REG - Gooch & Housego PLC - Divestment of EM4

Gooch & HousegoAnnouncement

18/03/2024 14:45

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RNS Number : 2868H  Gooch & Housego PLC  18 March 2024

     18 March 2024

 

Gooch & Housego PLC

("G&H" or the "Company" or the "Group")

 

Divestment of EM4

 

Completion of an important milestone on the rationalisation of the Group's
A&D product portfolio

 

 

Gooch & Housego PLC (AIM: GHH), the specialist manufacturer of photonic
components and systems announces that it has sold its subsidiary EM4, LLC to
EMFOUR Acquisition Co., LLC, a subsidiary of a US-based global technology
company (the "Buyer") for a total consideration of up to $12.0m (£9.4m) (the
"Disposal").

 

The EM4 business, located near Boston (MA), manufactures optoelectronic
components and laser modules primarily for the US A&D market. The business
also manufactured and supplied fused fibre couplers, but this product line has
been excluded from the sale and transferred to the Group's Torquay facility.

 

The total consideration payable of up to $12.0m comprises an initial
consideration of $5.25m (£4.1m) and deferred consideration of up to $6.75m
(£5.3m). The initial consideration will be settled in cash subject to
customary adjustments for working capital, cash and debt at completion. The
deferred consideration, which is based upon the performance of the EM4
business in the period ending 30 September 2025, will be settled in cash. The
net proceeds of the Disposal will be used to reduce the Group's borrowings.

 

In the Group's results for the year ended 30 September 2023, the elements of
the EM4 business that are subject to the sale contributed £13.4m of revenue
and delivered a loss before tax of £0.7m. Some of the Group's global function
resources previously charged to the EM4 business will be redeployed following
the Disposal to support the execution of the Group's strategy. At 31 January
2024, the book value of the gross assets of the business totalled £12.4m. The
Disposal and its associated costs are expected to generate a non-underlying
charge of circa £8.0m (cash effect circa £1.5m). The transaction is expected
to be marginally accretive to underlying earnings for the year ending 30
September 2024.

 

Charlie Peppiatt, Chief Executive Officer of Gooch and Housego, commented:

"I am pleased to be able to report the completion of an important milestone on
our journey to deliver sustainable margin growth for the Group. The divestment
of EM4 is the result of a carefully considered and ongoing review of our
A&D product portfolio."

"The Disposal supports the Group's consolidation of our A&D activities
into areas where we can offer differentiated products to our customers and
enable the Group to grow our optical systems business and maximise value
creation from accretive optical systems solutions."

"I would like to thank the EM4 team in Boston for their contribution to
G&H and wish them well for the future."

 

 

For further information please contact:

 

 Charlie Peppiatt, Chief Executive Officer                  Gooch & Housego PLC      +44 (0) 1460 256440

 Chris Jewell, Chief Financial Officer

 Mark Court / Sophie Wills / Abigail Gilchrist              Buchanan                 +44 (0) 20 7466 5000

 G&H@buchanan.uk.com (mailto:G&H@buchanan.uk.com)

 Christopher Baird / David Anderson                         Investec Bank plc        +44 (0) 20 7597 5970

 

 

Notes to editors

 

1.     Gooch & Housego is a photonics technology business
headquartered in Ilminster, Somerset, UK with operations in the USA and
Europe. A world leader in its field, the company researches, designs,
engineers and manufactures advanced photonic systems, components and
instrumentation for applications in the Aerospace & Defence, Industrial,
Life Sciences and Scientific Research sectors. World leading design,
development and manufacturing expertise is offered across a broad range of
complementary technologies.

 

2.     All financial information included in this announcement is sourced
from unaudited management accounts and excludes any specific items. This
announcement contains certain forward-looking statements that are based on
management's current expectations or beliefs as well as assumptions about
future events.  These are subject to risk factors associated with, amongst
other things, the economic and business circumstances occurring from time to
time in the countries and sectors in which G&H operates.  It is believed
that the expectations reflected in these statements are reasonable but they
may be affected by a wide range of variables which could cause actual results,
and G&H's plans and objectives, to differ materially from those currently
anticipated or implied in the forward-looking statements.  Investors should
not place undue reliance on any such statements. Nothing in this announcement
should be construed as a profit forecast.

 

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