Gooch & Housego Plc · LSE:GHH
Gooch & Housego — Investor Day (July 2015)
66 slides from Gooch & Housego's investor day presentation, Jul 1, 2015
Slide 1: Gooch & Housego PLC PCFM Open Day
Gooch & Housego PLC PCFM Open Day Introduction CEO: Mark Webster
Slide 2: Introduction
Introduction Mark Webster – CEO - Brief re-cap of the recent interim results & an overview of the strategy and performance improvement plan Tour of the Ilminster facility Alex Warnock – COO – Operational Performance Improvement Andy Rowswell - General Manager (Ilminster & Glenrothes Sites) –
Slide 3: Operational & Financial Highlights
Highlights Operational & Financial Highlights Strong performance from industrial laser & telecommunications products underpinned 13% increase in revenue to a record £38.9 million for the first six months of FY2015 Adjusted profit before tax up 23.5% to £6.3m from £5.1m Investment in R&D up 10%
Slide 4: Results at a glance
Highlights Results at a glance Half Year Ended 31 March HY 2015 HY 2014 Change Revenue £38.9m £34.4m 13.1% Adjusted profit before tax £6.3m £5.1m 23.5% Adjusted basic earnings per share 19.3p 15.9p 21.4% Interim dividend per share 3.0p 2.6p 15.4% Net cash £11.9m £2.3m £9.6m Revenue £’m Adjusted PBT
Slide 5: Strategy & Preparing for the Future: Diversification
Strategy & Preparing for the Future Diversification The newer markets of Aerospace & Defence and Life Sciences, together with new application areas within our Industrial market, offer the potential for significant growth through their rapid adoption of photonic technologies INDUSTRIAL AEROSPACE & DE
Slide 6: Moving up the Value Chain
Strategy & Preparing for the Future Moving up the Value Chain Diversify Exploit high-growth opportunities for photonics technology Fibre Optic lasers Fibre Optic sensing Laser surgery A&D sub- systems and systems Medical Diagnostics Space/ Satellite communications Move up the value cha
Slide 7: Performance Improvement Plan
Strategy & Preparing for the Future Performance Improvement Plan Three key areas of focus: 1. Ensuring a consistent high level of operational excellence across all the sites Small corporate group that lead, manage and set standards for supply chain management, quality assurance, compliance, process
Slide 8: Outlook
Outlook Gooch & Housego is well placed to deliver continued growth in FY15 and beyond, through our twin strategies of : • Diversification and; • Moving up the value chain. These strategies will be supplemented by the performance improvement programme aimed at : • Driving operational excellence; • De
Slide 9: Operational Performance Improvement
Operational Performance Improvement Alex Warnock – Chief Operating Officer
Slide 10: Operations Vision
Operations Vision Key Objective: Ensure a consistent and high level of operational excellence across all G&H sites setting standards for quality, manufacturing efficiency, process engineering, supply chain management, HSE & compliance. We will achieve this by…. Identifying and removing inefficienc
Slide 11: Operations Vision: Optimising the Structure
Operations Vision Optimising the Structure Site General Manager structure remains intact • Will look to strengthen management team at sites with shared General Manager’s Formation of a group level Global Quality Organisation • Based around 4 core functions – quality systems, compliance, process/
Slide 12: Optimising the Structure (Cont'd)
Operations Vision Optimising the Structure (Cont’d) Formation of a group level Global Supply Chain Organisation • Initial emphasis on strategic sourcing, global procurement and demand planning • Commodity Managers introduced as market/technology experts with responsibility for supplier selection and
Slide 13: Operations Vision: Working Capital
Operations Vision Working Capital Inventory Purchases must be viewed as Investments! Target inventory reduction via active management of Material, WIP and Finished Goods Development of an Inventory Policy Supported by ABC Classification Functionality available in ERP In practical terms • S
Slide 14: Optimising the Structure (Cont'd)
Operations Vision Optimising the Structure (Cont’d) Integrate the Business Systems function within Operations A data driven culture is integral to our success - “In God we trust. All others must bring data.” W. Edwards Deming Increase Product Management capacity and improve functional alignment/
Slide 15: Driving towards a LEAN Enterprise
Operations Vision Driving towards a LEAN Enterprise Techniques Techniques used to used to smooth, prevent or detect speed production defects Tools used to establish a base of operational stability and a culture of continuous improvement
Slide 16: Operations Vision Summary
Operations Vision Summary 7 months on… We have already made good progress but still have a lot to do and have significant opportunities in front of us … Key priorities for the coming year are… 1. Continue to drive growth across all sites 2. Strengthen our data provision and enhance KPI reporting 3.
Slide 17: The Role of Optics in A&D
The Role of Optics in A&D Andy Rowswell GM Ilminster/Glenrothes
Slide 18: Market Definition
Market Definition •Worldwide defence and Security Tier 1 & 2 Primes and OEMs. G&H start from an established position in PO component supply. •Initially targeting customers located in the UK and Europe with planned market sector expansion into the US. •Products and applications include Fixed Mag, Swi
Slide 19: Accessible Market
Accessible Market Aerospace & defence ■ Target designation ■ Laser Range Finding MANPAD TARGETING SYSTEMS FAST - JET ■ Fast-Jet HUD Displays OPTICS & MODULES ■ Helicopter HUD Displays ■ Hand-held Equipment ■ Surveillance ■ Threat detection ■ Imaging PORTABLE EQUIPMENT ATTACK HELICOPTER OPTICS & MODU
Slide 20: Defence & Security
Defence & Security Laser beacon detection EYESAFE LASER TARGETING
Slide 21: Defence & Security: Surveillance
Defence & Security Surveillance
Slide 22: Defence & Security: Intelligence & Surveillance
Defence & Security Intelligence & Surveillance
Slide 23: Development Plan
Development Plan Established Capability This program of work will incorporate and evolve current capabilities including the manufacture of precision optical components and sub-assemblies in the Visible and IR wavelength range(s). Move up the value chain Leverage excellence in components to become a
Slide 24: Development Plan – Continued
Development Plan – Continued Opto- Mechanical Design Final Precision Testing / Optics MTF testing Fabrication Specialist Assembly Processing Integration & Coating Develop and expand Assembly/Integration capabilities
Slide 25: Market Entry Point(s)
Market Entry Point(s) • Where do we start in offering a product(s) ? 1. Design-to-manufacture of added value VIS to LWIR Lens Modules • SWIR Wavelengths excel in: • Defence & Security applications • Imaging penetration through smoke • Imaging penetration through fog / water vapour • Imaging in low-l
Slide 26: Market Entry Point(s)
Market Entry Point(s) • Where do we start in offering a product(s) ? 2. HUD avionic display modules – emerging fast-jet and helicopter programs • Strong prime customer base in the UK, EU and US • HUD requirements include: • Defence fast-jet applications • Defence helicopter applications • Pilot aid
Slide 27: Timeline and Current Position
Timeline and Current Position • Complete UK design-to-manufacture combining G&H companies; Ilminster and Glenrothes. • Design-to-Manufacture of PO Lens Module • Phase 1 - Tested hardware will be available FY16 • HUD avionic combiner assemblies • Phase 1 - Qualification hardware targeted for FY17
Slide 28: New Product Development
New Product Development Murray Reed CTO
Slide 29: New Product R&D is Critical to G&H's Growth
New Product R&D is Critical to G&H’s Growth G&H’s Business • Optics and photonics technology 2012 R&D spend • Components and subsystems £4.3m = 7.1% of revenue • For medium to high volume OEMs 2013 R&D spend • High value customization for every customer £4.9m = 7.4% of revenue 2014 R&D spend £5.7m =
Slide 30: FY'15 Goal: Focus on Strategic New Products
FY’15 Goal: Focus on Strategic New Products New Products that • Deliver high growth over the next 5 years • Extend well beyond our existing customers and products • Extend across our sites to lever more of our capabilities • Develop systems and move us up the value chain Add up to an R&D Portfolio t
Slide 31: G&H's Nine Major R&D Programmes
G&H’s Nine Major R&D Programmes Display Test Space Reward AOD Fibre A&D Comm For ME Lasers Lasers (NPV) OCT DFBs Ge BBO AOM EO Colour Key: Systems Assemblies Risk (Time to Revenue) Components Major R&D Programmes Require • Stand Alone Budgets and Resource Plans • Dedicated R&D Leaders and Teams • Cr
Slide 32: Moving Up the Value Chain
Moving Up the Value Chain The Key Drivers for G&H • The differentiation of our components • Our customers lack of photonic expertise • Our ability to provide vertical integration • Our ability to offer design engineering services G&H’s Key Targets • AO and EO systems • OCT imaging • Aero & Defence l
Slide 33: Why Fibre Lasers are a Disruptive Technology
Why Fibre Lasers are a Disruptive Technology Solid State Lasers • Laser crystals and glasses mirror mirror • Discrete optics diode Q-switch output • Laser beams in the air laser laser pump laser rod optics beam • Mechanical assembly Fibre Lasers • Telecom technology • Integrated fibre-optics fibre f
Slide 34: Fibre Lasers have Multiple Critical Advantages
Fibre Lasers have Multiple Critical Advantages High Reliability • Integrated, stable and sealed optical path Small Size • Modular compact designs Excellent Performance • High beam quality and small focus area • High power (>10kW) scaling • Constant focus position over entire power range Low Cost • I
Slide 35: Fibre Lasers already Dominate Many Applications
Fibre Lasers already Dominate Many Applications Marking • Metals • Plastics Machining • Metal cutting , drilling, welding • Micromachining, scribing Medical Therapy • Eye Surgery defence • LIDAR • Directed Energy
Slide 36: G&H makes a Wide Range of Fibre Laser Components
G&H makes a Wide Range of Fibre Laser Components AO Modulators Fibre-Q Fiber Coupled AOMs Fused Fibre Components • SM Wavelength Couplers • MM Beam Couplers • Power Splitters Fibre Coupled Components • Collimators • Semiconductor Pump Lasers • DFB Seed lasers • SHG Wavelength Convertors OEM Fibre La
Slide 37: Fibre Lasers are Helping to Drive G&H Growth
Fibre Lasers are Helping to Drive G&H Growth The Market is Mature and Diversifying • We sell to all of the major fiber laser manufacturers • Demand is worldwide and growing fastest in China $14 Fibre Laser Related $12 Revenue G&H Revenue (million $) $10 OEM Fibre Lasers $8 Non AO Components Fibre-Q
Slide 38: New Fibre Laser Products in Development
New Fibre Laser Products in Development More Fibre Laser AOMs • Higher speed Fibre-Q • Fibre-Q for visible light • Low cost Fibre-Q • Modular Fibre-Q Driver New OEM Fibre Lasers • Low power femtosecond Seed Oscillators • High Power picosecond Amplifiers • High Power Narrow-Linewidth 780nm Laser • “F
Slide 39: Conclusion
Conclusion Photonics Technology is Maturing • Guided-wave fibre and integrated-circuits are replacing discrete “free-space” optics • Semiconductor and fibre lasers are replacing gas tube and bulk solid-state lasers • Photonics systems are becoming more reliable, more efficient, more compact, more po
Slide 40: STG update and emerging OCT Applications
STG update and emerging OCT Applications Dr Andrew Robertson – Senior Vice President
Slide 41: Systems Technology Group (STG)
Systems Technology Group (STG) Aims of the STG • To lead organic growth of system and sub-assembly business • Respond to customer needs beyond the capability of any individual site • Designing system level products that can be transferred into site manufacturing and ramped to high volume Implementat
Slide 42: STG Update: Increased Headcount
STG Update Increased Headcount (July 13 – 4, July 14 – 11, July 15 – 21) • Now 21 people • 9 Optical Engineers (all PhDs) • 4 Electrical Engineers • 2 Mechanical Engineers • 1 Software Engineer • 5 Support • Recruiting 2 more for FY15 New Facilities Mezzanine laboratory for satellite communications
Slide 43: Optical Coherence Tomography (OCT)
Optical Coherence Tomography (OCT) Key biomedical optical imaging technology • Developed commercially in last 10 years • Non-invasive, non-contact, completely safe • Able to image living tissue “in-situ” in high resolution that cannot be seen any other way
Slide 44: Optical Coherence Tomography: How it works
Optical Coherence Tomography (OCT) How it works OCT uses optical waves (light) • Light source transmits • Light waves bounce off target • Reflected echoes received • 3D Image created • Resolution is millionth of metre
Slide 45: OCT Markets
OCT Markets Recent market report estimates current total biomedical market is $500M rising to $1B by 2019 with 12% CAGR Largest application is ophthalmic OCT for imaging the retina. Current snapshot of market • Retinal Imaging – 75% • Cardiovascular – 15% • Guided surgery, gastroenterology, dermatol
Slide 46: OCT Optical Hardware
OCT Optical Hardware OCT Optical Hardware • $100M TAM, $50M SAM • Optical Head contains 5 key modules • G&H supply • Interferometer • Spectrometer • Delay Line • Currently supply 4 out of top 6 ophthalmic OCT companies OCT – Optical Head OCT – Retinal Imager
Slide 47: Emerging OCT - Cardiology
Emerging OCT - Cardiology Intravascular imaging • Assessment of diseased artery • Positioning of stents • Post-operative monitoring of stent
Slide 48: Cardiology OCT images
Cardiology OCT images 3D image of Stent within artery Development of bioabsorbable Stent Effectiveness of Stent
Slide 49: Emerging OCT – Guided Eye Surgery
Emerging OCT – Guided Eye Surgery LASIK and cataract surgery rapidly adopting OCT • OCT measurement of front of the eye guides femtosecond lasers to make precise incisions • Removes dependence on surgeon skill & experience • Removes need for surgical scalpel reducing risk of infection Traditional fl
Slide 50: Emerging OCT – Gastroenterology
Emerging OCT – Gastroenterology Imaging of the lining of the oesophagus • Goal is to identify Barrett’s Oesophagus • Considered to be premalignant condition to cancer • 5-15% heartburn referrals have Barrett’s oesophagus • Normal screening is down throat endoscopic procedure plus biopsy
Slide 51: New OCT Products – Delay Line
New OCT Products – Delay Line Second Generation OCT Optical Delay Line Production Units Miniature Delay Line Concept
Slide 52: New OCT Products – Spectrometer
New OCT Products – Spectrometer Separation of degrees of adjustment to avoid crosstalk Mounting of grating and focussing Fibre input – kinematic mounting lens - material selection for thermal to ensure pointing stability stability
Slide 53: STG OCT highlights over last 12 months
STG OCT highlights over last 12 months 1x design-in of G&H spectrometer product • Ophthalmic (retinal imaging) • First 60 prototypes ordered • 250 per year 2x design-in of G&H delay line product • Gastroenterology - first production units shipped • Laser guided surgery – first prototypes shipped Neg
Slide 54: G&H OCT Strategy
G&H OCT Strategy Consolidation of business with existing customers • Ensure we keep all existing business • Win new design-ins Target key players in emerging OCT applications • Win development contracts • Design in existing products Develop new products • Key development programs • Delay lines • Spe
Slide 55: Space Photonics
Space Photonics 1st July 2015 Stratos Kehayas, VP Space Photonics
Slide 56: Vision
Vision Implementation of G&H Strategic Objectives (A) Address and lead new markets R&D and technology transfer of innovative new products in satellite communications System-oriented R&D focusing on new product line creation (B) Moving up the value chain Functional integration of G&H comp
Slide 57: Space photonics & laser-comms
Space photonics & laser-comms WHY? No Electromagnetic interference (EMI) Low power consumption Image © Corning Small volume / Lightweight systems High capacity / future-proof Secure communication links WHERE? Satellite to Satellite (ISLs) Satellite to ground Image © ESA/JAXA UAV
Slide 58: Fiber-optics technology for space: Starting point
Fiber-optics technology for space: Starting point 2010: World’s first fibre coupler 2013: World’s first couplers, DFBs modules to fly in mission critical and pump lasers for laser-comms payload (SMOS satellite) built by G&H (LADEE satellite) built by G&H In operation. Zero failures Successful laser
Slide 59: Laser-comm Roadmap
Laser-comm Roadmap 2020 • Units • Laser modems 2017 • Inter-satellite • Sub-units • Deep space • Amplifiers • Satellite to Ground 2013 • Components • Lasers • Fused passives • Lunar link
Slide 60: Laser communications '101'
Laser communications ‘101’ LASER TX OFA PAT LASER MOD Telescope
Slide 61: Our 1st 'mission': the Amplifier
Our 1st ‘mission’: the Amplifier WHY? Critical components of an Amplifier Lasers manufactured by G&H Fiber- Fiber-optics (G&H Torquay) optics Optoelectronics (G&H Boston) Vertical integration (traceability, reliability, supply chain control) USPs Space heritage of components System desig
Slide 62: Target product lines
Target product lines PEGASUS HYDRA CENTAURUS • Pre-amplifiers • Mid-power • High-power • High gain • Satellite to Ground • Inter-satellite links • Inter-satellite links laser links • Deep space probes
Slide 63: Running development contracts – mapping to product lines
Running development contracts – mapping to product lines 1) HYDRA Series 4) PEGASUS Series ESA ESA For Optel-u terminal by RUAG High-gain pre-amplifiers In qualification stage Earth Observation / inter-satellite links Qualification of models 2) CENTAURUS-35 ESA 5) Active & passive co
Slide 64: A lot of amplifiers being built and tested!
A lot of amplifiers being built and tested! PEGASUS radiation testing HYDRA CENTAURUS
Slide 65: Moving up the value chain = new capabilities required
Moving up the value chain = new capabilities required Optical Circuit modelling Accurate simulation of amplifier performance Allows for customization to end-users (built to spec) Thermal modelling Thermal behavior of module in thermal vacuum Required for estimating performance in space Mecha
Slide 66: Come fly with me
Come fly with me HYDRA Prototype Qualify Fly PEGASUS Prototype Qualify Fly CENTAURUS Prototype Qualify Fly 2014 2016 2018 2020