Interim Results
Gooch & Housego PLC
17 June 2004
17 June 2004
GOOCH & HOUSEGO PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004
'Experienced considerable increase in demand'
Gooch & Housego PLC, the specialist manufacturer of acousto-optic and
electro-optic devices, precision optical components, crystals, and instruments
for measuring optical radiation, today announces interim results for the six
months ended 31 March 2004.
Highlights
• Turnover and profits ahead of expectations due to rising demand across
all product types.
• Group turnover for the half year increased by 21% to £8.86m (2003:
£7.31m)
• Profit before tax increased by 100% to £1.27m (2003: £0.63m)
• EPS increased by 91% to 4.2p (2003: 2.2p)
• Year end net funds of £0.14m (2003: net debt of £0.31m)
• Interim dividend increased by 9% to 1.2p (2003: 1.1p)
Gareth Jones, Chief Executive of Gooch & Housego, commented,
'The Group has experienced a considerable increase in demand with the result
that sales and profits have grown substantially.
In this climate of improving market conditions, the changes we have been making
to create a more dynamic and integrated group of companies are beginning to take
effect.
While these measures will facilitate organic growth, we will also consider
acquisitions which will allow us to progress more swiftly'
For further information:
Gareth Jones
Ian Bayer 01460 52271
Gooch & Housego PLC
Barrie Newton
Rowan Dartington 0117 933 0000
Tim Thompson / Tom Carroll
Buchanan Communications 0207 466 5000
Chief Executive's Review - 2003/4 Interims
Introduction
Against the backdrop of favourable market conditions I am pleased to be able to
report that the Group has made an excellent start to the year. We have
experienced a considerable increase in demand, with the result that sales are up
by a fifth and pre-tax profits have doubled when compared with the previous
year. These results represent a continuation of the trend seen in the second
half of last year, and signal that the Group has returned to growth mode. As a
consequence the seasonal bias seen in recent years is likely to diminish, with a
more even distribution of sales throughout the year developing.
Financial Results
For the half-year to 31 March 2004, group turnover increased by 21% to £8,866k
(2003: £7,315k). Profit before tax, after charging goodwill amortisation,
increased by 100% to £1,271k (2003: £634k), basic earnings per share increased
by 91% to 4.2p (2003: 2.2p) and earnings per share before goodwill amortisation
rose to 5.0p from last year's 3.0p
The major sales and profits improvement were, with the exception of Optronic
Laboratories Inc (OLI), reflected across the Group. The 21% increase in sales
was led by NEOS Technologies Inc (NEOS) with a 27% increase to £2,316k (2003:
£1,817k), Cleveland Crystals Inc (CCI) followed with a 26% improvement to
£2,189k (2003: £1,734k). OLI sales remained flat at £1,404k (£1,425k). In the UK
Gooch & Housego (G&H) saw sales increasing by 23% to £3,102k from £2,530 last
year.
Profits before tax, but after charging goodwill amortisation of £151k (2003:
£151k), were doubled at £1,271k. The improvement in the UK was 81% with pre-tax
profits up from £252k in 2003 to £455k. Overall the US subsidiaries returned an
82% increase in pre-tax profit to £968k (2003: £533k). NEOS improved pre-tax
profit to £558k (2003: £443k), OLI was 10% higher, up from £48k to £53k, while
CCI was eight times better at £357k (2003: £42k).
The Group's financial trading position remains particularly strong with net
funds inflow, before loan repayments, of £340k (2003: Outflow £404k). The
company has moved into net funds with a balance of £141k as at 31 March 2004
(2003: net debt of £312k).
An overall tax rate of 40.8% for the half year (2003: 38.6%) is a result of
higher rates of US tax and the effect of the non-allowable charge of goodwill
amortisation.
Dividends
The Directors have declared an interim dividend of 1.2p to be paid on 25 July
2004 to all shareholders on the register at 2 July 2004. This represents an
increase of 9% when compared with the 1.1p paid last year. The shares are
expected to go ex-dividend on 30 June 2004.
Gooch & Housego
The trend of rising demand across all product types established during the
second half of last year has been maintained throughout the first half of the
current year, with the result that both turnover and profits are ahead of
expectations. The increase in demand has imposed considerable pressure on
several areas of our Ilminster operations, and in particular on our ability to
respond in terms of increased output. By investing in people and equipment we
have so far been successful in meeting this demand, but we recognise the need to
make further advances in order to derive the maximum benefit from the
opportunities that we have. For this reason we have recently re-structured and
strengthened the senior management team, with the objective of increasing
capacity, improving efficiency, and reducing leadtimes. In the highly
specialised field in which we operate we also recognise the need for an adequate
resource of skilled and experienced people to enable our growth plans to be
realised. Our in-house training programme, which started in a small way last
year, is now being extended to include external training in order to meet our
needs for the future. While our output is not yet constrained by the space
available, we are putting a high priority on completing the purchase of a new,
larger site on which we plan to construct a new factory and headquarters
building. Not only will a new factory enable output to meet increasing demand,
but it will also allow us to extend our capabilities to new material and product
types.
Optronic Laboratories, Inc.
Market conditions for Optronic Laboratories products have not been particularly
favourable during the first half-year. Sales have remained flat and profits show
a small increase over the previous year. Optronic Laboratories is addressing
this situation by focussing on sales and marketing, and on new product
development. A new Vice President of Sales and Marketing will be appointed
shortly to drive up sales and at the same time achieve better value for our
sales and marketing spend. The recently introduced Display Measurement version
of the OL770 instrument has been carefully optimised to address the very
specific needs of this market and should be contributing to revenues in the
second half of the year. The current range of spectroradiometers will be
extended with the launch of a new portable instrument, the OL756, this summer.
In parallel, research and development work on next generation products is
progressing behind the scenes.
Cleveland Crystals, Inc.
Cleveland Crystals has experienced a good first half year with sales and profits
substantially in excess of expectations. The increase in business has been
spread across Cleveland Crystals various product categories, with no particular
trend emerging. The benefits of being able to provide a broad range of crystal
products and services, combined with excellent quality and unique or highly
specialised capabilities are demonstrated by these results. In common with other
Group companies, Cleveland Crystals has faced the problem of increasing output
to match demand, which has been successfully achieved. As in previous years,
crystals for inertial confinement fusion applications account for a significant
proportion of output. This is expected to continue to be the case for several
years, which is highly beneficial in terms of long term planning, but brings
with it the difficulties of responding to the changing demands of a small number
of customers who influence a significant percentage of turnover.
NEOS Technologies, Inc.
In common with other members of the Group, we have made a number of changes at
NEOS Technologies this year. Bob Belfatto retired as President of NEOS at the
beginning of January this year, as planned. Bob was a co-founder of the company,
and I would like to thank him for his contribution over the years. Pat
Shannonhouse has taken over from Bob as President, and was appointed from within
the organisation. Following on from Pat's appointment the senior team at NEOS
has been restructured and two new Vice Presidents posts created. I would like to
wish Pat and his new team every success in their new roles.
The new team took responsibility at a particularly significant time, coinciding
as it did with a surge in demand for NEOS Technologies products. I am pleased to
say that they and the whole company were able to respond positively; with the
result that first half sales and profits reached record levels. The results are
testament to the hard work of everyone involved and to the underlying strength
of the NEOS product range.
The other major change that is taking place is the construction of a new 20,000
square foot factory in Melbourne, a short distance from the existing 11,000
square foot leased buildings. Construction is progressing well and is scheduled
to be complete later this summer. The new building will provide a significant
increase in much-needed space as well as improved conditions and greater
efficiency.
Prospects
Our primary task for the remainder of the year is to ensure that we facilitate
growth by continuing to meet the increasing demands of our customers. In a
climate of improving market conditions the changes we have been making in order
to create a more dynamic and integrated group of companies are beginning to take
effect. Management changes within Group companies have produced stronger teams
capable of exploiting our opportunities going forward. The process of
integrating the acousto-optic activities at Gooch & Housego and NEOS
Technologies is gathering momentum and will yield many benefits going forward.
One of our key objectives is to increase sales in Europe. We will be taking
steps to facilitate this in the coming months. A programme of investment in
people, equipment and infrastructure should enable us to continue to respond to
demand for our products, while a focus on utilising our strong technology base
in new products will form the foundation for growth in the future. Several new
product initiatives will begin in the second half. While these measures will
facilitate organic growth, we will also consider acquisitions where they would
open up new opportunities or allow us to progress more swiftly.
I would like to express my thanks to the Directors and all employees of the
Group for their contribution to a successful first half year.
Gareth CW Jones,
Chief Executive Officer
GOOCH & HOUSEGO PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2004
6 months 6 months 12 months ended
ended ended 30 September 2003
31 March 2004 31 March 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover 8,866 7,315 15,910
Operating Profit before goodwill 1,419 818 2,565
amortisation
Goodwill amortisation (151) (151) (302)
Operating Profit 1,268 667 2,263
Net interest receivable /(payable) 3 (33) (74)
Profit on ordinary activities before 1,271 634 2,189
taxation
Tax on profit on ordinary activities (519) (245) (878)
Profit on ordinary activities after taxation 752 389 1,311
Dividends on equity shares (216) (198) (558)
Retained profit for the financial period 536 191 753
Basic earnings per ordinary share 4.2p 2.2p 7.3p
Earnings per share before goodwill
amortisation 5.0p 3.0p 9.0p
Dividend per share 1.2p 1.1p 3.1p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 31 March 2004
6 months ended 6 months ended 12 months ended
31 March 2004 31 March 30 September 2003
2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial 752 389 1,311
period
Currency translation differences on foreign
currency net investments (480) (51) (159)
Total recognised gains and losses for the 272 338 1,152
financial period
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
6 months 6 months 12 months ended
ended ended
31 March 31 March 30 September 2003
2004 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit on ordinary activities after taxation 752 389 1,311
Dividends in year (216) (198) (558)
536 191 753
Other recognised gains and losses (480) (51) (159)
Net addition to shareholders' funds 56 140 594
Opening shareholders' funds 12,736 12,142 12,142
Closing shareholders' funds 12,792 12,282 12,736
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2004
As at As at As at
31 March 2004 31 March 2003 30 September 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
FIXED ASSETS
Intangible assets 4,706 5,009 4,859
Tangible assets 4,112 4,197 4,162
8,818 9,206 9,021
CURRENT ASSETS
Stock 2,823 3,699 3,598
Debtors 3,372 2,671 3,078
Cash at bank and in hand 2,190 1,340 1,958
8,385 7,710 8,634
CREDITORS
Amounts falling due within one year (3,583) (2,747) (3574)
NET CURRENT ASSETS 4,802 4,963 5,060
TOTAL ASSETS LESS CURRENT LIABILITIES 13,620 14,169 14,081
CREDITORS:
Amounts falling due after more than one year (642) (1,642) (1159)
PROVISIONS FOR LIABILITIES AND CHARGES (186) (245) (186)
NET ASSETS 12,792 12,282 12,736
CAPITAL AND RESERVES
Called up share capital 3,600 3,600 3,600
Share premium 3,404 3,404 3,404
Revaluation reserve 308 308 308
Profit and loss account 5,480 4,970 5,424
12,792 12,282 12,736
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2004
6 months 6 months 12 months
ended ended ended
31 March 2004 31 March 30 September
2003 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash inflow from operating activities ( I ) 1,605 1,016 2,723
Returns on investments and servicing of finance
Interest received 12 26 36
Interest paid (45) (59) (106)
Interest element of hire purchase contracts (9) (8) (18)
Net cash outflow from returns on investments and
servicing of finance. (42) (41) (88)
Taxation
UK tax paid (78) (134) (249)
Overseas tax paid (528) (224) (450)
Cash outflow from taxation (606) (358) (699)
Capital expenditure
Purchase of tangible fixed assets (271) (661) (855)
Sale of tangible fixed assets 14 - 1
Net cash outflow from capital expenditure and
financial investment (257) (661) (854)
Equity dividends paid (360) (360) (558)
Net cash (outflow)/ inflow before financing 340 (404) 524
Financing
Repayment of bank loan (273) (712) (1,178)
Capital element of hire purchase repayments (77) (90) (102)
Net cash outflow from financing (350) (802) (1,280)
Decrease in cash in the period (ii) (10) (1,206) (756)
GROUP CONSOLIDATED ACCOUNTS
Notes to the cash flow statement
6 months 6 months 12 months
ended ended ended
31 March 2004 31 March 2003 30 September 2003
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
( i ) Reconciliation of operating profit to net
cash inflow from operating activities
Operating profit 1,268 667 2,263
Amortisation of goodwill & licenses 151 151 302
Amortisation of debt issue costs 8 8 16
Depreciation 206 212 413
Decrease/(Increase) in stock 495 (179) (121)
(Increase)/Decrease in debtors (533) 510 (99)
Increase/(Decrease) in creditors 10 (353) (51)
1,605 1,016 2,723
(ii) Reconciliation of net cash outflow to
movement in net debt in the period
Decrease in cash in the period (10) (1,206) (756)
Cash outflow from decrease in debt and lease financing 350 802 1,280
Changes in net debt resulting from cash flows 340 (404) 524
New hire purchase contracts (24) - (67)
Movement in debt issue costs (8) (8) (16)
Translation difference 145 8 194
Movement in net debt in the period 453 (404) 635
Net debt at 1 October 2003 (312) (947) (947)
Net debt at 31 March 2004 141 (1,351) (312)
(iii) Analysis of net debt
At Cash flow Exchange Non-cash At
1 October Movement Movement 31 March 2004
2003
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 1958 196 36 2,190
Bank overdrafts (95) (206) (301)
(10)
Debt due after one year (902) - 36 451 (415)
Debt due within one year (906) 273 100 (459) (992)
Hire purchase (367) 77 (27) (24) (341)
350
(312) 340 145 (32) 141
NOTES TO THE INTERIM STATEMENT
1. The financial information set out above does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985.
The summarised results for the six months ended 31 March 2004 and the
comparative figures for the six months ended 31 March 2003 are unaudited.
The figures for the year ended 30 September 2003 have been extracted from
the Group statutory accounts, which have been filed with the Registrar of
Companies and contain an unqualified audit report.
2. Taxation for the six months ended 31 March 2004 and 31 March 2003 has been
estimated at prevailing rates. Taxation for the year ended 30 September 2003
is the actual provision for that year.
3. Earnings per share for the six months to 31 March 2004 and for prior
periods have been calculated using a total of 17,999,162 shares, being the
average number of shares in issue in those periods.
4. All of the amounts above are in respect of continuing operations.
5. Accounting policies are consistent with those applied in previous years and
are as set out in the Group's audited accounts at 30 September 2003.
6. The interim dividend will be paid on 25 July 2004 to shareholders on the
register at close of business on 2 July 2004.
7. Copies of the Interim Statement are available from the Company Secretary,
Gooch & Housego PLC, The Old Magistrates Court, Ilminster, Somerset
TA19 0AB.
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