Interim Results
Gooch & Housego PLC
10 June 2003
10 June 2003
GOOCH & HOUSEGO PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2003
'Improved six month performance by the Group'
Gooch & Housego PLC, the specialist manufacturer of precision optical components
and bespoke glass engineering items, acousto-optic devices and instruments for
measuring optical radiation, today announces interim results for the six months
ended 31 March 2003.
Highlights
• Pre-tax profits increased by 18% to £634k (2002: £536k)
• Group turnover increased by 4.3% to £7.315 m (2002: £7.012m)
• Increase in basic earnings per share of 22%
• Additional key management in place
• Strong balance sheet maintained with gearing at 11%
Archie Gooch, Chairman of Gooch & Housego, commented, 'We are beginning to see
indications of an upward trend in demand for the Group's products. The Group
companies continue to be strong in their respective spheres of activity, a
situation that we intend to maintain through new product development and a
continuing emphasis on quality, performance and people.'
For further information:
Archie Gooch MBE JP
Gareth Jones
Ian Bayer 01460 52271
Gooch & Housego PLC
Barrie Newton
Rowan Dartington 0117 933 0000
Tim Thompson or Nicola Cronk
Buchanan Communications 0207 466 5000
Chairman's Statement
I am pleased to be able to report the results of the Group for the six months
ended 31 March 2003. These show increased turnover, profits and earnings per
share over the comparable period last year.
Financial Results
For the half-year to 31 March 2003, group turnover increased by £303k to £7.315
m (2002: £7.012 m), while operating profit, before goodwill amortisation
increased to £818k (2002: £770k). Profit before tax increased by 18% to £634k
(2002: £536k). Basic earnings per share increased by 22% from 1.8p to 2.2p while
earnings per share before goodwill amortisation rose to 3.0p from last year's
2.6p.
The Group's financial trading position remains strong with the net cash outflow
before financing of £404k being affected by the £583k purchase of building land
for the new factory. Without this purchase, there was a net inflow, before loan
repayments, of £179k (2002: £32k). Net gearing at the half year stood at 11%
(2002: 15%), while net interest was covered 20 times (2002: 7 times). An overall
tax rate of 38.6% for the half year (2002: 40.5%) is a result of higher rates of
US tax and the effect of the non-allowance of goodwill amortisation.
Dividends
The Directors have declared an interim dividend of 1.1p, to be paid on 18 July
2003 to all shareholders on the register at 26 June 2003. This represents an
increase of 10% when compared with the 1.0p paid last year. The shares are
expected to go ex-dividend on 24 June 2003.
United Kingdom
Gooch & Housego
Sales for Gooch & Housego (G&H) for the period under review were £2.53m (2002:
£2.58m) while operating profits, before goodwill amortisation, were £0.31m
(2002: £0.59m).
The market for acousto-optic devices has been relatively flat during the first
half of the year, with the lower level of Q-switch sales being largely
responsible for the reduction in profits. Nevertheless, sales activity has been
strong and we have been successful in converting quotations into orders. As a
result, the order intake for acousto-optic devices has been running comfortably
ahead of forecast. Recent months have seen an encouraging trend amongst
customers to increase their monthly Q-switch requirement. Two new products will
be launched this year that will reinforce our position as a technology leader in
the field of acousto-optics.
The core optical components business has also had an encouraging first
half-year. We are fortunate to have an established and loyal customer base and
we are working with several of them on medium to long-term contracts. While the
proportion of this work destined for military applications has increased it is
worth noting that our success in this area has resulted from long-term
relationships and developing demand for our products, rather than being a direct
consequence of recent military conflicts. There has also been a progressive
shift towards more exacting work and more demanding materials, such as those
required for use in the deep ultraviolet. This plays to our traditional
strengths, and allows us to differentiate ourselves better from potential
competitive threats such as that from the Far East, but it has resulted in a mix
of work that makes greater demands on our manufacturing resources. The effect of
this trend is that we are now operating close to capacity. We are responding to
this challenge by increasing our emphasis on training skilled staff, by building
a new factory and through investment in capital equipment.
United States
Optronic Laboratories
Sales for the period under review were £1.45m (2002: £1.21m) while operating
profits were £50,000 (2002: £220,000 loss).
Optronic Laboratories (OLI) is experiencing a much better start to the year,
with a 20% increase in sales over the same period last year. The market for
OLI's products is stronger in all areas, with increased quote activity and
success in conversion to sales orders. Enhanced sales activity for instruments
used for testing night vision equipment is being driven by increased demand from
the security and military markets. Sales of the new OL770 high-speed
spectroradiometer have been particularly strong and ahead of forecast. The
launch of further versions of the OL770 aimed at specific application areas and
operating wavelength ranges should enable this trend to be sustained. For
example, the OL770DMS, designed specifically for the measurements of displays
(TVs, monitors etc.), was launched at the Society of Information Displays
exhibition in May.
Cleveland Crystals
Cleveland Crystals (CCI) has made an improved start to the year and is following
the demand pattern experienced in recent years. Sales in the first half were
£1.73m (2002: £1.64m), with an operating profit of £23,000 (2002: £120,000
loss).
The trends in each of the main product areas are encouraging. CCI's most
significant product category is the growth and finishing of very large crystals
for use in the world's most powerful lasers, the main application of which is
nuclear fusion research. The largest current project of this type is the
National Ignition Facility (NIF) at Lawrence Livermore National Laboratory
(LLNL). CCI has been working very closely with LLNL for many years on the
technology for growing and finishing the exceptionally large crystals required
by NIF. LLNL has made a significant investment in facilities at CCI for this
purpose. NIF has recently made the transition from the development phase to the
full production phase of the project. CCI is the sole supplier of crystals to
NIF and is working with LLNL to increase growth capacity at Cleveland to meet
the production demands, which extend to 2010 and beyond. G&H is committed to
providing CCI with the support necessary to ensure the success of this major
undertaking.
There are several other fusion research projects, either already running, or in
development, which offer further opportunities for CCI. The most significant of
these is the French Laser MegaJoule (LMJ) project, which although several years
behind, is of a similar scale to NIF. CCI has begun working with LMJ on the
early stages of what could develop into a significant collaboration.
Demand for electro-optic Q-switches has been slow in the first half, but recent
product developments aimed at performance enhancement and cost reduction have
strengthened CCI's competitive position and are already generating positive
interest from customers.
NEOS Technologies
NEOS Technologies (NEOS) has continued to perform well in the first half of the
year, making the most of a relatively flat market. Sales were £1.82m (2002:
£1.72m) with operating profits of £0.44m (2002: £0.52m).
NEOS has several new products under development for both commercial and military
applications, and is working closely with one of its main OEM customers to
integrate NEOS products directly into the customer's subassembly.
The acousto-optic activities at G&H and NEOS have much in common and the two
operations are becoming ever more closely linked through sharing of resources
and the exploitation of the natural synergies. Over time, this will enhance the
competitive position of both the companies.
Management
I am pleased to be able to report on several key new appointments that have been
made during the last six months. Taken together, these appointments represent a
significant strengthening of the management team and will allow us to leverage
the complementary capabilities of the Group companies to achieve greater
integration, facilitate new product development and more effective sales and
marketing.
Firstly I would like to welcome back Gareth Jones, as CEO of the Group. Andrew
Virgin has been appointed to the board and takes up the position of Group
Marketing Director. Most recently, Professor Chris Pannell has been appointed as
Group Chief Scientist. Chris brings with him an extensive knowledge of optics,
optoelectronics and fibre optics. Chris will be based at OLI in Florida and will
concentrate on the development of new products and technologies.
With this strengthening of the team, and taking account of my recent poor
health, I now feel that the time is right for me to make the transition to a
non-executive role. As a founder of Gooch & Housego, and having devoted more
than fifty years of my life to the business, I will continue to take an active
interest in the business and will continue as Chairman. This transition will be
effective from today.
I would like to thank Directors, Presidents, VP's and our loyal staff for their
contribution to our continued success. It is the quality of our people that
keeps Gooch & Housego ahead of the competition.
Prospects
Overall, I believe that the group is in a strong position and has good prospects
for the future. Performance for the first half was in line with expectations and
although the market could best be described as flat, there are signs of
confidence returning. Consequently, we are beginning to see indications of an
upward trend in demand for the Group's products. The board can again indicate
that it expects the second half to show a greater level of sales than at the
interim stage, as was the case in 2002. The Group companies continue to be
strong in their respective spheres of activity, a situation that we intend to
maintain through new product development and a continuing emphasis on quality,
performance and people.
AW Gooch MBE JP
Chairman
10 June 2003
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2003
6 months ended 6 months ended 12 months ended
31 March 2003 31 March 2002 30 September 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover 7,315 7,012 15,586
Operating Profit before goodwill amortisation 818 770 2,482
Goodwill amortisation (151) (151) (302)
Operating Profit 667 619 2,180
Net interest payable (33) (83) (165)
Profit on ordinary activities before taxation 634 536 2,015
Tax on profit on ordinary activities (245) (217) (755)
Profit on ordinary activities after taxation 389 319 1,260
Dividends on equity shares (198) (180) (540)
Retained profit for the financial period 191 139 720
Basic earnings per ordinary share 2.2p 1.8p 7.0p
Earnings per share before goodwill amortisation 3.0p 2.6p 8.7p
Dividend per share 1.1p 1.0p 3.0p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months ended 6 months ended 12 months ended
31 March 2003 31 March 2002 30 September 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial period 389 319 1,260
Currency translation differences on (51) 233 (361)
foreign currency net investments
Total recognised gains and losses for the 338 552 899
financial period
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
6 months ended 6 months ended 12 months ended
31 March 2003 31 March 2002 30 September 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit on ordinary activities after 389 319 1,260
taxation
Dividends in year (198) (180) (540)
191 139 720
Other recognised gains and losses (51) 233 (361)
Net addition to shareholders' funds 140 372 359
Opening shareholders' funds 12,142 11,783 11,783
Closing shareholders' funds 12,282 12,155 12,142
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2003
As at As at As at
31 March 2003 31 March 2002 30 September
2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
FIXED ASSETS
Intangible assets 5,009 5,480 5,161
Tangible assets 4,197 3,614 3,763
9,206 9,094 8,924
CURRENT ASSETS
Stock 3,699 4,060 3,507
Debtors 2,671 2,636 3,215
Cash at bank and in hand 1,340 1,971 2,592
7,710 8,667 9,314
CREDITORS
Amounts falling due within one year (2,747) (3,053) (3,711)
NET CURRENT ASSETS 4,963 5,614 5,603
TOTAL ASSETS LESS CURRENT LIABILITIES 14,169 14,708 14,527
CREDITORS
Amounts falling due after more than one year (1,642) (2,494) (2,197)
PROVISIONS FOR LIABILITIES AND CHARGES (245) (59) (188)
12,282 12,155 12,142
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 4,970 4,843 4,830
12,282 12,155 12,142
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2003
6 months 6 months 12 months
ended ended ended
31 March 2003 31 March 2002 30 September
2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash inflow from operating activities ( i ) 1016 977 3,091
Returns on investments and servicing of finance
Interest received 26 19 33
Interest paid (59) (100) (198)
Interest element of hire purchase contracts (8) (2) (12)
Net cash outflow from returns on investments and (41) (83) (177)
servicing of finance.
Taxation
UK tax paid (134) (261) (444)
Overseas tax paid (224) (129) (336)
Cash outflow from taxation (358) (390) (780)
Capital expenditure
Purchase of tangible fixed assets (661) (136) (612)
Sale of tangible fixed assets - 6 4
Net cash outflow from capital expenditure and (661) (130) (608)
financial investment
Equity dividends paid (360) (342) (522)
Net cash (outflow)/ inflow before financing (404) 32 1,004
Financing
Repayment of bank loan (712) (550) (1,017)
Capital element of hire purchase repayments (90) (12) (78)
Net cash outflow from financing (802) (562) (1,095)
Increase in cash in the period (ii) (1,206) (530) (91)
GROUP CONSOLIDATED ACCOUNTS
Notes to the cash flow statement
6 months 6 months 12 months
ended ended ended
31 March 2003 31 March 2002 30 September
2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
( i ) Reconciliation of operating profit to net
cash inflow from operating activities
Operating profit 667 2,138 2,180
Amortisation of goodwill & licenses 151 155 302
Amortisation of debt issue costs 8 8 24
Depreciation 212 254 464
Increase in stock (179) (153) (55)
Decrease in debtors 510 954 349
Decrease in creditors (353) (860) (173)
1,016 977 3,091
(ii) Reconciliation of net cash inflow /
(outflow) to movement in net debt
(Decrease) in cash in the period (1,206) (530) (91)
Cash outflow from decrease in debt and lease 802 562 1,095
financing
Changes in net debt resulting from cash flows (404) 32 1,004
New hire purchase contracts - (59) (477)
Movement in debt issue costs (8) (8) (24)
Translation difference 8 (83) 311
Movement in net debt in the period (404) (118) 814
Net debt at 1 October 2002 (947) (1,761) (1,761)
Net debt at 31 March 2003 (1,351) (1,879) (947)
(iii) Analysis of net debt
At Cash flow Exchange Non-cash At
1 October Movement 31 March 2003
2002
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 2,592 (1,206) (46) - 1,340
Debt due after one year (1,882) - 24 468 (1,390)
Debt due within one year (1,212) 712 23 (476) (953)
Hire purchase (445) 90 7 (348)
802
(947) (404) 8 (8) (1,351)
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 2003 and the
comparative figures for the six months ended 31 March 2002 are unaudited. The
figures for the year ended 30 September 2002 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 2003 and 31 March 2002 has
been estimated at prevailing rates. Taxation for the year ended 30 September
2002 is the actual provision for that year.
3. Earnings per share for the six months to 31 March 2003 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 2002.
6. The interim dividend will be paid on 18 July 2003 to shareholders on the
register at close of business on 26 June 2003.
7. Copies of the Interim Statement will be desptached to Shareholders during
the week commencing 30 June 2003 and are available from the Company Secretary,
Gooch & Housego PLC, The Old Magistrates Court, Ilminster, Somerset TA18 0AB.
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