RNS Number:0951E
Gooch & Housego PLC
20 January 2000
GOOCH & HOUSEGO PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1999
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 preliminary results for the year
ended 30 September 1999.
Highlights
* Completion of the acquisition of Cleveland Crystals Inc
which contributed to increased profits.
* Turnover increased by 45% to #10,377,000 (1998: #7,154,000)
* Operating profit increased by 18% to #2,001,000 (1998:
#1,701,000)
* Appointment of new Management team to the Board in
January 2000
* Recommended increase in final dividend of 1.3p per share
making a total for the year of 1.9p (1998 : 1.7p)
Archie Gooch, Chairman of Gooch & Housego commented, "In the
past year we have witnessed several significant changes within
the Group. We have already taken steps in our various
operations to meet the challenges of the markets in which we
operate. All of our subsidiaries are working closely together
to integrate their unique technical and marketing skills, and
I believe that, with the new management team in place, we
again have a solid foundation on which to develop the Group".
For further information:
Archie Gooch/Ian Bayer
Gooch & Housego PLC 01460 52271
Tim Thompson/Jennie Duschenes
Buchanan Communications 0171 466 500
CHAIRMAN'S STATEMENT
I am pleased to submit my report for the year ended 30th
September 1999. These results reflect the considerable
changes at Gooch & Housego PLC including the key strategic
acquisition of Cleveland Crystals Inc (CCI) in February 1999.
The acquisition was achieved against strong competition from
both French and German companies, but we were successful
because the Management of CCI perceived that under our
ownership there were considerable advantages in the product
range and Management structure.
RESULTS & DIVIDENDS
Overall Group results for the year, including a significant
eight-month contribution from CCI, are ahead of last year,
although below our initial expectations. Turnover increased
45% from #7,154,000 to #10,377,000. Operating profits, after
deducting the amortisation of goodwill arising on the
acquisition of CCI of #115,000, were #2,001,000 (1998 :
#1,701,000) an increase of 18%. Profits before tax were
#1,851,000 (1998 : #1,812,000). The reduction in earnings per
share to 6.5p (1998 : 7.5p) reflects the higher relative
contribution from the Group's US subsidiaries where tax rates
are higher.
As a measure of the Board's confidence in the current and
future prospects of the Group, it is recommending an increased
final dividend of 1.3p (1998 : 1.2p) which, together with the
interim dividend paid, totals 1.9p (1998 : 1.7p) for the year.
Subject to approval at the Annual General Meeting the final
dividend will be payable on 2 March 2000 to all shareholders
on the register on 4 February 2000.
UNITED KINGDOM
Although turnover was marginally higher than in the previous
financial year at #4,798 ,000 (1998: #4,565,000) there were
two problems that affected the UK business.
The first of these, which was beyond our control, was due to
the much publicised problems of the electronics industry in
Japan and the Far East. We suffered a 21% down turn in the
call off of Q-switches and this significantly affected the
profitability of our UK business. I am pleased to report that
sales and production have now returned to their 1998 levels
and are increasing. The forward order book is still buoyant
and there have been no cancellations of annual contracts.
The second problem was the delay in the installation and
implementation of the new computer system. A number of
measures have now been taken to improve the flexibility and
responsiveness of our manufacturing process, including the
introduction of a new computerised material requirements
planning and production control system. The introduction of
the computer system has taken longer than expected and
resulted in a number of the production difficulties already
referred to. I am pleased to report that following the
appointment of an experienced IT Manager all modules of the
new systems are expected to be fully operational by March 2000
with the resultant expected increases in efficiency.
Progress on the development of a fibre-optic switch for
telecommunications applications is ongoing. The research
laboratory dedicated to this project is now fully established,
and our new physicist is generating encouraging results. We
are pleased to report that one of the main problems has now
been overcome, which has given us encouragement that this
switch can be developed to the final stages.
Our traditional precision optics business has come through a
turbulent year when, as referred to in my interim report,
although orders increased significantly the complexity of work
resulted in less efficient production and a decline in
profitability. I am pleased to report that our new middle
management team has tackled the operational production
problems and the business looks strongly placed to develop in
the current financial year with a greater depth of skills
across the employee base. The optics business has the
opportunity of some significant orders in the current year
which should help return the business to its historic levels
of profitability.
UNITED STATES
CLEVELAND CRYSTALS INC
The Board is very pleased to have secured the #4,272,000
acquisition of CCI. In the period since acquisition CCI has
contributed profits of #927,000 on turnover of #3,247,000.
These excellent results, benefitted from the accomplishment of
certain milestones on contracts with The US Department of
Energys National Ignition Facility (NIF) at Lawerence
Livermore National Laboratories (LLNL) in California and the
ongoing supply of large crystals to Rochester University. In
comparison trading in CCIs core electro optics Q switches has
suffered in the same way as the UK business.
The prospects for the current year are encouraging as CCI
continues work on the growth and fabrication of crystals for
the new laser facility at LLNL as part of a $5 million
incrementally funded contract, although the relative level of
profitability on the current stages of the contract is
expected to be less.
OPTRONICS LABORATORIES Inc
As reported in my interim statement trading conditions at
Optronic Laboratories Inc ("OLI") continue to be difficult.
Turnover for the twelve months was #2,562,000 (1998:
#2,723,000) down 6% with a resultant fall in operating
profits to #66,000 (1998 : #277,000).
Trading in the first quarter of the current financial year has
started ahead of the same period of 1998 and I am particularly
encouraged by the increased level of enquiries. New products
launched earlier in the year are experiencing an increasing
level of interest and we are anticipating that sales will
increase in the latter part of 2000.
I am pleased to report that the optics facility is now fully
operational in Orlando and sales have commenced. The facility
will allow G&H to penetrate the US market as a local supplier
as well as providing a secondary specialist production
facility to satisfy the high levels of demand being
experienced in the UK.
DIRECTORS
It was with much sadness that I reported the resignation of
Tony Heals through ill health. He had been a loyal servant of
the Group for 30 years, latterly as Financial Director. He
will be much missed by all our staff. Gareth Jones who had
been Managing Director has also moved on to further his career
outside of the industry. His unique skills as a physicist in
acousto optics helped establish G&H as a leader in the Q
switch market several years ago.
I am delighted since the year-end to have appointed a new team
to the Board, who I believe have the proven ability to drive
the Group forward.
Paul Kenrick joined at the start of January as replacement for
Gareth Jones as Managing Director. Paul has over thirty years
experience in the optical industry and has been responsible
for several major optical catalogue businesses. His
operational experience at Corning together with his market
knowledge gained at Melles Griot and OptoSigma will be an
invaluable asset to the Group.
Ian Bayer has replaced Tony Heals as Finance Director. He
brings with him a wealth of operational and financial
experience as a Finance Director within the public company
arena. His experience of controlling US subsidiaries will be
particularly helpful, as this part of the group has become
increasingly important. Bill Pooles appointment as Director
of Production is bringing further success.
I am delighted to announce that Eugene Arthurs the former
president of CCI has joined the Board as Non-Executive
Director. He has been involved in the optical industry across
both sides of the Atlantic for over thirty years in both a
commercial and senior management role. He is currently
Executive Director of SPIE the International Society for
Optical Engineering in the US. His vast knowledge of the
optics industry will bring considerable strength to the Board.
He joins Jan Melles who also has world wide respect in our
industry.
MANAGEMENT AND STAFF
The past year has been challenging for the Group. I am
grateful for the effort and dedication shown by the management
and staff without whom these results announced today would not
have been possible.
PROSPECTS
In the past year we have witnessed several significant changes
within the Group. We have already taken steps in our various
operations to meet the challenges of the markets in which we
operate. All of our subsidiaries are working closely together
to integrate their unique technical and marketing skills, and
I believe that, with the new management team in place, we
again have a solid foundation on which to develop the Group.
The current year has begun with strong order books and in line
with expectations, and we look forward to a year of increased
growth.
Archie Gooch MBE JP
Executive Chairman
20th January 2000
GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
30 SEPTEMBER 1999
Existing Acquisitions
Operations 1999 1998
# 000 # 000 # 000 # 000
Turnover 7,130 3,247 10,377 7,154
Trading expenditure (6,056) (2,320) (8,376) (5,453)
------ ------- ------- -------
Operating profit 1,074 927 2,001 1,701
====== ======
Exceptional item: Profit
on disposal of fixed
assets - 85
------ ------
Profit on ordinary
activities before interest 2,001 1,786
Other interest receivable
and similar income 41 88
Interest payable and
similar charges (191) (62)
------ -------
Profit on ordinary
activities before taxation 1,851 1,812
Tax on profit on ordinary
activities (756) (569)
------- ------
Profit on ordinary
activities after taxation 1,095 1,243
Dividends on equity shares (321) (288)
------- -------
Retained profit for the
financial year 774 955
====== =======
Earnings per 20p ordinary share 6.5p 7.5p
All operations undertaken by the Group during the current year
are continuing.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 September 1999
1999 1998
# 000 # 000
Profit for the financial year 1,095 1,243
Currency translation difference on foreign
currency net investments 16 (55)
----- ------
Total recognised gains and losses for the 1,111 1,188
financial year ===== ======
No note of historical cost profit for the group or the company
has been presented as the difference between the reported
profit is immaterial.
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 1999
1999 1998
# 000 # 000 # 000 # 000
FIXED ASSETS
Intangible assets 3,336 4
Tangible assets 3,497 2,955
----- ------
6,833 2,959
CURRENT ASSETS
Stocks 1,440 1,178
Debtors 3,238 1,591
Cash at bank and in hand 269 1,416
----- ------
4,947 4,185
CREDITORS : amounts falling
due within one year (2,806) (1,571)
------ --------
NET CURRENT ASSETS 2,141 2,614
------ -------
TOTAL ASSETS LESS CURRENT 8,974 5,573
LIABILITIES
CREDITORS : amounts falling
due after more than one year (2,916) (305)
------- -------
6,058 5,268
======= =======
CAPITAL AND RESERVES
Called up share capital 3,381 3,381
Share premium account 1,113 1,113
Revaluation reserve 308 308
Profit and loss account 1,256 466
------ ------
EQUITY SHAREHOLDERS FUNDS 6,058 5,268
====== ======
Note; The 1998 Balance Sheet, has been restated following the
implementation of FRS10 "Goodwill and Intangible Assets".
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 1999
Note 1999 1998
# 000 # 000 # 000 # 000
Cash flow from operating
activities (i) 1,592 1,423
Returns on investments
and servicing
of finance
Interest received 41 88
Interest paid (173) (67)
Interest element of
hire purchase
contracts (1) (7)
------- --------
Net Cash (outflow)/inflow
from returns on investments
and servicing of finance (133) 14
Taxation
UK tax paid (522) (374)
Overseas tax paid (251) (68)
------- --------
Cash outflow from taxation (773) (442)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (612) (1,193)
Sale of tangible fixed assets 15 286
------ --------
Net cash outflow from capital
expenditure and financial
investment (597) (907)
Acquisition
Acquisition of subsidiary (4,272) -
Cash acquired on acquisition 55 -
-------- --------
Net cash outflow from acquisition (4,217) -
Equity dividends paid (304) (111)
------ ------
Cash inflow before financing (4,432) (23)
Financing
New bank loans 3,411 -
Cash inflow from flotation - 1,495
Repayment of bank loan (202) (219)
Capital element of hire purchase
contracts (49) (11)
-------- -------
Net cash inflow from financing 3,160 1,265
----- -----
(Decrease)/increase in cash in the
year (iii) (1,272) 1,242
======= =====
CONSOLIDATED CASH FLOW STATEMENT
Notes to the cash flow statement
(i) Reconciliation of operating profit to operating cash flows
1999 1998
Continuing Acquisitions Total
# 000 # 000 # 000 # 000
Operating profit 1,074 927 2,001 1,701
Amortisation of goodwill - 115 115 -
Depreciation 318 44 362 258
Decrease/(increase)
in stock 21 182 203 (362)
(Increase) in debtors (605) (685) (1,290) (95)
(Decrease)/increase in
creditors 139 62 201 (79)
----- ----- ----- -----
947 645 1,592 1,423
===== ===== ===== ======
(ii) Cash flow relating to exceptional items
The cash inflows in the year ended 30 September 1998
included a cash inflow of #286,000 received from the new
proceeds of selling the Orlando factory.
(iii) Reconciliation of net cash inflow to movement in net
funds/(debt)
1999 1998
# 000 # 000
(Decrease)/increase in cash in the (1,272) 1,242
year
Cash (inflow)/outflow from
(increase)/decrease in
debt and lease financing (3,159) 230
------- ------
Changes in net debt resulting from
cash flows (4,431) 1,472
New hire purchase contracts (66) -
Translation difference 22 (12)
------- -------
Movement in net debt in the year (4,475) 1,460
Net funds/(debt) at 1 October 1998 893 (567)
------- ------
Net (debt)/funds at 30 September 1999 (3,582) 893
======= ======
Liquid resources comprise short-term deposits with banks.
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 1999
(iv) Analysis of net (debt)/funds
At 1 At 30
October Cash Exchange Non-cash September
1998 flow Movement Movement 1999
# 000 # 000 # 000 # 000 # 000
Cash in hand at
bank 1,416 (1,158) 11 - 269
Overdrafts - (114) - - (114)
-------
(1,272)
Debt due after
1 year (280) (2,632) 12 - (2,900)
Debt due within
1 year (186) (577) - - (763)
Hire Purchase (57) 50 (1) (66) (74)
-------
(3,159)
------ ------- ---- ----- -----
893 (4,431) 22 (66) (3,582)
====== ======= ==== ===== ======
Copies of this statement will be sent to shareholders on
4 February 2000 and will be available from The Old
Magistrates Court, Ilminster, Somerset.
END
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