Interim Results
Gooch & Housego PLC
07 June 2006
For Immediate Release 7 June 2006
Gooch & Housego PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006
'Sales and profit ahead of expectations'
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 2006.
Financial Highlights
•Group turnover up for the half year by 16% to £ £12.65m (2005: £10.90m)
•Profit before tax and after goodwill amortisation up by 31% to £2.59m
(2005: £1.98m)
•Basic earnings per share up by 31% to 8.5p (2005: 6.5p)
•Period end net funds of £2.08m (2005: net funds of £0.43m)
•Interim dividend increased by 8% to 1.4p (2005: 1.3p)
Operational Highlights
•Acquisition of ChromoDynamics, Inc.
•Commenced reorganisation to support long-term growth
•Work commenced on new UK factory
•New Q-switch products launched
Gareth Jones, Chief Executive of Gooch & Housego, commented:
'A positive start to the year combined with a strong position in our key markets
and a pipeline of innovative new products allows us to be optimistic about our
prospects. We will continue to look for acquisition opportunities that bring
market presence or key technology more quickly than would be possible by purely
organic means.'
For further information:
Gareth Jones / Ian Bayer 01460 52271
Gooch & Housego PLC
Tim Thompson / Susanna Gale
Buchanan Communications 020 7466 5000
Chief Executives Review
Overview
The Group has made a good start to the year and I am pleased to be able to
report sales and profits ahead of expectations. The trend towards a more even
spread of sales throughout the year was once again a contributory factor, having
the effect of lifting first half sales.
During the first half of this year we embarked on several major projects that
will provide the technology, infrastructure and manufacturing capacity to
support the continued development of the Group. These are the acquisition of
ChromoDynamics, Inc. (CDI), the reorganisation of the Group's optoelectronic
components and materials activities, and the commencement of work on the new
factory in the UK. While these projects have resource implications in the
short-term, they provide the foundation for sustained growth in the medium to
long-term.
The acquisition of CDI in February 2006 demonstrates our intention to leverage
our optoelectronic components and optical instrumentation expertise to move up
the value-chain and to diversify into new, high-growth market sectors. The move
into spectral imaging is a logical extension of our existing technology and
products but represents a major leap in terms of markets and applications. The
use of spectral imaging technology in biomedical and pharmaceutical applications
is relatively new, but the benefits it can bring are such that it has the
potential to grow rapidly.
The Group's businesses fall into two distinct categories - 'Optoelectronic
Components and Materials', and 'Instrumentation'.
Gooch & Housego (G&H), CCI, NEOS Technologies, Inc. (NEOS) and Landwehr
Electronic GmbH (LE) are manufacturers of optoelectronic components and
materials. They manufacture goods of similar value, serve the same markets in
the same territories and frequently supply the same customers. There is some
product duplication. At the same time they operate as semi-autonomous
businesses, so we are not readily able to leverage technology and market
synergies, eliminate duplication and improve efficiency. We have therefore
embarked upon a programme of reorganisation to create an integrated business
with a stable, scaleable structure capable of supporting sustained growth and
future acquisitions. In addition to providing a clear vision and strategy it
will also significantly enhance our market presence. The process will take
around eighteen months to complete.
Optronic Laboratories, Inc. (OLI) and CDI are manufacturers of high-value
spectroscopic instrumentation. As CDI moves from research and development to
production it will develop increasingly close links with OLI to form the core of
a broader instrumentation offering.
These changes signal the beginning of a transition from a collection of small
businesses into a more focussed and integrated medium-sized business with the
potential to be a mainstream player in our chosen fields.
All of the Group companies have recently been burdened over to a greater or
lesser extent with the need to comply with the EU directive on the Restrictions
of the use of certain Hazardous Substances in electronic equipment (the RoHS
directive). This directive, which comes into effect on 1st July 2006, has
significant implications for our electronics manufacturing activities and has
resulted in a small amount of non-compliant inventory being written-off. Good
progress towards achieving compliance has been achieved but some products will
remain non-compliant after the deadline because of lack of availability of
alternative compliant components or because of lack of time to implement the
necessary changes. It is not anticipated that this will have a material adverse
affect on trading. The implications for our optical components activities are
less onerous and most, if not all, of our products will be compliant by the
deadline.
On a high note, I am delighted to report that the Queen's Award for Enterprise:
International Trade has been conferred upon the UK business unit. The Queen's
Award for Enterprise in the International Trade recognises outstanding growth in
overseas earnings and commercial success over a period of at least three years.
Gooch & Housego is winning the award for the first time for increasing overseas
sales by £2.5 million to £6.7 million in three years and for selling 70% of its
products overseas. It is interesting to note that the product that has
contributed most to this result is the acousto-optic Q-switch, and that it was
for the development of acousto-optic technology that the Queen's Award for
Technological Achievement was conferred upon G&H back in 1994.
Financial Results
For the half year to 31 March 2006, Group turnover increased by 16% to £12.65m
(2005 : £10.90m). Profit before tax, after charging goodwill amortisation,
increased by 31% to £2.59m (2005 : £1.98m), basic earning per share increased by
31% to 8.5p (2005 : 6.5p) and basic earnings per share before goodwill
amortisation rose to 9.5p from last years 7.4p.
The US Group performed well with improvement in reported sales from £6.12m in
2005 to £7.82m for 2006. CCI improved by 42% to £3.11m (2005 : £2.19m), OLI was
up by £0.29m to £1.74m (2005 : £1.45m) and NEOS improved by £0.49m to £2.97m
(2005 : £2.48m).
LE returned an improvement in sales from £1.04m for 2005 to £1.29m for 2006.
Sales in the UK at G&H showed a modest reduction from £3.74m to £3.54m.
Group operating profits, after charging goodwill amortisation of £0.17m (2005 :
£0.17m), were up by 31% from £1.98m to £2.59m. In the UK trading profits mirror
the reduction in sales at £1.02m (2005 : £1.18m). Head office costs were £0.38m
(2005 : £0.34m).
The US companies all reported increased operating profits with a total of £1.93m
(2005 : £1.28m) an increase of 57%. CCI returned increased profits of 105% at
£0.84m (2005 : £0.41m), OLI profits were £0.23m (2005 : £0.18m) and NEOS profits
were £0.88m (2005 : £0.69m). CDI only reported for the two month post
acquisition period to 31 March 2006 and showed an operating loss of £0.02m.
LE reported half year operating profits of £0.12m, an increase of £0.05m over
the prior year.
The Group's financial trading position remains strong. The acquisition of CDI
was funded from the Groups own resources at a cost of £0.68m. Prior to this cost
the company had net funds inflow, before net loan repayment of £0.61m. The
company has net funds of £2.08m as at 31 March 2006 (2005 : £0.43m).
An overall tax rate of 41.1% for the half year (2005 : 41.3%) is again a result
of higher rates of US tax and the effect of the non-allowable charge for
goodwill amortisation.
Dividends
The Directors have declared an interim dividend of 1.4p to be paid on 14 July
2006 to all shareholders on the register at 16 June 2006. This represents an
increase of 8% when compared with the 1.3p paid last year. The shares are
expected to go ex-dividend on 14 June 2006.
As described in note 2, the Group has adopted FRS21 'Events after the balance
sheet date' in preparing this Interim Statement meaning that this interim
dividend will be recognised at the date of payment rather than at the balance
sheet date.
Gooch & Housego
Sales and profits in the UK were slightly behind those achieved for the same
period last year, which benefited from the clearance of a large backlog of
orders for Q-switches. By contrast the market this year for Q-switches was
distinctly softer throughout most of the first half, although it has picked up
well during the last three months. Other factors adversely affecting trading are
space constraints and the re-distribution of business within the Group.
While space is at a premium in our original, town centre premises we have been
fortunate in being able to progressively transfer people and equipment to our
new site, to the extent that we currently have ten people working there
fulltime. Redevelopment of the site has commenced with demolition,
refurbishment, flood prevention and design work on the new building all
progressing in parallel. Fortunately the site is large enough for us to benefit
from the additional space while this work proceeds, so we hope to be able to
minimise the impact of the short-term space limitations.
The G&H Group is an international business operating in a global market. As we
increasingly take a world-view we are changing the way we support our customers
in our principal geographical markets. For acousto-optics this means that we are
progressively channelling business with US based customers via NEOS (based in
Melbourne, Florida) and with German customers via LE (located near Hamburg),
with the consequence that sales of the UK business appear to decrease. As a
result, while UK acousto-optic sales are 9% lower than those for the same period
last year, the combined sales of acousto-optic products from G&H, NEOS and LE
has increased. Managing this change in the way we manufacture and sell our
products is addressed in our reorganisation programme.
There have been some significant Q-switch developments over the past six months.
The so-called Super Q-switch is a radical design aimed at the latest generation
of high power lasers and was originally launched two years ago, when it was
perhaps slightly ahead of the market. However, after extensive evaluation by our
customers it has since been designed into some of the newest lasers with the
result that sales have risen sharply of late. The VHE Q-switch (VHE stands for
Very High Efficiency) was launched in March 2006 following the submission of a
patent application, and is another innovative design to keep pace with the
latest advances in laser technology. These developments reinforce G&H's dominant
position in this market.
The precision optics business, which accounts for approximately 30% of UK
manufacturing output, has performed strongly with sales up by 35% when compared
with the same period last year. The ongoing process of reviewing our markets,
identifying opportunities that play to our strengths and then focussing our
investment and sales efforts in these areas is already producing results. This
process is also being used to manage capacity and increase margins by
concentrating on high-value, high-margin work at the expense of lower margin
non-core activities.
Optronic Laboratories, Inc.
OLI has continued the trend established in the second half of last year with a
steady and consistent growth in sales and profits supported by a promising sales
pipeline. Once again the OL770 instrument, launched three years ago, has been
one of the biggest winners with a 27% increase in sales over the same period
last year, demonstrating that OLI's new product developments are accurately
anticipating market requirements.
Looking further to the future, OLI has commenced a major new product development
programme that will extend the product range as well as significantly enhancing
existing product offerings. This programme is based on radical new technology
that OLI has licensed exclusively for use in its markets and which will provide
significant advantages over competing products. The first new products based on
this technology are scheduled for launch in early 2007.
The process of rationalising the sales channels and moving towards a more direct
sales model is progressing well. A West Coast Business Development Manager has
recently been appointed to join the two previous Business development Manager
hires on the East Coast, the objectives being to take ownership of the
relationship with our customers, improve sales effectiveness and reduce costs.
Cleveland Crystals, Inc.
CCI has achieved record sales for the first six months of the year, resulting in
an increase in operating profits of 105% when compared to the same period last
year. This excellent result reflects their success in overcoming equipment
reliability and capacity issues to meet customer requirements for ICF crystals,
and also in responding to increased demand for their electro-optic Q-switch
products.
Historically the ICF crystals business has been notoriously 'lumpy' because of
the high value of the products and the irregularity of shipments to meet
government budget requirements. While this lumpiness has helped the first half
year results, it is unlikely to be repeated in the second half and the trend
continues to be towards a more even spread of sales throughout the year now that
the projects have moved into the production phase. Additional space has recently
been leased to accommodate additional equipment to increase capacity in ICF
crystal growth and finishing to meet projected demand.
CCI's outstanding product quality and depth of materials expertise are factors
that have helped them win orders for components (Q-switches) and materials in
recent months. However, in the case of some of the more exotic crystals,
achieving a respectable yield represents a challenge that has to be overcome
before demand can be translated into sales and profits.
NEOS Technologies, Inc.
NEOS has made an excellent start to the year. Market conditions have been
favourable and a strong order book and sales pipeline has enabled monthly sales
to consistently exceed expectations.
Counterbalancing the healthy demand for product has been the challenge of
striving to achieve compliance with the RoHS directive, building stronger links
with other Group companies to share technology and resources, and building up
production resources in the face of strong local demand for skilled people.
Important recent initiatives include strengthening the teams in sales and
quality control and adopting latest manufacturing, test and inspection practices
in electronics manufacturing.
Landwehr Electronic GmbH
Sales and profits at LE are in line with expectations and comfortably exceed
those of the same period last year. LE has continued to make a significant
investment in human resources, with over half of the workforce having joined the
company since the acquisition in 2004. Recent appointments in engineering, sales
and administration are helping to keep on top of demand, which has grown
steadily.
The process of investment in people and infrastructure will continue in line
with our objective of increasing sales into mainland Europe, and Germany in
particular. Historically LE has strongly supported acousto-optic sales but
recent efforts have resulted in increased sales of precision optics. Technical
sales support will be extended to cover all optoelectronic components and
materials as part of the reorganisation.
Like NEOS, LE has been working to achieve RoHS compliance, while in parallel
they have completed the development of several important new RF drivers to
support the latest generation of G&H Q-switches. These have been lengthy and
costly projects but they are central to maintaining the Group's pre-eminent
position as the technology and performance leader, and they provide a solid
foundation for future sales.
ChromoDynamics, Inc.
Since the acquisition of CDI in February work has focussed on product
engineering and market definition to determine those applications in which the
technology can gain early traction.
Directors and staff
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.
I would also like to take this opportunity to thank Andrew Virgin on behalf of
the Directors for the contribution he has made as Group Marketing Director since
his appointment just over three years ago. Andrew left the company at the end of
May 2006 to explore new opportunities after over ten years with the business.
The position of Chairman continues to be vacant despite several meetings with
potential candidates during the first half of the year. Given the lack of
progress it was decided that a formal search should be commissioned in order to
improve the chances of securing the best possible candidate. Interviews will
take place shortly and it is hoped that an appointment can be made before the
end of the current financial year.
Prospects
A positive start to the year combined with a strong position in our key markets
and a pipeline of innovative new products allows us to be optimistic about our
prospects. In the short-term we are not expecting the same level of growth in
the second half of the year, and the cost and distraction of the major projects
we have recently initiated will hold us back to some extent. Looking slightly
farther ahead though, the sharper focus, better infrastructure and greater
emphasis on sales and marketing will enable the Group to exploit its full
potential in a global market, which is something we are not achieving at
present.
In addition to our plans to grow through the launch of new products and more
effective sales and marketing, we will continue to look for acquisition
opportunities that bring market presence or key technology more quickly than
would be possible by purely organic means. A scaleable infrastructure that
facilitates future acquisitions is one of the objectives of our current
reorganistion programme.
Gareth CW Jones,
Chief Executive Officer and Acting Chairman
7 June 2006
GOOCH & HOUSEGO PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006
GOOCH & HOUSEGO PLC
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2006
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2005 2005
2006 (restated) (restated)
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover 12,646 10,899 22,315
-----------------------------------------------------------------------------------------
Trading expenditure excluding
goodwill amortisation (9,883) (8,703) (17,213)
Goodwill amortisation (174) (166) (339)
-----------------------------------------------------------------------------------------
Operating profit 2,589 2,030 4,763
Other interest receivable and
similar income 48 41 41
Interest payable and similar charges (44) (86) (126)
-----------------------------------------------------------------------------------------
Profit on ordinary activities
before taxation 2,593 1,985 4,678
Tax on profit on ordinary activities (1,066) (820) (1,779)
-----------------------------------------------------------------------------------------
Profit on ordinary activities after
taxation 1,527 1,165 2,899
Dividends on equity shares (468) (432) (666)
-----------------------------------------------------------------------------------------
Retained profit for the financial
period 1,059 733 2,233
=========================================================================================
Basic earnings per 20p ordinary share 8.5p 6.5p 16.1p
Diluted earnings per 20p ordinary share 8.3p 6.4p 15.9p
=========================================================================================
GOOCH & HOUSEGO PLC
UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 31 March 2006
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2006 2005 2005
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial period 1,527 1,165 2,899
Currency translation differences on
foreign currency net investments 40 (321) 234
-----------------------------------------------------------------------------------------
Total recognised gains and losses for
the financial period 1,567 844 3,133
=========================================================================================
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the six months ended 31 March 2006
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2005 2005
2006 (restated) (restated)
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit on ordinary activities after
taxation 1,527 1,165 2,899
Dividends in period (468) (432) (666)
-----------------------------------------------------------------------------------------
1,059 733 2,233
Other recognised gains and losses 40 (321) 234
-----------------------------------------------------------------------------------------
Net addition to shareholders' funds 1,099 412 2,467
Opening shareholders' funds as previously
reported 15,994 13,563 13,563
Prior year adjustment 468 432 432
-----------------------------------------------------------------------------------------
Opening shareholders' funds 16,462 13,995 13,995
-----------------------------------------------------------------------------------------
Closing shareholders' funds 17,561 14,407 16,462
=========================================================================================
GOOCH & HOUSEGO PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 31 March 2006
As at As at As at
31 March 2006 31 March 2005 30 September 2005
(restated) (restated)
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
FIXED ASSETS
Intangible assets 5,410 4,985 4,893
Tangible assets 5,764 4,402 5,499
-----------------------------------------------------------------------------------------------
11,174 9,387 10,392
CURRENT ASSETS
Stock 3,711 3,561 3,872
Debtors 3,977 3,537 3,490
Asset held for resale - 525 -
Cash at bank and in hand 3,175 2,141 3,532
-----------------------------------------------------------------------------------------------
10,863 9,764 10,894
CREDITORS
Amounts falling due within one year (3,504) (3,798) (3,907)
-----------------------------------------------------------------------------------------------
NET CURRENT ASSETS 7,359 5,966 6,987
TOTAL ASSETS LESS CURRENT LIABILITIES 18,533 15,353 17,379
CREDITORS:
Amounts falling due after more than one year (795) (774) (740)
PROVISIONS FOR LIABILITIES AND CHARGES (177) (172) (177)
-----------------------------------------------------------------------------------------------
NET ASSETS 17,561 14,407 16,462
===============================================================================================
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 10,249 7,095 9,150
-----------------------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' FUNDS 17,561 14,407 16,462
===============================================================================================
GOOCH & HOUSEGO PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2006
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2006 2005 2005
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash inflow from operating
activities (i) 2,149 1,789 5,467
-------------------------------------------------------------------------------------------------
Returns on investments and servicing of
finance
Interest received 53 17 44
Interest paid (36) (53) (109)
Interest element of hire purchase contracts (8) (9) (19)
-------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) from returns on
investments and servicing of finance 9 (45) (84)
-------------------------------------------------------------------------------------------------
Taxation
UK tax paid (57) (156) (337)
Overseas tax paid (701) (476) (1,376)
-------------------------------------------------------------------------------------------------
Cash outflow from taxation (758) (632) (1,713)
-------------------------------------------------------------------------------------------------
Capital expenditure
Purchase of tangible fixed assets (331) (414) (1,677)
Sale of tangible fixed assets 6 1 621
-------------------------------------------------------------------------------------------------
Net cash outflow from capital expenditure
and financial investment (325) (413) (1,056)
-------------------------------------------------------------------------------------------------
Acquisitions
-------------------------------------------------------------------------------------------------
Acquisition of subsidiary (663) (20) (20)
-------------------------------------------------------------------------------------------------
Net cash outflow from acquisitions (663) (20) (20)
-------------------------------------------------------------------------------------------------
Equity dividends paid (468) (432) (666)
-------------------------------------------------------------------------------------------------
Net cash (outflow)/inflow before financing (56) 247 1,928
-------------------------------------------------------------------------------------------------
Financing
New bank loan - 197 204
Repayment of bank loan (216) (550) (1,163)
Capital element of hire purchase repayments (65) (78) (120)
-------------------------------------------------------------------------------------------------
Net cash outflow from financing (281) (431) (1,079)
-------------------------------------------------------------------------------------------------
(Decrease)/increase in cash in the period (ii) (iii) (338) (184) 849
=================================================================================================
GOOCH & HOUSEGO PLC
NOTES TO THE UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2006
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2006 2005 2005
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
(i) Reconciliation of operating profit to
net cash inflow from operating activities
Operating profit 2,589 2,030 4,763
Amortisation of goodwill 174 166 339
Amortisation of debt issue costs - 8 16
Depreciation 247 247 436
Decrease/(Increase) in stock 209 (109) (185)
Increase in debtors (455) (235) (76)
(Decrease)/Increase in creditors (615) (318) 174
-------------------------------------------------------------------------------------------------
2,149 1,789 5,467
=================================================================================================
(ii) Reconciliation of net cash outflow to
movement in net funds in the period
Decrease in cash in the period (338) (184) 849
Cash outflow from decrease in debt and lease
financing 281 430 1,079
-------------------------------------------------------------------------------------------------
Changes in net funds resulting from cash flows (57) 246 1,928
New hire purchase contracts (206) (128) (101)
Movement in debt issue costs - (8) (16)
Translation difference (25) (12) 233
--------------------------------------------------------------------------------------------------
Movement in net funds in the period (288) 98 2,044
Net funds at beginning of period 2,371 327 327
--------------------------------------------------------------------------------------------------
Net funds at end of period 2,083 425 2,371
==================================================================================================
(iii) Analysis of net funds
At Cash flow Exchange Non-cash At
1 October 2005 Movement Movement 31 March 2006
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 3,532 (338) (19) - 3,175
Bank overdrafts - - - - -
-------
(338)
Debt due after one year (578) 17 (30) - (591)
Debt due within one year (273) 199 (3) - (77)
Hire purchase (310) 65 27 (206) (424)
-------
281
------------------------------------------------------------------------------------------------
2,371 (57) (25) (206) 2,083
================================================================================================
GOOCH & HOUSEGO PLC
NOTES TO THE INTERIM STATEMENT
For the six months ended 31 March 2006
1. The financial information set our above does not constitute statutory
financial statements within the meaning of Section 240 of the Companies Act
1985.
The summarised results for the six months ended 31 March 2006 and comparative
figures for the six months ended 31 March 2005 are unaudited. The figures
included for the year ended 30 September 2005 have been extracted from the Group
statutory financial statements, which have been filed with the Registrar of
Companies and contain an unqualified audit opinion.
2. The Group has adopted FRS 21, 'Events after the balance sheet date' in
preparing this Interim Statement. The adoption of this standard represents a
change in accounting policy and the comparative figures have been restated
accordingly. FRS 21 requires that the Group only recgonise a liability for a
dividend at a balance sheet date if it has either been paid during the period or
proposed and approved by Shareholders at the balance sheet date.
The effect of this change in accounting policy was to recognise the final
proposed dividend of £467,978 for the year ended 30 September 2005 in the
current interim period. The proposed interim dividend for the current year of
£260,988 (1.4 pence per share) will be recognised in the second half of the
financial year as it has yet to be approved. The change in accounting policy has
had in a similar impact on the results for the six months ended 31 March 2005
and the twelve months ended 30 September 2005 and as a result the results of
these periods have been restated accordingly.
3. Taxation for the six months ended 31 March 2006 and 31 March 2005 has been
recognised at the forecast annual effective rate. Taxation for the year ended 30
September 2005 is the actual provision for that year.
4. 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 the six months ended 31
March 2006 the actual number of Ordinary Shares in issue throughout the year was
17,999,162.
The number of shares in issue throughout the current period was also 17,999,162,
however, the Group issued a number of share options on 23 July 2004, following
the approval by shareholders of 'The Gooch & Housego Plc 2004 Share Option
Scheme' and as a result, a diluted earnings per share has been disclosed.
All share options in respect of which the related performance criteria have been
met as at 30 September 2005 and which have an exercise price lower than the
average market price of the Group's share price in the period since issue have
been included in the calculation of diluted earnings per share.
The weighted average number of shares in issue during the six months ended 31
March 2006, taking into account of the dilutive effect of the share options was
18,363,248 and for the year to 30 September 2005 was 18,201,870.
GOOCH & HOUSEGO PLC
NOTES TO THE INTERIM STATEMENT (CONTINUED)
For the six months ended 31 March 2006
A reconciliation of the earnings used in the earnings per share calculation is
set out below:
6 months ended 6 months ended 12 months ended
31 March 2006 31 March 2005 30 Sep 2005
(unaudited) (unaudited) (audited)
£'000 p per £'000 p per £'000 p per
share share share
Basic earnings per share 1,527 8.5 1,165 6.5 2,899 16.1
Goodwill amortisation 174 1.0 166 0.9 339 1.9
Basic earnings per share
before goodwill amortisation 1,701 9.5 1,331 7.4 3,238 18.0
Diluted earnings per share 1,527 8.3 1,165 6.4 2,899 15.9
Goodwill amortisation 174 1.0 166 0.9 339 1.9
Diluted earnings per share
before goodwill amortisation 1,701 9.3 1,331 7.3 3,238 17.8
------ ------ ------ ------ ------ ------
Basic and diluted earnings per share before goodwill amortisation have been
shown above because, in the opinion of the directors, it reflects the underlying
performance of the group.
5. All of the amounts reported in this Interim Statement are in respect of
continuing operations. The trading results of CDI, the subsidiary acquired
during the period, have not been separately disclosed on the face of the profit
and loss account as, in the opinion of the directors, they are not material to
the reported performance of the Group for the period.
In respect of this acquisition the Group has recognised a provisional goodwill
balance of £661,000 at 31 March 2006.
6. Accounting policies are consistent with those applied in previous years and
are as set out in the Group's audited statutory financial statements at 30
September 2005, with the exception of the adoption of FRS 21 as described above.
7. The interim dividend will be paid on 14 July 2006 to shareholders on the
register at close of business on 16 June 2006.
8. 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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