Preliminary Results
Gooch & Housego PLC
27 November 2007
For immediate release 27 November 2007
Gooch & Housego PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007
HIGHLIGHTS
Sales and profit ahead of expectations
Gooch & Housego PLC, the specialist manufacturer of optical components and
systems, today announces preliminary results for the year ended 30 September
2007.
Financial highlights
•Group turnover increased by 20.9% to £30.67m (2006: £25.36m)
•Profit before tax and goodwill amortisation increased by 22.0% to £7.11m
(2006 restated: £5.83m)
•Basic earnings per share increased by 29.9% to 24.3p (2006 restated:
18.7p)
•Group operating profits improved by 24.0% to £6.72m (2006 restated:
£5.42m)
•Total dividend increased by 7.1% to 4.5p (2006: 4.2p)
Operational highlights
•Strong revenue and profit growth in acousto-optics and precision optics
•Acquisition of SIFAM Fibre Optics Limited
•Launch of ChromoDynamics biomedical imaging system
•Global sales and product management teams appointed
•Appointment of Peter Quinn as Chief Financial Officer
•New UK factory and headquarters nearing completion
Gareth Jones, Chief Executive of Gooch & Housego PLC, commented:
'We have delivered a notable increase in revenues and profits in a year in which
Gooch & Housego has made a significant acquisition, initiated a major
reorganisation and made substantial investments in facilities and product
development. I would like to thank everyone who has contributed to this
tremendous result.'
For further information:
Gooch & Housego PLC 01460 52271
Gareth Jones
Buchanan Communications 020 7466 5000
Tim Thompson / Susanna Gale
Oriel Securities Limited 020 7710 7600
Andrew Edwards/Scott Richardson Brown
Gooch & Housego PLC
Chairman's Statement 2007
For Gooch & Housego 2007 has been a year that has seen continued growth of the
traditional business set against a background of change as we put in place
people and systems to take the company forward. We have completed an important
acquisition, strengthened the Board and senior management team, and are nearing
completion of two major projects - the construction of a new UK facility and the
reorganisation of Gooch & Housego into a globally integrated business. We have
continued to perform well despite the challenges that we have set ourselves.
Acquisitions continue to be part of our strategy and a number of opportunities
have been considered this year. The acquisition of SIFAM was significant and
timely. It has broadened the technology and product portfolio of Gooch &
Housego, created opportunities for new product development and contributed key
people and skills at a time when we are establishing new management structures
as an integrated business.
We have made a number of changes to the Board in the past year. Terry Scribbins,
previously Director of Operations in Ilminster, joined the board as Chief
Operating Officer in December 2006. More recently, Peter Quinn has joined the
Board and will be taking up the position of Chief Finance Officer following the
retirement of Ian Bayer at the end of 2007. Most recently, Paul Heal has agreed
to join the Board as a non-executive director with effect from January 2008. I
would like to thank members of the Board for their contribution this year, and
wish Ian Bayer a happy retirement. I would also like to thank the entire
workforce for making this another record year.
Over the past year we have reinforced Gooch & Housego's already strong position
in its sector and we have a number of exciting projects and opportunities that
we believe will underpin future growth. We have plenty of work still to do but I
remain optimistic and believe that the company is well placed to take advantage
of opportunities that it creates and that present themselves.
Dr Julian Blogh
Chairman
Chief Executive's Review 2007
Over the past year we have made considerable progress in our drive to transform
Gooch & Housego from a group of small but exceptional companies into a world
leading, globally integrated business of sufficient critical mass to provide a
solid foundation for our next phase of growth. At the same time we have
maintained growth in revenues and profits and been active in acquisitions and
new product development to underpin future growth.
Performance
For the year ended 30 September 2007, Group turnover increased by 20.9% to
£30.67m (2006: £25.36m), despite the impact of the weakening US Dollar. Profit
before tax, after charging amortisation of £0.47m (2006 restated: £0.38m),
increased by 21.6% to £6.64m (2006 restated: £5.46m). Profit before tax and
goodwill amortisation increased by 22.0% to £7.11m (2006 restated: £5.83m).
Basic earnings per share rose by 29.9% to 24.3p (2006 restated: 18.7p) while
basic earnings per share before goodwill amortisation increased by 28.8% to
26.8p (2006 restated: 20.8p).
Group operating profits improved by 24.0% to £6.72m (2006 restated: £5.42m).
A Globally Integrated Business
The way in which we now plan and manage Gooch & Housego as an integrated optical
solutions provider is reflected in this review, which for the first time reports
on the performance of the business under two groupings that reflect their
products and markets - 'Components and Materials', and 'Instrumentation and Life
Sciences'.
Comprising Gooch & Housego UK Ltd (G&H UK, located in Ilminster, UK), Cleveland
Crystals Inc (CCI; Cleveland, Ohio), NEOS Technologies Inc (NEOS; Melbourne,
Florida), Landwehr Electronic GmbH (LE; Norderstedt, Germany), and SIFAM Fibre
Optics Ltd (SIFAM; Torquay, UK), the Components and Materials businesses
manufacture highly complementary optoelectronic components and materials. They
serve the same markets, they frequently share the same customers, and as we
harmonise products and manufacturing activities there is increasing
cross-fertilisation between operations.
Similarly, the Instrumentation and Life Sciences businesses, comprising Optronic
Laboratories Inc (OLI; Orlando, Florida) and ChromoDynamics Inc (CDI; Lakewood,
New Jersey), offer similar collaborative opportunities in respect of the
manufacture high-value optical measurement and imaging instruments. The links
between these businesses are equally strong, with OLI providing design
engineering and manufacturing services to CDI. Although a wide range of markets
and applications are addressed it is the emerging life sciences market that is
currently offering the greatest potential.
Over the last year we have established global sales, product management,
strategic marketing and new product introduction organisations spanning our
Components and Materials activities. Our objectives are to drive growth by
engaging with our key customers as a strategic supplier, improving our
understanding of the world market and extending our geographic reach. The
information gained will be used to fine tune our new product development and
inform our acquisitions strategy.
To achieve these objectives we have strengthened the senior management team and
have been fortunate in being able to benefit from the influx of experience that
came with the acquisition of SIFAM. In parallel we are putting in place the IT,
communications and financial infrastructure needed to operate as a globally
integrated business. These efforts will culminate in the launch of the new,
re-branded Components and Materials business in January 2008.
Financial Results
Components and Materials
The contribution of the Components and Materials businesses to Group turnover
increased from £22.05m in 2006 to £27.54m this year.
This increase in sales was led by G&H UK and NEOS, where sales increased to
£8.66m and £7.80m respectively (2006: £7.52m and £6.38m respectively).
LE increased sales by 28.8% to £3.28m (2006: 2.54m) while CCI sales were down
slightly to £5.40m (2006: £5.60m) due to the impact of the US Dollar's movement
against Sterling. SIFAM, which was acquired on 4 May 2007, contributed sales of
£2.40m for the 5 months from the date of acquisition to 30 September 2007.
Components and Materials contributed £7.90m (2006 restated: £6.08m) to operating
profits. Notably G&H UK and NEOS increased operating profit by over 30% and
contributed £3.27m and £3.03m respectively.
Instrumentation and Life Sciences
OLI, currently the only trading company in this segment, contributed £3.13m
(2006: £3.32m) to Group turnover, with the apparent year-on-year reduction
resulting from the impact of the US Dollar's movement against Sterling.
Instrumentation and Life Sciences suffered a loss of £0.15m (2006 restated:
profit £0.27m) in the year. The loss is due to a full year of research and
development expenditure at CDI where costs increased to £0.51m (2006: £0.16m).
Taxation
An overall tax rate of 32.8% (2006 restated: 38.1%) was recorded for the year.
The year-on-year reduction is a result of adjustments in respect of prior years,
additional costs being tax deductible and the use of capital allowances acquired
with SIFAM. The overall tax rate is above the UK corporation tax rate of 30% due
to overseas profits, predominantly US-based, being taxed at a higher rate.
Balance Sheet
The Group balance sheet remains strong with shareholders funds increasing by
£6.48m to £25.53m.
Intangible assets increased to £6.68m as a result of the acquisition of SIFAM.
Tangible assets increased due to the building of the new Ilminster factory.
Working capital has also increased as a result of a 20.9% increase in Group
turnover and the impact of the acquisition of SIFAM.
Cash flows
The Group cash flows remain strong with cash inflow from operating activities
increasing by 14.1% to £6.54m. The movement from net funds of £2.90m to net debt
of £0.98m primarily results from the cash element of the purchase price of SIFAM
(£2.35m) and £4.43m spent on plant, property and equipment, predominantly the
new G&H UK factory in Ilminster.
Dividends
Reflecting the Group's continuing strong performance, the Directors are
proposing a final dividend of 3.0p making a total for the year of 4.5p. This
represents an increase of 7.1% over last years total of 4.2p and is covered 5.8
times by post tax earnings. The shares are expected to go ex-dividend on 5th
December 2007, and following approval at the Annual General Meeting on 13th
February 2008, the dividend will be paid to shareholders on 14th February 2008.
Trading
Looking back over the year from a trading point of view we have been successful
in increasing revenues in all of our Components and Materials activities and in
all of our key geographical markets, despite increasingly unpredictable market
conditions as the year progressed.
Components and Materials
Acousto-optics
We experienced a significant increase in demand for acousto-optics that resulted
in a noteworthy performance by our Melbourne facility, closely followed by our
production unit in Ilminster. We were able to respond to this increase in demand
by coordinating optics and electronics manufacturing activities in Melbourne,
Ilminster and Norderstedt. A further benefit of this global approach to the
acousto-optic market has been a reduction in lead times.
Precision Optics
The manufacture of precision optical components and optics made from crystalline
materials such as quartz was the business upon which Gooch & Housego was founded
nearly sixty years ago, and it remains one of our core competencies today.
Output from the Ilminster facility has increased over the past year, driven by
the internal demand for optical elements for our acousto-optics business and our
success in expanding into the European and US markets. This increase has been
achieved despite the space constraints that apply until we are able to relocate
to the new Ilminster factory early next year.
Electro-Optics and Non-Linear Materials
We have reinforced our leading position in the electro-optic (Pockels cell)
market during the past year as a result of sales wins achieved through a
combination of quality, performance and reliability. Our primary market for
non-linear optics is the supply of very large aperture crystals for the world's
largest laser systems that are being constructed for nuclear fusion research.
Although a very specialised market, our Cleveland facility leads the world in
this technology and output has increased this year with laser systems under
construction in the US and Europe.
Fibre Optics
As a result of the acquisition of SIFAM in May this year, Gooch & Housego now
has a strategically important fibre optics capability, the rationale of which is
discussed elsewhere in this review. The integration of SIFAM has progressed
well, with the business exceeding its earnings forecast in the five months that
it has been part of the Group.
Instrumentation and Life Sciences
Instrumentation
The traditional high-end optical measurement instrumentation business of
Optronic Laboratories Inc (OLI) has seen a small US$ revenue growth and flat
profits (resulting in small decreases after currency translation). While
disappointing, this result is not unexpected and is behind the decision to
develop new products that will open up new, high growth markets, particularly in
life sciences. In addition to working with ChromoDynamics Inc (CDI) on the
development of a biomedical imaging system, OLI will be introducing a new
product in January 2008, aimed at the microscopy and life sciences market.
Biomedical Imaging
CDI has made excellent progress over the past year and has passed several key
milestones. In particular, CDI has completed development of its initial
biomedical imaging system, the HSi300, which is currently being evaluated in
research, microscopy and molecular diagnostics applications. A proof of concept
study assessing the potential for the HSi300 to assist in the diagnosis of early
stage cancer has been successfully completed.
UK Factory and Corporate Headquarters
One of the most significant investments we are currently making is the
construction of the new factory and corporate headquarters in Ilminster. The
development has progressed rapidly, particularly during the last six months, and
is on target for handover from the developers commencing in December 2007. The
relocation will be phased over approximately two months to minimise disruption.
Where necessary we have built up buffer stocks to maintain continuity of supply
to our customers. The new factory will be one of the most significant milestones
in the history of Gooch & Housego in Ilminster, and will facilitate a new era of
growth.
Acquisitions and New Product Development
Over the past year we have continued to take a proactive approach to
acquisitions. We see growth being driven by a combination of organic new product
development and acquisitions. The acquisition of SIFAM addressed both of these
objectives and brought a guided wave optics capability that perfectly
complements the conventional optics expertise of Gooch & Housego.
Fibre optics is becoming a ubiquitous technology, and for Gooch & Housego to be
able to provide its customers with a complete range of optical solutions it is
essential that we have an in-house capability. In fact, in SIFAM we have a world
class capability, which will help us to take a leading market position and
maintain a competitive edge.
SIFAM and Gooch & Housego share many customers and are active in the same market
sectors. Both companies have developed on parallel courses over the last five
years, and have shared ambitions to reach up the value chain through the
development of a systems capability, while taking care not to compete with
existing customers.
Perhaps the most obvious area in which G&H and SIFAM have complementary
capabilities is the manufacture of components for industrial and medical laser
systems. G&H is the leading manufacturer of components for traditional solid
state lasers. SIFAM is a leading supplier of fused fibre optic combiners, a
critical component in all fibre lasers. The acquisition therefore reinforces our
position as a leading supplier to the laser industry.
SIFAM will also play an important role in our new product development plans.
There are a number of exciting new products that we can now bring to market by
leveraging the combined capabilities of SIFAM and the other members of the
Group, in applications ranging from biomedical imaging to laser components.
Directors and Employees
I would like to thank my fellow directors and employees for their contribution
to another successful year for Gooch & Housego, and for their help and
understanding in implementing the considerable changes that are taking place.
I would particularly like to thank Ian Bayer, Finance Director, who will be
retiring at the end of 2007. Ian has been with the company for eight years and
has made a major contribution to our successes over that period. On behalf of
everyone in the company I would like to wish Ian a happy, healthy and
well-earned retirement.
I would also like to take this opportunity to welcome Peter Quinn and Paul Heal
to the board. Peter will formally take over as Chief Financial Officer with
effect from 2nd January 2008 following Ian Bayer's retirement. Peter brings
extensive experience in financial and operational roles in technology
businesses, including several NASDAQ quoted US companies. Paul Heal will join
the board on 2nd January 2008 as a non-executive director. Paul has been a
Partner with PricewaterhouseCoopers for more than twenty years and the Board and
its committees will benefit from his financial and corporate governance
experience.
Prospects
We will continue to invest in our core competencies, reach up the value chain
and deliver growth through the introduction of new products (supported by a
strong intellectual property portfolio) and by acquisition.
Our established products continue to be in demand, and we have a pipeline of new
products at various stages of development. With these products we will seek to
reinforce our position in our established markets, and with others, such as
those under development at CDI, OLI and SIFAM we aim to gain a foothold in the
potentially high growth biomedical market.
Notwithstanding the less predictable market conditions referred to earlier I
believe the Group is well positioned for continued growth.
Gareth Jones
Chief Executive Officer
Group Profit and Loss Account
For the year ended 30 September 2007
----------- -----------
Restated
2007 2006
unaudited unaudited
£000 £000
----------- -----------
Turnover 30,674 25,364
Trading expenditure excluding goodwill amortisation (23,490) (19,559)
----------- -----------
Operating profit before goodwill amortisation 7,184 5,805
Goodwill amortisation (466) (381)
----------- -----------
Operating profit 6,718 5,424
Interest receivable and similar income 181 123
Interest payable and similar charges (258) (96)
----------- -----------
Profit on ordinary activities before taxation 6,641 5,451
Tax on profit on ordinary activities (2,179) (2,079)
----------- -----------
Profit for the financial year 4,462 3,372
----------- -----------
Basic earnings per 20p ordinary share 24.3p 18.7p
Diluted earnings per 20p ordinary share 23.3p 18.3p
----------- -----------
All operations undertaken by the Group during the current year are continuing.
The results of the acquisition made during the year have not been separately
disclosed on the face of the profit and loss account as they are not considered
to be material to the Group result. The results of the acquired entity have,
however, been separately disclosed in the segmental reporting disclosure in note
2.
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 September 2007
----------- -----------
2007 Restated
unaudited 2006
£000 unaudited
£000
----------- -----------
Profit for the financial year 4,462 3,372
----------- -----------
Currency translation differences on foreign
currency net investments (567) (496)
----------- -----------
Total recognised gains and losses for the
financial year 3,895 2,876
----------- -----------
Prior year adjustment FRS 20 'Share-based Payment' 178
-----------
Total recognised gains and losses since last annual 4,073
report -----------
No note of historical cost profit for the Group has been presented as the
differences between the reported profit and the historical cost profit is
immaterial.
GROUP BALANCE SHEET
As at 30 September 2007
Restated
2007 2006
-------- -------- -------- --------
unaudited unaudited unaudited unaudited
£000 £000 £000 £000
-------- -------- -------- --------
FIXED ASSETS
Intangible assets 6,679 5,225
Tangible assets 12,134 6,516
-------- -------- -------- --------
18,813 11,741
CURRENT ASSETS
Stocks 5,081 3,875
Debtors 7,404 4,473
Asset held for resale 548 -
Cash at bank and in hand 5,428 4,060
-------- -------- -------- --------
18,461 12,408
-------- -------- -------- --------
CREDITORS: amounts falling due within
one year (10,531) (4,396)
-------- -------- -------- --------
NET CURRENT ASSETS 7,930 8,012
-------- -------- -------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES 26,743 19,753
CREDITORS: amounts falling due after
more than one year
(1,213) (679)
PROVISIONS FOR LIABILITES AND
CHARGES - (24)
-------- -------- -------- --------
NET ASSETS 25,530 19,050
-------- -------- -------- --------
CAPITAL AND RESERVES
Called up share capital 3,785 3,600
Share premium account 3,719 3,404
Merger reserve 2,671 -
Revaluation reserve 308 308
Profit and loss account 15,047 11,738
-------- -------- -------- --------
EQUITY SHAREHOLDERS' FUNDS 25,530 19,050
-------- -------- -------- --------
GROUP CASH FLOW STATEMENT
For the year ended 30 September 2007
2007 2006
-------- -------- -------- --------
unaudited unaudited
£000 £000 £000 £000
-------- -------- -------- --------
Net cash inflow from operating 6,547 5,734
activities
Returns on investments and servicing of
finance
Interest received 183 123
Interest paid (247) (63)
Interest element of hire purchase (16) (33)
contracts -------- -------- -------- --------
Net cash (outflow)/ inflow from returns
on investment and servicing of finance (80) 27
Taxation
UK tax paid (787) (321)
Overseas tax paid (1,904) (1,613)
-------- -------- -------- --------
Cash outflow from taxation (2,691) (1,934)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (4,430) (1,753)
Sale of tangible fixed assets 12 6
-------- -------- -------- --------
Net cash outflow from capital
expenditure and financial investment
(4,418) (1,747)
Acquisitions
Acquisition of subsidiary (2,350) (689)
Net cash acquired on acquisition 581 24
-------- -------- -------- --------
Net cash outflow from acquisition (1,769) (665)
Equity dividends paid (785) (720)
-------- -------- -------- --------
Cash (outflow)/inflow before financing (3,196) 695
Financing
Issue of share capital 371 -
Increase in borrowing - 169
Repayment of bank loans (57) (274)
Capital element of hire purchase (172) (128)
contracts -------- -------- -------- --------
Net cash inflow/(outflow) from financing 142 (233)
-------- -------- -------- --------
(Decrease)/increase in cash in the year (3,054) 462
-------- -------- -------- --------
NOTES TO THE CASH FLOW STATEMENT
For the year ended 30 September 2007
(i) Reconciliation of operating profit to net cash inflow from operating
activities
Restated
2007 2006
unaudited unaudited
£000 £000
-------- --------
Operating profit 6,718 5,424
Amortisation of goodwill 466 381
Depreciation 708 541
Loss on disposal of tangible fixed assets 6 67
Share-based Payment (FRS 20) 199 320
Increase in stocks (812) (154)
Increase in debtors (1,651) (1,139)
Increase in creditors 913 294
-------- --------
6,547 5,734
-------- --------
(ii) Reconciliation of net cash inflow to movements in net funds/(debt)
2007
unaudited 2006
£000 £000
-------- --------
(Decrease)/increase in cash in the year (3,054) 462
Cash outflow from decrease in debt and lease financing 229 402
-------- --------
Changes in net debt resulting from cash flows (2,825) 864
Debt acquired with subsidiary (879) -
New hire purchase contracts - (169)
Translation differences (178) (165)
-------- --------
Movement in net funds in the year (3,882) 530
Net funds at beginning of year 2,901 2,371
-------- --------
Net (debt)/funds at end of year (981) 2,901
-------- --------
(iii) Analysis of net funds/(debt)
Debt acquired At 30 September
At with subsidiary
1 October 2006 Exchange Non-cash 2007
movement movement
Cash flow
-------- -------- -------- -------- -------- --------
£000 £000 £000 £000 £000 £000
Cash in
hand 4,060 1,592 (224) - - 5,428
and at
bank
Bank (269) (4,646) - - - (4,915)
overdrafts -------- -------- -------- -------- -------- --------
3,791 (3,054) (224) - - 513
Debt due
within 1 (29) 57 2 (74) (105) (149)
year
Debt due
after (512) - 43 (805) 105 (1,169)
1 year
Hire (349) 172 1 - - (176)
purchase -------- -------- -------- -------- -------- --------
Net
funds/ 2,901 (2,825) (178) (879) - (981)
(debt) -------- -------- -------- -------- -------- --------
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2007
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 2006 which include the unqualified report of the independent
auditors and which have been filed with the Registrar of Companies, with the
exception of the adoption of Financial Reporting Standard 20 ('FRS 20') as
described below.
The Group has adopted FRS 20 'Share-based Payment' during the current financial
year which has resulted in a change in accounting policy. Consequently, the
comparative figures for the year to 30 September 2006 have been restated.
The adoption of FRS 20 has resulted in an increase in Group employee costs of
£198,815 for the year to 30 September 2007 and £320,229 for the comparative year
to 30 September 2006. An equivalent amount has been credited to reserves in each
year.
Due to share based payments tax treatment not mirroring the accounting treatment
a deferred tax asset arises each time an expense is charged to the profit and
loss account. As a result a deferred tax asset of £111,577 has been recognised
in the Group balance sheet at 1 October 2005, which reduces the deferred tax
liability by that amount. An equivalent amount has been credited to reserves.
In the year to 30 September 2006 the deferred tax asset increased by £66,125,
resulting in a further reduction of the deferred tax liability. The balance
sheet has been restated to reflect this change and the corresponding credit of
£66,125 has been taken to the profit & loss account.
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2007
2. Segmental reporting
Total Inter-segment Group Operating
Turnover Sales Turnover Profit/(loss)
------- ------- ------- ------- ------- ------- ------- -------
Restated
2007 2006 2007 2006 2007 2006 2007 2006
£000 £000 £000 £000 £000 £000 £000 £000
------- ------- ------- ------- ------- ------- ------- -------
Components &
Materials
Gooch &
Housego UK
Ltd* 10,983 9,124 (2,321) (1,603) 8,662 7,521 3,266 2,402
Neos
Technologies
Inc. 8,360 6,950 (564) (572) 7,796 6,378 3,033 2,305
Cleveland
Crystals Inc. 5,411 5,630 (8) (24) 5,403 5,606 1,289 1,355
Landwehr
Electronic
GmbH 3,701 2,830 (424) (286) 3,277 2,544 106 19
Sifam Fibre
Optics Ltd 2,444 - (42) - 2,402 - 209 -
------- ------- ------- ------- ------- ------- ------- -------
30,899 24,534 (3,359) (2,485) 27,540 22,049 7,903 6,081
Instrumentation & Life
Sciences
Optronic
Laboratories
Inc. 3,326 3,496 (192) (181) 3,134 3,315 359 428
Chromodynamics
Inc. - - - - - - (505) (157)
------- ------- ------- ------- ------- ------- ------- -------
3,326 3,496 (192) (181) 3,134 3,315 (146) 271
Gooch &
Housego head
office - - - - - - (1,039) (928)
------- ------- ------- ------- ------- ------- ------- -------
Group total 34,225 28,030 (3,551) (2,666) 30,674 25,364 6,718 5,424
------- ------- ------- ------- ------- -------
Net interest
(payable)/rece
ivable (77) 27
------- -------
Profit on
ordinary
activities
before
taxation
6,641 5,451
------- -------
* The comparative results for Gooch & Housego UK Ltd reflect the trading of the
business whilst it was part of the Gooch & Housego PLC statutory entity.
The analysis above is presented at the Components & Materials and
Instrumentation & Life Sciences divisional level and further analysed by the
individual businesses in the corporate structure.
------- -------
2007 2006
The analysis of turnover by destination is as follows: £000 £000
------- -------
United Kingdom 3,023 2,886
North America 15,286 12,463
Continental Europe 6,551 5,480
Other 5,814 4,535
------- -------
30,674 25,364
------- -------
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2007
3. Acquisition
On 4 May 2007, the Group acquired 100% of the ordinary share capital of Sifam
Fibre Optics Limited, a company which is the global leader in fibre optics
technology. Sifam Fibre Optics Limited and its 100% owned subsidiary, Sifam
Limited are based in the United Kingdom and were acquired for a total
consideration of £5,150,000 including acquisition costs. The fair value of the
net assets acquired was £3,243,000 resulting in £1,907,000 of goodwill arising
on acquisition. The goodwill is being amortised over 10 years.
4. Taxation
Analysis of tax charge for the year:
Restated
2007 2006
unaudited unaudited
£000 £000
-------- --------
Current taxation
UK Corporation tax 233 445
Double tax relief - (17)
Overseas tax 2,016 1,732
Adjustments in respect of prior year tax charge (135) (64)
-------- --------
Total current tax 2,114 2,096
Deferred tax
Origination and reversal of timing differences 65 (17)
-------- --------
Total deferred tax 65 (17)
-------- --------
Tax on profit on ordinary activities 2,179 2,079
-------- --------
The tax effect of share based payments has resulted in a reduction of tax on
profit on ordinary activities of £174,000 (2006 Restated: £66,000)
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2007
5. Dividends
2007 2006
£000 £000
-------- --------
Interim dividend paid: 1.5p per share (2006:1.4p) 281 252
Final 2006 dividend paid in 2007: 2.8p per share (2006:2.6p) 504 468
-------- --------
785 720
-------- --------
The directors have proposed a final dividend of £567,734 for the year ended 30
September 2007 which is 3.0p per share. This dividend has not been accounted for
with the 2007 financial year as it is yet to be approved.
6. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of Ordinary shares
outstanding during the year. The weighted average of Ordinary shares in issue
during the year was 18,337,144 (2006: 17,999,162).
All share options for which the performance criteria has been met at 30
September 2007 and 30 September 2006 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 diluted weighted average number of shares. The dilutive
weighted average number of shares in issue during the year was 19,170,388 (2006:
18,435,688).
A reconciliation of the earnings used in the earnings per share calculation is
set out below
Restated
2007 2006
-------- --------
unaudited unaudited unaudited unaudited
£000 p per share £000 p per share
-------- -------- -------- --------
Basic earnings 4,462 24.3p 3,372 18.7p
Goodwill amortisation 466 2.5p 381 2.1p
-------- -------- -------- --------
Basic earnings before goodwill
amortisation 4,928 26.8p 3,753 20.8p
-------- -------- -------- --------
Diluted earnings 4,462 23.3p 3,372 18.3p
Goodwill amortisation 466 2.4p 381 2.1p
-------- -------- -------- --------
Diluted earnings before
goodwill amortisation 4,928 25.7p 3,753 20.4p
-------- -------- -------- --------
Basic and diluted earnings per share before goodwill amortisation has been shown
because, in the opinion of the Directors, it more accurately reflects the
trading performance of the Group.
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2007
7. Assets held for resale
In December 2006, the Group exchanged contracts for the sale of its existing UK
factory and headquarters for a total cash consideration of £1,500,000. The sale
is contracted to complete by 31 March 2008 and is expected to generate a profit
on disposal of approximately £950,000 less selling costs. As a result, the
property has been reclassified as an asset held for sale at 30 September 2007.
8. Called up share capital
2007 2006 2007 2006
unaudited unaudited unaudited unaudited
No. No. £000 £000
-------- -------- -------- --------
Authorised
Ordinary shares of 20p each 24,000,000 24,000,000 4,800 4,800
-------- -------- -------- --------
2007 2006 2007 2006
No. No. £000 £000
-------- -------- -------- --------
Allotted, issued and fully paid
Ordinary shares of 20p each
At 1 October 17,999,162 17,999,162 3,600 3,600
Allotted under share option 277,892 - 56 -
schemes
Allotted on acquisition of
subsidiary 647,399 - 129 -
-------- -------- -------- --------
At 30 September 18,924,453 17,999,162 3,785 3,600
-------- -------- -------- --------
The value of the shares allotted on the acquisition of Sifam Fibre Optics
Limited was £2,800,000. The excess of £2,671,000 over the nominal value of the
share capital issued has been credited to the merger reserve.
Consideration received for the shares allotted under share option schemes during
2007 was £370,985 (2006: £nil).
Included in the allotment under share option schemes are 214,400 20p ordinary
shares allotted to directors.
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 September 2007
9. Reconciliation of movements in equity shareholders' funds
Restated
2007 2006
unaudited unaudited
£000 £000
-------- --------
Profit on ordinary activities before taxation 4,462 3,372
Dividends paid in the year (785) (720)
-------- --------
3,677 2,652
Share-based Payments 199 320
Shares issued under share option schemes 371 -
Shares issued on the acquisition of subsidiary 2,800 -
Other recognised gains and losses (567) (496)
-------- --------
Net addition to shareholders' funds 6,480 2,476
Opening shareholders' funds as previously reported 18,872 16,462
Prior year adjustment - FRS 20 'Share-based Payments' 178 112
-------- --------
Opening shareholders' funds restated 19,050 16,574
-------- --------
Closing shareholders' funds 25,530 19,050
-------- --------
This information is provided by RNS
The company news service from the London Stock Exchange