings using the effective interest method.
Borrowing costs which are directly attributable to the acquisition, 
construction or production of a qualifying asset the borrowing costs are 
capitalised as part of the cost of that asset.
Borrowing costs are classiﬁed as current liabilities unless the Group has 
an unconditional right to defer settlement of the liability for at least 12 
months after the balance sheet date.
Financial instruments
Financial instruments are initially recognised at fair value on the date 
that a contract is entered into and are subsequently remeasured at their 
fair value. The Group documents the relationship between the hedging 
instrument and the hedged item and, on a periodic basis, assesses 
whether the hedge is effective.
The fair value of the ﬁnancial instrument used for hedging purposes is 
disclosed in Note 30. Movements on the hedging reserve in shareholders 
equity is disclosed in Note 26.
The effective portion of changes in the fair value of derivatives that are 
designated and qualify as cash ﬂow hedges is recognised in equity.
Taxation
Income tax on the proﬁt or loss for the year comprises current and 
deferred tax.
Current tax is the expected tax payable on the taxable income for the year 
using rates enacted at the balance sheet date, and any adjustments to tax 
payable in respect of prior years.
Deferred income tax is provided in full, using the liability method, on 
temporary differences arising between the tax bases of assets and 
liabilities and their carrying amounts in the consolidated ﬁnancial 
statements. However, the deferred income tax is not accounted for, if it 
arises from initial recognition of an asset or liability in a transaction other 
than a business combination that at the time of the transaction affects 
neither accounting nor taxable proﬁt or loss. 
Deferred income tax is determined using tax rates (and laws) that have 
been enacted or substantially enacted by the balance sheet date and are 
expected to apply when the related deferred income tax asset is realised 
or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable 
that future taxable proﬁt will be available against which the temporary 
differences can be utilised.
Deferred income tax is provided on temporary differences arising on 
investments in subsidiaries, except where the timing of the reversal of the 
temporary difference is controlled by the Group and it is probable that the 
temporary difference will not reverse in the foreseeable future.
Deferred income tax is recognised in the income statement except to the 
extent that it relates to items recognised directly in other comprehensive 
income and equity, in which case it is recognised in other comprehensive 
income and equity.
In the UK and US, the Company is entitled to a tax deduction for amounts 
treated as compensation on exercise of certain employee share options 
under each jurisdiction’s tax rules. As explained under “Share options” 
below, a compensation expense is recorded in the Company’s income 
statement over the period from the grant date to the vesting date of 
the relevant options. As there is a temporary difference between the 
accounting and tax bases, a deferred income tax asset is recorded. The 
deferred income tax asset arising is calculated by comparing the estimated 
amount of tax deduction to be obtained in the future (based on the 
Company’s share price at the balance sheet date) with the cumulative 
amount of the compensation recorded in the income statement. If the 
amount of estimated future tax deduction exceeds the cumulative amount 
of the remuneration expense at the statutory rate, the excess is recorded 
directly in equity, against retained earnings.
Employee beneﬁts
a. Pension obligations
The Group operates money purchase pension schemes for UK employees 
and Section 401(k) plans for US employees. The Group pays contributions 
to publicly or privately administered pension insurance plans on a 
mandatory, contractual or voluntary basis. The Group has no further 
payment obligations once the contributions have been paid. The 
contributions are recognised as an employee beneﬁt expense in 
the income statement when they are due. Prepaid contributions are 
recognised as an asset to the extent that a cash refund or a reduction in 
the future payments is available.  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 43
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
b.  Proﬁt share and bonus plans
The Group recognises a liability and an expense for bonuses and proﬁt-
sharing, based on a formula that takes into consideration the proﬁt 
attributable to the Group’s shareholders after certain adjustments. The 
Group recognises a provision where contractually obliged or where there 
is a past practice that has created a constructive obligation.
c.  Share options
The Group operates two active share option schemes and one dormant 
scheme. In accordance with IFRS 2 the fair value of the employee services 
received in exchange for the grant of the options is recognised as an 
expense in the income statement. The total amount to be expensed 
over the vesting period is determined by reference to the fair value of 
the options granted, excluding the impact of any non-market vesting 
conditions (for example, proﬁtability targets). Non-market vesting 
conditions are included in assumptions about the number of options that 
are expected to vest. 
Employer’s National Insurance in the United Kingdom and equivalent taxes 
in other jurisdictions are payable on the exercise of certain share options. 
In accordance with IFRS 2, this is treated as a cash-settled transaction. A  
provision is made, calculated using the fair value of the Company’s shares at 
the balance sheet date, pro-rated over the vesting period of the options. 
At each balance sheet date, for awards with non market vesting conditions, 
the entity revises its estimates of the number of options that are expected 
to vest. It recognises the impact of the revision to original estimates, if any, 
in the income statement, with a corresponding adjustment to equity. The fair 
value of the options under the 2004 Gooch & Housego PLC Company Share 
Option Scheme was determined by using the Black-Scholes option pricing 
model. The fair value of the options under the Gooch & Housego 2010 Value 
Creation Plan was determined by using the Monte Carlo option pricing model.
The proceeds received net of any directly attributable transaction costs are 
credited to share capital (nominal value) and share premium when the 
options are exercised.
Provisions
Provisions are recognised when the Group has a present legal or 
constructive obligation as a result of past events; it is probable that an 
outﬂow of resources will be required to settle the obligation; and the 
amount has been reliably estimated.
Provisions are measured at the present value of the expenditures 
expected to be required to settle the obligation using a pre-tax rate that 
reﬂects current market assessments of the time value of money and the 
risks speciﬁc to the obligation. The increase in the provision due to the 
passage of time is recognised as interest expense.
Leases
Leases which transfer substantially all the risks and rewards of ownership 
of an asset are treated as a ﬁnance lease. Assets held under a ﬁnance 
lease are capitalised at their fair value at the inception of the lease and 
depreciated over the estimated useful economic life of the asset or lease 
term if shorter.
Finance charges are associated with the ﬁnance lease are expensed in 
proportion to the capital amount outstanding.
All other leases are classiﬁed as operating leases. Operating lease rentals 
are expensed in equal annual amounts over the lease term.
Share capital
Ordinary shares are classiﬁed as equity. 
Incremental costs directly attributable to the issue of new shares or 
options are shown in equity as a deduction, net of tax, from the proceeds.
Revenue recognition
Revenue comprises the fair value of the consideration received or 
receivable for the sale of goods and services in the ordinary course of 
the Group’s activities. Revenue is shown net of value-added tax, returns, 
rebates and discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be 
reliably measured, it is probable that future economic beneﬁts will ﬂow 
to the entity and when speciﬁc criteria have been met for each of the 
Group’s activities as described below. The amount of revenue is not 
considered to be reliably measurable until all contingencies relating to the 
sale have been resolved.
a.  Sale of goods
Revenue is recognised when the risks and rewards of the underlying 
sale have been transferred to the customer, and when collectability of 
the related receivable is reasonably assured. Depending on the terms of 
business, this occurs either on the dispatch/delivery of the goods supplied 
or on acceptance by the customer.
b.  Long-term contracts
Two companies within the Group (Cleveland and EM4) have a number of 
long-term contracts in place. Revenue is recognised on these by reference 
to the stage of completion of the contract activity at the balance sheet 
date. Revenue and proﬁts are determined by estimating the outcome of 
the contract and determining the costs and proﬁt attributable to the stage 
of completion.
Where the outcome of the contract cannot be reliably estimated, contract 
costs are recognised as an expense when incurred and revenue is recognised 
to the extent of the costs incurred that are expected to be recoverable. In 
both cases, any expected contract loss is recognised immediately.
Revenue from long-term contracts recognised in the year ended 30 
September 2012 was £3,667,000 (2011: £1,779,000).
c.  Interest income
Interest income is recognised on a time-proportion basis using the 
effective interest method.
Dividend distribution
Dividend distributions to the Company’s shareholders are recognised as 
a liability in the Group’s ﬁnancial statements in the period in which the 
dividends are approved by the Company’s shareholders.
5 FINANCIAL RISK MANAGEMENT
Capital risk management
Management considers capital as equity, as shown in the Group balance 
sheet, excluding net debt.
The Group’s objectives when managing capital are to safeguard the 
Group’s ability 
• to continue as a going concern, 
•  to provide returns for shareholders and beneﬁts for other stakeholders 
and 
• to maintain an optimal capital structure to reduce the cost of capital.
The Board is satisﬁed that these objectives have been met during the year. 
Actions taken during the year to achieve these objectives are outlined in 
the Chief Executive’s Review.  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 44
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
In order to maintain or adjust the capital structure, the Group may
• adjust the amount of dividends paid to shareholders,
• return capital to shareholders,
• issue new shares,
• sell assets to reduce debt and
• vary the level of debt ﬁnancing.
Consistent with others in the industry, the Group monitors capital on the 
basis of the debt to equity ratio. 
A summary of the Company’s debt to equity ratio at 30 September is set 
out below:
   Note 2012  2011
    £000  £000
Total borrowings 22 12,035  15,697
Less: cash and cash equivalents 20 (11,712)  (13,844)
Net borrowings  323  1,853
    
Total equity  58,566  54,100
Debt to equity ratio  0.6%  3.4%
The decrease in the debt to equity ratio during 2012 resulted primarily as 
a result of the repayment of bank borrowings and the positive cashﬂow 
achieved through the Group’s strong trading performance.
While the Group’s debt to equity ratio is consistently monitored, changes 
in the Group’s need for capital and the selection of the source and funding 
of capital are assessed against a number of criteria which may have a 
direct effect on the Group debt to equity ratio. 
The Group’s capital needs include, but are not solely limited to, its
• investment in non-current assets;
• investment in working capital; and
• acquisition of businesses, technologies and other intangible assets.
 
The criteria against which the Group’s capital needs are assessed include, 
but are not limited to, 
• availability of and cost of debt ﬁnancing;
• ability to raise equity ﬁnancing at an acceptable share price; and
• ratio of debt to equity. 
The Group’s activities expose it to a variety of ﬁnancial risks: market risk 
(including currency risk and cash ﬂow interest rate risk), credit risk and 
liquidity risk.
The Group’s overall risk management programme focuses on the 
unpredictability of ﬁnancial markets and seeks to minimise potential 
adverse effects on the Group’s ﬁnancial performance. Where considered 
appropriate, the Company will use derivative ﬁnancial instruments to 
hedge risk exposures during the year.
i. Market risk
a. Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange 
risk arising from various currency exposures, primarily with respect to the 
US Dollar. 
Foreign exchange risk arises from 
• future commercial transactions;
• recognised assets and liabilities; and
• net investments in foreign operations.
The Group has certain investments in foreign operations, whose net assets 
are exposed to foreign currency translation risk. 
Currency exposure arising from the net assets of the Group’s foreign 
operations is managed primarily through borrowings denominated in the 
relevant foreign currencies. 
No ﬁnancial derivatives have been entered into to manage foreign 
exchange exposure.
As a signiﬁcant amount of the Group’s proﬁt is earned by its US subsidiaries, 
the Group’s proﬁt is sensitive to movements in the US Dollar exchange rate. 
If the average US Dollar exchange rate for the year had been consistent 
with the closing exchange rate at 30 September 2011, with all other 
variables constant, post tax proﬁts for the year would have been £25,000 
higher (2011: £167,000 higher) as a result of the translation in US Dollars.   
Equity is more sensitive to movement in the US Dollar exchange rate as 
a signiﬁcant amount of the Group’s net assets are held in the Group’s US 
subsidiaries. If the US Dollar weakened by 10% against Pound Sterling with 
all other variables held constant, the net assets of the Group would be 
£3,099,000 lower (2011: £3,334,000 lower). If the US Dollar strengthened by 
10% against Pound Sterling with all other variables held constant, the net 
assets of the Group would be £3,787,000 higher (2011: £4,074,000 higher).
b. Cash ﬂow interest rate risk
The Group has cash balances of £11.7m which are held in interest bearing 
current accounts. The Group’s income and operating cash ﬂows are 
substantially independent of changes in market interest rates.
The Group’s interest rate risk arises from its long term borrowings and 
revolving credit facility. A 1% increase in the cost of borrowing would have 
resulted in an annualised increase in interest expense of £38,000 (2011: 
£43,000) had the Group’s borrowings been in place throughout the year.
Borrowings issued at variable interest rates expose the Group to cash ﬂow 
interest rate risk. The Group uses an interest rate swap to hedge a proportion 
of the interest rate risk. During 2011 and 2012, the Group’s borrowings at 
variable interest rates were denominated in Pound Sterling and US Dollars as 
detailed in Note 22.
ii. Credit risk
Credit risk is the risk of ﬁnancial loss to the Group if a customer or 
counterparty to a ﬁnancial instrument fails to meet its contractual 
obligations. It arises principally from the Group’s trade receivables.
a. Trade and other receivables
The management of credit risk exposure is the responsibility of each 
business unit which has credit policies in place to mitigate the risk. The 
credit policies seek to verify a customer’s credit worthiness prior to trading 
and maintain the level of trading within agreed credit limits. Changes to 
credit limits require authorisation in accordance with internal control policies.
The Group is exposed to concentration of credit risk. The Group’s top 10 
customers in 2012 accounted for 32% of the Group’s revenue (2011: 33%).  
No individual customer made up more than 6% of revenue (2011: 6%).
The Group’s trade receivables are analysed in note 19.
b. Cash
Cash is held in current and deposit accounts with ﬁnancial institutions 
which have credit ratings of A+ or greater. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 45
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
iii. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its ﬁnancial 
obligations as they fall due. The Group aims to achieve a balance between 
certainty of funding and a ﬂexible, cost effective borrowing structure.
The Company’s facilities comprise an $18 million US Dollar denominated term 
loan of which $11.3m is still outstanding (2011: $15.8m), a £3.1 million Sterling 
denominated term loan of which £2.4m is still outstanding (2011: £2.9m), an 
$8 million revolving credit facility (drawn to $4 million at both 30 September 
2012 and 30 September 2011) and an undrawn capital expenditure facility 
of $8 million. These are analysed in Notes 22 and 29. All facilities are 
committed until April 2015, subject to certain covenant provisions.
The Group aims to ensure that there are sufﬁcient funds or credit lines 
available to supplement cash ﬂows generated from trading to meet 
known obligations in the next twelve months.
6 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of ﬁnancial statements in accordance with International 
Financial Reporting Standards (IFRS) requires the Directors to make critical 
accounting estimates and judgments that affect the amounts reported 
in the ﬁnancial statements and accompanying notes. These estimates 
and judgments are continually evaluated and are based on historical 
experiences and other factors, including expectations of future events 
that are believed to be reasonable under the circumstances. The resulting 
accounting estimates will on occasions fail to equal actual results.
The estimates and assumptions that have signiﬁcant risk of causing a 
material adjustment to the carrying amounts of assets and liabilities 
within the next ﬁnancial year are outlined below.
 
Going Concern
The Directors are required to make an assessment of the Group’s ability to 
continue to trade as a going concern. In making this assessment the Directors 
make critical estimates and judgements in respect of expected future 
revenues, costs, investment requirements and debt servicing obligations. 
The Directors have given this matter due consideration and have concluded 
that it is appropriate to prepare the Group ﬁnancial statements on a going 
concern basis. The two main considerations were as follows:
•  Group cash ﬂow – During the year ended 30 September 2012, the Group 
was highly cash generative due to a strong trading performance. The 
Group expects to continue generating cash from operating activities. 
 
The Group investment in property, plant and equipment for the year 
ended 30 September 2012 has increased over the previous ﬁnancial 
year. This investment is expected to continue into the next ﬁnancial year.
•  Bank Facilities – The Group maintains a regular and ongoing constructive 
dialogue with its bankers and keeps them advised of Group developments 
and progress against its business plan. The Royal Bank of Scotland plc 
has committed signiﬁcant facilities to the Group which is available 
through April 2015. 
 
At 30 September 2012, the Group had available cash resources, based 
on translating the revolving credit facility at the closing exchange rate for 
the US Dollar to Pound Sterling, of £14.2m (2011: £16.4m).
Revenue recognition
Revenue from long term contracts is recognised on a percentage-of-
completion method basis. Use of this method requires an estimation of the 
total project resource requirement and also an estimation of the cost to 
complete and the assessment of potential losses on uncompleted contracts.
Provisions for income taxes
The Group is subject to income taxes in numerous jurisdictions.  Signiﬁcant 
judgement is required in determining the worldwide provision for income 
taxes. There are many transactions and calculations for which the ultimate 
tax determination is uncertain during the ordinary course of business.  
The Group recognises liabilities for anticipated tax audit issues based 
on estimates of whether additional taxes will be due.  Where the ﬁnal 
tax outcome of these matters is different from the amounts that were 
initially recorded, such differences will impact the income tax and deferred 
income tax provisions in the period in which such determination is made.
Impairment of goodwill
The Group tests goodwill for impairment at least annually. This requires an 
estimation of the value in use of the Cash Generating Units (the “CGUs”) 
to which goodwill is allocated. As set out in Note 17, estimating the value 
in use requires the Group to make an estimate of the expected future cash 
ﬂows from the CGUs and also to choose a suitable discount rate in order to 
calculate the present values of those cash ﬂows.
Provision for impairment of trade receivables
The Group assesses trade receivables for impairment which requires an 
estimation of the likelihood of payment forfeiture by customers. In making 
this assessment, the Directors will consider the payment history of the 
customer as well as the customer’s future viability.
Inventory provision
The Group continually monitors and assesses the provision for old and slow 
moving inventory. Factors considered by the Directors include the expected 
future usage and the potential obsolescence and deterioration of the Inventory .
Warranty provision
The Group monitors and assesses its warranty provision requirement 
on a continuing basis. In addition to considering historical repair and 
replacement costs, the Directors will also assess expected changes in 
future costs based on current information.
 
Share options
The Company has two active share option schemes and one dormant 
scheme. In accordance with IFRS 2, share options are measured at fair 
value at the date of grant. The fair value determined is then expensed 
in the Group income statement on a straight line basis over the vesting 
period, with a corresponding increase in equity. The fair value of the 
options under the 2004 Gooch & Housego PLC Company Share Option 
Scheme was measured by using the Black-Scholes option pricing model.  
The fair value of the options under the Gooch & Housego 2010 Value 
Creation Plan was measured by using the Monte Carlo option pricing 
model. The valuation of share options requires several judgements to 
be made in respect of the number of options that are expected to be 
exercised. Details of the assumptions included in the valuation of options 
are disclosed in Note 27. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 46
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
7 SEGMENTAL ANALYSIS
The Company’s segmental reporting reﬂects the information that management uses within the business. The business is divided into four market sectors, 
being Aerospace and Defence, Life Sciences, Industrial and Scientiﬁc Research, together with the Corporate cost centre.
The industrial business segment primarily comprises the industrial laser market for use in the semiconductor and microelectronic industries, but also 
includes other industrial applications such as metrology and telecommunications. Scientiﬁc Research covers academic and government funded research 
including major multi-national projects.
    Aerospace   Scientiﬁc 
    and Defence Life Sciences Industrial Research Corporate Total
For year ended 30 September 2012  £000 £000 £000 £000 £000 £000
Revenue      
 Total revenue  15,440 5,731 39,067 3,912 – 64,150
 Inter and intra-division  – – (3,278) (21) – (3,299)
External revenue  15,440 5,731 35,789 3,891 – 60,851
Divisional expenses  (12,712) (4,283) (28,045) (3,571) (1,119) (49,730)
EBITDA¹  2,728 1,448 7,744 320 (1,119) 11,121
EBITDA %  17.7% 25.3% 21.6% 8.2% 0.0% 18.3%
Depreciation and Amortisation  (548) (231) (1,177) (88) (344) (2,388)
Operating proﬁt before amortisation 
of acquired intangible assets  2,180 1,217 6,567 232 (1,463) 8,733
Acquired intangible assets amortisation  – – – – (881) (881)
Operating proﬁt  2,180 1,217 6,567 232 (2,344) 7,852
Operating proﬁt margin %  14.1% 21.2% 18.3% 6.0% 0.0%  12.9%
    Aerospace   Scientiﬁc 
    and Defence Life Sciences Industrial Research Corporate Total
For year ended 30 September 2011  £000 £000 £000 £000 £000 £000
Revenue      
 Total revenue  15,412 5,655 38,596 3,648 – 63,311
 Inter and intra-division  – – (2,302) – – (2,302)
External revenue  15,412 5,655 36,294 3,648 – 61,009
Divisional expenses  (12,349) (4,654) (25,816) (3,319) (1,382) (47,520)
EBITDA¹  3,063 1,001 10,478 329 (1,382) 13,489
EBITDA %  19.9% 17.7% 28.9% 9.0% – 22.1%
Depreciation and Amortisation  (496) (122) (858) (86) (824) (2,386)
Operating proﬁt before amortisation 
of acquired intangible assets  2,567 879 9,620 243 (2,206) 11,103
Acquired intangible assets amortisation  – – – – (1,427) (1,427)
Operating proﬁt  2,567 879 9,620 243 (3,633) 9,676
Operating proﬁt margin %  16.7% 15.5% 26.5% 6.7% 0.0%  15.9%
¹EBITDA = Earnings before interest, tax, depreciation and amortisation.
All of the amounts recorded are in respect of continuing operations.
Analysis of net assets/(liabilities) by location:
    2012 2012 2012 2011 2011 2011
    Assets Liabilities Net Assets Assets Liabilities Net Assets
    £000 £000 £000 £000 £000 £000
United Kingdom  33,155 (12,495) 20,660 35,031 (11,608) 23,423
North America  48,736 (10,884) 37,852 48,975 (18,467) 30,508
Continental Europe  118 (64) 54 264 (95) 169
    82,009 (23,443) 58,566 84,270 (30,170) 54,100
For the year to 30 September 2012 non-current asset additions totaled £1,393,000 (2011: £7,249,000) for the UK and for North America £3,555,000 
(2011: 29,842,000). There were no additions to non-current assets in respect of Continental Europe (2011: £nil).
Analysis of revenue by destination:
    2012 2011
    £000  £000   
United Kingdom  8,644 8,055   
North America  28,443 26,278   
Continental Europe  14,343 13,654   
Asia Paciﬁc and Other  9,421 13,022
Total revenue  60,851 61,009 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 47
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
8 EXPENSES BY NATURE
       Note 2012 2011
        £000 £000
Raw materials and consumables      15,076 17,165
Changes in stocks of ﬁnished goods and work in progress     (486) (3,002)
Employee costs     10 27,774 25,009
Other operating charges      8,349 9,135
Depreciation      2,092 2,063
Amortisation of other intangible assets      296 323
Amortisation of acquired intangible assets       881 1,427
Other income and expenses     9 (983) (787)
        52,999 51,333
9 OTHER INCOME AND EXPENSES
        2012 2011
        £000 £000
Grants receivable      956 443
Gain on disposal of property, plant and equipment     33 20
Change in fair value of contingent consideration on acquisition     – 2,085
Impairment of goodwill      – (1,969)
Other (expense)/income      (6) 208
        983 787
10 EMPLOYEE COSTS
        2012 2011
        £000 £000
Wages and salaries      21,941 19,949
Social security costs      2,310 1,841
Share options      471 471
Medical and other insurance      2,478 2,044
Pension costs      574 704
        27,774 25,009
The average number of employees during the year was:
        2012 2011
        Number Number
Manufacturing      413 371
Sales, ﬁnance and administration      166 151
        579 522
Key management compensation
        2012 2011
        £000 £000
Wages and salaries      2,555 2,696
Social security costs      402 432
Share options      471 471
Medical and other insurances      122 109
Pension scheme contributions      173 199
        3,723 3,907
Key management are those who are essential in the running of the Group.
11 OPERATING PROFIT
Operating proﬁt is stated after charging:      2012 2011
        £000  £000
Fees payable to the Company’s auditors for the audit of the parent company and consolidated ﬁnancial accounts  38 38
Fees payable to the Company’s auditors and its associates for other services:  
 - the audit of the Company’s subsidiaries pursuant to legislation    107 170
 - tax compliance services      47 55
Net (gains)/losses on foreign exchange      (160) 96
Operating lease rentals      1,052 716 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 48
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
12 FINANCE INCOME AND COSTS
        2012 2011
        £000  £000
Finance income comprises:    
 Bank interest      24 30
Finance costs comprise:    
 Bank interest      768 756
 Reﬁnancing costs      – 49
 Finance lease interest      1 1
 Imputed interest on contingent consideration on acquisitions     31 92
        800 898 
13. INCOME TAX EXPENSE
Analysis of tax charge in the year      2012 2011
        £000 £000
Current taxation    
UK Corporation tax      1,264 1,018
Overseas tax      491 1,273
Adjustments in respect of prior year tax charge     (395) (181)
Total current tax      1,360 2,110
    
Deferred tax    
Origination and reversal of timing differences      32 (592)
Adjustments in respect of prior year deferred tax     307 (298)
Impact of tax rate change to 23% (2011: 25%)     54 65
Total deferred tax      393 (825)
    
Income tax expense per income statement     1,753 1,285
Adjusted income tax workings      2012 2010
        £000  £000
Income tax expense per income statement     1,753 1,285
    
Add back one-off items:    
Losses utilised not previously recognised      – 232
Total one-off items      – 232
Adjusted income tax expense      1,753 1,517
The current taxation for the year is lower (2011: lower) than the standard rate of corporation tax in the UK. 
An explanation of the differences are explained below:
        2012 2011
        £000  £000
Proﬁt before income tax expense      7,076 8,808
    
Proﬁt at the effective standard rate of tax of 25% for the year (2011: 27%)    1,769 2,378
Permanent differences:       
– Change in fair value of contingent consideration for acquisition    – (693)
– Other permanent differences      (116) (130)
Recognition of tax losses not previously recognised     (87) –
Adjustments in respect of foreign tax rates      221 144
Adjustments in respect of prior year tax charge     (395) (181)
Impact of UK tax rate change to 23% on deferred tax (2011: 25%)    54 65
Adjustments in respect of prior year deferred tax     307 (298)
Total income tax expense      1,753 1,285 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 49
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
Factors affecting the future tax charge
Overseas tax losses of £1.8m (2011: £2.2m) and UK tax losses of £0.9m (2011: £0.9m) are available to offset against future proﬁts of the Group. The utilisation 
of these losses is not sufﬁciently certain to recognise a deferred tax asset.
The Finance Act 2011 included legislation to reduce the main rate of corporation tax from 26% to 25% with effect from 1 April 2012.  In his Budget speech 
on 21 March 2012 the Chancellor announced a further reduction in the rate of corporation tax to 24% with effect from 1 April 2012. This further reduction 
was enacted under the Provisional Collection of Taxes Act 1968 on 26 March 2012.
Legislation to reduce the main rate of corporation tax from 24% to 23% from 1 April 2013 has been included in the Finance Act 2012 and substantively 
enacted on 17 July 2012. Accordingly, the net deferred tax asset has been recognised at 23% resulting in a decrease in the Group’s net deferred tax asset 
and a charge to the statement of comprehensive income of £54,000.
The proposed further reduction in the rate of corporation tax by 2% to 21% from 1 April 2014 has not yet been substantively enacted. Therefore, this rate 
change has not been recognised in these ﬁnancial statements.
14 DIVIDENDS
        2012 2011
        £000  £000
Final 2011 dividend paid in 2012: 3.0p per share (Final 2010 dividend paid in 2011: 2.0p per share)   656 434
2012 Interim dividend paid: 2.0p per share (2011: 2.0p)     437 437
        1,093 871
The Directors propose a ﬁnal dividend of 3.2p per share making the total dividend paid and proposed in respect of the 2012 ﬁnancial year 5.2p (2011: 5.0p). 
15 EARNINGS PER SHARE
The calculation of earnings per 20p Ordinary Share is based on the proﬁt for the year using as a divisor the weighted average number of Ordinary Shares in 
issue during the year. The weighted average number of shares for the year ended 30 September is given below:
        2012 2011
Number of shares used for basic earnings per share     21,860,241 21,162,500
Dilutive shares      1,531,993 1,194,768
Number of shares used for dilutive earnings per share     23,392,234 22,357,268
A reconciliation of the earnings used in the earnings per share calculation is set out below:
      2012  2011
        £000 p per share £000 p per share
Basic earnings per share    5,323 24.4p 7,523 35.5p
Amortisation of acquired intangible assets (net of tax)   662 3.0p 1,083 5.1p
Acquisition costs    – – 434 2.1p
Goodwill impairment of investment (net of tax)   – – 1,299 6.1p
Change in value of contingent consideration for acquisition   – – (2,085) (9.9)p
Costs associated with debt re-ﬁnancing (net of tax)   – – 37 0.2p
Impact of one off tax adjustments    – –  (232) (1.1)p
Restructuring costs    180 0.8p – –
Total adjustments net of income tax expense    842 3.8p 536 2.5p
Adjusted basic earnings per share    6,165 28.2p 8,059 38.0p
    
Basic diluted earnings per share    5,323 22.8p 7,523 33.6p
Adjusted diluted earnings per share    6,165 26.4p 8,059 36.0p
Basic and diluted earnings per share before amortisation and adjustments has been shown because, in the opinion of the Directors, it provides a useful 
measure of the trading performance of the Group. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 50
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
16 PROPERTY, PLANT AND EQUIPMENT
 
   Capital Freehold   Fixtures,
   work in land and Leasehold Plant and ﬁttings and Motor
   progress buildings property machinery computers vehicles Total
   £000 £000 £000 £000 £000 £000 £000
Cost or valuation       
At 30 September 2010 35 8,907 556 13,681 2,367 28 25,574
Acquired  48 – – 3,763 99 – 3,910
Additions 373 31 908 1,460 107 – 2,879
Disposals (39) – – (276) (58) – (373)
Reclassiﬁcation (102) 31 5 64 2 – –
Exchange rate differences 3 11 30 48 6 – 98
At 30 September 2011 318 8,980 1,499 18,740 2,523 28 32,088
Additions 1,326 – 1,181 706 56 2 3,271
Disposals – – – (141) (69) – (210)
Reclassiﬁcation (708) – 587 181 3 – 63
Exchange rate differences (9) (33) (49) (431) (15) – (537)
At 30 September 2012 927 8,947 3,218 19,055 2,498 30 34,675
       
Accumulated depreciation       
At 30 September 2010 – 866 497 7,503 938 17 9,821
Charge for the year – 179 30 1,646 205 3 2,063
Disposals – – – (267) (33) – (300)
Exchange rate differences – 3 4 52 5 – 64
At 30 September 2011 – 1,048 531 8,934 1,115 20 11,648
Charge for the year – 179 172 1,507 230 5 2,093
Disposals – – – (240) (69) – (309)
Reclassiﬁcation – – 34 (37) 3 – –
Exchange rate differences – (8) (19) (124) (11) – (162)
At 30 September 2012 – 1,219 718 10,040 1,268 25 13,270
       
Net book value       
At 1 October 2010 35 8,041 59 6,178 1,429 11 15,753
At 30 September 2011 318 7,932 968 9,806 1,408 8 20,440
At 30 September 2012 927 7,728 2,500 9,015 1,230 5 21,405
At 30 September 2012, plant and equipment purchased under a hire purchase or ﬁnance lease agreement had a cost of £200,000 and net book value of 
£119,000. At 30 September 2011, plant and equipment purchased under a hire purchase or ﬁnance lease agreement had a cost of £137,000 and net book 
value of £109,000.
No interest was capitalised in the year (2011: £Nil). GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 51
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
17 INTANGIBLE ASSETS
      Acquired Capitalised Software
      intangible R&D, Patents and other
     Goodwill assets and licences intangibles Total
     £000 £000 £000 £000 £000
Cost     
At 1 October 2010   15,859 4,088 603 1,072 21,622
Acquired    5,870 4,302 – – 10,172
Additions   – – 40 56 96
Disposals   – – – (2) (2)
Exchange rate differences   238 156 6 5 405
At 30 September 2011   21,967 8,546 649 1,131 32,293
Additions   – – 28 377 405
Reclassiﬁcation   – – (63) – (63)
Exchange rate differences   (465) (267) (9) (10) (751)
At 30 September 2012   21,502 8,279 605 1,498 31,884
     
Accumulated amortisation     
At 1 October 2010   2,218 3,113 322 678 6,331
Charge for the year   – 1,427 145 178 1,750
Disposal    – – – (1) (1)
Impairment   1,969 – – – 1,969
Exchange rate differences   – 159 2 2 163
At 30 September 2011   4,187 4,699 469 857 10,212
Charge for the year   – 881 83 213 1,177
Exchange rate differences   (71) (144) (5) (5) (225)
At 30 September 2012   4,116 5,436 547 1,065 11,164
     
Net book value     
At 1 October 2010   13,641 975 281 394 15,291
At 30 September 2011   17,780 3,847 180 274 22,081
At 30 September 2012   17,386 2,843 58 433 20,720
Goodwill is allocated according to each operating entity as follows; Cleveland (£2.1m), Melbourne (£1.8m), Norderstedt (£0.1m), Ilminster (£0.6m), New 
Jersey (£0.6m), Torquay (£1.3m), Moorpark (£5.1m) and EM4 (£5.8m).  
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. The impairment testing requires an estimation of the 
‘value in use’ of the CGU. The value in use calculations use pre-tax cash ﬂow projections based on the latest projections approved by the Board for year 
one. For the purposes of the impairment review, the following key assumptions were made in respect of the cash ﬂows beyond year one:
• 42% Projected gross proﬁt margin
• 5% Average growth in EBITDA to 2015, 3% thereafter
• 15% Weighted average cost of capital used to discount cash ﬂow
The projected gross proﬁt margin and average growth is based on past performance and the Directors’ expectations for the foreseeable future. Based on 
this calculation of the value in use, no impairment of goodwill has arisen during the year ended 30 September 2012.
At the 30 September 2011 as part of its bi-annual review of the carrying value of goodwill, the Board took the decision to impair the goodwill of the 
General Optics acquisition. General Optics, now referred to as Gooch & Housego Moorpark, was acquired in October 2008 for a consideration of $21m and, 
prior to the impairment, the carrying value of the associated goodwill was £7.1m.   GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 52
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
18 INVENTORIES
        2012 2011
        £000 £000
Raw materials      5,043 3,991
Work in progress      5,029 4,852
Finished goods      2,730 2,421
        12,802 11,264
The cost of inventories recognised as an expense and included in Cost of revenue amounted to £37.4m (2011: £30.6m).
The movement in the inventories provision is as follows:
        2012 2011
        £000 £000
At 1 October      3,115 2,190
Increase in provision      159 54
Acquired       – 853
Exchange rate movement      (58)  18
At 30 September      3,216 3,115
19 TRADE AND OTHER RECEIVABLES
        2012 2011
        £000  £000
Trade receivables      9,214 10,118
Other receivables      179 332
Grant funding held in trust account      1,100 1,598
Prepayments      569 548
        11,062 12,596
The carrying amount of the Group’s trade and other receivables is denominated in the following currencies:
        2012 2011
        £000  £000
Pound Sterling      2,426 2,559
US Dollar       7,219 7,989
Euro        1,417 2,048
        11,062 12,596
The ageing of Trade receivables by due date is as follows:
        2012 2011
        £000  £000
Current       8,107 8,807
1 to 3 months      1,225 1,409
Over 3 months      117 224
        9,449 10,440
Less provision for impairment      (235) (322)
Net trade receivables      9,214 10,118
 
Movement on the provision for impairment of trade receivables is as follows: 
        2012 2011
        £000  £000
At 1 October      322 184
Acquired       – 104
Utilisation of provision      (32) (60)
Increase in provision      39 108
Release of provision no longer required      (88) (15)
Exchange rate movement      (6) 1
At 30 September      235 322
20 CASH AND CASH EQUIVALENTS
        2012 2011
        £000  £000
Cash at bank and on hand      11,712 13,844 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 53
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
21 TRADE AND OTHER PAYABLES
        2012 2011
        £000  £000
Payments on account      111 72
Trade payables      3,511 3,149
Other taxation and social security      317 167
Grant funding held in trust account      1,100 1,598
Accruals        5,163 7,740
        10,202 12,726
22 BORROWINGS
        2012 2011
        £000  £000
Current:  
Bank borrowings      5,741 5,934
Finance leases       33 67
        5,774 6,001
Non-current:  
Bank borrowings      6,261 9,663
Finance leases      – 33
        6,261 9,696
  
Total borrowings      12,035 15,697
The carrying values of the bank borrowings, overdraft and ﬁnance leases are not materially different from their fair values.
Gooch & Housego’s bank is The Royal Bank of Scotland plc. The Group’s facilities comprise of an $18m dollar denominated term loan and a £3.1m sterling 
denominated term loan. At 30 September 2012, the balance outstanding for the US Dollar facility was $11.3m (2011: $15.8m) and for the Sterling facility 
£2.4m (2011: £2.9m).
In addition, the Group has a revolving credit facility of US$8.0m of which US$4.0m (2011: $4.0m) is drawn down and a capital expenditure facility of 
US$8.0m, which has not been drawn down.
All facilities are committed until April 2015 and attract an interest rate of between 2.25% and 3.00% above LIBOR dependent upon the Company’s 
leverage ratio.
Gooch & Housego (Florida) LLC, a US subsidiary, has a US Dollar loan of $683,000 (2011: $738,000) which is secured by a charge over the property it 
occupies.  The loan is repaid in monthly instalments totalling $55,000 per annum. Interest is payable at 1.6% above 30 day US$ LIBOR.
Maturity proﬁle of bank and other borrowings
      Bank Finance Total Total
      borrowings leases 2012 2011
      £000 £000 £000 £000
Within one year    5,741 33 5,774 6,001
Between two and ﬁve years     6,009 – 6,009 9,398
More than ﬁve years    252 – 252 298
      12,002 33 12,035 15,697 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 54
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
23 PROVISION FOR OTHER LIABILITIES AND CHARGES
The movements in the Group provision for other liabilities and charges during the year are as follows:
Warranty reserve      2012 2011
        £000 £000
At 1 October       505 369
Utilised during year      (204) (286)
Charge to the income statement      63 420
Exchange movement      (7) 2
At 30 September       357 505
The Group provision for other liabilities and charges provides for the anticipated cost of repair and rectiﬁcation of products under warranty, based on known 
exposures and historical occurrences.
24 DEFERRED TAX ASSETS AND LIABILITIES
The movements in the Group’s deferred tax assets and liabilities during the year are as follows:
        2012  2011
        £000  £000
At 1 October       3,482 2,396
Deferred tax arising from acquisitions      – 180
(Charge)/credit to the income statement      (393) 825
Credit directly to equity       593 80
Exchange movement      (72) 1
At 30 September       3,610 3,482
The deferred tax provided for in the ﬁnancial statements is disclosed under the following balance sheet headings and can be analysed as follows:
        2012 2011
        £000 £000
Deferred income tax assets  
Intangible assets      372 299
Share options      1,537 902
Provisions      1,187 1,399
Unutilised losses      1,075 1,271
Other timing differences      137 174
        4,308 4,045
Deferred income tax liabilities  
Property, plant and equipment      (698) (446)
Other timing differences      – (117)
        (698) (563)
Deferred tax balance at 30 September      3,610 3,482
Overseas tax losses of £1.8m (2011: £2.2m) and UK tax losses of £0.9m (2011: £0.9m) are available to offset against future proﬁts of the Group. The 
Group has not recognised a deferred income tax asset of £0.6m (2011: £0.9m) in respect of these losses due to uncertainty as to whether they would be 
utilised within the foreseeable future.
The amount of deferred tax asset to be recovered within 12 months is expected to be £719.000. The amount of deferred tax liability to be settled within 
12 months is expected to be £118,000.
No deferred tax has been provided in relation to unremitted earnings from overseas subsidiaries on the basis that no incremental tax charge is currently 
anticipated to arise upon remittance of these earnings to the UK.
  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 55
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
25 CALLED UP SHARE CAPITAL
      2012 2011 2012 2011
      Number Number £000 £000
Allotted, issued and fully paid    
At 1 October    21,850,798 19,264,390 4,370 3,853
Shares issued and fully paid    59,976 2,586,408 12 517
At 30 September    21,910,774 21,850,798 4,382 4,370
During the year ended 30 September 2012 59,976 shares were allotted under share option schemes. 
Of the shares issued in the year ended 30 September 2011, 219,742 were allotted under share option schemes. In addition on 5 January 2011, Gooch & 
Housego PLC raised approximately £10.1 million (net of expenses) through a placing of 2,366,666 new 20p Ordinary Shares.
26 RESERVES
     Share   Cumulative
     premium Merger Hedging translation Retained
     account reserve reserve reserve earnings
     £000 £000 £000 £000 £000
At 1 October 2011   14,200 2,671 (264) 588 32,535
Proﬁt for the ﬁnancial year   – – – – 5,323
Dividends paid   – – – – (1,093)
Shares placed   111 – – – –
Fair value of share options   – – – – 471
Deferred tax on share options   – – – – 631
Change in fair value of interest rate swap   – – 95 – –
Currency translation differences   – – – (1,084) –
At 30 September 2012   14,311 2,671 (169) (496) 37,867
27 SHARE OPTIONS
The Company operates two active share option schemes, the Gooch & Housego PLC 2004 Company Share Option Scheme (the “2004 Scheme”) and the 
Gooch & Housego 2010 Value Creation Plan (the “2010 VCP”), which grant share options to certain employees. A third scheme, the Gooch & Housego 2007 
Long Term Incentive Plan (the “2007 LTIP”), is dormant.
The Gooch & Housego PLC 2004 Company Share Option Scheme
Under the 2004 Scheme, the Company has ceased granting share options. Options under this scheme are granted at market price on the date of grant with 
a ﬁxed exercise price equal to the market price of the shares under option at the date of the grant. The contractual life of an option is 10 years and is 
subject to continued employment.
At 30 September 2012, four senior employees within the Group have 444,077 share options outstanding relating to the 2004 Scheme. These options 
are subject to speciﬁc performance criteria, namely that their subsidiary audited pre-tax proﬁts for the relevant year will be at least US$500,000 and the 
subsidiary pre-tax proﬁts will be not less than 95% of the agreed budget. The remuneration report details the executive Directors’ share options and the 
performance criteria which are needed to be met for them to exercise their options. 
The options under the 2004 Scheme were valued using the Black-Scholes option pricing model. The fair value per option and the assumptions used in the 
calculations are as follows:
Grant date      8 Dec 2005 23 Jul 2004
Share price at grant date      272.5p 133.5p
Exercise price      272.5p 133.5p
Number of employees      2 5
Shares under option      250,000 1,313,275
Vesting period (years)      1-4 1-4
Expected volatility      38.1% 56.7%
Option life (years)      10 10
Expected life (years)      5.5 5.5
Risk free rate      4.23% 4.99%
Expected dividends expressed as dividend yield     1.49% 1.49%
Fair value per option      98.4p 66.1p
No performance conditions were included in the fair value calculations. The expected volatility is based on historical volatility over the last three years. The 
expected life is the average expected period to exercise. The risk free rate of return is the yield on zero-coupon UK Government bonds of a term consistent 
with the assumed option life. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 56
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
The Gooch & Housego 2010 Value Creation Plan
Under the 2010 VCP , the amount of options granted will not be determined until the end of the plan’s three year term and meeting the performance 
criteria. The remuneration report details the performance criteria. Under the plan, key employees are granted a one-off award of units from an agreed 
total. Three executive Directors have been awarded 44 units out of the total pool of 64 units and eight key employees hold the remaining 20 units.
The 2010 VCP was valued using the Monte Carlo option pricing model. The expected volatility of 73.5% used in the model is based on the historical 
volatility of the Company’s share price over the three years prior to 7 January 2010. The risk free rate of 2.1% was used. The total fair value of all the 
units granted to the participants in the 2010 VCP was £1,614,640. 
The Gooch & Housego 2007 Long Term Incentive Plan
The 2007 LTIP has been replaced by the 2010 VCP .  The share options granted under the 2007 LTIP have been surrendered by the participants and the 
scheme is now dormant. 
A reconciliation of share option movements is shown below:
      2012 2011
       Weighted  Weighted
       average  average
      Number exercise price Number exercise price
Outstanding at 1 October    756,953 156.5p 945,445 170.3p
Exercised    (91,226) 228.7p (188,492) 225.7p
Outstanding at 30 September    665,727 146.5p 756,953 156.5p
Exercisable at 30 September    587,165 148.3p 678,391 159.1p
The weighted average fair value of options granted in the year was £nil (2011: £nil).  For the options exercised, the average market price was 404.7p per 
share.
Share options information by exercise price
       Weighted Weighted average
Range of exercise prices – 30 September 2012   Number of average remaining life (years)
       options  exercise price Expected Contractual
£0-£1.50 2004 Scheme   603,227 133.5p 0.0 1.8
£1.50-£3.00 2004 Scheme   62,500 272.5p 0.0 3.2
       Weighted Weighted average
Range of exercise prices – 30 September 2011   Number of average remaining life (years)
       options  exercise price Expected Contractual
£0-£1.50 2004 Scheme   631,953 133.5p 0.0 2.8
£1.50-£3.00 2004 Scheme   125,000 272.5p 0.0 4.2
The total charge for the year relating to share options was £471,000 (2011: £471,000), all of which related to equity-settled share based payment transactions.
28 OPERATING LEASES
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
        2012 2011
        £000 £000
Within one year      1,050 890
Between two to ﬁve years      4,238 5,066
        5,288 5,956 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 57
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2012
29 FINANCIAL INSTRUMENTS 
The Group’s ﬁnancial instruments comprise an interest rate swap, bank borrowings, cash at bank, ﬁnance leases and various items such as trade 
receivables and trade payables that directly arise from its operations. The main risks arising from the Group’s ﬁnancial instruments are interest rate risk, 
liquidity risk and foreign currency risk.  
The Board’s policy on these risks is set out in the Directors’ Report.
Operations are ﬁnanced through a mixture of retained proﬁts, cash reserves, bank borrowings and ﬁnance leases. Other than ﬁnance leases the Board’s 
policy is to use variable rate borrowings whenever possible. Short-term funding ﬂexibility is achieved through the Group’s $8.0m revolving credit facility.
The currency proﬁle for the Group’s ﬁnancial assets and liabilities are set out below.
      Financial assets Financial liabilities
      2012 2011 2012 2011
      £000 £000 £000 £000
Pound Sterling    4,396 7,034 2,383 2,813
US Dollars    6,512 6,087 9,652 12,884
Euro      804 723 – –
      11,712 13,844 12,035 15,697
The ﬁnancial assets listed in the above table are subject to ﬂoating rates of interest.  The Interest rates on the ﬁnancial liabilities are provided in Note 22.  
The ﬁnancial assets include cash at bank but exclude short-term receivables, prepayments and other receivables.  The ﬁnancial liabilities includes bank 
borrowings and ﬁnance leases.  Other short-term payables are excluded from this disclosure.
30 DERIVATIVE FINANCIAL INSTRUMENTS
        2012 2011
        £000 £000
Interest rate swap      223 357
Current portion      89 102
Non-current portion      134 255
        223 357
The notional principal amount of the outstanding interest swap contract at 30 September 2012 was $13.5 million (2011: $18 million). The end date for 
the interest swap is 1 April 2015. At 30 September 2012, the ﬁxed rate of the interest rate swap was 2.14% and the ﬂoating rate was US dollar LIBOR. 
The fair value of the swap is a mark to market calculation based on future interest rate expectations over the life of the swap. This is the level 2 method 
of determining fair value as deﬁned by IFRS 7.
31 CAPITAL COMMITMENTS
        2012 2011
        £000 £000
Authorised and contracted but not provided for     – 1,444
All capital commitments relate to property, plant and equipment.
32 RELATED PARTY TRANSACTIONS
In addition to duties performed in his role as a non-executive director Dr Peter Bordui has provided additional consultancy services at the request of the 
company. Fees during the year to 30 September 2012 amounted to £11,680 (2011: £Nil), at the balance sheet date the balance outstanding totalled £11,680 
(2011: £Nil). The transactions are performed in the normal course of business on an arms length basis and that the outstanding balance is unsecured.
No other material contracts or arrangements have been entered into during the year, nor existed at the end of the year, in which a director or key 
manager had a material interest. 
33 POST BALANCE SHEET EVENTS
On 7 January 2013, 1,539,502 share options were granted to directors and employees under the Group’s Value Creation Plan (VCP).  In terms of dilutive 
effect, in aggregate these awards amount to 7% of current issued share capital. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2011 58
INDEPENDENT AUDITORS’ REPORT to the Members of Gooch & Housego PLC
We have audited the parent company ﬁnancial statements of Gooch & 
Housego PLC for the year ended 30 September 2012 which comprise the 
balance sheet and the related notes. The ﬁnancial reporting framework 
that has been applied in their preparation is applicable law and United 
Kingdom Accounting Standards (United Kingdom Generally Accepted 
Accounting Practice).
Respective responsibilities of directors and auditors
As explained more fully in the statement of Directors’ Responsibilities set 
out on pages 30 and 31, the directors are responsible for the preparation 
of the parent company ﬁnancial statements and for being satisﬁed that 
they give a true and fair view. Our responsibility is to audit and express an 
opinion on the parent company ﬁnancial statements in accordance with 
applicable law and International Standards on Auditing (UK and Ireland). 
Those standards require us to comply with the Auditing Practices Board’s 
Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the 
company’s members as a body in accordance with Chapter 3 of Part 16 of 
the Companies Act 2006 and for no other purpose. We do not, in giving 
these opinions, accept or assume responsibility for any other purpose or 
to any other person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent in writing.
Scope of the audit of the ﬁnancial statements
An audit involves obtaining evidence about the amounts and disclosures 
in the annual report and ﬁnancial statements sufﬁcient to give reasonable 
assurance that the ﬁnancial statements are free from material misstatement, 
whether caused by fraud or error. This includes an assessment of: whether 
the accounting policies are appropriate to the parent company’s 
circumstances and have been consistently applied and adequately 
disclosed; the reasonableness of signiﬁcant accounting estimates made 
by the directors; and the overall presentation of the ﬁnancial statements. 
In addition, we read all the ﬁnancial and non-ﬁnancial information in the 
annual report to identify material inconsistencies with the audited ﬁnancial 
statements. If we become aware of any apparent material misstatements 
or inconsistencies we consider the implications for our report.
Opinion on ﬁnancial statements 
In our opinion the parent company ﬁnancial statements: 
•  give a true and fair view of the state of the company’s affairs as at 30 
September 2012;
•  have been properly prepared in accordance with United Kingdom 
Generally Accepted Accounting Practice; and 
•  have been prepared in accordance with the requirements of the 
Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the 
ﬁnancial year for which the parent company ﬁnancial statements are 
prepared is consistent with the parent company ﬁnancial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the 
Companies Act 2006 requires us to report to you if, in our opinion: 
•  adequate accounting records have not been kept by the parent company, 
or returns adequate for our audit have not been received from branches 
not visited by us; or 
•  the parent company ﬁnancial statements are not in agreement with the 
accounting records and returns; or 
•  certain disclosures of directors’ remuneration speciﬁed by law are not made; or 
•  we have not received all the information and explanations we require for 
our audit.
Other matter 
We have reported separately on the group ﬁnancial statements of Gooch & 
Housego PLC for the year ended 30 September 2012.
Colin Bates (Senior Statutory Auditor)
for and on behalf of 
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
24 January 2013
Independent Auditors’ R eport GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 59
COMPANY BALANCE SHEET as at 30 September 2012
 2012 2011
 Note £000 £000 £000 £000
FIXED ASSETS     
Investments 5  12,003  12,003
Tangible assets 6  9,734  9,851
   21,737  21,854
CURRENT ASSETS     
Debtors 7 11,269  3,935 
Cash at bank and in hand  2,003  6,644 
  13,272  10,579 
CREDITORS: amounts falling due within one year 9 (5,319)  (9,812) 
NET CURRENT ASSETS   7,953  767
TOTAL ASSETS LESS CURRENT LIABILITIES   29,690  22,621
CREDITORS: amounts falling due after more than one year 10  (1,930)  (2,355)
     
NET ASSETS   27,760  20,266
     
CAPITAL AND RESERVES     
Called up share capital 12  4,382  4,370
Share premium account 13  14,311  14,200
Revaluation reserve 13  248  253
Proﬁt and loss account 13  8,819  1,443
SHAREHOLDERS’ FUNDS 14  27,760  20,266
The ﬁnancial statements for Gooch & Housego PLC, registered number 00526832 were approved by the Board of Directors on 24 January 2013 and signed 
on its behalf by:
Gareth C W Jones Andrew N Boteler
Director Director
 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company Balance Sheet
As at 30 September 2012 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 60
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2012
1 COMPANY ACCOUNTING POLICIES
Basis of preparation
The ﬁnancial statements have been prepared on a going concern basis under the historical cost convention as modiﬁed by the revaluation of certain ﬁxed 
assets and have been prepared in accordance with applicable United Kingdom Accounting Standards and the Companies Act 2006.
The accounting policies have been consistently applied over the period reported.
Pension schemes
The Company operates a money purchase pension scheme for Directors and staff. The assets of the scheme are held in separately administered funds. The 
pension charge represents contributions payable to the funds during the year.  Expenses under the plan are charged to the proﬁt and loss account as incurred.
Share options
The Company operates two active share option plans which grant share options to key employees and one dormant scheme. These plans are subject to 
both market and non-market related vesting conditions. Option grants are measured at fair value which is then charged to the proﬁt and loss account on 
a straight line basis over the vesting period. Adjustments are made to reﬂect expected and actual forfeiture during the vesting period due to failure to 
satisfy service conditions or non-market performance conditions. The fair value is determined using the Black-Scholes option pricing model for the Gooch 
& Housego PLC 2004 Share Option Scheme and the Monte Carlo option pricing model for the Gooch & Housego 2010 Value Creation Plan.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the group is treated as a capital 
contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an 
increase to investment in subsidiary undertakings, with a corresponding credit to equity.
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at rates ruling at the balance sheet date. Exchange differences 
which arise on the settlement of transactions and on the translation of other monetary assets and liabilities are dealt with in the proﬁt and loss account.
Tangible ﬁxed assets
Tangible ﬁxed assets are stated at historic purchase cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs 
attributable to bringing the asset to its working condition for its intended use. Depreciation is calculated to write down the cost or valuation of the ﬁxed 
assets, over their useful lives, at the following annual rates:
Freehold buildings  2-3% Straight line
Plant and machinery  10-20% Straight line
Fixtures, ﬁttings and computers 10-33% Straight line
Capitalised software and licenses 25-33% Straight line
No depreciation is charged on freehold land or capital work in progress.
Investments 
Investments are stated at cost less provision for any impairment in value. Where overseas borrowing is required to ﬁnance the investment in overseas 
subsidiaries, the investment is retranslated at the exchange rate ruling at the balance sheet date.
Deferred taxation
Deferred taxation is provided in full on all material timing differences.  Deferred tax assets are recognised where their recovery is more likely than not. 
Deferred tax assets and liabilities have not been discounted.
Financial liabilities
Finance costs associated with ﬁnancial liabilities are charged to the proﬁt and loss account over the life of the instrument.  Issue costs are accounted for as 
a deduction against the gross borrowings received and are amortised over the life of the instrument.
Financial instruments
The Company has not used derivative ﬁnancial instruments to hedge its exposure to currency risk. It has entered into an interest rate swap to hedge its 
exposure to interest rate movements. The Company does not apply hedge accounting to this swap. Amounts receivable or payable in respect of this derivative 
are recognised to interest expense over the period of the contract.  Changes in the derivative’s fair value are not recognised. Further details are given in Note 11. 
Leases
Leases which transfer substantially all the risks and rewards of ownership of an asset are treated as a ﬁnance lease. Assets held under a ﬁnance lease 
are capitalised at their fair value at the inception of the lease and depreciated over the estimated useful economic life of the asset or lease term if 
shorter. Finance charges associated with the ﬁnance lease are expensed in proportion to the capital amount outstanding. All other leases are classiﬁed as 
operating leases. Operating lease rentals are expensed in equal annual amounts over the lease term.
2 COMPANY PROFIT AND LOSS ACCOUNT
Gooch & Housego PLC has taken advantage of section 408(3) of the Companies Act 2006 and has not included its own proﬁt and loss account in these 
ﬁnancial statements. The Company’s loss after tax was £2,007,240 (2011: £2,590,000). 
Fees payable to the Company auditor for the year amounted to £15,800 (2011: £15,400). GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 61
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2012
3 DIRECTORS’ EMOLUMENTS
          2012 2012
        £000 £000
Directors’ remuneration      661 604
Performance related bonus      – 182
Medical and other insurances      14 11
Directors’ pension scheme contributions      40 39
        715 836
The number of Directors who are accruing retirement beneﬁts under a money purchase pension scheme is 3 (2011: 3).
Details of the remuneration and pension contributions of the highest paid Director is shown in the Remuneration Committee Report on page 32 and form 
part of these ﬁnancial statements.
4 DIVIDENDS
          2012 2011
        £000  £000
Final 2011 dividend paid in 2012: 3.0p per share. (Final 2010 dividend paid in 2011: 2.0p per share)  656 434
2012 Interim dividend paid: 2.0p per share (2011: 2.0p)     437 437
        1,093 871
The Directors propose a ﬁnal dividend of 3.2p per share making the total dividend paid and proposed in respect of the 2012 ﬁnancial year 5.2p (2011: 
5.0p). Should the ﬁnal dividend be approved at the Company Annual General Meeting, cut-off dates for payment are: 
 - Record date  25 January 2013
 - Payment date 01 March 2013 
 
5 INVESTMENTS
          2012 2010
        £000  £000
Cost and net book value at 1 October and 30 September     12,003 12,003
    
The major subsidiary companies at 30 September 2012, all of which are wholly owned either directly or indirectly, are listed below:
     % Ownership of Location and country 
Company Name ordinary shares of incorporation Activity
Gooch & Housego (UK) Limited 100% Ilminster, UK Manufacturer of acousto-optic products and precision optics
Gooch & Housego (Torquay) Limited 100% Torquay, UK Manufacturer of ﬁbre-optic products
Gooch & Housego (Deutschland) GmbH 100% Norderstedt, Germany Provider of sales and customer service functions
Gooch & Housego (Ohio) LLC 100% Cleveland, USA Manufacturer of electro-optic products and crystals
Gooch & Housego (California) LLC 100% Moorpark, USA Manufacturer of precision optics
Gooch & Housego (Florida) LLC 100% Melbourne, USA Manufacturer of acousto-optic products
Optronic Laboratories LLC 100% Orlando, USA Manufacturer of instruments for measuring optical radiation
ChromoDynamics, Inc. 100% Lakewood, USA Developer of hyperspectral imaging systems
EM4 Inc.  100% Boston, USA Manufacturer of ﬁbre optics products
Crystal Technology LLC 100% Palo Alto, USA Manufacturer of acousto-optic, electro-optic and ﬁbre optic  
       components and systems
The directors believe that the carrying value of the investments is supported by their underlying net assets. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 62
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2012
6 TANGIBLE ASSETS
          Capitalised
       Freehold  Fixtures, computer
       land and Plant and ﬁttings and software and
       buildings machinery computers licences Total
     £000 £000 £000 £000 £000
Cost or valuation      
At 1 October 2011   6,126 3,754 2,796 402 13,078
Additions   – – 708 28 736
Disposals   – (86) – – (86)
At 30 September 2012   6,126 3,668 3,504 430 13,728
Accumulated depreciation       
At 1 October 2011   711 815 1,373 328 3,227
Charge for the year   106 250 356 76 788
Disposals   – (21) – – (21)
At 30 September 2012   817 1,044 1,729 404 3,994
Net book value      
At 30 September 2011   5,415 2,939 1,423 74 9,851
At 30 September 2012   5,309 2,624 1,775 26 9,734
At 30 September 2012, plant and equipment purchased under a hire purchase or ﬁnance lease agreement had a cost of £33,000 and net book value of 
£16,000. At 30 September 2011, plant and equipment purchased under a hire purchase or ﬁnance lease agreement had a cost of £33,000 and net book 
value of £24,000.
7 DEBTORS
          2012 2011
       Note £000 £000
Amounts owed by group undertakings      10,053 2,278
Prepayments      47 65
Corporation tax receivable      – 58
Group tax relief receivable      590 739
Deferred tax asset     8 579 795
        11,269 3,935
Amounts owed by group undertakings are unsecured and due within one year. Non-trading amounts owed by US group undertakings is charged interest at the 
US LIBOR rate applicable for the year. Non-trading amounts owed by UK group undertakings is charged interest at the UK LIBOR rate applicable for the year.
8 DEFERRED TAX
The movement in the Company deferred tax asset during the year is as follows:
          2012 2011
        £000 £000
At 1 October      795 287
(Charge)/credit to proﬁt and loss account      (176) 565
Impact of tax rate change to 23%      (40) (57)
At 30 September      579 795
The deferred tax provided for in the ﬁnancial statements can be analysed as follows:
          2012 2011
        £000 £000
Property, plant and equipment      (83) (4)
Share options      550 404
Other timing differences      112 395
        579 795 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 63
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2012
9 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
          2012 2011
         Note £000  £000
Bank loans     11 443 443
Trade creditors      302 155
Amounts owed to group undertakings      3,236 7,835
Taxation and Social Security       48 48
Accruals        1,281 1,319
Finance leases falling due within one year       9 12
          5,319 9,812
Amounts owed to group undertakings are unsecured and due within one year. Non-trading amounts owed to US group undertakings is charged interest at the 
US LIBOR rate applicable for the year. Non-trading amounts owed to UK group undertakings is charged interest at the UK LIBOR rate applicable for the year.
10 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
          2012 2011
         Note £000  £000
Finance leases falling due after more than one year     – 8
Bank borrowings falling due after more than one year    11 1,930 2,347
          1,930 2,355
11 BANK BORROWINGS
At 30 September 2012, the Sterling facility is to be repaid by four instalments of £221,000 and a ﬁnal instalment of £1,550,000 in April 2015. Instalments 
are payable at six monthly intervals and interest is payable at 2.5% above UK£ LIBOR.
          2012 2011
          £000  £000
Maturity proﬁle of bank borrowings  
Within one year      443 443
Between two and ﬁve years      1,930 2,347
          2,373 2,790
Currency proﬁle of bank borrowings  
Pound sterling      2,373 2,790
12 CALLED UP SHARE CAPITAL
        2012 2011 2012 2011
        Number Number £000 £000
Allotted, issued and fully paid    
At 1 October    21,850,798 19,264,390 4,370 3,853 
Shares issued and fully paid    59,976 2,586,408 12 517
At 30 September    21,910,774 21,850,798 4,382 4,370
During the year ended 30 September 2012 59,976 shares were allotted under share option schemes. 
Of the shares issued in the year ended 30 September 2011, 219,742 were allotted under share option schemes. In addition on 5 January 2011, Gooch & 
Housego PLC raised approximately £10.1 million (net of expenses) through a placing of 2,366,666 new 20p Ordinary Shares.
13 RESERVES
         Share
         Premium Revaluation Proﬁt and
         account reserve loss account
         £000 £000 £000
At 1 October 2011     14,200 253 1,443
Loss for the ﬁnancial year     – – (2,007)
Transferred to proﬁt & loss     – (5) 5
Share options     111 – 471
Dividends received     – – 10,000
Dividends paid     – – (1,093)
At 30 September 2012     14,311 248 8,819 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 64
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2012
14 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
          2012  2011
          £000   £000
Loss for the ﬁnancial year      (2,007) (2,590)
 
Shares issued and fully paid      123  10,612
Share options      471  471
Dividends paid      (1,093) (871)
Dividends received      10,000  –
Exchange movement taken to reserves      –  231
Net addition to shareholders’ funds      7,494  7,853
  
Opening shareholders’ funds      20,266  12,413
Closing shareholders’ funds      27,760  20,266
15 SHARE OPTIONS
The Company operates two active share option schemes, the Gooch & Housego PLC 2004 Company Share Option Scheme (the “2004 Scheme”) and the 
Gooch & Housego 2010 Value Creation Plan (the “2010 VCP”), which grant share options to certain employees.  A third scheme, the Gooch & Housego 
2007 Long Term Incentive Plan (the “2007 LTIP”), is dormant.
The Gooch & Housego PLC 2004 Company Share Option Scheme
Under the 2004 Scheme, the Company has ceased granting share options. Options under this scheme are granted at market price on the date of grant 
with a ﬁxed exercise price equal to the market price of the shares under option at the date of the grant. The contractual life of an option is 10 years and 
is subject to continued employment.
At 30 September 2012, four senior employees within the Group have 444,077 share options outstanding relating to the 2004 Scheme. These options 
are subject to speciﬁc performance criteria, namely that their subsidiary audited pre-tax proﬁts for the relevant year will be at least US$500,000 and the 
subsidiary pre-tax proﬁts will be not less than 95% of the agreed budget. The remuneration report details the executive Directors’ share options and the 
performance criteria which are needed to be met for them to exercise their options.  
The options under the 2004 Scheme were valued using the Black-Scholes option pricing model. The fair value per option and the assumptions used in the 
calculations are as follows:
Grant date      8 Dec 2005 23 Jul 2004
Share price at grant date      272.5p 133.5p
Exercise price      272.5p 133.5p
Number of employees      2 5
Shares under option      250,000 1,313,275
Vesting period (years)      1-4 1-4
Expected volatility      38.1% 56.7%
Option life (years)      10 10
Expected life (years)      5.5 5.5
Risk free rate      4.23% 4.99%
Expected dividends expressed as dividend yield     1.49% 1.49%
Fair value per option      98.4p 66.1p
No performance conditions were included in the fair value calculations. The expected volatility is based on historical volatility over the last three years. 
The expected life is the average expected period to exercise. The risk free rate of return is the yield on zero-coupon UK Government bonds of a term 
consistent with the assumed option life.
The Gooch & Housego 2010 Value Creation Plan
Under the 2010 VCP , the amount of options granted will not be determined until the end of the plan’s three year term and meeting the performance 
criteria. The remuneration report details the performance criteria. Under the plan, key employees are granted a one-off award of units from an agreed 
total. Three executive Directors have been awarded 44 units out of the total pool of 64 units and eight key employees hold the remaining 20 units.
The 2010 VCP was valued using the Monte Carlo option pricing model. The expected volatility of 73.5% used in the model is based on the historical 
volatility of the Company’s share price over the three years prior to 7 January 2010. The risk free rate of 2.1% was used. The total fair value of all the 
units granted to the participants in the 2010 VCP was £1,614,640.    GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 65
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2012
The Gooch & Housego 2007 Long Term Incentive Plan
The 2007 LTIP has been replaced by the 2010 VCP . The share options granted under the 2007 LTIP have been surrendered by the participants and the 
scheme is now dormant.  
A reconciliation of share option movements is shown below:
      2012 2011
       Weighted  Weighted
       average  average
      Number exercise price Number exercise price
Outstanding at 1 October    756,953 156.5p 945,445 170.3p
Exercised    (91,226) 228.7p (188,492) 225.7p
Outstanding at 30 September    665,727 146.6p 756,953 156.5p
Exercisable at 30 September    587,165 148.3p 678,391 159.1p
The weighted average fair value of options granted in the year was £nil (2011: £nil). For the options exercised, the average market price was 404.7p per share.
Share options information by exercise price
       Weighted Weighted average
Range of exercise prices – 30 September 2012   Number of average remaining life (years)
       options  exercise price Expected Contractual
£0-£1.50 2004 Scheme   603,227 133.5p 0.0 1.8
     
£1.50-£3.00 2004 Scheme   62,500 272.5p 0.0 3.2
       Weighted Weighted average
Range of exercise prices – 30 September 2011   Number of average remaining life (years)
       options  exercise price Expected Contractual
£0-£1.50 2004 Scheme   631,953 133.5p 0.0 2.8
     
£1.50-£3.00 2004 Scheme   125,000 272.5p 0.0 4.2
     
The total charge for the year relating to share options was £471,000 (2011: £471,000), all of which related to equity-settled share based payment transactions.
16 FINANCE LEASES
Future minimum payments under ﬁnance leases are as follows: 
          2012 2011
          £000  £000
Within one year      9 12
In more than one year, but not more than ﬁve years     – 9
          9 21
17 RELATED PARTY DISCLOSURES
In addition to duties performed in his role as a non-executive director Dr Peter Bordui has provided additional consultancy services at the request of the 
company. Fees during the year to 30 September 2012 amounted to £11,680 (2011: £Nil), at the balance sheet date the balance outstanding totalled £11,680 
(2011: £Nil). The transactions are performed in the normal course of business on an arms length basis and that the outstanding balance is unsecured.
No other material contracts or arrangements have been entered into during the year, nor existed at the end of the year, in which a director or key manager had 
a material interest. 
The company has taken advantage of the exemption allowed under FRS 8 ‘Related Party Disclosures’ not to disclose related party transaction with other group 
companies as consolidated ﬁnancial statements in which the company is included are publicly available.
18 POST BALANCE SHEET EVENTS
On 7 January 2013, 1,539,502 share options were granted to directors and employees under the Group’s Value Creation Plan (VCP). In terms of dilutive effect, in 
aggregate these awards amount to 7% of current issued share capital. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 66
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the 
Company will be held at Dowlish Ford, Ilminster, Somerset, TA19 0PF on 
27 February 2013 at 11.00 a.m. for the following purposes:
To consider and, if thought ﬁt, to pass the following resolutions as Ordinary 
Resolutions:
1   To receive the Annual Report and Accounts for the ﬁnancial year ended 
30 September 2012 together with the Auditors’ Report thereon.  
2   To declare a ﬁnal dividend, as recommended by the directors, of 3.2 
pence per ordinary share for the ﬁnancial year ended 30 September 2012.  
3 To re-elect Gareth Jones as a Director.
4 To re-elect Terry Scribbins as a Director.
5 To re-elect Andrew Boteler as a Director.
6 To re-elect Julian Blogh as a Director. 
7   To re-elect Paul Heal as a Director.
8   To re-elect Peter Bordui as a Director.
9   To re-elect Mark Webster as a Director.
10 To re-appoint Messrs PricewaterhouseCoopers LLP as Auditors. 
11  To authorise the Directors to ﬁx the remuneration of the Auditors. 
12  THAT the Directors of the Company be, and they are hereby, generally 
and unconditionally authorised in accordance with section 551 of the 
Companies Act 2006 (the “Act”), in substitution for any existing authority 
to the extent unused, to exercise all the powers of the Company to allot 
shares in the Company or grant rights to subscribe for or to convert any 
security into shares in the Company on, and subject to, such terms as the 
Directors may determine. The authority hereby conferred shall, subject to 
section 551 of the Act, be for a period commencing on the date of the 
passing of this Resolution and expiring at the conclusion of the next Annual 
General Meeting of the Company or 27 May 2014 (whichever is the 
earlier) unless reviewed, varied or revoked by the Company in General 
Meeting and the maximum nominal amount of shares which may be 
allotted pursuant to such authority shall be £1,478,439 (representing 
approximately one third of the total ordinary share capital of the Company 
in issue at 24 January 2013). The Directors shall be entitled under such 
authority to make at any time prior to the expiry of such authority any 
offer or agreement which would or might require shares in the Company 
to be allotted after the expiry of such authority and the Directors may 
allot shares in pursuance of such offer or agreement as if such 
authority had not expired. 
13  THAT:
(a) the Company be and is hereby authorised to capitalise up to an 
aggregate of £276,113.20 of its reserves in paying up the par value of 
up to 1,380,566 ordinary shares of £0.20 each in the capital of the 
Company upon the exercise by the recipients thereof of nil cost options 
and US restricted shares over such shares which were granted pursuant 
to the Gooch & Housego 2009 Value Creation Plan; and 
(b) the issue and allotment by the Company prior to the date of this 
resolution of 138,082 ordinary shares of £0.20 each in the capital of the 
Company on an unpaid basis pursuant to the exercise nil cost options and 
US restricted shares which were granted pursuant to the Gooch & Housego 
2009 Value Creation Plan be and is hereby ratiﬁed and the Company be 
and is hereby authorised to pay up the par value of such shares by 
means of the capitalisation of reserves referred to in paragraph (a).
To consider and, if thought ﬁt, to pass the following resolutions as Special 
Resolutions:
14  THAT the Directors of the Company be, and they are hereby, generally and 
unconditionally empowered pursuant to section 570 of the Companies 
Act 2006 (the “Act”), in substitution for any existing authority to the 
extent unused, to allot equity securities (as deﬁned in section 560 of 
the Act) for cash pursuant to the authority conferred by Resolution 12 
above as if section 561 of the Act did not apply to such allotment, 
provided that the power hereby conferred shall be limited to:  
(i) the allotment of equity securities in connection with an offer of 
securities, open for acceptance for a period ﬁxed by the Directors, by 
way of rights to the holders of ordinary shares in proportion (as nearly 
as may be) to the respective numbers of ordinary shares held by them 
on a record date ﬁxed by the Directors and subject to such exclusions 
or other arrangements as the Directors may deem necessary or 
expedient to deal with legal or practical problems under the laws of 
any overseas territory or the requirements of any regulatory body or 
any stock exchange in any territory or in connection with fractional 
elements or otherwise howsoever; and   
(ii) otherwise than pursuant to sub-paragraph (i) above, the allotment 
of equity securities up to an aggregate nominal amount of £221,765 
(representing approximately 5 per cent. of the total ordinary share 
capital of the Company in issue at 24 January 2013),
and the power hereby conferred shall expire at the conclusion of the next 
Annual General Meeting of the Company or 27 May 2014 (whichever is 
the earlier), save that the Company may before such expiry make an offer 
or agreement which would or might require equity securities in the 
Company to be allotted after such expiry and the Directors may allot 
equity securities in pursuance of such offer or agreement as if the power 
conferred hereby had not expired.
15  THAT the Company be and is hereby generally and unconditionally 
authorised for the purposes of section 701 of the Companies Act 2006 
(the “Act”) to make one or more market purchases (within the 
meaning of section 693(4) of the Act) of fully paid ordinary shares of 
£0.20 each in the capital of the Company on such terms and in such 
manner as the Directors may determine, provided that: 
(a) the maximum aggregate number of ordinary shares hereby 
authorised to be purchased is 2,217,659 (representing approximately 
10 per cent. of the total ordinary share capital of the Company in issue 
at 24 January 2013); 
(b) the minimum price (exclusive of expenses) which may be paid for 
each ordinary share is 20 pence per share; 
(c) the maximum price (exclusive of expenses) which may be paid for 
each ordinary share shall not be more than 5 per cent. above the 
average of the middle market quotations for an ordinary share as 
derived from the AIM section of the London Stock Exchange Daily 
Notice of Annual General Meeting GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 67
NOTICE OF ANNUAL GENERAL MEETING
Ofﬁcial List for the ﬁve business days immediately preceding the date 
on which the ordinary share is contracted to be purchased; 
(d) unless previously renewed, varied or revoked, the authority hereby 
conferred shall expire at the conclusion of the next Annual General 
Meeting of the Company or 27 May 2014 (whichever is the earlier); 
(e) the Company may, pursuant to the authority hereby conferred, 
enter into a contract to purchase ordinary shares which would, will or 
might be executed wholly or partly after the expiry of such authority 
and the Company may make a purchase of ordinary shares in pursuance 
of such contract as if the authority conferred hereby had not expired.
By order of the Board 
Andrew Boteler
Director and Company Secretary   24 January 2013
Registered Ofﬁce: Dowlish Ford, Ilminster, Somerset TA19 0PF 
Registered Number: 526832
Notes: 
1  Resolutions 1 to 13 (inclusive) are proposed as Ordinary Resolutions. 
This means that for those resolutions to be passed, more than half of 
the votes cast on such resolutions must be in favour of such resolutions. 
Resolutions 14 and 15 are proposed as Special Resolutions. This means 
that for those resolutions to be passed, at least three-quarters of the 
votes cast on such resolutions must be in favour of such resolutions.
2  Resolution 13 is proposed as an Ordinary Resolution for the following 
reasons. In accordance with the terms of the Gooch & Housego 2009 
Value Creation Plan and as disclosed in the Remuneration Committee 
Report contained in each of the 2010, 2011 and 2012 Annual Reports of 
the Company, the Company has awarded nil cost options to its Executive 
Directors and certain senior managers. The Value Creation Plan matured 
on 7 January 2013 and accordingly the participants in the Plan are now 
entitled to exercise half of their nil cost options or US restricted shares and 
will become entitled to exercise the other half of such entitlement in 2014. 
In order to facilitate such exercise, the Company is seeking authority to 
capitalise up to an aggregate of £276,113.20 of its reserves in order to 
pay up the par value of the shares over which nil cost options and US 
restricted shares are exercised, being up to 1,380,566 ordinary shares of 
£0.20 each. As the Company has already issued a number of ordinary 
shares of £0.20 each on an unpaid basis pursuant to the exercise of a 
small number of nil cost options prior to the date of the meeting, the 
Company is also seeking to ratify those issues of shares which will be 
paid up by means of the capitalisation for which authorisation is sought. 
3  A member entitled to attend and vote at the meeting is entitled to 
appoint one or more proxies to exercise all or any of the member’s 
rights to attend, speak and vote at the meeting (or any adjournment of 
the meeting). A proxy need not be a member of the Company. If a 
member appoints more than one proxy in relation to the meeting, each 
proxy must be appointed to exercise the rights attached to a different 
share or shares held by that member. 
4  To appoint as a proxy a person other than the Chairman of the meeting, a 
member must insert the proxy’s full name in the box on the proxy form. 
If a member signs and returns a proxy form with no name in the box, the 
Chairman of the meeting will be deemed to be the member’s proxy. Where 
a member appoints as a proxy someone other than the Chairman, the 
member is responsible for ensuring that the proxy attends the meeting and 
is aware of the member’s voting intentions. If a member wishes a proxy 
to make any comments on the member’s behalf, the member will need 
to appoint someone other than the Chairman and give them the 
relevant instructions directly.  
5  A member which is a corporation is entitled to appoint one or more 
corporate representatives to exercise the same powers on behalf of the 
corporation as the corporation could exercise if it were an individual 
member. If a member which is a corporation appoints more than one 
corporate representative in relation to the meeting (or any adjournment 
of the meeting), each such corporate representative shall be entitled to 
exercise the same powers on behalf of that corporation as that corporation 
could exercise if it were an individual member, provided that if such persons 
purport to exercise those powers the same way, those powers shall be 
treated as exercised in that way, but if those persons purport to exercise 
those powers in different ways, those powers shall be treated as not 
exercised. In the case of a member which is a corporation, the proxy form 
must be executed under the corporation’s common seal or signed on its 
behalf by a duly authorised ofﬁcer of the corporation or an attorney for 
the corporation.
6  A form of proxy is enclosed. To be valid, the form of proxy (and any 
power of attorney or other authority (if any) under which it is signed) 
must by duly completed and signed and deposited at the ofﬁce of the 
Company’s registrars, Capita Registrars Limited, Freepost RSBH-UXKS-LRBC, 
PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU not less than 48 
hours before the time for holding the meeting (or any adjournment of the 
meeting). Completion of a form of proxy does not preclude a member 
from attending and voting in person at the meeting if (s)he so wishes.
7  Pursuant to Regulation 41 of the Uncertiﬁcated Securities Regulations 2001, 
the Company speciﬁes that only those members entered in the 
Company’s register of members at 6.00 pm on 25 February 2013 shall 
be entitled to attend and vote at the meeting in respect of the number of 
shares registered in their names at that time. Changes in the Company’s 
register of members after that time shall be disregarded in determining the 
rights of any person to attend and vote at the meeting. If the meeting is 
adjourned, the time which is 48 hours (disregarding any part of a day 
which is not a working day) before the time ﬁxed for the adjourned 
meeting shall apply for the purpose of determining the entitlement of 
members to attend and vote at the adjourned meeting.
8  To appoint a proxy or to give or amend an instruction to a previously 
appointed proxy via the CREST system, the CREST message must be received 
by the issuer’s agent by 11.00 a.m. on 25 February 2013. For this purpose, 
the time of receipt will be taken to be the time (as determined by the 
timestamp applied to the message by the CREST Applications Host) from 
which the issuer’s agent is able to retrieve the message. After this time 
any change of instructions to a proxy appointed through CREST should be 
communicated to the proxy by other means. CREST Personal Members or 
other CREST sponsored members, and those CREST Members who have 
appointed voting service provider(s) should contact their CREST sponsor or 
voting service provider(s) for assistance with appointing proxies via CREST. 
For further information on CREST procedures, limitations and system timings 
please refer to the CREST Manual. The Company or its Registrars may treat 
as invalid a proxy appointment sent by CREST in the circumstances set out 
in Regulation 35(5) (a) of the Uncertiﬁcated Securities Regulations 2001. 
In any case your Form of Proxy must be received by the Company’s 
Registrars by no later than 11.00 a.m. on 25 February 2013.
9  Copies of Directors’ service agreements and letters of appointment and the 
rules of the Company Share Option Schemes will be available for inspection 
at the registered ofﬁce of the Company from the date of this Notice of 
AGM until the date of the meeting during normal business hours, and at 
the place of the meeting from 10.45 a.m. until its conclusion. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2012 68
NOTES www.goochandhousego.com
DESIGN: www.thinkassociates.co.uk Gooch & Housego PLC   Dowlish Ford   Ilminster   Somerset  TA19 0PF   United Kingdom
T +44 (0)1460 256440   F +44 (0)1460 256442   E plc@goochandhousego.com   www.goochandhousego.com