RNS Number:3887X
Gooch & Housego PLC
18 June 2002
FOR IMMEDIATE RELEASE 18 June 2002
For further information :
Ian Bayer 01460 52271
Gooch & Housego PLC
Tim Thompson 020 7466 5000
Buchanan Communications
GOOCH & HOUSEGO PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2002
CHAIRMAN'S STATEMENT
The Board of Gooch & Housego PLC would like to update the market on the current
trading position.
Following last year's record profit, it was disappointing to issue the trading
statement in March. It set out the reasons for the anticipated reduction in
current year sales and profits for the Group, and the interim results announced
today reflect that position. As previously stated parts of the Group have
performed to budget but a decline for acousto-optic products and in particular
for the Group's Q-switches, has resulted in overall lower profits for the
half-year. The G&H UK order book for Q-switches is currently in excess of £1m
and the monthly input for orders has been growing.
During this period the group has been subject to the impact of the global
recession, particularly in the United States. Whilst we have not experienced
major problems in respect to order cancellations, we have been subjected to our
customers exercising options to re-schedule their deliveries in order to reduce
their inventory levels. As a result of these changes we have revised our
projections and future expectations. Primary causes relating to this
re-alignment by customers resulted from a slow down in the marker business,
semi-conductor and laser equipment markets. The UK Company was however only
affected from January to March 2002, a total of 3 months. By end of March 2002,
an increasing number of orders were being placed and with re-scheduling taking
place, we have now increased production from 500 per month to 800 per month.
I am delighted to have welcomed Mr Ian Davidson as Chief Executive in January
2002. His management skills will be of considerable value. I feel patience has
been rewarded, having interviewed at least 8 applicants who were not considered
suitable for the position. I am extremely pleased with Ian's contribution in
his first few months with the Group.
FINANCIAL RESULTS
For the six months to 31st March 2002 the Group is reporting operating profits,
before amortisation of goodwill, of £0.77m (2001: £2.28m). Profit before
taxation was £0.54m (2001: £1.99m), achieved on a turnover of £7.01m (2001:
£10.24m).
Earnings per share for the period were 1.8p (restated 2001: 6.5p).
The Group's financial position remains strong. Gearing at the half year stood at
15% (2001: 25%) while interest was covered 7 times (2001: 14 times).
DIVIDENDS
The Directors are declaring an interim dividend of 1.0p to be paid on 26 July
2002 to all shareholders on the register on 26 June 2002. This represents an
increase of 11% when compared to the 0.9p paid last year.
UNITED KINGDOM
GOOCH & HOUSEGO
Sales for Gooch & Housego (G&H) for the period under review were £2.58m (2001:
£3.64m) while operating profits, before goodwill amortisation were £0.59m (2001:
£1.22m).
As highlighted in the trading statement of 25 March 2002, the principal reason
for the trading statement was as a significant fall off in demand for
Q-switches. This had been caused by orders being deferred rather than
cancelled.
Apart from the Q-switch problem the scientific optical section has not felt the
recession. Indeed the order book is growing and we are working on three new
products. In addition the £1.2m order for the proximity switch has now been
received and development work on two other confidential projects are at the
prototype stage.
We intend to invest in our lens manufacturing facility to include, in the new
factory, another machine titled MRF (Magneto Rhelogical Finishing), to carry out
production of aspheric lens, using this to improve quality. The new US$0.5m MRF
machine corrects finished optics to accuracies our competitors will find
difficult to achieve. It is the first machine in the UK, with only 10 at this
time of writing in the world.
UNITED STATES
OPTRONIC LABORATORIES INC
Optronic Laboratories Inc (OLI) has experienced a downturn in sales of 33% to
£1.21m (2001:£1.74m) during the first six months of the financial year resulting
in an operating loss of £220,000 (2001: £148,000 profit).
In a difficult trading time I am pleased to report OLI have developed a new
light measuring instrument. Pre-production of the basic instrument is completed
and sales are beginning to be received. There is considerable sales activity
and we have already received orders for 10 units. We expect a number of further
orders by the year-end. The cost per basic machine is $20,000. I believe that
the market is crying out for this type of unit, and I am grateful to the OLI
management and staff for their hard work in preparing this machine for the
market. Other products are showing satisfactory activity. Shipments are good
and I believe that by the year-end we will move away from the difficulties we
have experienced since acquisition of OLI.
To strengthen our technical ability Professor Chris Pannell will take the
position of Chief Scientist for the Group and will operate in Orlando. I have
recommended his appointment. He has advised G&H UK over a number of years.
NEOS TECHNOLOGIES INC
It is apparent from the results now reported that NEOS Technologies Inc (NEOS),
with their reliance on Q-switch orders, has suffered the greatest decline in
sales within the Group with a 44% reduction in sales for the half-year. This
follows their record results in the year ended 30 September 2001. Sales for the
six months to 31 March 2002 were £1.72m (2001: £2.94m) with operating profits of
£ 0.52m (2001: £0.80m).
The NEOS order book is however now growing as orders are received. Their
recovery is well in hand and satisfactory.
CLEVELAND CRYSTALS INC
Cleveland Crystals Inc (CCI) has experienced a slow start to the current
financial year with an operating loss of £120,000 (2001:profit £116,000) from
sales of £1.64m (2001: £2.14m). The reduction in profit was expected and is in
line with budget.
The shortfall was due to the severity of the decline in semiconductor and
optical communications equipment markets. A year on year revenue decline was
projected as the National Ignition Facility (NIF) related large KDP crystals
sales were lower than normal because of facility preparation activities and
downtime from machinery moves. The new 10,500 sq.ft. fabrication and finishing
facility for large KDP crystals started pilot production in February.
Second half results should be much stronger. Billings for NIF related large KDP
crystals will be up significantly as a crystal growth milestone is reached and
the pilot production for finishing continues. Sales of materials for infra-red
applications are accelerating due to demand from defence programs. In addition,
pro-active sales and marketing, pricing adjustments, and timely deliveries are
yielding increased shipments of laser components (frequency converters and
pockels' cell Q-switches) in a flat market.
There has been an interchange of production within the Group's US businesses to
improve efficiency. NEOS have undertaken the entire production of RF Drivers
and have invested in a specialised plant called Pick & Place to increase
production considerably. NEOS have transferred manufacture of engineered metal
components to OLI, and have placed considerable orders with OLI. NEOS have also
transferred to G&H (UK) all manufacture of crystal transducers. The transfer has
made an improvement in NEOS production. G&H hope to be manufacturing quartz
bodies on modern equipment we have installed in the G&H (UK) facility. These
were previously purchased overseas.
NEW FACTORY
We have now identified a suitable site for a new factory for G&H in the UK and
have acquired an option that will be exercised when we receive full planning
approval. We hope to start building as soon as possible, with completion
estimated to take 9 - 10 months. The factory area will be 50,000 sq.ft., as
opposed to our present 25,000 sq.ft factory. Our investment programme on
modernisation is continuing. OLI's optical capability will be transferred to
Ilminster on completion of the new factory.
I hope this report shows faith we have in the future growth and success of the
Group. Despite the difficulties in the first half of this year, we are now
seeing a greater level of enquiries and an improving order book. We therefore
look forward with confidence that our revised financial budget will be achieved.
I thank all Shareholders for their support and finally I am grateful for the
Presidents (USA) and Directors (UK) for their untiring contribution. I
appreciate our Bank, Royal Bank of Scotland, for so readily agreeing the
necessary funds to invest in all our proposals, our advisor,
PricewaterhouseCoopers and Burges Salmon, Solicitor for their support.
A W Gooch MBE JP
Chairman
18 June 2002
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 31 March 2002. 6 months ended 6 months ended 12 months
ended
31 March 2002 31 March 2001 30 September 2001
(unaudited) (unaudited) (audited)
(restated) (restated)
£'000 £'000 £'000
Turnover 7,012 10,240 19,146
Operating Profit 619 2,138 4,312
Net interest payable (83) (153) (256)
Profit on ordinary activities before taxation 536 1,985 4,056
Tax on profit on ordinary activities (217) (814) (1,663)
Profit on ordinary activities after taxation 319 1,171 2,393
Dividends on equity shares (180) (162) (504)
Retained profit for the financial period 139 1,009 1,889
Earnings per ordinary share 1.8p 6.5p 13.3p
Dividend per share 1.0p 0.9p 2.8p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months ended 6 months ended 12 months ended
31 March 2002 31 March 2001 30 September 2001
(unaudited) (unaudited) (audited)
(restated) (restated)
£'000 £'000 £'000
Profit for the financial period 319 1,171 2,393
Currency translation differences on foreign
currency net investments 233 93 (11)
Taxation on retranslation gains/losses on
foreign currency loans hedged against foreign
currency investments - 44 3
Total recognised gains and losses for the
financial period 552 1,308 2,385
Prior year adjustment (179)
Total gains and losses recognised 373
since the last annual report
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
6 months ended 6 months ended 12 months ended
31 March 2002 31 March 2001 30 September 2001
(unaudited) (unaudited) (audited)
(restated) (restated)
£'000 £'000 £'000
Profit on ordinary activities after taxation 319 1,171 2,393
Dividends in year (180) (162) (504)
139 1,009 1,889
Other recognised gains and losses 233 93 (11)
Taxation on retranslation gains on foreign - 44 3
currency loans
Net addition to shareholders' funds 372 1,146 1,881
Opening shareholders' funds as previously 11,962 10,024 10,024
stated
Prior year adjustment - Increase in provision (179) (122) (122)
for deferred tax
Restated opening shareholders' funds 11,783 9,902 9,902
Closing shareholders' funds 12,155 11,048 11,783
UNAUDITED CONSOLIDATED BALANCE SHEET
As at As at As at
31 March 2002. 31 March 2001 30 September
2001.
(unaudited) (unaudited) (audited)
(restated) (restated)
£'000 £'000 £'000
FIXED ASSETS
Intangible assets 5,480 5,481 5,463
Tangible assets 3,614 3,742 3,710
9,094 9,223 9,173
CURRENT ASSETS
Stock 4,060 3,457 3,759
Debtors 2,636 4,134 3,524
Cash at Bank and in hand 1,971 2,056 2,481
8,667 9,647 9,764
CREDITORS
Amounts falling due within one year (3,053) (4,253) (4,112)
NET CURRENT ASSETS 5,614 5,394 5,652
TOTAL ASSETS LESS CURRENT LIABILITIES 14,708 14,617 14,825
CREDITORS
Amounts falling due after more than one (2,494) (3,562) (2,978)
year
PROVISIONS FOR LIABILITIES AND CHARGES (59) (7) (64)
12,155 11,048 11,783
CAPITAL AND RESERVES
Called up share capital 3,600 3,600 3,600
Share premium 3,404 3,404 3,404
Revaluation reserve 308 308 308
Profit and loss account 4,843 3,736 4,471
12,155 11,048 11,783
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 March 2002
6 months 6 months 12 months
ended ended ended
31 March 2002 31 March 2001 30 September 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash inflow from operating activities (i) 977 2,222 4,352
Returns on investments and servicing of
finance
Interest received 19 45 76
Interest paid (100) (197) (327)
Interest element of hire purchase contracts (2) (1) (5)
Net cash outflow from returns on investments (83) (153) (256)
and servicing of finance
Taxation
UK tax paid (261) (164) (434)
Overseas tax paid (129) (664) (1,092)
Cash outflow from taxation (390) (828) (1,526)
Capital expenditure
Purchase of tangible fixed assets (136) (295) (597)
Sale of tangible fixed assets 6 - 29
Net cash outflow from capital expenditure and (130) (295) (568)
financial investment
Acquisitions
Acquisition of subsidiary - NEOS Technologies - (239) (266)
Inc
Net cash outflow from acquisition - (239) (266)
Equity dividends paid (342) (279) (441)
Net cash inflow before financing 32 428 1,295
Financing
Repayment of bank loan (550) (248) (744)
Capital element of hire purchase repayments (12) (20) (50)
Net cash outflow from financing (562) (268) (794)
Increase in cash in the period (ii) (530) 160 501
GROUP CONSOLIDATED ACCOUNTS
Notes to the cash flow statement
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
2002 2001 2001
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
( i ) Reconciliation of operating profit to net
cash inflow from operating activities
Operating profit 619 2,138 4,312
Amortisation of goodwill & licenses 155 148 301
Amortisation of debt issue costs 8 11 15
Depreciation 254 284 496
(Increase) in (153) (86) (508)
stock
Decrease / (increase) in debtors 954 (565) (69)
(Decrease) / increase in creditors (860) 292 (195)
977 2,222 4,352
(ii) Reconciliation of net cash inflow / (outflow) to
movement in net debt (Decrease) / increase in cash in the
period (530) 160 501
Cash outflow from decrease in debt and lease financing 562 268 794
Changes in net debt resulting from cash flows 32 428 1,295
New hire purchase contracts (59) - -
Movement in debt issue costs (8) (11) (15)
Translation difference (83) (186) 26
Movement in net debt in the period (118) 231 1,306
Net debt at 1 October 2001 (1,761) (3,067) (3,067)
Net debt at 31 March 2002 (1,879) (2,836) (1,761)
(iii) Analysis of net debt
At Cash flow Non-cash At
Exchange 3 March 2002
1 October 2001 Movement
£'000 £'000 £'000 £'000 £'000
Cash at Bank and in hand 2,481 (530) 20 - 1,971
Debt due after one year (2,978) - (37) 563 (2,452)
Debt due within one year (1,236) 550 (66) (571) (1,323)
Hire purchase (28) 12 - (59) (75)
(1,761) 32 (83) (67) (1,879)
NOTES TO THE INTERIM STATEMENT
1. The financial information set out above does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
summarised results for the six months ended 31 March 2002 and the comparative
figures for the six months ended 31 March 2001 are unaudited. The figures for
the year ended 30 September 2001 have been extracted from the Group statutory
accounts, which have been filed with the Registrar of Companies and contain an
unqualified audit report.
2. Following the adoption of FRS19, deferred tax is now provided in full. Prior
to the introduction of FRS19, deferred tax was provided using the liability
method, on all material timing differences to the extent that the liability or
asset was expected to crystalise in the forseeable future. The figures for
March 2001 and September 2001 have been restated by means of a prior year
adjustment to reflect a full provision for deferred tax for those periods.
Taxation for the six months ended 31 March 2002 and 31 March 2001 has been
estimated at prevailing rates. Taxation for the year ended 30 September 2001 is
the actual provision for that year.
3. Earnings per share for the six months to 31 March 2002 and for prior periods
have been calculated using a total of 17,999,162 shares, being the average
number of shares in issue in those periods.
4. All of the amounts above are in respect of continuing operations
5. Accounting policies are consistent with those applied in previous years
and are as set out in the Group's audited accounts at 30 September 2001
6. The interim dividend will be paid on 26 July 2002 to shareholders on the
register at close of business on 26 June 2002.
7. Copies of the Interim Statement will be dispatched to Shareholders during
the week commencing 1 July 2002 and are available from the Company Secretary,
Gooch & Housego PLC, The Old Magistrates Court, Ilminster, Somerset, TA18 OAB.
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