Final Results
Gooch & Housego PLC
07 December 2005
FOR IMMEDIATE RELEASE 07 December 2005
GOOCH & HOUSEGO
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
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 preliminary results for the
year ended 30 September 2005.
Highlights
• Turnover and profits up substantially on the previous year due to strong
performance by each of the Group companies.
• Group turnover for the year increased by 19% to £22.32m (2004 : £18.81m)
• Profit before tax increased by 42% to £4.68m * (2004 : £3.30m)
• Basic EPS increased by 40% to 16.1p (2004 : 11.5p)
• Basic EPS, before goodwill amortisation, rose to 18.0p (2004 : 13.2p)
• Year end total net funds of £2.37m (2004 : £0.33m)
• Total dividend increased by 8% to 3.9p (2004 : 3.6p)
* After goodwill amortisation of £339k (2004 : £307k)
Gareth Jones, Chief Executive of Gooch & Housego, commented:
'We are pleased with the way Gooch & Housego has performed, exceeding the record
results of the previous year. Each of the Group companies has made a valuable
contribution to the substantial sales and profits increase we have achieved.
Having now secured land and buildings for further development, we are looking
forward to future growth.'
For further information:
Gareth Jones / Ian Bayer 01460 52271
Gooch & Housego PLC
Nick Hyslop
Oriel Securities 020 7710 7600
Tim Thompson
Buchanan Communications 020 7466 5000
Chairman's Statement 2005
Summary
The past year has been significant for Gooch & Housego. Sales and profits
increased substantially over the previous year, which was itself a record year
for the Group. Each of the Group companies performed well and made a valuable
contribution to this excellent result. In the UK, Gooch & Housego succeeded in
securing land and buildings for the development of a new state-of-the-art
factory and headquarters after many years of searching. On a sad note, Mr Gooch,
co-founder of the company and its inspiration throughout its history, passed
away in September. He will be missed by all.
Financial Results
For the year ended 30 September 2005, Group turnover increased by 19% to £22.32m
(2004 : £18.81m). Profit before tax, after charging goodwill amortisation of
£339k (2004 : £307k) increased by 42% to £4.68m (2004 : £3.30m). Basic earnings
per share increased by 40% to 16.1p (2004 : 11.5p) and basic earnings per share,
before goodwill amortisation, rose to 18.0p from last years 13.2p.
The Group's improved sales results were led by Gooch & Housego (G&H) with sales
up by £0.96m to £7.61m (2004 : £6.65m). All of the US subsidiaries returned
improved sales with Optronic Laboratories Inc (OLI) improving by £0.44m to
£3.08m (2004 : £2.64m), Cleveland Crystals Inc (CCI) improved by £0.37m to
£4.46m (2004 : £4.09m) and NEOS Technologies Inc (NEOS) returned a small
improvement with sales of £5.18m (2004 : £5.15m). Our German subsidiary,
Landwehr Electronic GmbH was included for a full year for the first time and
recorded sales of £1.99m (2004 (2 months) : £0.27m).
Operating profits of the Group improved by £1.38m. OLI increased operating
profits by £0.23m to £0.38m (2004 : £0.15m) while CCI improved operating profits
by £0.18m to £0.78m (2004 : £0.60m). NEOS returned operating profits of £1.62m
(2004 : £1.71m). Landwehr's first full year of trading as part of the Group
returned operating profits of £85k (2004 (2 months) : £21k). G&H had a most
successful year with operating profits up by £1.00m to £1.94m (2004 : £0.90m).
The Group's financial position remains strong with net funds inflow, before loan
repayments, of £1.93m (2004 : £1.00m). The Group has total net funds of £2.37m
(2004 : £0.33m).
An overall tax rate of 38% for the year (2004 : 37%) is as a result of higher
rates of US tax and the effect of non-allowable charge for goodwill
amortisation.
Dividends
Reflecting the Group's improved performance the Directors are proposing a final
dividend of 2.6p, making a total for the year of 3.9p. This represents an
increase of 8% over last years total of 3.6p and is covered 4.1 times by
post-tax earnings. The shares are expected to go ex-dividend on 14 December
2005, and following approval at the Annual General Meeting on 15 February 2006,
the dividend will be paid to Shareholders on 16 February 2006.
Operations - UK
The challenge for our UK operations has been to increase output and maintain
quality and efficiency despite the increasingly cramped conditions in our
Ilminster factory. I am pleased to be able to report that this challenge has
been met, and that thanks to the organisational skills of our senior management
team and sterling efforts of the entire workforce we have been able to
substantially increase both sales and profits.
The growth in the precision optics business has been particularly noteworthy,
and a number of significant orders from European and US customers have confirmed
that in certain key areas G&H is truly world-class. While the ever-present
competition from the Far East is very real, by recognising and developing our
key strengths we have been able to carve out a valuable, and growing, niche
market for G&H optical components.
Sales of acousto-optic devices have increased again this year, with the Q-switch
continuing to be the dominant product. A process of continuous product
development, some of which has generated patentable intellectual property,
ensures that Gooch & Housego's world-leading position in the Q-switch market
remains firm. We have also stepped up our research and development efforts in
other areas, made possible by the recruitment of a further two research and
development scientists.
The new factory is essential for the continued growth of the UK operations.
While we will leave our town centre location with mixed feelings, this
development represents a long-awaited opportunity to expand our UK precision
optics and acousto-optics operations in what will be ideal conditions. In
particular, the factory is being designed and equipped to extend our
capabilities in the areas we have identified as key to our future success.
Overall, the amount of useable space will more than double compared to our
current facilities, and there will be ample room for future expansion when
needed.
Plans for the new facility have been submitted for approval, which we expect to
be granted in December or January. We are targeting to have the new facility
ready for occupation by September 2006, with relocation scheduled for the
following month. The budget for the project, including the purchase of the land,
is £4 million. In the meantime, recognising our urgent need to increase
capacity, we have constructed a new polishing facility in one of the existing
buildings on the site, and we are in the process of installing a new thin-film
coating plant at a cost in excess of £200k using space freed-up in the existing
factory.
Overseas Operations
Optronic Laboratories Inc
The emphasis over the last few years on broadening the product range and
strengthening sales and marketing has yielded benefits this year with a
sustained higher level of sales throughout the year, and a corresponding
improvement in profits. The OL770 family of products has taken off this year and
is now making a significant contribution to total sales. It is reaching a more
diverse market than that addressed by OLI's traditional high-end research-grade
products, demonstrating that the demand exists for a top quality product priced
and specified to appeal to industrial and commercial users. In parallel with
additions to the OL770 range, further upgrades, improvements and new product
releases have been made, ensuring that OLI maintains its position as a leader in
the optical radiation measurement field.
With the aim of further broadening its product range, OLI has investigated a
number of new technologies during the year. The most promising of these has the
potential to form the basis of a new range of spectroradiometric instruments and
sources, the first examples of which could reach the market in the coming year.
Cleveland Crystals Inc
A strong performance by Cleveland Crystals Inc (CCI) again this year reflects
the company's leading position in its three spheres of activity - crystals for
inertial confinement fusion (ICF), electro-optic devices (Pockels cells) and
non-linear optical materials. Each of these highly specialised areas has
presented problems and challenges, which CCI has successfully overcome to finish
the year ahead of budget.
The market for Pockels cells and non-linear materials has been relatively flat.
By providing better products than its competitors and by overcoming some tough
technical challenges CCI has been able to increase its market share and open the
door to new opportunities.
Despite federal budget uncertainties earlier in the year (recently resolved),
the demand for ICF crystals has been steady and output has been in line with the
long-term targets. Establishing and maintaining a volume production capability
for these uniquely large and difficult crystals (the only such capability
worldwide) has been a major challenge. Work has already started on increasing
the size and capacity of the ICF crystal facility to meet future demand.
NEOS Technologies Inc
Following on from a year of high growth in 2004, the challenge for NEOS was to
sustain the performance into 2005 in a flatter market. The fact that NEOS has
managed a small increase in sales under these conditions (and with a factory
relocation at the start of the year) is an excellent result.
The rapid growth in output over the last few years has put pressure on the
infrastructure at NEOS. The new factory has helped a great deal in this respect.
The slight reduction in profits this year reflects the investments NEOS has made
in strengthening the team and introducing product and quality improvements, as
well as the costs associated with the relocation. Profits nevertheless continue
to be strong at NEOS.
Landwehr Electronic GmbH
In its first full year as part of Gooch & Housego, Landwehr Electronic GmbH
(Landwehr) has made a positive contribution to the Group. Sales showed a marked
improvement over the previous year, while profits, although up, were impacted by
the higher costs arising from the investment in new personnel. During the past
year the team at Landwehr has been significantly strengthened with the addition
of three senior engineers. By increasing the resources in research and
development and applications engineering, the objective is to accelerate new
product development and increase sales of Group products in Germany.
The other significant contribution made by Landwehr is the injection of
state-of-the-art radio-frequency electronics technology. This has proved to be
invaluable in the past year in meeting the increasingly stringent requirements
of our customers. Looking forward, this is likely to become even more important
as we rationalise our product range and ensure compliance with the Restriction
of Use of Hazardous Substances (RoHS) requirements.
Prospects
The challenge facing Gooch & Housego in the coming year is to sustain the growth
in profits that we have maintained for the last two years. Looking forward,
trading conditions are likely to be no more favourable than they were last year,
with demand from our existing customer base remaining relatively flat. In order
to sustain or increase growth we must therefore sell a wider range of products
to our existing customers, introduce new products and develop new applications
beyond our traditional markets. We are active on all of these fronts.
In acousto-optics, the largest segment of Group sales, we must continue to adapt
to the changing demands of our customers and ensure compliance with new
standards. The trend in the world of industrial and medical lasers is towards
hitherto unprecedented levels of performance and reliability. As lasers become
'black box' components in complex and expensive systems used in critical
applications (e.g. semiconductor processing and operating theatres),
reliability, repeatability and consistency are absolutely essential. Although we
have enjoyed a solid reputation for quality, this, and the need to comply with
the RoHS directive, is driving a Group-wide review of our products and of our
quality, design and manufacturing procedures. A consequence of this will be
greater product rationalisation, and further integration of our acousto-optic
activities at G&H, NEOS and Landwehr. A fully coordinated approach to worldwide
sales will be a further benefit of an integrated business.
Our long-term strategy is to overlay our materials and component activities with
a new tier of optoelectronic products that bring together optics, electronics
and software into high-added-value instruments and systems. This will be
achieved through a combination of internal research and development, and
acquisition. This year, under the guidance of our Group Chief Scientist, we have
successfully coordinated complex research and development projects across
several Group companies. These projects have demonstrated the ability of the
Group as a whole to develop sophisticated products that are beyond the
capability of any one company. In the process we have become more focussed on
the generation of intellectual property and several patents will be filed as a
result of recent innovations. We plan to launch several new products in the
course of the coming year that will affirm our strategy of moving up the value
chain. We will increase Group-level research and development in the coming year.
Underlying the development of new products is an ongoing process of analysing
current and future trends in optoelectronics, and identifying those that play to
the strengths of the Group. A by-product of this process is the identification
of potential partners and acquisition targets.
It is the view of the board that G&H should have an independent non-executive
Chairman. Several potential candidates for this post have been considered, but
the right person has yet to be identified. Efforts to recruit a new Chairman
have therefore been stepped-up with the aim of filling this important position
in the first half of 2006.
In summary, I believe that the necessary steps are being taken to create a
framework to support the continued growth of G&H. We are working hard to
maximise the potential of existing products, while in parallel developing
innovative new products and evaluating new market opportunities that will
underpin longer-term growth.
Finally, I would like to thank the directors and all employees of the Group for
the contribution they have made to an excellent result. It is the quality of the
people that makes G&H the success it is.
GCW Jones
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2005
+--------------------------------------------------+-----------+---+-----------+
| | 2005 | | 2004 |
+--------------------------------------------------+-----------+---+-----------+
| |(unaudited)| | |
| | | | |
+--------------------------------------------------+-----------+---+-----------+
| | £'000 | | £'000 |
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Turnover | 22,315 | | 18,812 |
+--------------------------------------------------+-----------+---+-----------+
|Trading expenditure | (17,552) | | (15,429) |
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Operating profit | 4,763 | | 3,383 |
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Other interest receivable and similar income | 41 | | 25 |
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Interest payable and similar charges | (126) | | (110) |
| | ---------| | ---------|
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Profit on ordinary activities before taxation | 4,678 | | 3,298 |
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Tax on profit on ordinary activities | (1,779) | | (1,235) |
| | ---------| | ---------|
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Profit on ordinary activities after taxation | 2,899 | | 2,063 |
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Dividends on equity shares | (702) | | (648) |
| | ---------| | ---------|
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Retained profit for the financial year | 2,197 | | 1,415 |
| | =========| | =========|
+--------------------------------------------------+-----------+---+-----------+
| | | | |
+--------------------------------------------------+-----------+---+-----------+
|Basic earnings per share | 16.1p | | 11.5p |
+--------------------------------------------------+-----------+---+-----------+
|Basic earnings per share before goodwill | 18.0p | | 13.2p |
|amortisation | | | |
+--------------------------------------------------+-----------+---+-----------+
|Diluted earnings per share | 15.9p | | 11.5p |
+--------------------------------------------------+-----------+---+-----------+
|Diluted earnings per share before goodwill | 17.8p | | 13.2p |
|amortisation | | | |
+--------------------------------------------------+-----------+---+-----------+
|Dividend per share | 3.9p | | 3.6p |
+--------------------------------------------------+-----------+---+-----------+
|All operations undertaken by the group during the current year are |
|continuing. |
|================================================ |
+------------------------------------------------------------------------------+
Gooch & Housego PLC
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 SEPTEMBER 2005
2005 2004
(unaudited)
£'000 £'000
--------- ---------
Profit for the financial year 2,899 2,063
Currency translation differences on foreign currency
net 234 (588)
investments --------- ---------
Total recognised gains and losses for the financial 3,133 1,475
year ========= =========
No note of historical cost profit for the Group or the Company has been
presented as the difference between the reported profit and the historical cost
profit is immaterial.
Gooch & Housego PLC
GROUP BALANCE SHEET
AS AT 30 SEPTEMBER 2005
2005 2004
(unaudited)
£'000 £'000 £'000 £'000
--------- --------- --------- ---------
FIXED ASSETS
Intangible assets 4,893 5,151
Tangible assets 5,499 4,239
--------- ---------
10,392 9,390
CURRENT ASSETS
Stocks 3,872 3,690
Debtors 3,490 3,395
Asset held for resale - 525
Cash at bank and in hand 3,532 2,543
--------- ---------
10,894 10,153
CREDITORS : amounts falling due
within one (4,375) (5,249)
year --------- ---------
NET CURRENT ASSETS 6,519 4,904
--------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES 16,911 14,294
CREDITORS : amounts falling due after
more (740) (559)
than one year
PROVISIONS FOR LIABILITIES AND (177) (172)
CHARGES --------- ---------
15,994 13,563
========= =========
CAPITAL AND RESERVES
Called up share capital 3,600 3,600
Share premium account 3,404 3,404
Revaluation reserve 308 308
Profit and loss account 8,682 6,251
--------- ---------
EQUITY SHAREHOLDERS' FUNDS 15,994 13,563
========= =========
Gooch & Housego PLC
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2005
2005 2004
Note (unaudited)
£'000 £'000 £'000 £'000
-------- --------- -------- ---------
Cash inflow from operating
activities (i) 5,467 4,789
Returns on investments and
servicing of finance
Interest received 44 25
Interest paid (109) (90)
Interest element of hire
purchase (19) (19)
contracts
(84)
-------- --------
Net cash outflow from returns
on
investments and servicing of (84)
finance
Taxation
UK tax paid (337) (227)
Overseas tax paid (1,376) (1,085)
-------- --------
Cash outflow from taxation (1,713) (1,312)
Capital expenditure and
financial investment
Purchase of tangible fixed (1,677) (1,101)
assets
Sale of tangible fixed assets 621 13
-------- --------
Net cash outflow from capital
expenditure and financial
investment (1,056) (1,088)
Acquisitions
(20) (591)
Acquisition of
subsidiary
Net overdraft acquired on
acquisition - (142)
-------- --- --------
Net cash outflow from (20) (733)
acquisition
Equity dividends paid (666) (576)
--------- ---------
Cash inflow before financing 1,928 996
Financing
New Bank loans 204 399
Repayment of bank loan (1,163) (719)
Capital element of hire
purchase (120) (50)
contracts
-------- --------
Net cash outflow from financing (1,079) (370)
--------- ---------
Increase in cash in the year (ii) 849 626
(iii) ========= =========
Gooch & Housego PLC
NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2005
(i) Reconciliation of operating profit to net cash inflow from
operating activities
+------------------------------------------------+-------------+-------------+
| | 2005 | 2004 |
+------------------------------------------------+-------------+-------------+
| |(unaudited) | |
+------------------------------------------------+-------------+-------------+
| | £'000 | £'000 |
| | ----------| ----------|
+------------------------------------------------+-------------+-------------+
| | | |
+------------------------------------------------+-------------+-------------+
|Operating profit | 4,763 | 3,383 |
+------------------------------------------------+-------------+-------------+
|Amortisation of goodwill | 339 | 307 |
+------------------------------------------------+-------------+-------------+
|Amortisation of debt issue costs | 16 | 16 |
+------------------------------------------------+-------------+-------------+
|Depreciation | 436 | 439 |
+------------------------------------------------+-------------+-------------+
|Increase in stocks | (185) | (234) |
+------------------------------------------------+-------------+-------------+
|Increase in debtors | (76) | (528) |
+------------------------------------------------+-------------+-------------+
|Increase in creditors | 174 | 1,406 |
| | ----------| ----------|
+------------------------------------------------+-------------+-------------+
| | 5,467 | 4,789 |
| | ==========| ==========|
+------------------------------------------------+-------------+-------------+
(ii) Reconciliation of net cash outflow to movement in net funds/(debt)
2005 2004
(unaudited)
£'000 £'000
----------- ----------
Increase in cash in the year 849 626
Cash outflow from decrease in
debt and lease financing 1,079 370
----------- ----------
Changes in net debt resulting from cash flows 1,928 996
New hire purchase contracts (101) (40)
Movement in debt issue costs
Loans acquired upon (16) (16)
acquisition - (375)
Translation difference 233 74
----------- ----------
Movement in net debt in the year 2,044 639
Net funds/(debt) at 1 October 2004 327 (312)
----------- ----------
Net funds at 30 September 2005 2,371 327
=========== ==========
NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2005 (continued)
(iii) Analysis of net funds
+-------------------+--------+--------+----------+----------+-----------+
| | At | | | | At |
+-------------------+--------+--------+----------+----------+-----------+
| | 1 Oct | Cash |Exchange |Non-cash | 30 Sep |
+-------------------+--------+--------+----------+----------+-----------+
| | 2004 | flow |Movement |Movement | 2005 |
+-------------------+--------+--------+----------+----------+-----------+
| | | | | |(unaudited)|
| | | | | | |
+-------------------+--------+--------+----------+----------+-----------+
| | £'000 | £'000 | £'000 | £'000 | £'000 |
| | -------| -------| -------| -------| -------|
+-------------------+--------+--------+----------+----------+-----------+
| | | | | | |
+-------------------+--------+--------+----------+----------+-----------+
|Cash in hand and at| 2,543 | 749 | 240 | - | 3,532 |
|bank | | | | | |
+-------------------+--------+--------+----------+----------+-----------+
|Bank overdraft | (100) | 100 | - | - | - |
+-------------------+--------+--------+----------+----------+-----------+
| | | | | | |
+-------------------+--------+--------+----------+----------+-----------+
|Debt due after 1 | (370) | (204) | (21) | 17 | (578) |
|year | | | | | |
+-------------------+--------+--------+----------+----------+-----------+
|Debt due within 1 |(1,412) | 1,163 | 9 | (33) | (273) |
|year | | | | | |
+-------------------+--------+--------+----------+----------+-----------+
|Hire Purchase | (334) | 120 | 5 | (101) | (310) |
+-------------------+--------+--------+----------+----------+-----------+
| | | | | | |
+-------------------+--------+--------+----------+----------+-----------+
| | | | | | |
| | -------| -------| -------| -------| -------|
+-------------------+--------+--------+----------+----------+-----------+
| | 327 | 1,928 | 233 | (117) | 2,371 |
| | =======| =======| =======| =======| =======|
+-------------------+--------+--------+----------+----------+-----------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2005
1. Basis of preparation
The unaudited financial information contained in this preliminary announcement
does not comprise statutory accounts within the meaning of Section 240 of the
Companies Act 1985.
The figures in this preliminary announcement have been prepared under generally
accepted accounting policies in the United Kingdom. The accounting policies
adopted are those set out in the Annual Report and Accounts for the year ended
30 September 2004 which includes the unqualified report of the independent
auditors and which have been filed with the Registrar of Companies.
2. Segmental reporting
The analysis of turnover by destination is as follows:
+--------------------------------------------+-------------+-------------+
| | 2005 | 2004 |
+--------------------------------------------+-------------+-------------+
| |(unaudited) | |
+--------------------------------------------+-------------+-------------+
| | £'000 | £'000 |
| | ----------| ----------|
+--------------------------------------------+-------------+-------------+
| | | |
+--------------------------------------------+-------------+-------------+
|United Kingdom | 2,921 | 2,862 |
+--------------------------------------------+-------------+-------------+
|North America | 10,539 | 10,037 |
+--------------------------------------------+-------------+-------------+
|Continental Europe | 4,669 | 2,854 |
+--------------------------------------------+-------------+-------------+
|Other | 4,186 | 3,059 |
+--------------------------------------------+-------------+-------------+
| | | |
| | ----------| ----------|
+--------------------------------------------+-------------+-------------+
| | 22,315 | 18,812 |
| | ==========| ==========|
+--------------------------------------------+-------------+-------------+
The trading results by subsidiary are as follows:
G&H NEOS CCI OLI LE Total
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
unaudited unaudited unaudited unaudited unaudited unaudited
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ------
Total 8,532 6.836 5,484 5,293 4,489 4,098 3,204 2,766 2,159 290 23,868 19,283
turnover
Inter-segment
sales (924) (182) (304) (144) (30) (4) (123) (123) (172) (18) (1,553) (471)
------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ------
Sales to
third 7,608 6,654 5,180 5,149 4,459 4,094 3,081 2,643 1,987 272 22,315 18,812
parties ====== ===== ===== ===== ===== ===== ===== ===== ===== ===== ====== ======
Operating
profit before
interest and
taxation 1,900 904 1,621 1,710 780 597 377 151 85 21 4,763 3,383
Net interest
payable (85) (85)
------ ------
Group profit
before
taxation 4,678 3,298
====== ======
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2005 (Continued)
3. Taxation
The charge for taxation on the profit for the year is made up as follows:
+--------------------------------------------+-------------+-------------+
| | 2005 | 2004 |
+--------------------------------------------+-------------+-------------+
| |(unaudited) | |
+--------------------------------------------+-------------+-------------+
| | £'000 | £'000 |
| | ----------| ----------|
+--------------------------------------------+-------------+-------------+
| | | |
+--------------------------------------------+-------------+-------------+
|UK Corporation tax | 571 | 261 |
+--------------------------------------------+-------------+-------------+
|Overseas taxation | 1,180 | 930 |
+--------------------------------------------+-------------+-------------+
|Deferred taxation | 28 | 44 |
+--------------------------------------------+-------------+-------------+
| | | |
| | ----------| ----------|
+--------------------------------------------+-------------+-------------+
| | 1,779 | 1,235 |
| | ==========| ==========|
+--------------------------------------------+-------------+-------------+
4. Earnings per share
The calculation of earnings per 20p Ordinary Share is based on the profit on
ordinary activities after taxation using as a divisor the weighted average
number of Ordinary Shares in issue during the year. For 2005 and 2004 the actual
number of Ordinary Shares in issue throughout the year was 17,999,162. All share
options in respect of which the related performance criteria have been met as at
30 September 2005 and 2004 and which have an exercise price lower than the
average market price of the Group's share price in each year have been included
in the calculation of diluted earnings per share. The weighted average number of
shares in issue during the year, taking into account of the dilutive effect of
the share options was 18,201,870 (2004 : 18,001,508). A reconciliation of the
earnings used in the earnings per share calculation is set out below:
+--------------------------+-------------------+--+-------------------+--+
| | 2005 | | 2004 | |
+--------------------------+-------------------+--+---------+---------+--+
| | (unaudited) | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
| | £'000 | p per | | £'000 | p per | |
| | --------| share | | --------| share | |
| | |-------- | | |-------- | |
+--------------------------+---------+---------+--+---------+---------+--+
| | | | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
|Basic earnings per share | 2,899 | 16.1 | | 2,063 | 11.5 | |
+--------------------------+---------+---------+--+---------+---------+--+
| | | | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
|Goodwill amortisation | 339 | 1.9 | | 307 | 1.7 | |
+--------------------------+---------+---------+--+---------+---------+--+
| | | | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
|Basic earnings per share | | | | | | |
|before | 3,238 | 18.0 | | 2,370 | 13.2 | |
|goodwill amortisation | | | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
| | | | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
|Diluted earnings per share| 2,899 | 15.9 | | 2,063 | 11.5 | |
+--------------------------+---------+---------+--+---------+---------+--+
| | | | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
|Goodwill amortisation | 339 | 1.9 | | 307 | 1.7 | |
+--------------------------+---------+---------+--+---------+---------+--+
| | | | | | | |
+--------------------------+---------+---------+--+---------+---------+--+
|Diluted earnings per share| | | | | | |
|before goodwill | 3,238 | 17.8 | | 2,370 | 13.2 | |
|amortisation | --------| --------| | --------| --------| |
+--------------------------+---------+---------+--+---------+---------+--+
|Basic and diluted earnings per share before goodwill amortisation has |
|been shown because, in the opinion of the directors, it reflects the |
|underlying performance of the group. |
+------------------------------------------------------------------------+
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2005 (Continued)
5. The final dividend will be paid on 16 th February 2006 to shareholders
on the register at close of business on 16th December 2005.
6. Copies of the Report and Accounts will be despatched to shareholders
during the week commencing 16th January 2006 and will also be available from the
Company Secretary, Gooch & Housego PLC, The Old Magistrates Court, Ilminster,
Somerset. TA19 0AB.
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