RNS No 3743f
GOOCH & HOUSEGO PLC
20th January 1999
GOOCH & HOUSEGO PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1998
Gooch & Housego PLC ("G&H"), the specialist manufacturer of
precision optical components and bespoke glass engineering
items, acoustic-optic devices and instruments for measuring
optical radiation, today announces preliminary results for
the year ended 30 September 1998.
Highlights
* Turnover increased by 6.5% to #7,154,000 (1997:
#6,718,000)
* Profit before tax and exceptional credits increased by
21% to #1,727,000 (1997: #1,427,000)
* Profit before tax increased by 15% to #1,812,000
(1997: #1,576,000)
* UK business increased pre-tax profits by 14.7% to
#1,448,000 on turnover of #4,565,000, up 14.1%
* Management changes in US led to an improvement in 2nd
half results
* Recommended final dividend of 1.2p per share making a
total for the year of 1.7p
Archie Gooch, Chairman of Gooch & Housego commented:
"The developments that are taking place in many of the
activities of the group, including potential acquisitions,
leave it well positioned for continued growth and
profitability. The increasingly broad product spread
resulting from these developments will benefit both the UK
and the USA operations, and as a result I continue to be
optimistic about the future success of Gooch & Housego."
For further information:
Archie Gooch/ Gareth Jones
Gooch & Housego PLC Tel: 01460 52271
Tim Thompson/ Jennie Roberts
Buchanan Communications Tel: 0171 4665000
Trevor Inglis
Sutherlands Ltd Tel: 0171 628 2030
Extract from the annual report and accounts
Chairmans Statement
Introduction
This is Gooch & Housego PLCs first Annual Report and
Accounts since its flotation on the Alternative Investment
Market in December 1997, and follows Interim Results sent to
shareholders in June 1998. I am pleased to report on a year
that combined successful financial results with significant
and ongoing developments aimed at strengthening and expanding
the group.
Results for the Year
Overall group results for the year are pleasing with profits
in line with our expectations at the time of flotation. Group
pre-tax profits for the year ended 30th September 1998 were
#1,812,000, including an exceptional profit on the sale of US
property of #85,000, representing an increase of 15% relative
to the previous financial year. The comparative increase in
pre-tax profits before exceptional items was 21%. Turnover
increased by 6.5% to #7,154,000.
United Kingdom
The United Kingdom business continued its strong performance
with an increase in pre-tax profits of 14.7% to #1,448,000 on
a turnover that increased by 14.1% to #4,565,000. Sales of
acousto-optics, including RF drivers, increased by 18% on the
previous year and now account for 65% of turnover. During the
summer the group invested in an advanced automated lens
manufacturing facility, which has significantly increased the
lens production capacity and will enable further growth of
the traditional optics business. Worldwide problems in the
semiconductor industry have been accompanied by a slackening
in demand for Q-switches. However the UK year end total order
book stood at a record level of #2,199,000, up 18% on the
1997 level. Given the prevailing market conditions this is a
satisfactory figure. Implementation of a fully integrated
computer system and associated software is continuing and
good progress is being made. The system, which will be fully
operational during the current financial year, should deliver
real production and administrative savings.
United States
The United States business, Optronic Laboratories Inc., has
shown improvement in the second half of the year following
the management changes referred to in my interim report, and
this improvement looks set to continue. Pre-tax profit for
the year was up by 19.4% at $602,000, albeit including profit
on the sale of vacated property, on a turnover of $4,505,000.
Steve Denomme, in his new role as President, has introduced
several changes including the appointment of a new marketing
manager. This will enable Optronic Laboratories to take
better advantage of its leading product range.
It is Gooch & Housegos policy to develop the business of
Optronic Laboratories to more effectively market the groups
leading products in the US market for optics and acousto-
optics, as well as extending the core instrumentation product
range to address a wider market. The first step in this
process was the successful development of a range of RF
drivers for use with our acousto-optics Q-switches, and these
are now achieving increased market penetration. The
completion of the new 25,000 square foot factory in Orlando,
opened in February 1998, was the next phase, creating
considerable additional space for new projects, including, in
particular, the manufacture of precision optics which, until
now, had been carried out entirely at the groups UK site.
US Optics Manufacturing
An optics manufacturing facility is being established at the
new Orlando facility that will allow G&H to address the large
US optics market as a US manufacturer, thereby overcoming any
resistance or financial disadvantage that we may have
hitherto suffered as a foreign supplier. In particular, this
will enable us to compete on even terms for the supply of
optics to a major potential US government customer that is
forced to pay a 12% surcharge when purchasing goods from non-
US companies. Jeff Orton, a specialist in optical
manufacturing with previous experience of establishing a new
facility, joined G&H in June and, after a period of
familiarisation with the companys products and methods in
the UK, moved to Orlando in September to begin the set-up
process.
A new range of instrument products targeted at higher volume
industrial markets should result from a joint development
between the UK and USA companies. These will complement the
current range of low volume laboratory instruments.
Directors
Two non-executive directors were appointed to the Board in
1997. Jan Melles brings extensive knowledge of the photonics
industry and mergers and acquisitions, whilst Andrew Davison
has considerable city and finance expertise.
Flotation
The group was successfully floated on the Alternative
Investment Market on 12th December 1997 with 33.3% of the
enlarged issued share capital passing into public hands. Of
the funds raised approximately #1,495,000 was for investment
in the group, notably for the construction of the new factory
in Orlando and additional automated manufacturing equipment
in Ilminster.
Dividend
The Board has recommended a final dividend of 1.2p per
ordinary share. This makes a total for the year of 1.7p.
Subject to approval at the Annual General Meeting, the final
dividend will be payable on 26th February 1999 to all
shareholders registered on 5th February 1999.
Strategy
The research and development of photonic devices and
systems for our next generation of products continues to be a
high priority. Work has commenced on the commercialisation of
a fibre-optic re-routing switch that if successful will find
applications in the telecommunications market. This project,
supported under the Department of Trade and Industrys SMART
scheme, has allowed us to strengthen the research and
development team through the recruitment of an additional
post-doctoral physicist. A number of other research and
development projects looking into new devices and instruments
are running in parallel and involve collaboration between the
UK and US companies and with universities.
Gooch and Housego will continue to concentrate on the
manufacture of photonic products for a worldwide market. It
is our aim to be a world leader in each of our spheres of
activity. Growth will be achieved organically through
internal investment and research and development; and by
acquisition. Since flotation the Board have investigated
several potential acquisitions, both in the UK and the USA,
and we hope that we shall be in a position to make an
announcement in respect of one such initiative shortly.
Outlook
The developments that are taking place in many of the
activities of the group, including potential acquisitions,
leave it well positioned for continued growth and
profitability. The increasingly broad product spread
resulting from these developments will benefit both the UK
and the USA operations, and as a result I continue to be
optimistic about the future success of Gooch and Housego.
Finally I would like to thank both the UK and USA workforce
and directors for the part they have played in achieving yet
another good year for the company.
Archie Gooch M.B.E. J.P.
Executive Chairman
GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 SEPTEMBER 1998
Note 1998 1997
#000 #000
Turnover 7,154 6,718
Changes in stocks of
finished goods and work in 321 51
progress
Own work capitalised 19 -
Other operating income 35 128
Raw materials and (1,575) (1,498)
consumables
Other external charges (430) (396)
Staff costs (2,765) (2,618)
Depreciation (257) (241)
Other operating charges (801) (644)
------- -------
Operating profit 1,701 1,500
Exceptional item: Profit
on disposal of fixed assets 85 149
------- -------
Profit on ordinary
activities before 1,786 1,649
Interest
Other interest receivable
and similar Income 88 7
Interest payable and
similar charges (62) (80)
------- -------
Profit on ordinary
activities before 1,812 1,576
Taxation
Tax on profit on ordinary (569) (465)
activities ------- -------
Profit on ordinary
activities after
Taxation 1,243 1,111
Dividends on equity shares (288) (51)
------- --------
Retained profit for the
financial year 955 1,060
======= ========
Earnings per 20p ordinary
share 7.5p 7.4p
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 1998
1998 1997
#000 #000
Profit for the financial year 1,243 1,111
Currency translation differences
on foreign currency net (55) (34)
investments ------ ------
Total recognised gains and losses
for the financial year 1,188 1,077
======= ======
No note of historical cost profit for the group or the
company has been presented as the difference between the
reported profit and the historical cost profit is immaterial.
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 1998
Note
1998 1997
#000 #000 #000 #000
FIXED ASSETS
Intangible assets 4 5
Tangible assets 2,955 2,175
----- ------
2,959 2,180
CURRENT ASSETS
Stocks 1,178 835
Debtors 1,591 1,659
Cash at bank and in hand 1,416 278
------ -----
4,185 2,772
CREDITORS: amounts
falling due within one
year (1,571) (1,531)
------ ------
NET CURRENT ASSETS 2,614 1,241
------ ------
TOTAL ASSETS LESS
CURRENT LIABILITIES 5,573 3,421
CREDITORS: amounts
falling due after more
than one year (305) (547)
------ ------
5,268 2,874
====== ======
CAPITAL AND RESERVES
Called up share capital 3,381 5
Share premium account 1,113 -
Revaluation reserve 308 308
Goodwill reserve (1,335) (1,335)
Profit and loss account 1,801 3,896
------ -------
EQUITY SHAREHOLDERS
FUNDS 5,268 2,874
====== =======
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 1998
Note
1998 1997
#000 #000 #000 #000
Cash flow from
operating activities 1,423 1,451
Returns on investments
and servicing of
finance
Interest received 88 7
Interest paid (67) (71)
Interest element of
hire purchase
contracts (7) (7)
------- ------
Net cash
inflow/(outflow) from
returns on investments 14 (71)
and servicing of
finance
Taxation
UK tax paid (374) (252)
Overseas tax paid (68) (128)
------- -------
Cash outflow from (442) (380)
taxation
Capital expenditure and
financial investment
Purchase of tangible (1,193) (899)
fixed assets
Sale of tangible fixed 286 189
assets ------ -------
Net cash outflow from
capital expenditure
and financial (907) (710)
investment
Equity dividends paid (111) (26)
------ ------
Cash (outflow)/inflow
before financing (23) 264
Financing
Cash inflow from
flotation 1,495 -
Inception of hire purchase - 76
contracts
Repayment of bank loan (219) (233)
Capital element of hire
purchase contracts (11) (27)
------- ------
Net cash
inflow/(outflow) from 1,265 (184)
financing ----- -----
Increase in cash in the 1,242 80
year ====== =====
NOTES TO THE CASH FLOW STATEMENT
1. (i)Reconciliation of operating profit to operating cash flows
1998 1997
#000 #000
Operating profit 1,701 1,500
Depreciation 258 262
(Increase) in stock (362) (122)
(Increase) in debtors (95) (282)
(Decrease)/increase in creditors (79) 93
------ ------
1,423 1,451
====== ======
(ii) Cash flow relating to exceptional items
The cash inflows in the year ended 30 September 1998 include
a cash inflow of #301,000 received from the net proceeds of
selling the Orlando factory (note 7). The prior years
inflow includes #232,000 from the proceeds of an insurance
claim arising from a fire in the Ilminster factory.
(iii)Reconciliation of net cash inflow to movement in
net funds/(debt)
1998 1997
#000 #000
Increase in cash in the year 1,242 80
Cash outflow from decrease in debt 230 260
and lease financing ------ ------
Changes in net debt resulting from 1,472 340
cash flows
New finance leases - (76)
Translation difference (12) (4)
------ -------
Movement in net debt in the year 1,460 260
Net debt at 1 October 1997 (567) (827)
------ -------
Net funds/(debt) at 30 September 893 (567)
1998 ====== =======
NOTES
1. EXCEPTIONAL ITEM
Optronic Laboratories Inc moved into a purpose built factory
in Orlando in February 1998 and the old factory was sold in
May 1998 realising a profit of #85,000.
In 1997 the exceptional item arose from insurance claim
proceeds following a fire in the Ilminster factory which
destroyed or badly damaged some fixed assets.
2. Copies of this Statement will be sent to Shareholders on 28th
January 1999, and will be available from The Old Magistrates
Court, Ilminster, Somerset.
END
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