Gooch & Housego Regulatory News (GHH)

8 Jun 2005 07:00

Gooch & Housego PLC08 June 2005 FOR IMMEDIATE RELEASE 8 June 2005 GOOCH & HOUSEGO PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 "An excellent start" Gooch & Housego PLC, the specialist manufacturer of acousto-optic andelectro-optic devices, precision optical components, crystals, and instrumentsfor measuring optical radiation, today announces interim results for the sixmonths ended 31 March 2005. Financial Highlights • Group turnover for the half year increased by 23% to £10.90m (2004: £8.87m)• Profit before tax * increased by 56% to £1.98m (2004: £1.27m)• Basic earnings per share * increased by 48% to 7.4p (2004: 5.0p)• Year end net funds of £0.43m (2004: net funds of £0.33m)• Interim dividend increased by 8% to 1.3p (2004: 1.2p) *after goodwill amortisation Operational Highlights • All Group companies performing well• Optics and acousto-optics leading the way• Production increased and leadtimes reduced• Purchase of land and buildings in Ilminster for the development of a new UK manufacturing facility and headquarters. Gareth Jones, Chief Executive of Gooch & Housego, commented, "We continue to be optimistic about the future. The quality, performance andcompetitiveness of our products, which is demonstrated by our leading positionin several market sectors, underpins our confidence and is the basis for a rangeof opportunities for organic growth. We are also looking out for acquisitionopportunities that complement our existing strengths and take us into newmarkets." For further information: Gareth JonesIan Bayer 01460 52271Gooch & Housego PLC Tim Thompson / Nicola CronkBuchanan Communications 0207 466 5000 Gooch & Housego PLC Chairman's Statement - 2004/5 Interims Overview The Group has made an excellent start to the year with sales and profits for thefirst half comfortably ahead of the same period last year. In the context of ourpredictions for revenues to become more evenly distributed throughout the yearthese results are in line with our expectations for the full year. We started the year with strong order books across the Group as a result of thesurge in demand for our products in 2004. An unwelcome consequence of theincreased demand was that we also started the year with a backlog of overdueshipments, and leadtimes became unacceptably high for some products. A levellingoff in demand combined with sustained higher production levels allowed us toovercome the backlog and get leadtimes back to normal within a few months. Thegreater output also provided a boost to sales during the first half-year. All members of the Group have performed well. Demand for optical components atGooch & Housego in the UK (G&H) has been encouraging and prospects for furtherlong-term growth in this area are good. In acousto-optics, NEOS Technologies,Inc. (NEOS) has managed to sustain the high level of sales and profits reachedlast year, and this has been mirrored by a similar performance in the UK. AtOptronic Laboratories, Inc. (OLI) and Cleveland Crystals, Inc. (CCI) theprogress being made by both companies is reflected in increased profits.Landwehr Electronic GmbH (LE) is performing in line with expectations, and at asubstantially higher level than they were last year pre-acquisition. The purchase of land and buildings at Dowlish Ford, near Ilminster, in April2005 for the development of a new UK manufacturing facility and headquartersrepresents a significant milestone for G&H, providing scope for long-term growthand investment in new plant and processes that has not been possible on thecurrent site. The search for a new site has been protracted and difficult but weare now able to concentrate our efforts creating the new facility and reapingthe benefits that will flow from it. The plot of land purchased in 2002 as a possible site for a new factory inIlminster, being no longer required, was sold in June 2005, realising a smallprofit. We have begun the process of identifying potential candidates for the positionof Chairman. Some preliminary discussions have taken place and we will beholding further meetings in the coming months. Financial Results For the half-year to 31 March 2005, group turnover increased by 23% to £10.90m(2004: £8.87m). Profit before tax, after charging goodwill amortisation,increased by 56% to £1.98m (2004: £1.27m), basic earnings per share increased by55% to 6.5p (2004: 4.2p) and basic earnings per share before goodwillamortisation rose to 7.4p from last year's 5.0p. The overall increase in sales was reflected across the whole Group. UKoperations showed an increase of £0.64m to £3.74m (2004: £3.10m). The US group performed well despite flat sales for OLI at £1.45m (2004: £1.35m)and also at CCI at £2.19m (2004: £2.19m). Sales at NEOS were up from £2.25m in2004 to £2.48m in 2005, an increase of 7%. LE contributed sales of £1.04m inits first six months. Group operating profits before tax, but after charging goodwill amortisation of£0.17m (2004: £0.15m) were up by 55% from £1.42m to £2.20m. In the UKmanufacturing operating profits were £1.18m compared to last year at £0.81m withhead office costs incurred of £0.34m (2004: £0.35m). The US companies allreported increased operating profits with NEOS improving from £0.55m to £0.69mand despite relatively flat sales both OLI and CCI managed to improve theiroperating profit position. CCI saw increased profits of £49,000 to £0.41m whileOLI increased profits by £0.13m to £0.18m. In its first six months since the acquisition LE contributed £72,000 to Groupprofits. The Group's financial trading position remains particularly strong with netfunds inflow, before net loan repayments, of £0.25m (2004: inflow £0.34m). Thecompany has net funds of £0.43m as at 31 March 2005 (2004: net funds of £0.14m). An overall tax rate of 41.3% for the half year (2004: 40.8%) is again a resultof higher rates of US tax and the effect of the non-allowable charge of goodwillamortisation. Dividends The Directors have declared an interim dividend of 1.3p to be paid on 15 July2005 to all shareholders on the register at 17 June 2004. This represents anincrease of 8% when compared with the 1.2p paid last year. The shares areexpected to go ex-dividend on 15 June 2005. Gooch & Housego The new senior management team, established less than twelve months ago, hasbeen effective in increasing sales, reducing leadtimes and improving quality andperformance in all product areas. Q-switch leadtimes, running at 12 weeks orhigher in October 2004, were down to less than 2 weeks for standard products bythe end of March 2005. In parallel, the extra capacity created has been used tomeet the growing demand for custom Q-switches and focus efforts on increasingsales of acousto-optic products other than the Q-switch. As expected, demand forQ-switches has settled at a level that is below the peak reached in mid to late2004, but which is nevertheless higher than it was at the same time last year. In precision optics we have achieved notable successes in the specialised areasof thin-film coatings and crystal optics. A substantial investment in thecoating department has increased capacity and allowed us to put concerted effortinto the development of coatings that are highly resistant to damage by highpower lasers, with the result that we are now achieving world-class levels ofperformance. This is an enabling technology for the top-end optics business andopens up several new opportunities. Further investment in coating plant isplanned in conjunction with the creation of a much larger facility in our newfactory. Our ability to produce optical components in crystalline materials,particularly quartz, has long differentiated us from our competitors and recentexport sales successes confirm our world standing in this field. Optronic Laboratories, Inc. The changes introduced across the company in sales, manufacturing and productdevelopment are beginning to have a beneficial effect. The sales andapplications engineering teams have been strengthened in order to providegreater support for direct sales opportunities and to forge new OriginalEquipment Manufacturer (OEM) relationships. In parallel, several new developmentprojects have been initiated with the aim of extending the product range andbroadening the customer base. Cleveland Crystals, Inc. CCI continues to be strong in its two main areas of activity - inertialconfinement fusion (ICF) crystals, and electro-optics/non-linear materials. There is visibility of demand for ICF crystal growth and finishing from both USand European customers extending at least eight years into the future. To meetthe forecasted requirements, plans are being made to install further productionequipment, which will require the allocation of additional space at theCleveland facility during the coming months. In the electro-optic Q-switch market, CCI has been successful in consolidatingits leading position by focussing on quality and performance. CCI are participating in the process of identifying the next generation ofproducts for the Group, and several opportunities relevant to the activities atCleveland are currently under investigation. NEOS Technologies, Inc. NEOS has maintained the momentum built up during 2004 with the result that salesand profits for the first half-year are ahead of the same period last year.Overall, demand has softened slightly during this period, as expected. The acousto-optic activities of the Group at NEOS, G&H and LE are becomingprogressively more integrated. By addressing a single world market we are ableto focus our sales activities, balance demand and share development resourcesacross the Group in the most effective way. For example, NEOS are workingclosely with LE on the development of the next generation of Radio Frequency(RF) drivers, the first of which will go into production later this year. The relocation to a new factory in October 2004 did not adversely impact onoutput, while the improved and more spacious environment has enabled NEOS toincrease capacity and bring in additional production staff. Further managementappointments are planned in the coming months to strengthen the team in salesand quality control. Landwehr LE has experienced an encouraging level of demand during the first half year,with the result that sales and profits are on target. The integration of LE intothe Group is progressing well, with the only limitation being the availabilityof resources within the senior team. To address this problem and bring the teamup to full strength in the areas of technical sales, applications engineeringand new product development two senior appointments have recently been made,with a further two planned for later this summer. Several exchanges of personnelhave taken place between LE and other Group companies and several collaborativeinitiatives are now underway. It is anticipated that inter-companycommunications will continue increase as time goes by. Prospects Despite the expected softening of demand for the Q-switch following the surge in2004 we continue to be optimistic about the future. The quality, performance andcompetitiveness of our products, which is demonstrated by our leading positionin several market sectors, underpins our confidence and is the basis for a rangeof opportunities for organic growth. We are also looking out for acquisitionopportunities that complement our existing strengths and take us into newmarkets. Our efforts to establish a shared strategy and vision for the Group areyielding benefits that range from cross-selling opportunities through to newproduct development. The constraints that have been imposed by cramped and inadequate facilities aregradually being eliminated. The new facility at NEOS, expansion at CCI and theimminent re-development of the new UK site are major steps forward and willallow us to focus on extending our capabilities and increasing capacity. Amodest increase in investment in plant and equipment is planned. Increasing the sales resource and its effectiveness in the context of aGroup-wide sales and marketing strategy continues to be a high priority. Furthersales and applications engineering appointments will be made at G&H, NEOS and LEin the coming months, in addition to those that have recently been made. Webelieve that there is scope to increase sales of existing products by bringingthem to the attention of a wider audience. Substantial progress has been made in the search for new product opportunities.Again, we are taking a Group-wide approach in which the aim is to match marketopportunities to the strengths of the Group. An objective is to move up thevalue chain through the introduction of more instrument and systems levelproducts that build on our materials and components expertise. Severalinitiatives have been launched that, if successful, will result in the releaseof new products during the 2006 financial year. I would like to express my thanks to the Directors and all employees of theGroup for their contribution to a successful first half year. Gareth CW Jones,Chief Executive Officer and Acting Chairman8 June 2005 GOOCH & HOUSEGO PLCUNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the six months ended 31 March 2005 6 months 6 months 12 months ended 30 September 2004 ended ended 31 March 31 March 2004 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover 10,899 8,866 18,812 Operating costs excluding goodwillamortisation (8,703) (7,447) (15,122) Goodwill amortisation (166) (151) (307) Operating Profit 2,030 1,268 3,383 Other interest receivable and similar income 41 57 25 (86) (54) (110) Interest payable and similar charges Profit on ordinary activities before 1,985 1,271 3,298taxation Tax on profit on ordinary activities (820) (519) (1,235) Profit on ordinary activities after taxation 1,165 752 2,063 Dividends on equity shares (234) (216) (648) Retained profit for the financial period 931 536 1,415 Basic earnings per 20p ordinary share 6.5p 4.2p 11.5p Diluted earnings per 20p ordinary share 6.4p 11.5p Basic earnings per share before goodwill 7.4p 5.0p 13.2pamortisation Diluted earnings per share before goodwill 7.3p 13.2pamortisation Dividend per share 1.3p 1.2p 3.6p GOOCH & HOUSEGO PLCUNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the six months ended 31 March 2005 6 months 6 months 12 months ended ended ended 31 March 2005 31 March 30 September 2004 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit for the financial 1,165 752 2,063period Currency translation differences on foreigncurrency net investments (321) (480) (588) Total recognised gains and losses for thefinancial period 844 272 1,475 RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS 6 months 6 months 12 months ended ended ended 31 March 31 March 30 September 2004 2005 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit on ordinary activities after taxation 1,165 752 2,063 Dividends in year (234) (216) (648) 931 536 1,415 Other recognised gains and losses (321) (480) (588) Net addition to shareholders' funds 610 56 827 Opening shareholders' funds 13,563 12,736 12,736 Closing shareholders' funds 14,173 12,792 13,563 GOOCH & HOUSEGO PLCUNAUDITED CONSOLIDATED BALANCE SHEETAS AT 31 MARCH 2005 As at As at As at 31 March 2005 31 March 2004 30 September 2004 (unaudited) (unaudited) (audited) £'000 £'000FIXED ASSETSIntangible assets 4,985 4,706 5,151Tangible assets 4,402 4,112 4,239 9,387 8,818 9,390 CURRENT ASSETSStock 3,561 2,823 3,690Debtors 3,537 3,372 3,395Asset held for resale 525 - 525Cash at bank and in hand 2,141 2,190 2,543 9,764 8,385 10,153 CREDITORSAmounts falling due within one year (4,032) (3,583) (5,249) NET CURRENT ASSETS 5,732 4,802 4,904 TOTAL ASSETS LESS CURRENT LIABILITIES 15,119 13,620 14,294 CREDITORS:Amounts falling due after more than one year (774) (642) (559) PROVISIONS FOR LIABILITIES AND CHARGES (172) (186) (172) NET ASSETS 14,173 12,792 13,563 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 6,861 5,480 6,251 14,173 12,792 13,563 GOOCH & HOUSEGO PLCUNAUDITED CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 March 2005 6 months 6 months 12 months ended ended ended 31 March 2005 31 March 2004 30 September 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash inflow from operating activities (i) 1,789 1,605 4,789 Returns on investments and servicing of financeInterest received 17 12 25Interest paid (53) (45) (90)Interest element of hire purchase contracts (9) (9) (19)Net cash outflow from returns on investments andservicing of finance (45) (42) (84) TaxationUK tax paid (156) (78) (227)Overseas tax paid (476) (528) (1,085)Cash outflow from taxation (632) (606) (1,312) Capital expenditure Purchase of tangible fixed assets (414) (271) (1,101)Sale of tangible fixed assets 1 14 13Net cash outflow from capital expenditure andfinancial investment (413) (257) (1,088) Acquisitions Acquisition of subsidiary (20) - (591)Net overdraft acquired on acquisition - - (142)Net cash outflow from acquisitions (20) - (733) Equity dividends paid (432) (360) (576) Net cash inflow before financing 247 340 996 Financing New bank loan 197 - 399Repayment of bank loan (550) (273) (719)Capital element of hire purchase repayments (78) (77) (50)Net cash outflow from financing (431) (350) (370) (Decrease)/increase in cash in the period (ii) (iii) (184) (10) 626 GOOCH & HOUSEGO PLCNOTES TO THE UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 March 2005 6 months 6 months 12 months ended ended ended 31 March 2005 31 March 2004 30 September 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000(i) Reconciliation of operating profit to net cashinflow from operating activitiesOperating profit 2,030 1,268 3,383Amortisation of goodwill 166 151 307Amortisation of debt issue costs 8 8 16Depreciation 247 206 439(Increase)/Decrease in stock (109) 495 (234)Increase in debtors (235) (533) (528)(Decrease)/Increase in creditors (318) 10 1,406 1,789 1,605 4,789 (ii) Reconciliation of net cash outflow to movementin net funds in the periodDecrease in cash in the period (184) (10) 626Cash outflow from decrease in debt and lease financing 430 350 370Changes in net funds resulting from cash flows 246 340 996New hire purchase contracts (128) (24) (40)Movement in debt issue costs (8) (8) (16)Debt acquired upon acquisition - - (375)Translation difference (12) 145 74Movement in net funds in the period 98 453 639Net funds/(debt) at beginning of period 327 (312) (312)Net funds at end of period 425 141 327 (iii) Analysis of net funds At Cash flow Exchange Non-cash At 1 October 2004 Movement Movement 31 March 2005 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 2,543 (256) (146) - 2,141Bank overdrafts (100) 72 - - (28) (184) Debt due after one year (370) (197) 34 (533)Debt due within one year (1,412) 550 95 (8) (775)Hire purchase (334) 78 5 (128) (379) 327 246 (12) (136) 425 GOOCH & HOUSEGO PLCNOTES TO THE INTERIM STATEMENTFor the six months ended 31 March 2005 1. The financial information set our above does not constitute statutoryfinancial statements within the meaning of Section 240 of theCompanies Act 1985. The summarised results for the six months ended 31 March 2005 andcomparative figures for the six months ended 31 March 2004 are unaudited. Thefigures included for the year ended 30 September 2004 have been extracted fromthe Group statutory financial statements, which have been filed with theRegistar of Companies and contain an unqualified audit opinion. 2. Taxation for the six months ended 31 March 2005 and 31 March 2004 hasbeen estimated at prevailing rates. Taxation for the year ended 30 September2004 is the actual provision for that year. 3. The calculation of earnings per 20p Ordinary Share is basedon the profit on ordinary activities after taxation using as a divisor theweighted average number of Ordinary Shares in issue during the year. For thesix months ended 31 March 2004 the actual number of Ordinary Shares in issuethroughout the year was 17,999,162. The number of shares in issue throughout the current period was also17,999,162, however, the Group issued a number of share options on 23 July 2004,following the approval by shareholders of "The Gooch & Housego Plc 2004 ShareOption Scheme" and as a result a diluted earnings per share has been disclosedfor the first time. All share options in respect of which the related performancecriteria have been met as at 31 March 2005 and as at 30 September 2004 and whichhave an exercise price lower than the average market price of the Group's shareprice in the period since issue have been included in the calculation of dilutedearnings per share. The weighted average number of shares in issue during the six monthsended 31 March 2005, taking into account of the dilutive effect of theshare options was 18,077,356, and for the year to 30 September 2004 was18,001,508. A reconciliation of the earnings used in the earnings per sharecalculation is set out below: 6 months ended 31 6 months ended 31 12 months ended March 2005 March 2004 30 Sep 2004 (unaudited) (unaudited) (audited) £'000 p per £'000 p per £'000 p per share share share Basic earnings per share 1,165 6.5 752 4.2 2,063 11.5 Goodwill amortisation 166 0.9 151 0.8 307 1.7 Basic earnings per share beforegoodwill amortisation 1,331 7.4 903 5.0 2,370 13.2 Diluted earnings per share 1,165 6.4 2,063 11.5 Goodwill amortisation 166 0.9 307 1.7 Diluted earnings per share beforegoodwill amortisation 1,331 7.3 2,370 13.2 Basic and diluted earnings per share before goodwillamortisation has been shown because, in the opinion of the directors, it reflects the underlying performance of the group. GOOCH & HOUSEGO PLCNOTES TO THE INTERIM STATEMENT (CONTINUED)For the six months ended 31 March 2005 4. All of the amounts reported in this Interim Statement are in respectof continuing operations. 5. Accounting policies are consistent with those applied in previousyears and are as set out in the Group's audited statutory financialstatements at 30 September 2004. 6. The interim dividend will be paid on 15 July 2005 to shareholders onthe register at close of business on 17 June 2005. 7. Copies of the Interim Statement are available from the CompanySecretary, Gooch & Housego PLC, The Old Magistrates Court, Ilminster, Somerset TA19 0AB. This information is provided by RNS The company news service from the London Stock Exchange