Interim Results
Oxford Instruments PLC
14 November 2000
Oxford Instruments plc
Announcement of interim results for 2000/2001
Oxford Instruments plc, the advanced instrumentation group, today
announced consolidated interim results for the half year to 30
September 2000.
* Orders for continuing wholly owned businesses increased by
16% on the first half of last year to £92 million.
* Turnover for continuing wholly owned businesses was up 4% to
£78 million.
* Operating profit excluding exceptional items and
discontinued operations was up £0.3 million to £0.5 million.
* Pre-tax profit for continuing operations was down £0.1
million to £0.3 million.
* The restructuring programme which was initiated in September
1999 is on schedule and starting to deliver the forecast
operational improvements.
* Net borrowings were £5.5 million at the half-year following
expenditure on the reorganisation but before sale of surplus
buildings.
* Interim dividend is held at 2.4 pence.
Chief Executive, Andrew Mackintosh said: 'We set out in September
1999 to accelerate the improvement in our service to customers and
reduce our cost base through a streamlining of our organisation. Our
improving results indicate that we have made progress in many areas
toward this goal. We remain committed to transforming our operational
performance so that we can improve our returns on the opportunities
we create through our world wide market strength and our outstanding
technical innovation.'
Enquiries: Oxford Instruments plc Tel: 01865 881437
Fax: 01865 884045
Nigel Keen, Chairman
Andrew Mackintosh, Chief Executive
Martin Lamaison, Financial Director
Citigate Dewe Rogerson Tel: 020 7638 9571
Fax: 020 7282 8190
Chris Barrie
No. of pages: 13
For further copies of our Interim Results announcement please contact
Vinnetta Hutchings at the Company's registered office at Old Station
Way, Eynsham, Witney, Oxon OX8 1TL (email: vinnetta.hutchings@oxinst.co.uk).
Chairman's statement
Nigel Keen, Chairman of Oxford Instruments plc, said today:-
'A year ago we initiated the 'TopFlight' programme with the aim of
restructuring our UK businesses to achieve the improved and
sustainable performance which will create significant value for our
shareholders. I am pleased to report that we have made good progress
in this, with our recent activity focussed on securing the
operational improvements to the businesses which are now running
under the new management structures. Overheads in the restructured
businesses are down 10%, targetted headcount reductions of 150 have
been achieved, major site relocations are almost complete and we are
on track to realise the forecast savings of £4m in the current year.
As our operational performance continues to improve the benefits of
these initiatives will contribute further to profits.
Our future also depends on technical innovation and in the past year
we have maintained our investment in new product development at a
high level. We have been focussing our efforts on fewer but better
funded projects while also improving our project management
capabilities.
Financial summary
Orders in the period for the continuing wholly-owned businesses were
encouraging and increased to £92m, up 16% on the same period last
year, whilst turnover was 4% higher at £78m. Operating profit from
these businesses, together with the share of the joint venture,
increased by £0.3m on the same period last year to £0.5m. This was
made up of an improvement of £0.6m from the wholly owned businesses
offset by a reduction of £0.3m from the share of the joint venture.
After adjusting for interest the group pre-tax profit from continuing
operations of £0.3m was £0.1m lower than last year.
Exceptional items of £0.8m represent part of the £1.6m remaining
spend expected this year as previously indicated in connection with
the 'TopFlight' reorganisation. The disposal of the
cathodoluminescence and accessories business is included in
discontinued operations.
A net cash outflow of £8.1m since last year end left net borrowings
at £5.5m at the half-year. This outflow reflected increases in stock
due to the robust order level and expenditure of £2.7m on the
'TopFlight' restructuring programme. The cash position will benefit
in the coming months from the sale of surplus property.
The Directors have recommended an interim dividend of 2.4p, unchanged
from last year.
Operational review
Analytical
Turnover increased by 32% to £28m relative to the same period last
year on the back of increased orders from the semiconductor industry.
Demand was strong both for chemical microanalysis products and for
capital equipment used for the plasma processing of compound
semiconductors from our Plasma Technology business.
We have successfully relocated our California-based manufacturing
activity to the UK and are now implementing the final step of the
consolidation of our Analytical business onto one main site in High
Wycombe. This will occur during the second half after we have
completed major refurbishment work on this site.
We have successfully launched a number of new products, including a
new low-cost instrument for quality control in the food industry as
well as software upgrades for our 'INCA' chemical microanalysis
offering. Further product launches will occur in the second half.
Medical
Orders have held up well in the first half during which we have
successfully relocated the business to a single site. This move
caused a temporary slowdown in output, resulting in shipments of £17m
in the period, down 12% on last year. However we have now doubled
the rate of shipments since the start of the year and will be able to
sustain increased volumes going forward.
The business received a clean bill of health from the US FDA audit
carried out in May, confirming that we have maintained control of key
processes during our recent restructuring and relocation. Meanwhile
the planned overhead reductions have been achieved, with current
overheads running 16% lower than the first half last year.
Manufacturing yields on the largest volume product line of
accessories are now averaging over 95%, a substantial improvement.
We have started shipments of a new 'Synergy' product for neurological
measurements and more recently of a new 'Sonicaid' FM800 labour and
delivery monitor. Initial orders have also been taken in the period
for products for sleep analysis from our new distribution agreement
with Compumedics. These new products will contribute to improved
results in the second half.
Superconductivity
Turnover from our Superconductivity business of £33m was 3% down on
the equivalent period last year, reflecting the continuing effort
involved in working through a range of low-margin 'legacy' projects.
There remain a number of these technically challenging projects to
complete over the next 18 months. However, the total number of
overdue projects has been reduced by 40% in the past six months and
the losses in this business have now decreased in each of the last
four quarters as we work steadily through the outstanding orders.
We have been reviewing all our product lines in order to ensure our
critical resources are focussed on the right priorities. The
installation of our 'Helios 2' X-ray synchrotron in Singapore is now
complete. We have also successfully negotiated the transfer of some
key technology to an oil exploration business in return for a licence
fee on future sales.
In August, we launched a world-leading new ultra high field magnet
used for protein structure determination and other biological
applications. This underscores our technical leadership in magnet
design and manufacture. We have also renewed a long-term contract
with Varian - a major customer for our magnets.
Our US-based superconducting wire and MRI magnet service activity
performed well and has been strengthened by the recent acquisition of
the Austin Scientific cryogenic refrigeration and pump business.
Oxford Magnet Technology
The 49% share of Oxford Magnet Technology (OMT), our joint venture
with Siemens, generated operating profits of £2.5m, down 12%, on
turnover up by 2%. The market for the MRI systems which use OMT's
magnets remains steady, but continued price pressure and increased
product development expenditure contributed to reduced profits. The
cost-reduction and product development programmes which are essential
to maintain OMT's leading position continue.
We are delighted that the past achievements of the business have been
recognised by the receipt of a 6th Queen's Award for Enterprise in
September.
Prospects
The recent order level has been encouraging and all our businesses
are maximising their capacity to deliver increased volumes in the
second half. By the end of the year our major site relocations will
be complete and we already have an active programme of building
disposals under way. There remain a reducing number of significant
technical challenges in our Superconductivity operation which we are
working hard to resolve.
We are making progress on the completion of this stage of the
TopFlight programme and are returning the business to profitability.
This, when combined with the potential of our leading high technology
position in world markets, will enable us to unlock value for
shareholders.'
Group Profit and Loss Account
Half year ended 30 September 2000 (Unaudited)
Continuing Exceptional Discontinued Total
Operations items operations
£000 £000 £000 £000
Turnover
1 Group and share of
joint venture turnover 97,478 - 568 98,046
3 Less share of joint
venture's turnover (19,525) - - (19,525)
-------- -------- -------- --------
2 Group turnover 77,953 - 568 78,521
Cost of sales (55,519) (157) (432) (56,108)
-------- -------- -------- --------
Gross profit 22,434 (157) 136 22,413
Net operating expenses (24,391) (607) (236) (25,234)
-------- -------- -------- --------
2 Group operating loss (1,957) (764) (100) (2,821)
3 Share of operating
profit of joint venture 2,483 - - 2,483
-------- -------- -------- --------
Total operating
profit/(loss):
Group and share of
joint venture 526 (764) (100) (338)
5 Profit on sale of
discontinued business
before goodwill - - 1,010 1,010
5 Goodwill previously
written off to reserves - - - -
Group net interest payable (184) - - (184)
-------- -------- -------- --------
Profit/(loss) on ordinary
activities before tax 342 (764) 910 488
6 Tax on profit/(loss)
on ordinary activities (160) 22 24 (114)
-------- -------- -------- --------
7 Profit/(loss) for the
period attributable to
shareholders 182 (742) 934 374
-------- -------- --------
8 Dividends (1,131)
--------
9 Retained loss for the period (757)
========
pence pence pence pence
7 Earnings/(losses) per
share - basic and diluted 0.4 (1.6) 2.0 0.8
Group Profit and Loss Account
Half year ended 30 September 1999 (Unaudited)
Half year to 30 September 1999
Continuing Exceptional Discontinued Total Year to
operations items operations 31 Mar
2000
£000 £000 £000 £000 £000
Turnover
1 Group and share of
joint venture turnover 95,449 - 1,700 97,149 201,068
3 Less share of joint
venture's turnover (20,792) - - (20,792) (40,378)
-------- -------- -------- -------- -------
2 Group turnover 74,657 - 1,700 76,357 160,690
Cost of sales (50,837) - (1,411) (52,248) (115,948)
-------- -------- -------- -------- -------
Gross profit 23,820 - 289 24,109 44,742
4 Net operating expenses(26,419) (6,500) (397) (33,316) (59,431)
-------- -------- -------- -------- -------
2 Group operating loss (2,599) (6,500) (108) (9,207) (14,689)
3 Share of operating
profit of joint venture 2,813 - - 2,813 5,800
-------- -------- -------- -------- -------
Total operating
profit/(loss):
Group and share
of joint venture 214 (6,500) (108) (6,394) (8,889)
5 Profit on sale of
discontinued business
before goodwill - - 2,858 2,858 2,855
5 Goodwill previously
written off to reserves - - (11,986) (11,986) (11,986)
Group net interest
receivable/(payable) 214 - (16) 198 197
-------- -------- -------- -------- -------
Profit/(loss) before
taxation 428 (6,500) (9,252) (15,324) (17,823)
6 Tax on profit/(loss)
on ordinary activities (155) 1,640 (946) 539 (1,647)
-------- -------- -------- -------- -------
7 Profit/(loss) for the
period attributable to
shareholders 273 (4,860) (10,198) (14,785) (19,470)
-------- -------- --------
8 Dividends (1,138) (3,941)
-------- -------
9 Retained loss for
the period (15,923) (23,411)
======== =======
pence pence pence pence pence
7 Earnings/(losses) per
share - basic and diluted 0.6 (10.3) (21.6) (31.3) (41.3)
Group Statement of Total Recognised Gains and Losses
Half year ended 30 September 2000 (Unaudited)
Half year to Half year to Year to
30 Sep 2000 30 Sep 1999 31 Mar 2000
£000 £000 £000
Profit/(loss) for the period 374 (14,785) (19,470)
Exchange differences on foreign
currency net investments 2,110 (568) 28
-------- -------- --------
Total recognised gains
and losses for the period 2,484 (15,353) (19,442)
======== ======== ========
Group Balance Sheet
Half year ended 30 September 2000 (Unaudited)
As at As at As at
30 Sep 2000 30 Sep 1999 31 Mar 2000
Notes £000 £000 £000
Fixed assets
Goodwill 2,581 2,442 2,798
Negative goodwill (975) (1,408) (1,191)
--------- --------- ---------
Intangible assets 1,606 1,034 1,607
--------- --------- ---------
Tangible assets 40,388 41,977 40,815
Investments
Share of gross assets
of joint venture 14,599 14,225 11,772
Share of gross liabilities
of joint venture (9,278) (8,237) (8,069)
--------- --------- ---------
Net investment in joint venture 5,321 5,988 3,703
Other investments 1,247 1,147 1,321
--------- --------- ---------
Total investments 6,568 7,135 5,024
--------- --------- ---------
Total fixed assets 48,562 50,146 47,446
--------- --------- ---------
Current assets
Stocks 42,653 37,403 36,114
Debtors 61,785 60,786 63,208
Cash at bank and in hand 3,000 7,913 5,709
--------- --------- ---------
107,438 106,102 105,031
--------- --------- ---------
Creditors: amounts falling
due within one year
Bank loans and overdrafts (8,466) (2,492) (3,105)
Other creditors (51,839) (48,502) (53,284)
--------- --------- ---------
(60,305) (50,994) (56,389)
--------- --------- ---------
Net current assets 47,133 55,108 48,642
Total assets less
current liabilities 95,695 105,254 96,088
Provisions for liabilities
and charges (6,806) (10,917) (8,552)
--------- --------- ---------
Net assets employed 88,889 94,337 87,536
========= ========= =========
Capital and reserves
Called up share capital 2,392 2,389 2,392
Share premium account 18,656 18,569 18,656
Other reserves 15,930 15,930 15,930
Profit and loss account 51,911 57,449 50,558
--------- --------- ---------
9 Equity shareholders' funds 88,889 94,337 87,536
========= ========= =========
Group Cash Flow Statement
Half year ended 30 September 2000 (Unaudited)
Half year to Half year to Year to
30 Sep 3000 30 Sep 1999 31 Mar 2000
£000 £000
10Net cash (outflow)/
inflow from operating activities (9,350) 46 (1,563)
Dividend from joint venture - - 4,358
10Returns on investments and
servicing of finance (54) 477 491
Taxation 1,914 (639) (119)
10Capital expenditure and
financial investment (1,990) (2,424) (4,062)
Acquisitions - (2,876) (3,454)
Disposals 1,356 5,901 5,896
Equity dividends paid - (1,138) (5,095)
-------- -------- --------
Cash (outflow) before management
of liquid resources and financing (8,124) (653) (3,548)
10Management of liquid resources 4,997 791 5,041
10Financing - 13 103
-------- -------- --------
(Decrease)/increase
in cash in the period (3,127) 151 1,596
======== ======== ========
Reconciliation of Net Cash Flow to Movement in Net Funds
Half year ended 30 September 2000 (Unaudited)
Half year to Half year to Year to
30 Sep 2000 30 Sep 1999 31 Mar 2000
£000 £000 £000
(Decrease)/increase in
cash in the period (3,127) 151 1,596
Change in liquid resources (4,997) (791) (5,041)
Translation difference 54 30 18
-------- -------- --------
Movement in net funds in
the period (8,070) (610) (3,427)
Opening net funds 2,604 6,031 6,031
-------- -------- --------
11 Closing net funds (5,466) 5,421 2,604
======== ======== ========
Notes on the Interim Financial Statements
Half year ended 30 September 2000 (Unaudited)
1. Basis of presentation of accounts
The Group profit and loss account and balance sheet for the half
years ended 30 September 2000 and 30 September 1999 have been
prepared on a basis consistent with the accounting policies
disclosed in the Group's Report and Accounts 2000. The operations
of Nuclear Measurements, Scanning Probe Microscopy and
Cathodoluminescence and Accessories businesses were discontinued on
1 April 1999, and 13 December 1999 and 16 June 2000 respectively.
The results of these operations are shown as Discontinued
Operations.
The principal exchange rates used to translate the Group's overseas
results were as follows:-
Half year to Half year to Year to
30 Sep 2000 30 Sep 1999 31 Mar 2000
Average Period End Average Period End Average Period End
US
Dollar 1.52 1.48 1.61 1.65 1.61 1.60
Euro 1.64 1.68 1.52 1.55 1.56 1.67
Yen 162 160 187 175 178 164
2. Results by business group for continuing operations
Turnover Operating profit/(loss)
Half year to Half year to Half year to Half year to
30 Sep 2000 30 Sep 1999 30 Sep 2000 30 Sep 1999
£000 £000 £000 £000
Analytical 27,581 20,917 381 (1,295)
Medical 16,934 19,335 (923) (605)
Superconductivity 33,438 34,405 (1,415) (699)
------- ------- ------- -------
77,953 74,657 (1,957) (2,599)
Share of OMT jv (49%) 19,525 20,792 2,483 2,813
------- ------- ------- -------
97,478 95,449 526 214
======= ======= ======= =======
3. Joint venture
The Group owns 49% of the issued share capital of Oxford Magnet
Technology Limited ('OMT') of 3,000,000 £1 ordinary shares. It
is engaged in advanced instrumentation and is registered and
operates in England. The Group has accounted for its interest
in OMT as a joint venture under Financial Reporting Standard
(FRS) 9.
The Group's share of the joint venture's turnover as shown in
the Group Profit and Loss Account has been derived after
adjusting for trading between the Group and OMT as follows:
Half year to Half year to
30 Sep 2000 30 Sep 1999
£000 £000
49% of joint venture
turnover 24,494 23,933
less 49% of sales by
OMT to Group (2,193) (1,066)
less 49% of sales by
Group to OMT (2,776) (2,075)
-------- --------
Group share of joint
venture's turnover 19,525 20,792
======== ========
4. Exceptional Items
Exceptional items relate to continuing activities and include
the costs incurred during the current financial period in
connection with the 'Topflight' reorganisation of the Group's UK
based businesses into a simplified operational structure as
announced in September 1999.
5. Disposal of businesses
On 16 June 2000 the Group sold its cathodoluminescence and
accessories business based in Oxford for a cash consideration of
£1.4m. The results of this business are shown under
discontinued operations in the Group profit and loss account.
There is an estimated net profit on disposal of £1.0m.
6. Taxation
The tax charge for the half year ended 30 September 2000 has
been based on the estimated effective rate applicable to each
significant category of income for the full year.
7. Earnings per share
Earnings per share (EPS) has been calculated using profits of
£374,000 (1999 losses of £14,785,000) and weighted average
shares of 47,109,456 (1999 47,210,514) for basic EPS and
47,113,498 (1999 47,292,747) for diluted EPS respectively.
8. Dividends per share
An interim dividend of 2.4p (1999 2.4p) will be paid on 27 March
2001 to shareholders registered at the close of business on 23
February 2001, the record date. The shares will be marked 'ex-
dividend' on 21 February 2001.
9. Movements in Equity Shareholders' Funds
Half year to Half year to Year to
30 Sep 2000 30 Sep 1999 31 Mar 2000
£000 £000 £000
Profit/(loss) for the period 374 (14,785) (19,470)
Dividends paid and proposed (1,131) (1,138) (3,941)
------- ------- -------
Retained (loss) for the period (757) (15,923) (23,411)
Exchange differences on
foreign currency net
investments 2,110 (568) 28
New share capital subscribed - 13 103
Goodwill written off during
the period - (82) (81)
Goodwill written back to
profit and loss account - 11,986 11,986
------- ------- -------
Net increase/(reduction)
in equity shareholders'
funds 1,353 (4,574) (11,375)
Opening equity shareholders'
funds 87,536 98,911 98,911
------- ------- -------
Closing equity shareholders'
funds 88,889 94,337 87,536
======= ======= =======
10. Cash flows netted in the consolidated cash flow statement
Half year to Half year to Year to
30 Sep 2000 30 Sep 1999 31 Mar 2000
£000 £000 £000
Group operating loss (2,821) (9,207) (14,689)
Depreciation charges and
amortisation 2,779 2,751 5,494
Change in stocks (5,976) (4,695) (3,684)
Change in debtors 863 3,371 1,553
Change in creditors and
provisions (4,195) 7,826 9,763
-------- -------- --------
Net cash (outflow)/inflow
from operating activities (9,350) 46 (1,563)
-------- -------- --------
Interest received 118 529 593
Interest paid (172) (52) (102)
-------- -------- --------
Net cash (outflow)/inflow
from returns on investments
and servicing of finance (54) 477 491
-------- -------- --------
Purchase of fixed assets (2,400) (2,379) (4,806)
Sale of fixed assets 410 144 1,321
Investments acquired - (189) (577)
-------- -------- -----
Net cash outflow for
capital expenditure and
financial investment (1,990) (2,424) (4,062)
-------- -------- --------
Decrease in term deposits 1,500 1,059 5,041
Increase/(decrease) in term
loans 3,497 (268) -
-------- -------- --------
Net cash inflow from management
of liquid resources 4,997 791 5,041
-------- -------- --------
Issue of ordinary shares
including share premium - 13 103
-------- -------- --------
Net cash inflow from financing - 13 103
======== ======== ========
11.Movements in Net Funds
As at Exchange Cash As at
30 Sep 2000 rate movement in 31 Mar
effect period 2000
£000 £000 £000 £000
Cash at bank and in hand 3,000 189 (1,398) 4,209
Bank overdrafts (4,029) (113) (1,729) (2,187)
------- ------- ------- -------
Net cash (1,029) 76 (3,127) 2,022
Cash on deposit - - (1,500) 1,500
Debt due within one year (4,437) (22) (3,497) (918)
------- ------- ------- -------
Net funds (5,466) 54 (8,124) 2,604
======= ======= ======= =======
12. Report and Accounts 2000
The comparative figures for the financial year ended 31 March
2000 are extracted from the company's statutory accounts for
that financial year. Those accounts have been reported on by
the company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did
not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. Copies of the Report and Accounts 2000 are
available from the Company's registered office by applying to
the Company Secretary, Oxford Instruments plc, Old Station Way,
Eynsham, Witney, Oxon, OX8 1TL. The Company is registered in
England Number 775598.
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