RNS No 7564h
GOOCH & HOUSEGO PLC
14 June 1999
The issuer has made the following alteration to the
GOOCH & HOUSEGO PLC - INTERIM RESULTS
announcement released today.
Under the "DIVIDEND" section of the announcement the interim dividend should
read "0.6p", not "0.66p".
All other details remain unchanged.
Interim results for the six months ended 31 March 1999
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 interim results for the
six months ended 31 March 1999.
HIGHLIGHTS
* Pre tax profits of #833,000 (1998: #826,000)
* Turnover marginally lower at #2,296,000 (1998: #2,326,000)
* Q-Switch sales down by 18%, whilst RF Driver sales
increased by 122%
* Positive start from Cleveland Crystals
* Interim dividend of 0.6p (1998: 0.5p) per ordinary share
For further information:
Archie Gooch/ Gareth Jones
Gooch & Housego PLC Tel: 01460 52271
Tim Thompson/ Jennie Roberts
Buchanan Communications Tel: 0171 4665000
CHAIRMAN'S STATEMENT
I am pleased to submit my report on a period when
Gooch & Housego has achieved similar pre-tax profits to
last year and completed the key strategic acquisition of
Cleveland Crystals Inc. ("CCI").
GROUP
The Group has performed satisfactory for the six months
ended 31 March 1999. Pre-tax profits, including a two
month contribution from the acquisition of CCI, were
#833,000 (1998: #826,000) after charging amortisation
of goodwill, of #28,000 arising on the acquisition.
These are satisfactory results in a period when difficult
trading conditions in the Far East, and turmoil in the
semi-conductor market led to a reduction in demand for
acousto-optics products - albeit partially offset by an
increase in demand for our conventional optics products
in the UK.
The acquisition of CCI, along with new products under
development and a strong order book for the United Kingdom
business, give grounds for cautious optimism for the long
term future, although it is very difficult to predict the
contributions from individual businesses in the shorter term.
UNITED KINGDOM
Turnover was marginally lower than in the same period last year
at #2,296,000 (1998: #2,326,000). The reduced demand for
Q-switches, attributable to the problems in the semi-conductor
industry referred to in my last Annual Report Statement has
continued, with sales down by 18%. The trend for major
customers to renew their contracts on an annual basis has
continued with the result that the Q-switch order book
actually increased by 2% during the period. The downturn in
sales therefore reflects a reduced order call-off rather
than any significant change in our competitive position
in the market.
RF driver sales increased by 122% for the equivalent period
and now account for 10% of UK sales, representing considerable
added value to the Q-switch business. The sluggishness of the
laser market in general has, however, resulted in a slightly
reduced demand for our other acousto-optic products with sales
down by 7%. In contrast, demand for precision optics, lenses,
prisms and waveplates has increased considerably with orders
on hand up by 74%.
This represents not only a shift in the type of work, but also the
complexity of the manufacturing process. This has more recently
resulted in less efficient production and a decline in
profitability as well as a need for more labour with optical
engineering skills. Due to the shortage of skilled workers
available for recruitment, we have increased the training of
employees with the assistance of our skilled staff, who
have been very willing to share their knowledge.
A number of measures are being taken to improve our flexibility
and responsiveness, including the progressive introduction of new
computerised material requirements planning and production control
systems. In addition, we have opened new facilities in the USA at
the O.L.I factory, which will allow direct supply of conventional
optics to our overseas customers.
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 initial results. An intensive
programme of work lies ahead.
UNITED STATES
Cleveland Crystals Inc
The Board is very pleased to have secured the $6,500,000 acquisition
of CCI at an exciting time in that Company's development. The
acquisition of 100% of the share capital was financed by new bank
loans of #3.3 million and cash from reserves. CCI have recently
commenced work on a new incrementally funded $5 million contract
to grow and fabricate crystal plates for the new laser under
construction at the US Department of Energy's National Ignition
Facility (NIF) at Lawrence Livermore National Laboratory in
California. This contract is expected to contribute over
$1,000,000 of sales in the current financial year. Lawrence
Livermore is investing in a new specially equipped facility
at CCI and it is anticipated that this and similar projects
will play an important role in CCI's future.
There has already been interaction between G&H and CCI in the
areas of marketing and technology, targeting key customers with
each company's complementary product range. There will be significant
benefits to be derived from a united approach. In this respect we
warmly welcome CCI's President, Dr Eugene Arthurs, and look forward
to a successful future with him.
CCI has made an impressive start since acquisition into the G&H
group contributing turnover of $1,207,000 and profit before tax of
$265,000 after adjusting for the amortisation of goodwill and interest
on loans. The business of CCI provides larger and more individually
significant sales. The timing of sales is difficult to predict.
This makes it more difficult to forecast both turnover and profits
in any given period.
Optronic Laboratories Inc
Trading at Optronic Laboratories Inc (OLI) continues to be difficult
and the Company has recorded a profit of $154,000 for the half year,
which represents a drop of 14% on the same period last year.
However, diversification is continuing and new products were
introduced at the CLEO Exhibition in Baltimore USA in May
and will also be exhibited at the forthcoming Laser '99
Exhibition in Munich. The new RF driver business has shown
encouraging growth and the new optics manufacturing unit
has recently begun production.
We appreciate the effort that is being made by Steve Denomme,
President of OLI.
DIVIDEND
The Board has declared an interim dividend of 0.6p (1998: 0.5p)
per Ordinary Share. The dividend will be payable on 22 July 1999
to all shareholders registered on 25 June 1999.
Archie Gooch M.B.E. J.P.
Executive Chairman
Copies of the statement will be sent to shareholders
during the week of 14 June 1999, and will be available from
The Old Magistrates Court, Ilminster, Somerset.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover - existing 3,511 3,662 7,154
- acquisitions 743 - -
--------- --------- ------
4,254 3,662 7,154
--------- --------- -------
Operating profit
- existing 658 826 1,701
- acquisitions 194 - -
-------- --------- -------
Operating profit before
exceptional item 852 826 1,701
Exceptional item:
Profit on disposal
of fixed assets - - 85
-------- --------- -------
Profit on ordinary activities
before interest 852 826 1,786
Net interest
receivable/(payable) (19) - 26
-------- --------- -------
Profit on ordinary activities
before taxation 833 826 1,812
Tax on profit on
ordinary activities (291) (249) (569)
-------- --------- ---------
Profit on ordinary activities
after taxation 542 577 1,243
Dividends on
equity shares (101) (85) (288)
-------- --------- --------
Retained profit for the
financial period 441 492 955
--------- --------- -------
Earnings per
ordinary share 3.2p 3.6p 7.5p
--------- --------- --------
All of the amounts above are in respect of continuing operations.
Earnings per ordinary share is calculated on profit on
ordinary activities after taxation, using the weighted average
number of shares in issue for the period, of which there were
16,904,162 (1998: 16,150,630).
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Profit for the financial period 542 577 1,243
Currency translation differences on
foreign currency net
investments 112 (71) (55)
---------- ---------- -----
Total gains and losses for
the financial period 654 506 1,188
---------- ---------- -----
CONSOLIDATED BALANCE SHEET
31 March 31 March 30 September
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Intangible assets 3,412 5 4
Tangible assets 3,337 2,862 2,955
------------ ----------- ------
6,749 2,867 2,959
------------ ----------- -------
Current assets
Stocks 1,777 918 1,178
Debtors 2,302 1,736 1,591
Cash at bank and in hand 735 1,337 1,416
------------ ----------- -------
Total current assets 4,814 3,991 4,185
------------ ----------- -------
Creditors: amounts falling due
within one year (2,443) (1,622) (1,571)
------------ ----------- --------
Net current assets 2,371 2,369 2,614
------------ ----------- --------
Total assets less
current liabilities 9,120 5,236 5,573
creditors: amounts
falling due after more
than one year (3,299) (412) (305)
-------- -------- ---------
Net assets 5,821 4,824 5,268
-------- -------- ----------
Capital and reserves
Called up share capital 3,381 3,381 3,381
Share premium 1,113 1,115 1,113
Revaluation reserve 308 308 308
Profit and loss account 1,019 20 466
-------- -------- -------
Equity shareholders'funds 5,821 4,824 5,268
======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Cash flow from operating activities
(note 1) 672 786 1,423
Returns on investments
and servicing of finance
Interest received 31 33 88
Interest paid (33) (37) (67)
Interest element of
hire purchase contracts (2) (3) (7)
------------ ------------ -----------
Net cash (outflow/inflow
from returns on investments and
servicing of finance (4) (7) 14
Taxation
UK tax paid (51) (11) (374)
Overseas tax paid (40) (20) (68)
----------- ---------- -----------
Cash outflow from taxation (91) (31) (442)
Capital expenditure
and financial investment
Acquisition of subsidiary (4,089) -
Cash acquired on acquisition 55 - -
Purchase of tangible
fixed assets (245) (933) (1,193)
Sale of tangible fixed assets 3 1 286
---------- ------------ ----------
Net cash outflow
from capital expenditure
and financial investment (4,276) (932) (907)
Equity dividends paid (203) (26) (111)
------------ ------------ ---------
Net cash (outflow)
/inflow before financing (3,902) (210) (23)
Financing
Cash inflow from flotations - 1,495 1,495
New bank loans 3,338 - -
Repayment of bank loan (105) (119) (219)
Hire purchase repayment (28) (5) (11)
------------ -------- ----------
Net cash inflow/(outflow)
from financing 3,205 1,371 1,265
Increase/(decrease)
in cash in the period (note 2) (697) 1,161 1,242
------------ ------------ -------------
NOTES TO THE CASH FLOW STATEMENT
Reconciliation of operating profit to operating cash flows
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating profit 852 826 1,701
Depreciation 165 141 258
Amortisation of goodwill 28 - -
Increase in stock (115) (97) (362)
Increase in debtors (282) (86) (95)
Increase in creditors 24 2 (79)
------- --------- -------
672 786 1,423
-------- --------- -------
(2) Reconciliation of net cash inflow to movement
in net debt
6 months 6 months 12 months
ended ended ended
31 March 31 March 30 September
1999 1998 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
(Decrease)/increase
in cash in the period (697) 1,161 1,242
Cash outflow from
decrease in debt and lease
financing 133 124 230
----------- ---------- -----------
Changes in net debt
resulting from cashflows (564) 1,285 1,472
New bank loans (3,338) - -
Translation difference (17) (8) (12)
------------ ---------- -----------
Movement in net debt
in the period (3,919) 1,277 1,460
Net debt at
1 October 1998 893 (567) (567)
------------ ---------- -----------
Net debt at
31 March 1999 (3,026) 710 893
------------ ---------- -----------
The comparative figures for the year to 30 September 1998
are an abridged version of the Accounts filed with the Registrar
of Companies, on which unqualified audit opinion has been given.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited results for the half year to 31 March 1999
have been prepared in accordance with UK generally accepted
accounting principles. The accounting policies applied are those
set out in the Group's 1998 Annual Report and Account except for
changes in accounting arising from the adoption of Financial
Standard Number 10 Goodwill and intangible assets (FRS 10).
Under FRS10 goodwill arising on acquisitions made after 1 October 1998
is capitalised and amortised over its estimated useful life.
Previously, all goodwill was written off to a goodwill reserve
on acquisition. On adoption of FRS10 the goodwill reserve of
#1,335,000 has been transferred to the profit and loss reserve.
There has been no impact on the net assets of the Group.
The amortisation charge in respect of capitalised goodwill for
the first half of 1999 was #28,000.
END
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