ANNUAL REPORT + ACCOUNTS 2013 www.goochandhousego.com GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 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 
Company Secretary and  
Registered Office
Andrew N Boteler
Dowlish Ford
Ilminster
Somerset T A19 0PF
Company 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 
Statutory Auditors
31 Great George Street
Bristol BS1 5QD
Registrars
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Financial Highlights 2
STRATEGIC REPORT
An overview of our performance, a focus  
on our strategic direction and a review of  
the segments underpinning our strategy
Chairman’s Statement 2013 6
Chief Executive Officer’s Statement 2013  7
Market Overview 10
Financial and Operating Review 18
Strategy Overview 22
Board of Directors 24
Directors’ Report 26
BOARD COMMITTEE REPORTS
Audit Committee Report 32
Nomination Committee Report 32
Remuneration Committee Report 33
FINANCIAL STATEMENTS
Independent Auditors’ Report - Group 38
Group Income Statement 39
Group Statement of  
Comprehensive Income 39
Group Balance Sheet 40
Group Statement in Changes in Equity 41
Group Cash Flow Statement 42
Notes to the Group 
Cash Flow Statement 43
Notes to the Financial Statements 44
Independent Auditors’ Report - Company 62
Company Balance Sheet 63
Notes to the Company Balance Sheet 64
SHAREHOLDER INFORMATION
Notice of Annual General Meeting 71
Annual General Meeting 
Final dividend for the year ended  
30 September 2013 to shareholders on  
the register at close of business 7 February 
2014. 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 2014
26 February 2014
28 March 2014
June 2014
30 September 2014
December 2014
Expected Financial Calendar
Directors and Advisers
Gooch & Housego PLC 
01460 256440
Gareth Jones / Andrew Boteler
Investec Bank PLC (Nomad & Broker) 
020 7597 5970
Patrick Robb / David Anderson
For Further Information GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 2
FINANCIAL HIGHLIGHTS
 2013 2012 Change
 Revenue (£m) 63.3 60.9 3.9%
 Adjusted profit before tax (£m)* 9.7 8.2 18.3%
 Adjusted basic earnings per share (pence)* 32.0 28.2 13.5%
 Total dividend per share (pence) 6.3 5.2 21.2%
 Net funds/(debt) (£m) 5.7 (0.3) £6.0m
Statutory   
 Statutory profit before tax (£m) 8.3 7.1 16.9%
 Basic earnings per share (pence) 27.7 24.4 13.5%
* adjusted figures are stated after excluding the amortisation of acquired intangible assets and exceptional items being acquisition costs and restructuring costs.
09 10 11 12 13
65
60
55
50
45
40
35
30
25
20
15
10
5
0
Revenue
(£ million)
12
11
10
9
8
7
6
5
4
3
2
1
0
Adjusted profit
before tax (£ million)
45
40
35
30
25
20
15
10
5
0
Adjusted basic  
earnings per share 
(pence)
7.0
6.5
6.0
5.5 
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
6.3
nil
5.2
38.0
23.0
11.5
32.0
28.2
10.8
6.0
3.1
9.7
8.2
61.0
44.7
36.4
63.3
60.9
Financial Highlights
09 10 11 12 13 09 10 11 12 13 09 10 11 12 13 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 3
FINANCIAL HIGHLIGHTS
“
Gooch & Housego has made considerable 
progress in line with its strategic objectives to 
yield a better balanced business with enhanced 
growth potential in diversified markets.
With excellent customer relationships and a 
strong pipeline of new products the Company 
is well-positioned to deliver sustained growth 
and continued margin improvement.”
Gareth Jones
Operating and Strategic 
Highlights
Efficiency and volume drive margin improvement from 13.5% to 15.3%
Strong cash performance results in net cash position at year end
21% growth in the full year dividend reflecting the strength of the 
balance sheet
Systems T echnology Group established to accelerate transition from 
components supplier to solutions provider
Post year end: - 
  •  Acquisition of Spanoptic opens up new opportunities in  
Aerospace & Defence and brings supply chain and  
manufacturing partner in China
  •  Acquisition of Constelex strengthens STG team and brings  
satellite communications expertise
Increased geographical footprint established across the Far East GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 4
09   10    11    12    13
30
25
20
15
10
5
0
8.1
6.2
4.2
8.6
09   10    11    12    13
30
25
20
15
10
5
0
13.0
8.9
4.7
9.4
9.8
09   10    11    12    13
30
25
20
15
10
5
0
13.7
7.3
5.8
14.3
13.8
FINANCIAL HIGHLIGHTS
A Global Business
HISTORICAL REVENUE BY GEOGRAPHIC REGION (£ millions)
09   10    11    12    13
30
25
20
15
10
5
0
USA
26.3
22.3
21.8
28.4
Continental Europe Asia Pacifi c and Other United Kingdom
 Manufacturing
Ilminster, UK (Head Offi  ce)
T orquay , UK
Glenrothes, UK
Boston, Massachusetts, US
Cleveland, Ohio, US
Melbourne, Florida, US
Moorpark, California, US
Orlando, Florida, US
Palo Alto, California, US
Athens, Greece
 Research and Development
Lakewood, New Jersey , US
 Sales Offi  ces
Hong Kong, China
Nagoya, Japan
Singapore
Paris, France 
Cologne, Germany
Hamburg, Germany
Munich, Germany
Seattle, Washington, US
Washington DC, US
TOT AL GROUP REVENUE
£63.3m
(2012 £60.9m)
USA £30.2m /  47.8%
Continental Europe £13.8m /  21.8%
Asia Pacifi c and Other £9.8m / 15.4%
United Kingdom £9.5m / 15.0%
30.2
9.5 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 5
REVENUE BY CURRENCY
 USD 74% (2012 75%)
 GBP 20% (2012 21%)
 EURO 6% (2012 4%)
“
We push the boundaries  
of technology and 
manufacturing and pass  
the benefits on to our 
customers in terms of more 
cost-effective, capable and 
durable assemblies and 
components. We exploit our 
expertise in optical science, 
design, engineering and 
manufacturing to meet  
the most demanding 
specifications – adding value 
to everything we produce.
We are experts in the science 
behind the technology , its 
application and commercial 
development.”
FINANCIAL HIGHLIGHTS
Industrial
£34.3m / 54%
Scientific Research
£4.3m / 7%
Aerospace & Defence
£17.3m / 27%
Life Sciences
£7.4m / 12%
REVENUE BY SECTOR
30.2
$
£
€ GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 6
CHAIRMAN’S STATEMENT
I am pleased to report that your company made good strategic progress in the last 
twelve months on many fronts, against a challenging market backdrop.
While revenues showed some growth in the year, adjusted profit before tax was 18.3% 
higher due to increased volumes and efficiency savings. This was achieved despite an 
increase in our investment in research and development. Cash management remains a 
focus for the Group and at the year-end we were in a net cash position. Following two 
acquisitions since the year end, this has moved to a very manageable modest debt.
The Board’s responsibilities include ensuring that Gooch & Housego has a robust and 
achievable strategy , investments are made without undue risks, we have the resources 
to achieve our objectives and that the Company operates efficiently. Our consistent 
strategy of diversifying the Company’s product range and customer base was effective 
in the year with the establishment of our new Systems Technology Group and the 
subsequent award of a number of early stage development contracts in the Space 
sector. It is expected that these activities will lead to business growth as the products 
progress from the development phase and enter production in the medium term. 
These contracts will assist in the business moving up the value chain into sub-systems 
in line with our strategic objectives. Gooch & Housego’s risks in this new sector are 
also minimised as these new product developments are mostly externally funded.
We continued to assess ways of improving the efficiency and the effectiveness of 
the business and management changes and organisational improvements were made 
this year to the marketing and sales activities of the group. We are also exploring if 
a reduction in the number of sites in the US by consolidating capabilities would 
increase efficiency. Progress was also made in sharing technology between 
operations, whilst recognising national security constraints. In manufacturing, 
plans were made to increase the use of our partner company in the Czech Republic 
where labour costs are significantly lower, whilst maintaining product quality.
The global environment in which we enter our new financial year remains unclear. 
In the US, budget uncertainties continue to cloud our vision and the reduction in 
Government spending could limit our opportunities in Aerospace & Defence. It is, 
however, important to note Gooch & Housego’s technology has the advantage of 
being relevant in areas where expenditure is likely to be least affected. In the Far 
East and Europe, some improvement in the economic situation is evident which we 
expect to benefit the Company in due course.
Finally, on behalf of the Board, I would like to thank all employees for their efforts 
and contribution during the year to the success of the Company. With their support, 
the Board believes the company is well placed to continue its growth into the future.
Dr Julian Blogh
 
Chairman’s 
Statement
2013
“
Our consistent strategy of 
diversifying the company’ s 
product range and 
customer base has been 
successful in the year .”
Dr Julian Blogh GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 7
CHIEF EXECUTIVE OFFICER’S STATEMENT
Chief 
Executive 
Officer’s 
Statement
2013
Trading conditions during the year were broadly positive, albeit set against a 
background of some uncertainty affecting most of the sectors in which Gooch & 
Housego operates. Order intake was at the level needed to sustain growth in the 
business. The order book ended the year at £27.8 million, an increase of 12% from 
the beginning of the year.
Gooch & Housego has seen continued growth in its Aerospace & Defence business 
despite the headwinds affecting this sector. While some significant programmes 
stalled or were subject to delays, other more mature programmes proceeded as 
planned and outweighed the setbacks. While this market continues to be challenging, 
the Company remains optimistic about continued growth prospects based on the 
strong customer relationships that have been developed in recent years and the 
breadth of opportunities currently being addressed.
In line with its strategy, the Company has continued to diversify its activities in the 
Industrial sector, with sensors and test and measurement systems growing in 
importance over the past year. In the industrial laser market Gooch & Housego has 
kept pace with the technology shift away from solid state lasers in favour of fibre 
lasers for many routine materials processing applications. The Company is now a 
major supplier to the fibre laser market at both component and subsystem level. 
In Life Sciences, the Company began to utilise its Systems Technology Group (STG), 
established mid-way through the year, to leverage its excellence in components to 
develop subsystems-level products to address new opportunities in laser surgery 
and to build upon its already strong presence in Optical Coherence Tomography 
(OCT). These initiatives, combined with established business in microscopy and 
research and development work in diagnostics, have reinforced Life Sciences as 
one of the Company’s main growth markets. 
Creating the means to deliver growth has been a primary objective during the past 
year. The aim has been to build a broad-based business that can deliver sustainable 
growth in flat economic conditions and is able to respond to economic recovery, 
while being sufficiently well-balanced to minimise the effects of market cyclicality. 
We have sought to deliver growth in a number of ways:
• Via organic growth and new product development
• By moving up the value-chain from components to sub-systems
•  By developing new application areas where Gooch & Housego can take  
a market leading position 
•  Through acquisitions, where they accelerate the delivery of our strategic 
objectives
•  By leveraging our supply chain and low-cost manufacturing relationships  
to increase competitiveness
•  By strengthening our presence in geographical markets with significant  
growth potential
Organic New Product Development
A more focused approach to research and development has paid dividends in 2013, 
with a significant number of new products being brought to market. These new 
products have ranged from acousto-optic, electro-optic and fibre optic devices, to 
sophisticated laser sources and optical amplifiers, spanning a broad range of 
application areas ranging from microelectronics to satellite communications. By 
carefully selecting our projects, based on enhanced market intelligence derived 
from increasingly close relationships with our major customers, we have been able 
to increase the success rate and value of the new products we have developed.
 
Organic Growth – Moving up the Value Chain
The Systems Technology Group (STG) was established to drive organic growth at 
the sub-systems level. Recognising that it is difficult to make the transition from 
components to systems, and inefficient to try to do this at multiple locations, the 
STG provides Gooch & Housego with a vehicle to undertake the development of 
complex photonic sub-systems without the constraints that apply to its 
component manufacturing operations. With optical, mechanical, electronic and 
software design and modelling capabilities, and the ability to integrate multiple  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 8
CHIEF EXECUTIVE OFFICER’S STATEMENT
photonic component technologies (for example, fibre optics, semiconductor lasers 
and acousto-optics), each of which may be manufactured at a different Gooch & 
Housego facility, the STG is able to lead and coordinate complex projects with 
commercial customers, space agencies and collaborative partners. Although still a 
small team (seven people at the year-end), the STG is expected to double in 
headcount during 2014. The STG is also able to call upon development and 
engineering resources from across Gooch & Housego, and works with outside 
partners and consultants, with the result that it is able to take on more demanding 
projects than its small size would suggest.
The STG has initially focussed on space photonics and optical coherence 
tomography (OCT). In both applications Gooch & Housego is experiencing customer 
pull to supply “black-box” solutions, rather than low-level components. In these 
new markets Gooch & Housego’s customers tend to be very large organisations 
that perform the role of systems integrator, and they are not well-equipped to 
interact at the component level.
In space applications, photonics technology has significant advantages over the 
equivalent electronic systems that are the norm today (specifically lower mass, 
higher bandwidth and reduced power consumption, all of which contribute to 
lower cost). A major technology shift in favour of photonics technology is taking 
place and represents an opportunity for Gooch & Housego to take a leading 
position in this rapidly developing new market. Gooch & Housego has a strong 
heritage in space qualified photonic components and the objective is to leverage 
this to develop a family of sub-systems for applications in telecommunications and 
earth observation satellites. Once proven in satellite applications it is anticipated 
that this technology will filter down to the much larger commercial and military 
aerospace markets. (Gooch & Housego has already participated in several 
collaborative projects with aerospace partners to investigate the application of 
fibre optic networks for data, sensing and control systems in next generation 
aircraft). The STG has successfully bid for a number of European Space Agency 
(ESA) and European Union Framework 7 (EU FP7) collaborative programmes and 
has recently completed a programme to design and demonstrate a fibre optic 
amplifier suitable for use in a satellite laser communications system.
Acquisitive Growth
Shortly after the year end Gooch & Housego completed the acquisition of 
Spanoptic Limited (“Spanoptic”), a manufacturer of precision optical components 
based in Glenrothes, Scotland.
Spanoptic specialises in spherical and aspheric lenses and diffractive optics for 
applications in the ultraviolet, visible and infrared regions of the spectrum. This 
capability is highly complementary to Gooch & Housego’s predominantly planar 
optics business and enhances the Company’s ability to provide complete  
sub-system solutions to its customers in line with its strategic objectives. 
Spanoptic’s capabilities in infrared optics and coatings are particularly relevant  
to Gooch & Housego’s activities in the Aerospace & Defence sector.
In recent years Spanoptic has invested heavily in state-of-the-art optical 
manufacturing, metrology and thin-film coating equipment. These investments 
have enabled Spanoptic to produce optical components at the upper end of the 
quality and precision scale while maintaining highly competitive pricing. As a  
result, Spanoptic has been able to win business and develop strong, mainly 
European customer relationships across a broad range of applications including 
analytical instrumentation, optical sensing, security, imaging, life sciences and 
aerospace and defence. 
Also following the year end, in late November 2013, Gooch & Housego completed 
the acquisition of Constelex Technology Enablers Limited (Constelex), a small 
Athens, Greece, based business specialising in the design and manufacture of 
low-noise, high power optical fibre amplifiers and lasers for applications in 
telecommunications, sensing and defence. The Constelex team will relocate to the 
UK in early 2014 and will be based at Gooch & Housego’s Torquay facility as part of 
the STG. Constelex brings highly relevant optical systems expertise to the STG plus 
“
In space 
applications, 
photonics 
technology  
has significant 
advantages over 
the equivalent 
electronic  
systems that are 
the norm today . ”
Gareth Jones GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 9
CHIEF EXECUTIVE OFFICER’S STATEMENT
a number of ESA and EU funded collaborative projects in the space photonics field. 
The acquisition of Constelex will add valuable skills and experience to the STG and 
will help to accelerate the delivery of the Company’s strategic objective of 
becoming a leader in space photonics.
Increasing Competitiveness
Spanoptic’s competitive advantage is further enhanced by the strategic alliance 
that it has with a Chinese manufacturer of precision optics, optical sub-systems 
and instrumentation. This alliance is being developed and extended to provide 
Gooch & Housego with an enhanced foothold in the increasingly important 
Chinese market and to serve as a high-quality, low-cost manufacturing partner  
for both components and systems. With the ability to manufacture photonic 
sub-systems and instrumentation in higher volumes and at lower cost than would 
be possible elsewhere within Gooch & Housego this relationship will enable the 
Company to scale to higher volumes than would otherwise have been possible.
Similarly, we have made greater use of our established European contract 
manufacturing partner based in the Czech Republic to enhance the competitiveness 
of our products, a process that will continue in the current year. 
Strengthening our Presence in Geographical Markets with Significant 
Growth Potential
2013 has seen a number of initiatives to increase our penetration of Far Eastern 
markets. Over the past 25 years Gooch & Housego has grown its business in Japan 
with the assistance of its distribution partners. In order to gain access to new 
opportunities and to demonstrate commitment to this important market, Gooch  
& Housego Japan KK was established and an office opened in Nagoya in April  
2013. A number of significant new opportunities are already under development.  
In addition to the new relationships in China that came with the acquisition of 
Spanoptic, we have strengthened our applications engineering team there and 
opened a sales office in Singapore during 2013.
Summary
During 2013, Gooch & Housego has made considerable progress in line with  
its strategic objectives to yield a better balanced business with enhanced  
growth potential.
Gooch & Housego has become a more vertically integrated business. At the 
component end of the scale, the acquisition of Spanoptic has added highly 
complementary capabilities in precision optics. The STG has given Gooch & Housego 
a vehicle with which to provide its customers with sub-systems design and 
development services, and the acquisition of Constelex has enhanced the ability of 
the STG to develop complex systems for space and telecommunications applications.
Greater efficiency and volume has helped to deliver revenue growth at improved 
margins, resulting in strong cash generation and a net cash position at the year end.
Prospects
Gooch & Housego has taken a number of important initiatives in the past year – a 
re-focussing of Research and Development and Sales and Marketing, the creation 
of the STG and the identification of new markets such as space photonics. When 
combined with the acquisitions of Spanoptic and Constelex, these initiatives 
provide Gooch & Housego with the means to deliver growth in a flat economy, and 
the ability to respond to, and benefit from, market recovery.
With excellent customer relationships and a strong pipeline of new products Gooch 
& Housego is well-positioned to deliver sustained growth and continued margin 
improvement.
Gareth Jones
“
Despite what 
at times have 
been challenging 
market conditions, 
Gooch & Housego 
has traded well, 
whilst investing 
in initiatives that 
underpin long 
term growth.”
Gareth Jones GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 10
Revenue
£34.3m
(2012 £35.8m)
Operating Profit
£7.0m
(2012 £6.6m)
Percentage of Company 
Revenue
          54% (2012 59%)
MARKET OVERVIEW
Industrial
APPLICA TIONS, 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.
 Telecommunica tions 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.
 Me trology 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 STRA TEGY
•  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. During FY2013 
Gooch & Housego introduced six new products that address its Industrial market.
•  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.
•   In October 2013, Gooch & Housego acquired Spanoptic. This acquisition 
strengthens the Group’s position in precision optics for the Industrial market. 
  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 11
MARKET OVERVIEW GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 12
Revenue
£17.3m
(2012 £15.4m)
Operating Profit
£2.4m
(2012 £2.2m)
Percentage of Company 
Revenue
          27% (2012 25%)
MARKET OVERVIEW
Aerospace  
& Def ence
APPLICA TIONS, PRODUCTS AND MARKETS
T arget 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.
Quantum cryptography & cyber security  this is an area of considerable research 
interest, requiring the most sophisticated fibre-optic components and sub systems.
GROWTH STRA TEGY
•  Aerospace & 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 & Defence industry. 
•  To continue to focus energies and investment to move from being a components 
supplier to a sub-systems provider. Our Aerospace & 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 & Defence customer base.
•  In October and November 2013, respectively, Gooch & Housego acquired 
Spanoptic and Constelex. These acquisitions strengthen the Group’s position in 
Defence and Space photonics. Whilst Gooch & Housego is not planning any 
further acquisitions in the short term, the Company is not discounting high 
quality acquisitions as a route to continue to grow its Aerospace & Defence 
business should the opportunity arise. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 13
MARKET OVERVIEW GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 14
Revenue
£7.4m
(2012 £5.7m)
Operating Profit
£1.5m
(2012 £1.2m)
Percentage of Company 
Revenue
          12% (2012 10%)
MARKET OVERVIEW
Lif e Sciences
APPLICA TIONS, 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 most of 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 customers are typically medical equipment manufacturers.
GROWTH STRA TEGY
•  The growth strategy for Life Sciences mirrors that for Aerospace & 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. In October 2013,  
Gooch & Housego acquired Spanoptic. This acquisition strengthens the Group’s 
position in precision optics for the Life Sciences market. Whilst Gooch & Housego  
is not planning any further 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.
Micrograph cleavage stage of a frog egg. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 15
MARKET OVERVIEW
Microscopic section of human kidney tissue. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 16
MARKET OVERVIEW
Revenue
£4.3m
(2012 £3.9m)
Operating Profit
£0.5m
(2012 £0.2m)
Percentage of Company 
Revenue
          7% (2012 6%)
Scientific
Research
APPLICA TIONS, 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 and energy, 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. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 17
MARKET OVERVIEW
Images on pages 16 & 17 courtesy of Lawrence Livermore National Laboratory  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 18
FINANCIAL AND OPERATING REVIEW
Performance 
Overview
The business has delivered profitable growth and improving margins whilst experiencing 
variable demand patterns within our core markets. The trend towards a more evenly 
balanced business has continued, reflecting our strategy of diversification and our 
efforts to develop new opportunities in Aerospace & Defence and Life Sciences.
Following a steady first half, the second half of this financial year experienced strong 
sales into many of our market sectors. It is particularly pleasing to report sales growth 
of 16.3%, in aggregate, in our key target markets of Aerospace & Defence and Life 
Sciences. These markets now account for 38.9% of Gooch & Housego’s total revenue.
In the financial year under review, margins benefited from the greater operating 
leverage gained from increased volumes and efficiency gains made by the  
business this year. As a result adjusted operating margins have increased  
to 16.2% (2012: 14.7%).
REVENUE   
 2013 2012
Year ended 30 September £000 % £000 %
Industrial 34,345 54% 35,789 59%
Aerospace & Defence 17,273 27% 15,440 25%
Life Sciences 7,353 12% 5,731 10%
Scientific Research 4,281 7% 3,891 6%
Group Revenue 63,252 100% 60,851 100%
Group revenue for the year was a record £63.3m, an increase of £2.4m, or 4% over 
the previous year of £60.9m. On a consistent currency basis revenue was 3% 
higher than the previous year.
In our Aerospace & Defence segment, revenue grew by 11.9% from £15.4m last year to 
£17.3m this year . Similarly , revenue in our Life Sciences business grew by 28.3%, from 
£5.7m to £7.4m. Sales into our Industrial market fell by 4.0% this year on the back 
of weaker business in our telecommunications and traditional Q-switch markets.
A more detailed analysis of revenues by market is shown in the Market Analysis 
section, earlier in this report.
GROUP EARNINGS PERFORMANCE    
All amounts in £’000      Adjusted    Reported
Year ended 30 September 2013 2012 2013 2012
Operating profit 10,268 8,973 8,951 7,852
Net finance costs (608) (776) (608) (776)
Profit before taxation 9,660 8,197 8,343 7,076
Taxation (2,490) (2,032) (2,151) (1,753)
Profit for the year 7,170 6,165 6,192 5,323
Basic earnings per share (p) 32.0p 28.2p 27.7p 24.4p
The Group adjusted profit before tax amounted to £9.7m (2012: £8.2m) and 
represented a return on revenue of 15.3% compared with 13.5% in the previous 
year. Statutory profit before tax was £8.3m compared with £7.1m last year.
The effective rate of tax was 25.8% (2012: 24.8%), reflecting a combination of the 
varying tax rates applicable throughout the countries in which the Group operates, 
principally the UK and the USA. The introduction of the patent box tax rate from April 
2013 has not contributed to a lower tax rate in 2013 and will not in 2014. The effective 
rate of tax should benefit in the future from further reductions in the UK tax rate.
Adjusted earnings per share (EPS) increased from 28.2p to 32.0p. Basic EPS was 
27.7p compared with 24.4p last year.
“
As a result of a 
strong trading 
performance, 
the business 
has been able to 
deliver growth in 
adjusted diluted 
EPS of 15.5%.” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 19
RECONCILIATION OF ADJUSTED PERFORMANCE MEASURES
 Operating Profit Net finance costs Taxation Earnings per share
Year ended 30 September 2013 2012 2013  2012 2013 2012 2013 2012
 £000 £000 £000 £000 £000 £000 pence pence
Reported 8,951 7,852 (608) (776) (2,151) (1,753) 27.7p 24.4p
Amortisation of acquired intangible assets 875 881 – – (225) (219) 2.9p 3.0p
Acquisition costs 164 – – – (42) – 0.5p –
Restructuring costs 278 240 – – (72) (60) 0.9p 0.8p
Adjusted 10,268 8,973 (608) (776) (2,490) (2,032) 32.0p 28.2p
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 and costs 
associated with restructuring activities. 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 £34.3m, compared 
with £35.8m last year. Revenue from the Group’s traditional Q-switch product fell during 
the year, as anticipated, and now represents 12.2% of total group revenues. We believe 
this reflects the continuing shift towards the use of fibre lasers in materials processing 
applications. This appears to be supported by the significant increase in sales of fibre laser 
components experienced by Gooch & Housego in 2013. Telecommunications revenues 
were down in 2013 following the completion of the London Olympics, a one off benefit 
experienced in 2012 and the continuing softness in the undersea components business.
Operating profit for the Industrial sector as a whole was 6.8% higher at £7.0m, compared 
with £6.6m last year. This reflects a combination of cost-saving initiatives and a better 
performance from our Palo Alto facility , being offset to some extent by a poorer product mix.
Aerospace & Defence (A&D)
Our A&D business revenue increased by 11.9% from £15.4m to £17.3m in 2013. Despite 
a significant reduction in engineering contracts, which were affected by US Government 
sequestration issues, the business was able to deliver considerable growth in this market 
sector. This was driven through the provision of both components and systems to our UK 
and US A&D customers. Operating margins in this sector were marginally down in 
percentage terms, but increased absolutely. This reflected the combination of mix and 
volume this year.
Life Sciences
Gooch & Housego grew its presence in the Life Sciences sector in 2013 with revenues 
of £7.4m (2012: £5.7m). The growth in this market was driven by the Optical Coherence 
Tomography (OCT) and Microscopy markets. Operating margins in this sector were 
marginally down in percentage terms, but increased absolutely. This was mainly a 
reflection of the business having to absorb a larger share of Group costs.
Scientific Research
Our activities in the Scientific Research market are dominated by a small number of large, 
long-term programmes. This market saw growth in 2013 on the back of increased 
business from laser fusion projects. These programmes are now largely complete, although 
we do expect on-going business to service replacement and maintenance requirements.
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. There were a large number of 
product releases in 2013 and there is an extensive new product pipeline with a number 
of new product introductions anticipated in the 2014 financial year.
Expenditure on R&D in the year to 30 September 2013 increased by 15% from £4.3m to 
£4.9m. A proportion of this increase was funded through UK Government and European 
grant funding. R&D expenditure represented 7.8% of revenue (2012: 7.0%). The Group 
capitalised £0.03m (2012: £0.01m) of R&D expenditure.
FINANCIAL AND OPERATING REVIEW
“
The Group is 
committed 
to actively 
developing new 
technologies 
and capabilities 
that will become 
a key part of the 
future product 
portfolio.” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 20
BALANCE SHEET
The Group’s shareholders’ funds at the end of the year were £64.9m, an increase 
of £6.3m over the prior year. This increase mainly comprised £1.0m due to the 
issue of share capital and £5.3m from retained earnings.
Additions to property, plant and equipment totalled £2.0m. The main fixed asset 
additions were in response to the increase in Aerospace & Defence business, 
where a further £1.0m has been invested in extending coating and precision optics 
capabilities. £0.5m has also been invested in expanding our Torquay facilities and 
equipment to accommodate the Systems Technology Group.
Working capital was 24.7% of revenue in the current year compared to 21.3% in 
2012. Inventories have increased by £0.6m from £12.8m in 2012 to £13.4m at this 
year-end. This has been driven by the necessity to hold safety stocks for our A&D 
customers. Since the half-year, the business has worked on initiatives to reduce 
inventory. This has resulted in inventory carrying values reducing by £0.8m from 
£14.2m as at 31 March 2013. Trade receivables increased from £9.2m to £10.2m 
following a strong final quarter revenue performance.
Cash balances at 30 September 2013 were £14.6m, compared with £11.7m at 30 
September 2012. Net cash flows from operating activities generated £9.2m, 
compared with £8.9m last year. During the year the business moved from a net 
debt position of £0.3m as at 30 September 2012, to a net cash position of £5.7m.
MOVEMENT IN NET (DEBT)/FUNDS   
All amounts in £m Gross Cash Gross Debt Net Debt
At 1 October 2012 11.7 (12.0) (0.3)
Operating cash flows 12.4 – 12.4
Debt repayment (3.4) 3.4 –
Capital expenditure (2.2) – (2.2)
Working capital (2.2) – (2.2)
Proceeds from share issue 1.0 – 1.0
Interest, tax, share options and dividends (2.6) – (2.6)
Exchange movement (0.1) (0.3) (0.4)
At 30 September 2013 14.6 (8.9) 5.7
ORDER BOOK
As at 30 September 2013, the Group order book stood at £27.8m, compared to 
£24.9m at the end of the 2012 financial year, a 12% increase. On a like for like basis, 
excluding the impact of foreign exchange, the order book was 12% higher. Book to 
bill ratios for the business as a whole were 0.98 times (six month rolling average) 
as at 30 September 2013, compared to 1.01 times for the same period last year.
STAFF
The Group workforce reduced slightly from 588 at 30 September 2012 to 581 at the 
end of September 2013, a fall of 7. This is a net position and therefore reflects both 
the reductions in staffing resulting from the work the business has done in integration 
and rationalisation of sites and processes and the additional investment that the 
business has made in engineering, business development and senior management. 
During the year, the Group appointed Jon Fowler as EVP Commercial Development. 
Mr Fowler was an internal appointment having previously held a general 
management role in our US operations. Mr Fowler brings a wealth of customer 
development experience to this role.
POST BALANCE SHEET EVENTS
On 15 October 2013 Gooch & Housego completed the acquisition of Spanoptic 
Limited (“Spanoptic”), a manufacturer of precision optical components, based in 
Glenrothes, Scotland.
Founded in 1976, Spanoptic currently employs 62 people and in the year ended 31 
December 2012 had revenues of £7.7m and made a profit before tax of £1.0m. 
Spanoptic had net assets of £5.5m at acquisition, including net cash of £0.7m.  
The gross cash consideration paid by Gooch & Housego was £6.6m, funded from 
existing cash and debt facilities. 
Spanoptic will continue to operate from its Glenrothes factory as an integrated part 
of Gooch & Housego’s UK precision optics business. As a long-term supplier to 
FINANCIAL AND OPERATING REVIEW
Gross
cash
16
14
12
10
8
6
4
2
0
-2
-0.3
-1.9
15.7
13.8
11.7
12.0
Net debt (£m)
 2011
 2012
 2013
Gross
debt
Net
cash/(debt)
5.7
14.6
8.9 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 21
Gooch & Housego (Gooch & Housego accounted for approximately 1.5% of 
Spanoptic’s turnover in the year to 31 December 2012), Spanoptic is well-known to 
the Gooch & Housego management team and has been the subject of regular 
quality and process audits in recent years.
On 26 November 2013, Gooch & Housego completed the acquisition of Constelex 
Technology Enablers Limited (Constelex), an Athens, Greece, based designer and 
manufacturer of advanced photonic systems. The gross consideration payable by 
Gooch & Housego is €0.65m.
Constelex is a small, start-up company specialising in low-noise optical fibre amplifiers. 
With a mission to become a world-leading design-house and solution provider for 
photonic systems with applications in telecommunications, space, defence and life 
sciences, Constelex has built up a strong reputation for technical excellence since it 
was founded in 2009. As a result, Constelex has enjoyed considerable success in 
securing contracts from the European Space Agency and attracting funding from 
the European Union to develop complex photonic systems predominantly for space 
and satellite applications. 
DIVIDENDS
The Directors propose a final dividend of 4.0p per share making a total dividend for the 
year of 6.3p (2012: 5.2p). The final dividend will be payable on 28 February 2014 to 
shareholders on the Company’s share register as at close of business on 7 February 2014.
KEY PERFORMANCE INDICATORS (KPIs)
The Group 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 2013 2012 2011
At actual exchange rates 4% 0% 37%
At constant exchange rates 3% (1%) 40%
The Board is focused on delivering revenue growth by investing both organically 
and through acquisitions. The Group business has delivered underlying growth, 
whilst experiencing variable demand patterns within its core markets.
Target market revenue growth 2013 2012 2011
Aerospace & Defence (£m) 17.3 15.4 15.4
Life Sciences (£m) 7.4 5.7 5.7
The Group target markets of Aerospace & Defence and Life Sciences provide a 
route to sustainable growth, and a more diversified revenue base. These markets 
also provide 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. The business has made 
good progress in addressing its target markets of Aerospace & Defence and Life 
Sciences which, in aggregate, have increased by 16.3% in the 2013 financial year.
Net cash analysis 2013 2012 2011
Net cash/(debt) (£m) 5.7 (0.3) (1.9)
In order to balance business risk with the investment needs of the Company , Gooch & 
Housego closely monitors and manages its net debt. This year the business moved 
from a net debt position of £0.3m as at 30 September 2012, to a net funds position of 
£5.7m, 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 (EPS) 2013 2012 2011
Adjusted diluted EPS (pence) 30.5 26.4 36.0
As a result of a strong trading performance, the business has been able to deliver 
growth in adjusted diluted EPS of 15.5%, from 26.4p to 30.5p in 2013.
FINANCIAL AND OPERATING REVIEW
11 12 13
6
5
4
3
2
1
0
-1
-2
Net cash analysis (£m)
-1.8
-0.3
45
40
35
30
25
20
15
10
5
0
Earnings per share (pence)
30.5
36.0
26.4
11   12   13
40
35
30
25
20
15
10
5
0
T otal revenue growth (%)
 at actual exchange rates
 at constant exchange rates
37
4
3
40
20
15
10
5
0
Emerging market revenue (£m)
 Aerospace & Defence
 Life Sciences
5.7
15.4
15.4
5.7
nil
-1
11           12   13
5.7
17.3
7.4
11 12 13 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 22
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 FY2013, Gooch & Housego grew 
its business in the areas of: 
• Metrology 
• Sensing 
• Semi-conductor
b)  Aerospace & Defence. 
• Revenues increased by 12% in this market segment in FY2013 
• Significant sub-system revenues from European Aerospace & Defence customers 
• Establishing a leading position in Space/Satellite applications
c)  Lif e Scienc es 
• Revenues increased by 28% in this market segment in FY2013 
• Reinforced market leading position in Optical Coherence Tomography (OCT)
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
•  Establishment of the Systems Technology Group to further focus the business’s 
drive towards moving up the value chain.
ORGANIC RESEARCH & DEVELOPMENT
T o leverage Gooch & Housego’ s exceptional materials and component capabilities to 
develop innovative new products.
Progress
•  An unprecedented number of new products introduced. In FY2013 the company’s 
organic research & development programmes have delivered twelve new products. 
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.
Strategy 
Overview
STRATEGY OVERVIEW
“
In 2013 G&H has 
continued to 
make progress 
in its key 
strategic goals 
of diversification 
and moving up 
the value chain.” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 23
STRATEGY OVERVIEW GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 24
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 UK fibre optics business of JDSU, the 
US telecommunications group, 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 for Europe, Middle East 
and Africa and Acting Chief Financial Officer for Gooch & Housego, before joining the Board in 
August 2009.
Terry Scribbins, Gareth Jones and Andrew Boteler
BOARD OF DIRECTORS
Board of 
Directors
EXECUTIVE DIRECTORS GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 25
BOARD OF DIRECTORS
Paul Heal 
(Appointed January 2008)
Paul Heal retired from his position as a client service Partner with PricewaterhouseCoopers 
at the end of 2007, leaving a role he had held for 20 years. Based in its Bristol office, he was 
primarily responsible for middle market clients ranging from smaller listed companies (market 
cap <£250m) to venture capital backed and privately owned businesses. Gooch & Housego 
PLC was a client of Mr Heal prior to September 2003 and he advised the company through 
the preparation for IPO, and acted as reporting accountant for the flotation in 1997.
Mr Heal is a non-executive Director of a number of other commercial and charitable 
organisations. Commercial Directorships include Andrew and Partners (Estate Agents) and 
the West of England Trust (including Jordans Limited and Jordan Publishing Limited). He is 
a Trustee of The Theatre Royal, Bath 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 T echnology (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 Limited 
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.
NON-EXECUTIVE CHAIRMAN
Dr Julian Blogh CBE PhD CEng 
(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.
NON-EXECUTIVE DIRECTORS GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 26
DIRECTORS’ REPORT
The Directors present their report together with the audited consolidated financial 
statements for the year ended 30 September 2013.
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 principal activities, strategy and the 
Group’s progress in the year towards these strategies is given in the Strategic 
Report on pages 6 to 23. Finally an analysis of the segmental information by 
market sector is given on pages 10 to 17.
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 2013, the Company was in a net cash position of 
£5.7m (2012: net debt of £0.3m). 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 long term growth. 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 21 of the Financial and Operating Review. 
DIVIDENDS
During the year ended 30 September 2013 a final dividend of 4.0p per share was 
paid for the previous financial year, the final 2011 dividend of 3.0p per share was 
paid in the year ended 30 September 2012. A further interim dividend of 2.3p per 
share was paid for the half year ended 31 March 2013 (2012: 2.0p).
For the year ended 30 September 2013, the Directors propose that a final dividend 
of 4.0p per share be paid.
SUBSTANTIAL SHAREHOLDINGS
As at 15 December 2013, 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
Schroders Investment Management 3,349,970 14.5%
BlackRock Investment Management  3,046,988 13.2%
Gooch & Virgin Family Trust 1,477,090 6.4%
Investec Wealth & Investment 1,464,069 6.3%
Standard Life 1,020,023 4.4%
SVG Investment Management 1,002,479 4.3%
Octopus Investments 959,187  4.2%
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 2013 27
DIRECTORS’ REPORT GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 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
  2013  2012
Non-Executive Directors 
 Dr Julian Blogh 10,000 10,000
 Paul Heal 21,485 21,485 
 Dr Peter Bordui – – 
 Mark Webster – – 
Executive Directors 
 Gareth C W Jones 45,468 8,000 
 Terry Scribbins 2,468 – 
 Andrew N Boteler 18,533 16,065
Jan A Melles retired in October 2012.
Since the year end the number of shares held by Terry Scribbins and Andrew 
Boteler have increased to 13,116 and 26,181 respectively.
For details of Directors’ interests in options to subscribe for shares of the Company, 
see the Remuneration Committee Report on page 33.
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.
“
A more focused 
approach to R&D 
has paid dividends 
in 2013, with a 
significant number 
of new products 
being brought  
to market.” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 29
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 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.
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.
DIRECTORS’ REPORT
“
Gooch & Housego 
has become a  
more vertically 
integrated 
business.” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 30
DIRECTORS’ REPORT
Board membership and meeting attendance is presented in the following table.
Non-Executive Directors  
 Dr Julian Blogh  10/10
 Dr Peter Bordui  10/10
 Mark Webster  10/10
 Paul Heal 10/10
Executive Directors
 Gareth C W Jones  10/10
 Terry Scribbins  7/10
 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 continued to develop its 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 financial statements in accordance 
with applicable law and regulations.
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. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 31
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
20 January 2014
DIRECTORS’ REPORT
“
The Board is  
focused on  
delivering revenue 
growth by investing 
both organically  
and through 
acquisitions.” GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 32
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. The Audit Committee consists of four Independent Non-executive Directors and I consider that 
the Committee has an appropriate balance between those individuals with finance or accounting training and those from a general business 
background. 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. There were no material changes in the reporting standards that affect our financial statements in 2013.
ROLE OF THE COMMITTEE
•  Monitors the integrity of the Company’s financial statements and 
reviews significant financial reporting judgements.
•  Reviews the effectiveness of financial and regulatory compliance 
controls and systems.
•  Oversees the relationship with the external auditors including 
agreeing their fee, scope of any non-audit services and fee and 
assessing their independence and effectiveness.
AREAS OF FOCUS FOR THE AUDIT COMMITTEE
• Financial reporting at the half year and full year
•  External audit, including meeting with the auditors at the planning 
and completion stages of their work for both the half and full year
• Governance
• Code of Conduct, including our Whistle Blower Policy
• Accounting policy review
• Internal financial control systems
• Review of the Group’s risk matrix
• Appropriateness of the Group’s non –audit service policy
Paul Heal
Chairman of the Audit Committee
20 January 2014
AUDIT COMMITTEE REPORT
Audit Committee Report
Nomination Committee Report
The Nomination Committee which consists of all four Non-Executive Directors is responsible for the composition of the Board.
ROLE OF THE COMMITTEE
• Reviews the composition of the Board and its committees.
•  Identifies and recommends for Board approval suitable candidates 
to be appointed to the Board.
•  Considers succession planning for Directors and other senior 
executives and in doing this considers diversity, experience, 
knowledge and skills.
AREAS OF FOCUS FOR THE NOMINATION COMMITTEE
• Succession Planning.
• Search for senior executives
Dr Julian Blogh
Chairman of the Nomination Committee
20 January 2014
MEMBERSHIP AND ATTENDANCE AT MEETINGS HELD IN 2013
Non-Executive Directors 
 Dr Julian Blogh  3/3
 Dr Peter Bordui  3/3
 Mark Webster  3/3
 Paul Heal 3/3
Executive Directors
 Gareth C W Jones  3/3
 Andrew N Boteler  3/3
MEMBERSHIP AND ATTENDANCE AT MEETINGS HELD IN 2013
Non-Executive Directors 
 Dr Julian Blogh  2/2
 Dr Peter Bordui  2/2
 Mark Webster  2/2
 Paul Heal 2/2 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 33
REMUNERATION COMMITTEE REPORT
INTRODUCTION
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.
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. 
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.
MEMBERSHIP AND ATTENDANCE AT MEETINGS HELD IN 2013 
Non-executive Directors 
 Dr Julian Blogh  2/2
 Dr Peter Bordui  2/2
 Mark Webster  2/2
 Paul Heal 2/2
2013 PERFORMANCE
Gooch & Housego has continued to perform well in 2013, delivering strong financial performance and continuing to make progress in its key 
strategic goals of diversification and moving up the value chain.
In terms of financial performance, net profit margin improved from 13.5% to 15.3%. Once again a strong cash performance resulted in the 
Group reporting a significant net cash position for the first time since 2008. The increasing strength of the balance sheet meant that the 
Company was able to recommend a 21% increase in the total dividend for the year.
At an operational level, the business has achieved an unprecedented level of diversification in 2013, with 39% of the business now being 
generated from the new markets of Aerospace & Defence and Life Sciences. The establishment of the Systems Technology Group is a 
progressive step in helping move the business up the value chain.
2013 bonus outcomes were 40.5% of maximum, reflecting the challenging targets set by the Remuneration Committee.
SHAREHOLDER CONSUL TATION
Following consultation with major shareholders in early 2013, the Long Term Incentive Plan (L TIP) was approved by the Committee and 
awards made on 9 April 2013.
During the consultation, we took into consideration all comments received, and I am very grateful for the constructive and helpful feedback. 
This feedback helped to shape the L TIP into a scheme that will both support the underlying objectives and provide shareholders with the 
comfort that their views are taken account of in the design of the L TIP .
2013 PROPOSALS
Gooch & Housego’s objective is to set salaries for its Directors within a mid-market range and also uses variable remuneration mechanisms to 
ensure that individuals only receive substantial remuneration for exceptional performance.
We continue to review the remuneration framework to ensure that it is appropriate to attract and retain executives of the right calibre. To 
this end the Committee has commissioned an independent review of Director benefits and bonus schemes. This review is ongoing with 
conclusions expected before the 2014 year end.
The committee values all feedback from shareholders and hopes to receive your support at the forthcoming AGM.
Remuneration Committee Report GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 34
REMUNERATION POLICY TABLE 
The table below summarises our policy for 2013/14
REMUNERATION COMMITTEE REPORT
Element of
remuneration
Purpose and link to 
strategy
Policy and approach Opportunity Planned
changes
Base Salary •  Takes into account 
experience and 
personal contribution 
to the company’s 
strategy
•  Attracts and retains 
executives of the 
quality required to 
deliver the company’s 
strategy
•  Reviewed annually with changes effective 
from 1 October if applicable
•  Consideration given to individual and 
company performance
•  General pay increases across the wider 
workforce are also taken into consideration
•  Where the company considers it appropriate 
and necessary, larger increases may be 
awarded in exceptional circumstances
Base salary increases are 
applied in line with the 
outcome of the annual 
review
No
Annual Bonus •  Inc en tivise 
achievement of short-
term financial targets 
that the Committee 
considers to be critical 
drivers of business 
growth
• Awarded annually
•  Award level is based upon level of 
normalised profit before tax against an 
internal target
•  10% of the maximum bonus is payable for 
reaching threshold targets
•  Maximum bonus is achieved for reaching 
25% over threshold targets
Maximum of 100% of 
base salary
Yes
Bonus scheme 
currently under 
independent 
review
Pension •  Provide employees 
with market 
competitive pension 
scheme
•  Defined contribution personal pension plan.
•  Company contributes 8% of salary
8% of base salary
The Committee keeps 
the benefit policy and 
benefit levels under 
regular review
Yes
Pension scheme 
currently under 
independent 
review
Benefits •  Provide employees 
with market 
competitive benefits
•  Executive Directors receive private health 
insurance, life assurance and long term 
disability insurance
The Committee keeps 
the benefit policy and 
benefit levels under 
regular review
Yes
Benefits 
currently under 
independent 
review
Long Term 
Incentive Plan 
(L TIP)
•  Incentivise executive 
performance over the 
longer term.
•  Performance measures 
linked to the long-
term strategy of the 
business and the 
creation of shareholder 
value over the longer 
term.
•  Award levels are determined by reference 
to an individual’s position and performance 
prior to grant
•  Awards vest after three years subject to 
achievement of performance conditions  
(as set out later in the report)
Maximum award of 
120% of base salary
No GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 35
REMUNERATION COMMITTEE REPORT
DIRECTORS’ REMUNERATION
 
2013  Basic pay  Performance  Benefits Pension  Sub-total  Share Total 
    Related Bonus in kind contribution 2013 Options* 2013
   £000 £000 £000 £000 £000 £000 £000
Executive      
 G C W Jones  213 86 31 17 347 2,140 2,487
 T Scribbins  151 61 11 12 235 1,285 1,520
 A N Boteler 143 58 3 11 215 1,285 1,500
Non-Executive   
 Dr J Blogh 70 – – – 70 – 70
 P Heal  37 – – – 37 – 37
 J A Melles 1 – – – 1 – 1
 Dr P Bordui 18 – – – 18 – 18
 M Webster  35 – – – 35 – 35
   668 205 45 40 958 4,710 5,668
2012  Basic pay  Performance  Benefits Pension  Sub-total  Share Total 
    Related Bonus in kind contribution 2012 Options 2012
   £000 £000 £000 £000 £000 £000 £000
Executive      
 G C W Jones  213 – 8 17 238 – 238
 T Scribbins  151 – 3 12 166 – 166
 A N Boteler 140 – 3 11 154 – 154
Non-Executive   
 Dr J Blogh 67 – – – 67 – 67
 Dr E G Authurs  5 – – – 5 – 5
 J A Melles 16 – – – 16 – 16
 P Heal  35 – – – 35 – 35
 Dr P Bordui 11 – – – 11 – 11
 M Webster  23 – – – 23 – 23
   661 – 14 40 715 – 715
* For 2013 the values for Share Options in the above table are based upon the vesting of awards under the Value Creation Plan (VCP) 
introduced in 2010 as this was the only scheme to meet its performance criteria during the period. Share options from the 2004 and 2005 
schemes were exercised during the year by Directors but these had met their performance criteria before 2012. Details of these are shown 
later in this report.
The basic pay of the Chief Executive Officer did not increase in the year, this compares to an increase of 4% for the Company as a whole.
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 (2012: 3). Contributions to a scheme on behalf of continuing Directors amount to 8% of the 
Director’s basic salary.
DIRECTORS’ CONTRACTS
The Executive Directors 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. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 36
REMUNERATION COMMITTEE REPORT
SHARE OPTIONS EXERCISED 
2013    Scheme Number of Market Exercise Exercise Total 
     Share Options Price Price Date Gain
     No. p p  £000
Executive      
 G C W Jones   2004 95,000 433.0 133.5 04.03.2013 285
 G C W Jones   2004 262,645 450.0 133.5 11.07.2013 831
 G C W Jones   VCP 35,000 450.0 0.0 11.07.2013 158
 G C W Jones   CSOP 9,934 461.0 151.0 18.01.2013 31
 T Scribbins   2004 62,500 450.0 272.5 11.07.2013 111
 T Scribbins   VCP 132,648 450.0 0.0 11.07.2013 597
 T Scribbins   CSOP 9,934 461.0 151.0 18.07.2013 31
 A N Boteler   VCP 132,648 450.0 0.0 11.07.2013 597
 A N Boteler   CSOP 9,934 461.0 151.0 18.07.2013 31
2012    Scheme Number of Market Exercise Exercise Total 
     Share Options Price Price Date Gain
     No. p p  £000
Executive      
 G C W Jones   2004 18,726 425.0 133.5 04.03.2012 55
The VCP and CSOP exercises in the above table include options disclosed in the Directors’ Remuneration table on page 35.
Following the year end, Gareth Jones exercised 190,347 nil cost options at a market price of 655p. Terry Scribbins and Andrew Boteler each 
exercised 132,648 options at a market price of 700p.
SHARE OPTION SCHEMES
At 30 September 2013 Gooch & Housego had three active share based incentive schemes. 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 directors’ share options were subject to the achievement of certain financial performance criteria, all of which have now been met. All 
Directors’ options under the 2004 scheme have been exercised.
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 01.10.12 in year in year 30.09.13                    From                   to
G C W Jones 23.07.04 133.5p 2,397 (2,397) – – 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 118,416 (118,416) – – a 23.07.08 22.04.14
    357,645 (357,645) – –   
         
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   420,145 (420,145) – –   
a = Performance criteria met GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 37
REMUNERATION COMMITTEE REPORT
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 L TIP”). 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 gave 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.
Executive Directors’ share options are listed below:
       – Number of ordinary shares under option –   
  Date of Exercise  At Awarded Exercised  At Expiry
  grant price 01.10.12 in year in year 30.09.13 Date
G C W Jones 07.01.2013 151.0p – 19,867 (9,934) 9,933 06.01.2020
G C W Jones 07.01.2013 0.0p – 450,747 (35,000) 415,747 06.01.2020
T Scribbins 07.01.2013 151.0p – 19,867 (9,934) 9,933 06.01.2020
T Scribbins 07.01.2013 0.0p – 265,296 (132,648) 132,648 06.01.2020
A N Boteler 07.01.2013 151.0p – 19,867 (9,934) 9,933 06.01.2020
A N Boteler 07.01.2013 0.0p – 265,296 (132,648) 132,648 06.01.2020
    – 1,040,940 (330,098) 710,842 
GOOCH & HOUSEGO 2013 LONG TERM INCENTIVE PLAN
On 9 April 2013, a new Long Term Incentive Plan was adopted. Under the plan, awards will be made annually to key employees based on a 
percentage of salary. Subject to the satisfaction of the required TSR performance criteria and EPS financial performance, these grants will 
vest upon publication of the results of the Company for the year ending 30 September 2015.
On 9 April 2013, awards were made under the 2013 L TIP new plan to a number of key employees, including the three executive Directors of 
the Company. Aggregate awards made to Directors of the Group were as follows:
G C W Jones 56,876 Nil-cost share options
T Scribbins 36,985 Nil-cost share options
A N Boteler 35,076 Nil-cost share options
During the year to 30 September 2013, £340,749 (2012: £471,000) was charged to the income statement in respect of the IFRS 2 share 
based payments charge on all share option schemes (valued using the Monte Carlo option pricing model) and £340,000 (2012: £370,000) in 
respect of accrued employer’s national insurance contributions, based on a year end share price of £5.55 (2012: £4.35).
Paul Heal
Chairman of the Remuneration Committee
20 January 2014 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 38
INDEPENDENT AUDITORS’ REPORT to the Members of Gooch & Housego PLC
We have audited the group financial statements of Gooch & Housego 
Plc for the year ended 30 September 2013 which comprise the Group 
Income Statement, the Group Statement of Comprehensive Income, 
the Group Balance Sheet, the Group Cash Flow Statement, the Group 
Statement of Changes in Equity 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 page 30, 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 and to identify 
any information that is apparently materially incorrect based on, or 
materially inconsistent with, the knowledge acquired by us in the 
course of performing the audit. 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 2013 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 Strategic Report and 
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 2013.
Colin Bates (Senior Statutory Auditor)
for and on behalf of 
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
20 January 2014
 
 
 
Independent Auditors’ Report GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 39
FINANCIAL STATEMENTS
  2013 2012
 Note £000 £000
Revenue 7 63,252 60,851
Cost of revenue  (37,635) (37,405)
Gross profit  25,617 23,446
Research & Development  (4,913) (4,277)
Sales & Marketing  (4,666) (4,119)
Administration  (8,814) (8,181)
Other income and expenses 9 1,727 983
Operating profit 11 8,951 7,852
Finance income 12 15 24
Finance costs 12 (623) (800)
Profit before income tax expense  8,343 7,076
Income tax expense 13 (2,151) (1,753)
Profit for the year  6,192 5,323
Basic earnings per share 15 27.7p 24.4p
Diluted earnings per share 15 26.4p 22.8p
Reconciliation of operating profit to adjusted operating profit:  2013 2012
  £000 £000
Operating profit  8,951 7,852
Amortisation of acquired intangible assets  875 881
Acquisition costs  164 –
Restructuring costs  278 240
Adjusted operating profit  10,268 8,973
   2013 2012
 Note £000  £000
Profit for the year 6,192 5,323
   
Other comprehensive income/(expense) - items that may be reclassified subsequently  
to profit or loss   
Fair value adjustment of interest rate swap net of tax 26 90 95
Currency translation differences (364) (1,084)
Other comprehensive expense for the year net of tax (274) (989)
   
Total comprehensive income for the year
attributable to the shareholders of Gooch & Housego PLC 5,918 4,334
Group Income Statement
For the year ended 30 September 2013
Group Statement of  
Comprehensive Income
For the year ended 30 September 2013 GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 40
FINANCIAL STATEMENTS
    2013 2012
   Note £000 £000
Non-current assets   
Property, plant and equipment 16 21,456 21,405
Intangible assets 17 19,821 20,720
Deferred income tax assets 24 3,830 4,308
    45,107 46,433
Current assets   
Inventories 18 13,390 12,802
Income tax assets  420 –
Trade and other receivables 19 12,706 11,062
Cash and cash equivalents 20 14,558 11,712
    41,074 35,576
Current liabilities   
Trade and other payables 21 (10,461) (10,202)
Borrowings 22 (5,726) (5,774)
Income tax liabilities  (307) (17)
Provision for other liabilities and charges 23 (271) (357)
    (16,765) (16,350)
Net current assets  24,309 19,226
Non-current liabilities   
Borrowings 22 (3,113) (6,261)
Deferred income tax liabilities 24 (1,330) (698)
Derivative financial instruments 30 (34) (134)
    (4,477) (7,093)
Net assets  64,939 58,566
Shareholders’ equity   
Called up share capital 25 4,620 4,382
Share premium account 26 15,213 14,311
Merger reserve 26 2,671 2,671
Hedging reserve 26 (79) (169)
Cumulative translation reserve 26 (860) (496)
Retained earnings 26 43,374 37,867
Equity shareholders’ funds  64,939 58,566
The financial statements for Gooch & Housego PLC, registered number 00526832, were approved by the Board of Directors on 20 January 
2014 and signed on its behalf by:
Gareth C W Jones Andrew N Boteler
Director Director
Group Balance Sheet
For the year ended 30 September 2013
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 41
FINANCIAL STATEMENTS
   Note Called up  Share Merger Hedging  Retained  Total 
    share premium reserve reserve earnings equity
    capital account
    £000 £000 £000 £000 £000 £000
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/(expense)   – – – 95 (1,084) (989)
 for the year
Total comprehensive income for the year  – – – 95 4,239 4,334
Dividends 14 – – – – (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  12 111 – – 9 132
owners of the parent recognised directly
in equity 
At 30 September 2012  4,382 14,311 2,671 (169) 37,371 58,566
At 1 October 2012   4,382 14,311 2,671 (169) 37,371 58,566
Profit for the financial year   – – – – 6,192 6,192
Other comprehensive income /(expense)  – – – 90 (364) (274)
 for the year
Total comprehensive income for the year  – – – 90 5,828 5,918
Dividends 14 – – – – (1,229) (1,229)
Proceeds from shares issued  238 902 – – (96) 1,044
Fair value of employee services  – – – – 341 341
Tax credit relating to share option schemes   – – – – 299 299
Total contributions by and distributions to  238 902 – – (685) 455
owners of the parent recognised directly
in equity 
At 30 September 2013  4,620 15,213 2,671 (79) 42,514 64,939
Group Statement of  
Changes in Equity
For the year ended 30 September 2013 GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 42
FINANCIAL STATEMENTS
    2013 2012
    £000 £000
Cash flows from operating activities   
Cash generated from operations  10,130 10,653
Income tax paid  (882) (1,793)
Net cash generated from operating activities  9,248 8,860
   
Cash flows from investing activities   
Acquisition of subsidiaries, net of cash acquired  (22) (2,061)
Purchase of property, plant and equipment  (2,032) (3,337)
Sale of property, plant and equipment  67 59
Purchase of intangible assets  (202) (405)
Interest received  15 24
Net cash used in investing activities  (2,174) (5,720)
   
Cash flows from financing activities   
Repayment of borrowings  (3,394) (3,397)
Proceeds from issues of share capital  1,044 123
Dividends paid to ordinary shareholders  (1,229) (1,093)
Interest paid  (505) (711)
Net cash used in financing activities  (4,084) (5,078)
   
Net increase/(decrease) in cash, cash equivalents, revolving credit facility and bank overdraft  2,990 (1,938)
Cash, cash equivalents, working capital facility and bank overdraft at beginning of the year  9,235 11,276
Exchange losses on cash and bank overdrafts  (137) (103)
Cash, cash equivalents, revolving credit facility and bank overdraft at the end of the year  12,088 9,235
Cash, cash equivalents, revolving credit facility and bank overdrafts at the end of the year comprise:
    2013 2012
    £000 £000
Cash and cash equivalents  14,558 11,712
Revolving credit facility and overdraft  (2,470) (2,477)
Cash, cash equivalents, revolving credit facility and bank overdraft at the end of the year  12,088 9,235
 
Group Cash Flow Statement
For the year ended 30 September 2013 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 43
FINANCIAL STATEMENTS
Reconciliation of cash generated from operations  2013  2012
    £000 £000
Profit before income tax  8,343 7,076
Adjustments for:   
- Amortisation of acquired intangible assets  875 881
- Amortisation of other intangible assets  168 296
- Depreciation  1,949 2,092
- Profit on disposal of property , plant and equipment  91 48
- Share based payment obligations  341 471
- Finance income  (15) (24)
- Finance costs  623 800
Total   4,032 4,564
   
Changes in working capital   
- Inventories  (1,328) (1,465)
- Trade and other receivables  (1,208) 1,351
- Trade and other payables  (538) (327)
- Movement in working capital provisions  829 (546)
Total   (2,245) (987)
Cash generated from operating activities  10,130 10,653
Reconciliation of net cash inflow to movements in net funds
    2013  2012
    £000  £000
Increase/(decrease) in cash in the year  2,990 (1,938)
Repayment of borrowings  3,394 3,397
Changes in net debt resulting from cash flows  6,384 1,459
   
Translation differences  (342) 71
Movement in net debt in the year  6,042 1,530
   
Net debt at 1 October  (323) (1,853)
Net funds/(debt) at 30 September  5,719 (323)
Analysis of net (debt)/funds 
     At 1 Oct   Cash flow Exchange At 30 Sep 
     2012  movement 2013
     £000 £000 £000 £000
Cash at bank and in hand   11,712 2,990 (144) 14,558
Bank overdrafts & RCF
1
    (2,477) – 7 (2,470)
     9,235 2,990 (137) 12,088
      
Debt due within 1 year   (3,264) – 8 (3,256)
Debt due after 1 year   (6,261) 3,360 (212) (3,113)
Finance leases   (33) 34 (1) –
Net (debt)/funds   (323) 6,384 (342) 5,719
1
 RCF = Revolving Credit Facility
Notes to the Group
Cash Flow Statement
For the year ended 30 September 2013 GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 44
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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 2013 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 65.
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 as adopted by the 
European Union (“IFRS”) and IFRIC Interpretations in issue at 30 
September 2013, 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.
T ransactions, 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 presentation 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 presentation currency are 
translated into the presentation 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. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 45
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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.
Depreciation on other assets is calculated 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  
computers 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 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 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 lives, 
which is typically 7 years, and are charged to Research and Development 
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 and charge to administration in the 
Income Statement.
• 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. 
Non-financial assets other than goodwill which have suffered an 
impairment are reviewed for possible reversal of the impairment at 
each balance sheet date. 
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. GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 46
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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 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 for the purpose of the cash flow statement 
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  GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 47
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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.
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.
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 a number of share option schemes. 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 and 
the Gooch & Housego 2013 Long Term Incentive Plan were 
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.
The Group monitors and assesses its warranty provision requirement 
on a continuing basis. The provision for other liabilities and charges 
provides for the anticipated cost of repair and rectification of products 
under warranty, based on historical repair and replacement costs. In 
addition the Directors will also assess expected changes in future 
costs based on current information.
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 (Gooch & Housego (Ohio) 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 2013 was £2,272,000 (2012: £3,667,000)
c.  Interest income
Interest income is recognised on a time-proportion basis using the 
effective interest method. GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 48
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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.
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.
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. 
Financial risks
The Group’s activities expose it to a variety of financial risks: market 
risk (including foreign exchange 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 2012, with all other variables constant, post tax profits 
for the year would have been £69,000 lower (2012: £25,000 
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 £3,234,000 lower (2012: £3,099,000 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 
£3,952,000 higher (2012: £3,787,000 higher).
b. Cash flow interest rate risk
The Group has cash balances of £14.6m 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 
£43,000 (2012: £38,000) 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 2012 and 2013, 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 
ten customers in 2013 accounted for 33% of the Group’s revenue 
(2012: 32%). No individual customer made up more than 6% of 
revenue (2012: 6%).
The Group’s trade receivables are analysed in note 19. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 49
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
b. Cash
Cash is held in current and deposit accounts with financial 
institutions which have credit ratings of A- or greater, except for one 
subsidiary which held cash in a bank rated BBB at the year end, but 
which has now been closed.
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 $6.8m is outstanding (2012: $11.3m), a £3.1 
million Sterling denominated term loan of which £2.0m is still 
outstanding (2012: £2.4m), an $8 million revolving credit facility (drawn 
to $4 million at both 30 September 2013 and 30 September 2012) and 
at 30 September 2013 an undrawn capital expenditure facility of $8 
million, which was subsequently fully drawn down on 9 October 2013. 
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 2013, the 
Group was highly cash generative due to a strong trading 
performance. The Group expects to continue generating cash from 
operating activities.
•  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 are available through April 2015. 
 
At 30 September 2013, 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 £17.0m 
(2012: £14.2m). 
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
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 and the 2013 Long Term Incentive 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 PL C
ANNUAL REPORT 2013 50
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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 & 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 
    & Defence Life Sciences Industrial Research Corporate Total
For year ended 30 September 2013  £000 £000 £000 £000 £000 £000
Revenue      
 Total revenue  17,273 7,353 38,179 4,281 – 67,086
 Inter and intra-division  – – (3,834) – – (3,834)
External revenue  17,273 7,353 34,345 4,281 – 63,252
Divisional expenses  (14,335) (5,664) (26,425) (3,600) (1,288) (51,312)
EBITDA¹  2,938 1,689 7,920 681 (1,288) 11,940
EBITDA %  17.0% 23.0% 23.1% 15.9% – 18.9%
Depreciation and amortisation  (550) (220) (907) (143) (294) (2,114)
Operating profit before amortisation 
 of acquired intangible assets  2,388 1,469 7,013 538 (1,582) 9,826
Amortisation of acquired intangible assets – – – – (875) (875)
Operating profit  2,388 1,469 7,013 538 (2,457) 8,951
Operating profit margin %  13.8% 20.0% 20.4% 12.6% –  14.2%
    Aerospace   Scientific 
    & 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% – 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
Amortisation of acquired intangible assets – – – – (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% –  12.9%
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:
    2013 2013 2013 2012 2012 2012
    Assets Liabilities Net Assets Assets Liabilities Net Assets
    £000 £000 £000 £000 £000 £000
United Kingdom  38,258 (11,418) 26,840 33,155 (12,495) 20,660
USA   47,751 (9,776) 37,975 48,736 (10,884) 37,852
Continental Europe  162 (42) 120 118 (64) 54
Asia Pacific  10 (6) 4 – – –
    86,181 (21,242) 64,939 82,009 (23,443) 58,566
For the year to 30 September 2013 non-current asset additions were £1.1m (2012: £1.4m) for the UK and for USA £1.1m (2012: £3.6m). There 
were no additions to non-current assets in respect of Continental Europe (2012: £nil) and Asia Pacific (2012: £nil). The value of non-current 
assets in the USA was £26.1m (2012: £27.1m) and United Kingdom £19.1m (2012: £19.3m). There were no non-current assets in Asia Pacific or 
Continental Europe.
Analysis of revenue by destination:
    2013 2012
    £000  £000   
United Kingdom  9,481 8,644   
USA   30,213 28,443   
Continental Europe  13,821 14,343   
Asia Pacific and Other  9,737 9,421
Total revenue  63,252 60,851 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 51
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
8 EXPENSES BY NATURE
         Note 2013 2012
          £000 £000
Raw materials and consumables      13,559 15,076
Changes in stocks of finished goods and work in progress     (309) (486)
Employee costs     10 29,662 27,774
Other operating charges      10,128 8,349
Depreciation      1,949 2,092
Amortisation of other intangible assets      164 296
Amortisation of acquired intangible assets      875 881
Other income and expenses     9 (1,727) (983)
          54,301 52,999
9 OTHER INCOME AND EXPENSES
          2013 2012
          £000 £000
Grants receivable      1,339 956
Gain on disposal of property, plant and equipment     10 33
Other income/(expense)      378 (6)
          1,727 983
10 EMPLOYEE COSTS
          2013 2012
          £000 £000
Wages and salaries      23,599 21,941
Social security costs      2,106 2,310
Share options      341 471
Medical and other insurance      2,719 2,478
Pension costs      897 574
          29,662 27,774
The average number of employees during the year was:
          2013 2012
          Number Number
Manufacturing      403 413
Sales, finance and administration      164 166
          567 579
Key management compensation
          2013 2012
          £000 £000
Salaries and other short-term benefits      4,047 3,079
Share based payments      341 471
Pension scheme contributions      219 173
Redundancy payments      82 –
          4,689 3,723
Key management comprise the Executive Board and the senior operational staff.
11 OPERATING PROFIT
Operating profit is stated after charging/(crediting):     2013 2012
          £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    87 91
 - taxation compliance services      45 47
 - taxation advisory services      20 –
 - services related to corporate finance transactions     33 –
Net losses/(gains) on foreign exchange      96 (160)
Operating lease rentals      1,076 1,052 GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 52
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
12 FINANCE INCOME AND COSTS
          2013 2012
          £000  £000
Finance income comprises:    
 Bank interest      15 24
Finance costs comprise:    
 Bank interest      622 768
 Finance lease interest      1 1
 Imputed interest on contingent consideration on acquisitions    – 31
          623 800 
13 INCOME TAX EXPENSE
Analysis of tax charge in the year      2013 2012
          £000 £000
Current taxation    
UK Corporation tax      1,263 1,264
Overseas tax      238 491
Adjustments in respect of prior year tax charge     (304) (395)
Total current tax      1,197 1,360
    
Deferred tax    
Origination and reversal of temporary differences     677 32
Adjustments in respect of prior year deferred tax     234 307
Impact of tax rate change to 20% (2012: 23%)     43 54
Total deferred tax      954 393
    
Income tax expense per income statement     2,151 1,753
The current taxation for the year is higher (2012: lower) than the standard rate of corporation tax in the UK. 
An explanation of the differences are explained below:
          2013 2012
          £000  £000
Profit before income tax expense      8,343 7,076
    
Profit at the effective standard rate of tax of 23.5% for the year (2012: 25%)   1,961 1,769
Permanent differences      (74) (116)
Recognition of tax losses not previously recognised     (2) (87)
Adjustments in respect of foreign tax rates     293 221
Adjustments in respect of prior year tax charge     (304) (395)
Impact of UK tax rate change to 20% on deferred tax (2012: 23%)    43 54
Adjustments in respect of prior year deferred tax     234 307
Total income tax expense      2,151 1,753
Factors affecting the future tax charge
Overseas tax losses of £2.2m (2012: £1.8 m) and UK tax losses of £1.0m (2012: £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 changes to the main rate of corporation tax for UK companies announced in the March 2013 Budget were substantively enacted for 
financial reporting purposes on 2 July 2013. The main changes in corporation tax rates, that will have accounting implications for deferred tax, 
are as follows: 
• The main rate of corporation tax will reduce from 23% to 21% from 1 April 2014. 
• The main rate of corporation tax will further reduce to 20% from 1 April 2015.
The majority of the deferred tax assets and liabilities is either located outside the UK or expected to be realised or settled after 1 April 2015. 
Accordingly, the deferred tax assets and liabilities attributable to the UK companies have been recognised at 20% resulting in a decrease in 
the Group’s net deferred tax asset and a charge to the income statement of £43,000 (2012: £54,000). GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 53
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
14 DIVIDENDS
        2013 2012
        £000  £000
Final 2012 dividend paid in 2013: 3.2p per share (Final 2011 dividend paid in 2012: 3.0p per share)  712 656
2013 Interim dividend paid: 2.3p per share (2012: 2.0p)     517 437
        1,229 1,093
The Directors propose a final dividend of 4.0p per share making the total dividend paid and proposed in respect of the 2013 financial year 6.3p 
(2012: 5.2p). 
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:
        2013 2012
Number of shares used for basic earnings per share     22,376,650 21,860,241
Dilutive shares      1,097,927 1,531,993
Number of shares used for dilutive earnings per share     23,474,577 23,392,234
A reconciliation of the earnings used in the earnings per share calculation is set out below:
      2013  2012
        £000 p per share £000 p per share
Basic earnings per share    6,192 27.7p 5,323 24.4p
Amortisation of acquired intangible assets (net of tax)   650 2.9p 662 3.0p
Acquisition costs (net of tax)    122 0.5p – –
Restructuring costs (net of tax)    206 0.9p 180 0.8p
Total adjustments net of income tax expense   978 4.3p 842 3.8p 
Adjusted basic earnings per share    7,170 32.0p 6,165 28.2p
    
Basic diluted earnings per share    6,192 26.4p 5,323 22.8p
Adjusted diluted earnings per share    7,170 30.5p 6,165 26.4p
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 PL C
ANNUAL REPORT 2013 54
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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 1 October 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
Additions 803 31 217 887 35 – 1,973
Disposals – – – (110) (1) – (111)
Reclassification (767) – 31 702 1 12 (21)
Exchange rate differences – (3) (11) (52) (2) – (68)
At 30 September 2013 963 8,975 3,455 20,482 2,531 42 36,448
       
Accumulated depreciation       
At 1 October 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
Charge for the year – 180 250 1,317 196 6 1,949
Disposals – – – (166) (1) – (167)
Exchange rate differences – (2) (9) (44) (5) – (60)
At 30 September 2013 – 1,397 959 11,147 1,458 31 14,992
       
Net book value       
At 1 October 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 2013 963 7,578 2,496 9,335 1,073 11 21,456
At 30 September 2013, there was no plant and equipment purchased under a hire purchase or finance lease agreement. 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.
No interest was capitalised in the year (2012: £Nil). GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 55
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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 2011   21,967 8,546 649 1,131 32,293
Additions   – – 28 377 405
Disposals   – – (63) – (63)
Exchange rate differences   (465) (267) (9) (10) (751)
At 30 September 2012   21,502 8,279 605 1,498 31,884
Additions   – – 64 54 118
Reclassification   – – – 20 20
Exchange rate differences   (33) (20) (1) (2) (56)
At 30 September 2013   21,469 8,259 668 1,570 31,966
     
Accumulated amortisation     
At 1 October 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
Charge for the year   – 875 23 141 1,039
Exchange rate differences   – (54) – (4) (58)
At 30 September 2013   4,116 6,257 570 1,202 12,145
     
Net book value     
At 1 October 2011   17,780 3,847 180 274 22,081
At 30 September 2012   17,386 2,843 58 433 20,720
At 30 September 2013   17,353 2,002 98 368 19,821
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 Boston (£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 2019, 3% thereafter
• 10.6% pre-tax discount rate used to discount cashflows
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 2013.
The Boston cash generating unit made a small loss during the year ended 30 September 2013. However, the business continues to 
contribute to the Group’s Space Photonics activities and management expect activity levels to increase. Consequently, the impairment 
calculation for the Boston cash generating unit utilises a specific set of growth assumptions based on forecast revenue streams resulting in 
an average annual forecast EBITDA of £720,000 in the period to 30 September 2018. The headroom on the impairment calculation (of 
£693,000), would be reduced to zero if the average annual EBITDA were to reduce to £550,000.
Whilst the directors are confident that no impairment is necessary at 30 September 2013, should the forecast results not be met an 
impairment may become necessary. GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 56
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
18 INVENTORIES
          2013 2012
          £000 £000
Raw materials      4,988 5,043
Work in progress      5,624 5,029
Finished goods      2,778 2,730
          13,390 12,802
The cost of inventories recognised as an expense and included in Cost of revenue amounted to £35.5m (2012: £37.4m).
The movement in the inventories provision is as follows:
          2013 2012
          £000 £000
At 1 October      3,216 3,115
Increase in provision      623 159
Exchange rate movement      (8)  (58)
At 30 September      3,831 3,216
19 TRADE AND OTHER RECEIVABLES
          2013 2012
          £000  £000
Trade receivables      10,193 9,214
Other receivables      223 179
Grant funding held in trust account      1,510 1,100
Prepayments      780 569
          12,706 11,062
The carrying amount of the Group’s trade and other receivables is denominated in the following currencies:
          2013 2012
          £000  £000
Pound Sterling      2,647 2,426
US Dollar      7,928 7,219
Euro        2,128 1,417
Yen         3 –
          12,706 11,062
The ageing of trade receivables by due date is as follows:
          2013 2012
          £000  £000
Current       8,341 8,107
1 to 3 months      1,914 1,225
Over 3 months      97 117
          10,352 9,449
Less provision for impairment      (159) (235)
Net trade receivables      10,193 9,214
 
Movement on the provision for impairment of trade receivables is as follows: 
          2013 2012
          £000  £000
At 1 October      235 322
Utilisation of provision      (128) (32)
Increase in provision      60 39
Release of provision no longer required      (7) (88)
Exchange rate movement      (1) (6)
At 30 September      159 235
20 CASH AND CASH EQUIVALENTS
          2013 2012
          £000  £000
Cash at bank and on hand      14,558 11,712 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 57
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
21 TRADE AND OTHER PAYABLES
          2013 2012
          £000  £000
Payments on account      – 111
Trade payables      3,137 3,511
Other taxation and social security      307 317
Grant funding held in trust account      1,510 1,100
Accruals       5,507 5,163
          10,461 10,202
22 BORROWINGS
          2013 2012
          £000  £000
Current:  
Bank borrowings      5,726 5,741
Finance leases       – 33
          5,726 5,774
Non-current:  
Bank borrowings      3,113 6,261
          3,113 6,261
  
Total borrowings      8,839 12,035
The carrying values of the bank borrowings, overdraft and finance leases are not materially different from their fair values.
Gooch & Housego’s primary lending 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 2013, the balance outstanding for the US Dollar facility was $6.8m 
(2012: $11.3m) and for the Sterling facility £2.0m (2012: £2.4m).
In addition, the Group has a revolving credit facility of US$8.0m of which US$4.0m (2012: $4.0m) is drawn down and a capital expenditure 
facility of US$8.0m, which at 30 September 2013 had not been drawn down. 
The capital expenditure facility of US$8.0m was fully drawn down on 9 October 2013.
The facilities above 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 $628,000 (2012: $683,000) 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
          2013 2012
          £000 £000
Within one year      5,726 5,774
Between two and five years       2,895 6,009
More than five years      218 252
          8,839 12,035
23 PROVISION FOR OTHER LIABILITIES AND CHARGES
The movements in the Group provision for other liabilities and charges during the year are as follows:
          2013 2012
          £000 £000
At 1 October       357 505
Utilised during year      (141) (204)
Charged to the income statement      55 63
Exchange movements      – (7)
At 30 September       271 357
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. GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 58
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
24 DEFERRED TAX ASSETS AND LIABILITIES
The movements in the Group’s deferred tax assets and liabilities during the year are as follows:
          2013  2012
          £000  £000
At 1 October       3,610 3,482
Charged to the income statement      (954) (393)
(Charged)/credited directly to equity       (174) 593
Exchange movements      18 (72)
At 30 September       2,500 3,610
The deferred tax provided for in the financial statements is disclosed under the following balance sheet headings and can be analysed as follows:
          2013 2012
          £000 £000
Deferred income tax assets  
Intangible assets      503 372
Share options      1,205 1,537
Provisions      1,139 1,187
Unutilised losses      868 1,075
Other timing differences      115 137
          3,830 4,308
Deferred income tax liabilities  
Property, plant and equipment      (1,221) (698)
Intangible assets      (109) –
          (1,330) (698)
Deferred tax balance at 30 September      2,500 3,610
Overseas tax losses of £2.2m (2012: £1.8m) and UK tax losses of £1.0m (2012: £0.9m) are available to offset against future profits of the 
Group. The Group has not recognised a deferred income tax asset of £0.9m (2012: £0.6m) in respect of these losses due to uncertainty as to 
whether they would be utilised within the foreseeable future.
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.
25 CALLED UP SHARE CAPITAL
        2013 2012 2013 2012
        Number Number £000 £000
Issued and fully paid    
At 1 October    21,910,774 21,850,798 4,382 4,370
Shares issued and fully paid    1,188,090 59,976 238 12
At 30 September    23,098,864 21,910,774 4,620 4,382
During the year 1,188,090 shares (2012: 59,976 shares) were allotted under share option schemes. 
26 RESERVES
       Share   Cumulative
       premium Merger Hedging translation Retained
       account reserve reserve reserve earnings
       £000 £000 £000 £000 £000
At 1 October 2012   14,311 2,671 (169) (496) 37,867
Profit for the financial year   – – – – 6,192
Dividends paid   – – – – (1,229)
Shares issued   902 – – – (96)
Fair value of share options   – – – – 341
Deferred tax on share options   – – – – 299
Change in fair value of interest rate swap   – – 90 – –
Currency translation differences   – – – (364) –
At 30 September 2013   15,213 2,671 (79) (860) 43,374 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 59
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
27 SHARE OPTIONS
The Company operates the Gooch & Housego PLC 2004 Company Share Option Scheme (the “2004 Scheme”), the Gooch & Housego 2010 Value 
Creation Plan (the “2010 VCP”) and the Gooch & Housego 2013 Long Term Incentive Plan (the “2013 L TIP”).
The Gooch & Housego PLC 2004 Company Share Option Scheme
The Company has ceased granting share options under the 2004 Scheme. Options under this scheme were 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 2013, one senior employee within the Group has 39,281 share options outstanding relating to the 2004 Scheme. These 
options were subject to specific performance criteria, namely that their subsidiary audited pre-tax profits for the relevant year were at least 
US$500,000 and the subsidiary pre-tax profits were not less than 95% of the agreed budget. It is unlikely these criteria will be fulfilled and 
the options expire in July 2014. 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 , key employees were granted a one-off award of units from an agreed total. Three executive Directors were awarded 44 
units out of the total pool of 64 units and eight key employees hold the remaining 20 units. These units had no intrinsic value on grant but 
gave 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, was calculated. A share of that value (approximately 12%) was 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 were exercisable immediately and the balance after twelve months, subject to certain conditions.
Details of the award are as follows:-
Total number of market value (151p) Company Share Option Plan (CSOP) share options awarded:   158,936
Total number of nil-cost share options and share awarded:      1,380,566
Out of the total options, the executive Directors’ were awarded 59,601 CSOP share options and 981,339 Nil-cost share options. The remuneration 
report provides further details on the share options awarded and exercised during the financial year. 
The 2010 VCP award was valued using the Monte Carlo option pricing model. The expected volatility of 73.5% used in the model was 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 PL C
ANNUAL REPORT 2013 60
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
The Gooch & Housego 2013 Long Term Incentive Plan
On 9 April 2013 a new Long Term Incentive Plan was adopted. Under the plan, awards will be made annually to key employees based on a 
percentage of salary. Subject to the satisfaction of the required TSR performance criteria and EPS financial performance, these grants will 
vest upon publication of the results of the Company for the year ending 30 September 2015.
On 9 April 2013, 178,960 options were awarded under the 2013 L TIP plan to a number of key employees, including the three executive Directors 
of the Company. The remuneration report provides further details on the share options awarded and exercised during the financial year.
The 2013 Long Term Incentive Plan award was valued using the Monte Carlo option pricing model. The expected volatility of 43% used in the 
model was based on the historical volatility of the Company’s share price over the three years prior to 9 April 2013. The risk free rate of 2.7% 
was used. The total fair value of the award on 9 April 2013 was £429,795.
A reconciliation of total share option movements is shown below:
      2013 2012
         Weighted  Weighted
         average  average
        Number exercise price Number exercise price
Outstanding at 1 October    665,727 156.5p 756,953 156.5p
Awarded    1,718,462 15.6p – 0.0p
Exercised    (1,189,087) 87.7p (91,226) 228.7p
Outstanding at 30 September    1,195,102 17.0p 665,727 146.5p
Exercisable at 30 September    207,115 0.0p 587,165 148.3p
The weighted average fair value of options granted in the year was 119.0p per option (2012: nil). For the options exercised, the average market 
price was 447.7p per share.
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
        Exercise price Number of share options
       Expiry date per share option 2013  2012
2004 Scheme   22.07.2014 133.5p 39,281  603,227
2004 Scheme   07.12.2015 272.5p –  62,500
2010 VCP   06.01.2020 0.0p 897,397  –
2010 CSOP   06.01.2020 151.0p 79,464  –
2013 L TIP   08.04.2023 0.0p 178,960  –
         1,195,102  665,727
The total charge for the year relating to share options was £340,749 (2012: £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:
        2013 2012
        £000 £000
Within one year      1,142 1,050
Between two to five years      2,437 4,238
        3,579 5,288 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 61
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 September 2013
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 note 5.
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.  
The currency profile for the Group’s financial assets and liabilities are set out below.
      Financial assets Financial liabilities
      2013 2012 2013 2012
      £000 £000 £000 £000
Pound Sterling    4,010 4,396 1,993 2,383
US Dollars    9,457 6,512 6,846 9,652
Euro     1,083 804 – –
      14,550 11,712 8,839 12,035
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
        2013 2012
        £000 £000
Interest rate swap      103 223
Current portion      69 89
Non-current portion      34 134
Total liability      103 223
The notional principal amount of the outstanding interest swap contract at 30 September 2013 was $9.0 million (2012: $13.5 million). The end 
date for the interest swap is 1 April 2015. At 30 September 2013, 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
        2013 2012
        £000 £000
Authorised and contracted but not provided for     14 –
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 2013 amounted to £17,520 (2012: £11,680). At the balance sheet date the 
balance outstanding totalled £4,380 (2012: £11,680). The transactions are performed in the normal course of business on an arm’s length 
basis and 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. 
Details of key management compensation are given in note 10.
33 POST BALANCE SHEET EVENTS
The group acquired 100% of the share capital of Spanoptic Limited a Glenrothes, Scotland, based manufacturer of precision optical 
components for a gross consideration of £6.6m, funded from existing cash and debt facilities on 15 October 2013.
On 26 November 2013 the group acquired 100% of the share capital of Constelex Technology Enablers Limited, an Athens, Greece, based 
designer and manufacturer of advanced photonic systems. The gross consideration will be €650,000, comprising €400,000 in cash, funded 
from existing cash and debt facilities, at completion, followed by €250,000 in Gooch & Housego shares once activities are relocated to the UK. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2011
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 2013 
which comprise the Company 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 page 30, 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 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 and to identify any information that is apparently 
materially incorrect based on, or materially inconsistent with, the 
knowledge acquired by us in the course of performing the audit. 
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 2013;
•  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 Strategic Report and 
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 2013.
Colin Bates (Senior Statutory Auditor)
for and on behalf of 
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
20 January 2014
Independent Auditors’ Report
62 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 63
COMPANY BALANCE SHEET as at 30 September 2013
 2013 2012
 Note £000 £000 £000 £000
FIXED ASSETS     
Investments 5  12,025  12,003
Tangible assets 6  9,153  9,734
   21,178  21,737
CURRENT ASSETS     
Debtors 7 6,400  11,269 
Cash at bank and in hand  2,779  2,003 
  9,179  13,272 
CREDITORS: amounts falling due within one year 9 (2,907)  (5,319) 
NET CURRENT ASSETS   6,272  7,953
TOT AL ASSETS LESS CURRENT LIABILITIES   27,450  29,690
CREDITORS: amounts falling due after more than one year 10 (1,512)   (1,930)
     
NET ASSETS   25,938  27,760
     
CAPIT AL AND RESERVES     
Called up share capital 12  4,620  4,382
Share premium account 13  15,213  14,311
Revaluation reserve 13  243  248
Profit and loss account 13  5,862  8,819
SHAREHOLDERS’ FUNDS 14  25,938  27,760
The financial statements, including the notes on pages 64 to 70, were approved by the Board of Directors on 20 January 2014 and signed on 
its behalf by:
Gareth C W Jones Andrew N Boteler
Director Director
 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company Balance Sheet
As at 30 September 2013 GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 64
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2013
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 the Gooch & Housego PLC 2004 Company Share Option Scheme (the “2004 Scheme”), the Gooch & Housego 2010 Value 
Creation Plan (the “2010 VCP”) and the Gooch & Housego 2013 Long Term Incentive Plan (the “2013 L TIP).
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, and the Gooch & Housego 2013 Long Term Incentive 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
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 fair value of which was a liability of £103,000 (2012: £223,000 liability) 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.
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 £1,978,000 (2012: £2,007,000). 
Fees payable to the Company auditors for the year amounted to £15,800 (2012: £15,800). GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 65
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2013
3 DIRECTORS’ EMOLUMENTS
          2013 2012
        £000 £000
Directors’ remuneration      873 661
Medical and other insurances      45 14
Directors’ pension scheme contributions      40 40
        958 715
The number of Directors who are accruing retirement benefits under a money purchase pension scheme is 3 (2012: 3).
Details of Directors’ share options and the remuneration and pension contributions of the highest paid Director are shown in the 
Remuneration Committee Report and form part of these financial statements.
4 DIVIDENDS
          2013 2012
        £000  £000
Final 2012 dividend paid in 2013: 3.2p per share. (Final 2011 dividend paid in 2012: 3.0p per share)  712 656
2013 Interim dividend paid: 2.3p per share (2012: 2.0p)     517 437
        1,229 1,093
The Directors propose a final dividend of 4.0p per share making the total dividend paid and proposed in respect of the 2013 financial year 
6.3p (2012: 5.2p). Should the final dividend be approved at the Company Annual General Meeting, cut-off dates for payment are:
 - Record date  07 February 2014
 - Payment date 28 February 2014 
 
5 INVESTMENTS
          2013 2012
        £000  £000
Cost and net book value at 1 October2012     12,003 12,003
Additions      22 –
Cost and net book value at 30 September 2013     12,025 12,003
    
The major subsidiary companies at 30 September 2013, 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
Gooch & Housego (Palo Alto) LLC 100% Palo Alto, USA Manufacturer of acousto-optic, electro-optic and fibre  
       optic components and systems
Gooch & Housego Japan KK 100% Nagoya, Japan Provider of sales and customer service functions
The directors believe that the carrying value of the investments is supported by their underlying net assets. GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 66
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2013
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 2012   6,126 3,668 3,504 430 13,728
Additions   24 – 58 32 114
Reclassification   – 368 (368) – –
Disposals   – (110) – – (110)
At 30 September 2013   6,150 3,926 3,194 462 13,732
Accumulated depreciation       
At 1 October 2012   817 1,044 1,729 404 3,994
Charge for the year   107 262 244 16 629
Disposals   – (44) – – (44)
At 30 September 2013   924 1,262 1,973 420 4,579
Net book value      
At 30 September 2012   5,309 2,624 1,775 26 9,734
At 30 September 2013   5,226 2,664 1,221 42 9,153
At 30 September 2013, the company had no assets held under a hire purchase or finance lease agreement. 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.
7 DEBTORS
          2013 2012
         Note £000 £000
Amounts owed by group undertakings      4,737 10,053
Prepayments      256 47
Group tax relief receivable      1,151 590
Deferred tax asset     8 256 579
          6,400 11,269
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:
          2013 2012
          £000 £000
At 1 October      579 795
Charge to profit and loss account      (280) (176)
Impact of tax rate change to 20% (2012: 23%)     (43) (40)
At 30 September      256 579
The deferred tax provided for in the financial statements can be analysed as follows:
          2013 2012
          £000 £000
Property, plant and equipment      (119) (83)
Share options      221 550
Other timing differences      154 112
          256 579 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 67
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2013
9 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
          2013 2012
         Note £000  £000
Bank loans     11 443 443
Trade creditors      185 302
Amounts owed to group undertakings      76 3,236
Taxation and Social Security       195 48
Accruals       2,008 1,281
Finance leases falling due within one year      – 9
          2,907 5,319
Amounts owed to group undertakings are unsecured and due within one year. Non-trading amounts owed to US group undertakings are 
charged interest at the US LIBOR rate applicable for the year. Non-trading amounts owed to UK group undertakings are charged interest at the 
UK LIBOR rate applicable for the year.
10 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
          2013 2012
         Note £000  £000
Bank borrowings falling due after more than one year    11 1,512 1,930
11 BANK BORROWINGS
At 30 September 2013, the Sterling facility is to be repaid by two 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.
          2013 2012
          £000  £000
Maturity profile of bank borrowings  
Within one year      443 443
Between two and five years      1,512 1,930
          1,955 2,373
Currency profile of bank borrowings  
Pound sterling      1,955 2,373
12 CALLED UP SHARE CAPITAL
        2013 2012 2013 2012
        Number Number £000 £000
Allotted, issued and fully paid    
At 1 October    21,910,774 21,850,798 4,382 4,370 
Shares issued and fully paid    1,188,090 59,976 238 12
At 30 September    23,098,864 21,910,774 4,620 4,382
During the year 1,188,090 shares (2012: 59,976 shares) were allotted under share option schemes. 
13 RESERVES
         Share
         Premium Revaluation Profit and
         account reserve loss account
         £000 £000 £000
At 1 October 2012     14,311 248 8,819
Loss for the financial year     – – (1,978)
Transferred to profit and loss account     – (5) 5
Shares issued     902 – (96)
Fair value of employee services     – – 341
Dividends paid     – – (1,229)
At 30 September 2013     15,213 243 5,862 GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 68
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2013
14 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
          2013 2012
          £000 £000
Loss for the financial year      (1,978) (2,007)
 
Shares issued and fully paid      1,044 123
Fair value of employee services      341 471
Dividends paid      (1,229) (1,093)
Dividends received      – 10,000
Net (reduction)/addition to shareholders’ funds     (1,822) 7,494
  
Opening shareholders’ funds      27,760 20,266
Closing shareholders’ funds      25,938 27,760
15 SHARE OPTIONS
The Company operates the Gooch & Housego PLC 2004 Company Share Option Scheme (the “2004 Scheme”), the Gooch & Housego 2010 Value 
Creation Plan (the “2010 VCP”) and the Gooch & Housego 2013 Long Term Incentive Plan (the “2013 L TIP”).
The Gooch & Housego PLC 2004 Company Share Option Scheme
The Company has ceased granting share options under the 2004 Scheme. 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 2013, one senior employee within the Group has 39,281 share options outstanding relating to the 2004 Scheme. These options 
were subject to specific performance criteria, namely that their subsidiary audited pre-tax profits for the relevant year were at least 
US$500,000 and the subsidiary pre-tax profits were not less than 95% of the agreed budget. It is unlikely these criteria will be fulfilled and 
the options expire in July 2014. 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 , key employees were granted a one-off award of units from an agreed total. Three executive Directors were awarded 44 
units out of the total pool of 64 units and eight key employees hold the remaining 20 units. These units had no intrinsic value on grant but 
gave 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%) was 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 (151p) Company Share Option Plan (CSOP) share options awarded:   158,936
Total number of nil-cost share options and share awarded:      1,380,566 GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 69
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2013
Out of the total options, the executive Directors’ were awarded 59,601 CSOP share options and 981,339 Nil-cost share options. The remuneration 
report provides further details on the share options awarded and exercised during the financial year. 
The 2010 VCP award was valued using the Monte Carlo option pricing model. The expected volatility of 73.5% used in the model was 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 2013 Long Term Incentive Plan
On 9 April 2013 a new Long Term Incentive Plan was adopted. Under the plan, awards will be made annually to key employees based on a 
percentage of salary. Subject to the satisfaction of the required TSR performance criteria and EPS financial performance, these grants will 
vest upon publication of the results of the Company for the year ending 30th September 2015.
On 9 April 2013, 178,960 options were awarded under the 2013 L TIP to a number of key employees, including the three executive Directors 
of the Company. The remuneration report provides further details on the share options awarded and exercised during the financial year.
The 2013 Long Term Incentive Plan award was valued using the Monte Carlo option pricing model. The expected volatility of 43% used in the 
model was based on the historical volatility of the Company’s share price over the three years prior to 9 April 2013. The risk free rate of 2.7% 
was used. The total fair value of the award on 9 April 2013 was £429,795.
A reconciliation of total share option movements is shown below:
      2013 2012
       Weighted  Weighted
       average  average
      Number exercise price Number exercise price
Outstanding at 1 October    665,727 148.3p 756,953 156.5p
Awarded    1,718,462 15.6p – 0.0p 
Exercised    (1,189,087) 87.7p (91,226) 228.7p
Outstanding at 30 September    1,195,102 17.0p 665,727 146.5p
Exercisable at 30 September    207,115 148.3p 587,165 148.3p
The weighted average fair value of options granted in the year was 119.0p (2012: nil). For the options exercised, the average market price was 
447.7p per share.
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
        Exercise price Number of share options
       Expiry date per share option 2013  2012
2004 Scheme   22.07.2014 133.5p 39,281  603,227
2004 Scheme   07.12.2015 272.5p –  62,500
2010 VCP   06.01.2020 0.0p 897,397  –
2010 CSOP   06.01.2020 151.0p 79,464  –
2013 L TIP   08.04.2023 0.0p 178,960  –
         1,195,102  665,727
     
The total charge for the year relating to share options was £340,749 (2012: £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: 
          2013 2012
          £000  £000
Within one year      – 9 GOOCH & HOUSEGO PL C
ANNUAL REPORT 2013 70
NOTES TO THE COMPANY BALANCE SHEET for the year ended 30 September 2013
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 2013 amounted to £17,520 (2012: £11,680), at the balance sheet date the balance 
outstanding totalled £4,380 (2012: £11,680). The transactions are performed in the normal course of business on an arm’s 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 transactions 
with other group companies as consolidated financial statements in which the company is included are publicly available.
18 POST BALANCE SHEET EVENTS
The group acquired 100% of the share capital of Spanoptic Limited,  a Glenrothes, Scotland, based manufacturer of precision optical components 
for a gross consideration of £6.6m, funded from existing cash and debt facilities on 15 October 2013.
On 26 November 2013 the group acquired 100% of the share capital of Constelex T echnology Enablers Limited, an Athens, Greece, based 
designer and manufacturer of advanced photonic systems. The gross consideration will be €650,000, comprising €400,000 in cash, funded from 
existing cash and debt facilities, at completion, followed by €250,000 in Gooch & Housego shares once activities are relocated to the UK. GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 71
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, T A19 0PF 
on 26 February 2014 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 2013 together with the Director’s’ Report and 
Auditor’s Report thereon. 
2  To declare a final dividend, as recommended by the directors, of 
4.0 pence per ordinary share for the financial year ended 30 
September 2013. 
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  THA T 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 26 May 2015 
(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 £1,539,990 (representing approximately one third of the total 
ordinary share capital of the Company in issue at 20 January 2014). 
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. 
  To consider and, if thought fit, to pass the following resolutions 
as Special Resolutions:
13  THA T 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 £230,998 (representing approximately 5 per cent. of the total 
ordinary share capital of the Company in issue at 20 January 2014),
  and the power hereby conferred shall expire at the conclusion of 
the next Annual General Meeting of the Company or 26 May 2015 
(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. 
14  THA T 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 2,309,986 (representing 
approximately 10 per cent. of the total ordinary share capital of 
the Company in issue at 20 January 2014); 
(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 
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 26 May 2015 (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  20 January 2014
Registered Office: Dowlish Ford, Ilminster, Somerset T A19 0PF 
Registered Number: 526832
Notice of Annual General Meeting GOOCH & HOUSEGO PLC
ANNUAL REPORT 2013 72
NOTICE OF ANNUAL GENERAL MEETING
Notes: 
1  Resolutions 1 to 12 (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 13 and 14 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  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. If a member submits 
more than one valid proxy appointment in relation to the same share, 
the appointment received last before the latest time for receipt of 
proxies will take precedence. A member may only appoint a proxy 
in accordance with the procedures described in notes 3, 4 and 5.
3  To appoint a proxy outside of the CREST system, a form of proxy is 
enclosed for use. To be valid, this 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 sent to or deposited at the office 
of the Company’s registrars, Capita Registrars Limited, Freepost 
RSBH-UXKS-LRBC, PXS, 34 Beckenham Road, Beckenham, Kent 
BR3 4TU so as to be received 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 that member  
so wishes.
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  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 
24 February 2014. 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 24 February 2014.
6  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.
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 24 
February 2014 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  Copies of Directors’ service agreements and letters of appointment 
and the rules of the Company’s 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.  www.goochandhousego.com Gooch & Housego PLC   Dowlish Ford   Ilminster
Somerset  T A19 0PF   United Kingdom
T +44 (0)1460 256440   F +44 (0)1460 256442
E plc@goochandhousego.com   www.goochandhousego.com