Interim Results
Oxford Instruments PLC
18 November 2004
18 November 2004
Oxford Instruments plc
Announcement of interim results for 2004/05
Oxford Instruments plc ("Oxford Instruments" or "The Company"), the advanced
instrumentation business, today announced interim results for the six months to
30 September 2004.
• Turnover of £81.9m (2003: £87.3m) declined following an anticipated
drop in first half orders to £82.6m (2003: £87.4m). Orders were
affected by the expected deferral of magnet business as well as
adverse currency movements.
• Profit before tax* of £2.8m (2003: £2.7m), slightly ahead of the same
period last year, despite lower turnover and adverse currency effects
of £1.2m, reflecting the Company's continuing focus on implementing
efficiencies across its operational base.
• The acquisitions in September 2004 of Metorex International Oy and
Resonance Instruments Ltd mark important steps in the Company's
strategy to grow its systems and solutions business in the life
sciences, nanotechnology and environmental quality control sectors.
• Net cash at the end of the period was £10.5m (2003: £5.4m), an outflow
of £10.2m in the period, of which acquisition costs were £4.7m.
• EPS* of 3.7 pence (2003: 3.9 pence) reflects a higher tax charge.
• Recommended interim dividend of 2.4 pence, unchanged from last year.
• As separately announced today, Dr Andrew Mackintosh, Chief Executive,
will be leaving the Group; Nigel Keen, Chairman, will assume the
day-to-day responsibility for running the Group until a new Chief
Executive is appointed.
* from continuing operations before goodwill amortisation and exceptional items
Nigel Keen, Chairman of Oxford Instruments plc, said: "We are focusing on
end-user market segments where we see significant growth drivers and we have
made important progress with this strategy in the last six months. We will
continue to seek out opportunities to build our solutions business in our chosen
areas of life sciences, nanotechnology and environmental quality control. At the
same time, our focus on value creation across our existing business will remain
a top priority.
Looking ahead to the rest of the year, we anticipate an increase in turnover in
the second half, which, when combined with the cost reduction benefits flowing
through from our previous actions, should result in an outcome for the full year
in line with expectations."
Enquiries: Oxford Instruments plc Tel: 01865 881437 Fax: 01865 884045
Nigel Keen, Chairman
Martin Lamaison, Financial Director
Hogarth Partnership Limited Tel: 020 7357 9477 Fax: 020 7357 8533
Rachel Hirst
Andrew Jaques
For further copies of this Interim Results announcement, please contact
Christine Dunford at the Company's registered office at Old Station Way,
Eynsham, Witney Oxon OX29 4TL (email: Christine.Dunford@oxinst.co.uk).
Chairman's Statement
Nigel Keen, Chairman of Oxford Instruments plc, said today:
Business Strategy and Focus
We are continually reviewing our portfolio to improve profitability and growth
in a way that maximises shareholder value. Over the past two years, we have been
simplifying our business at the same time as increasing our investment in areas
where we supply complete solutions and services to end customers. In parallel we
are maintaining our operational focus on delivering a higher quality of service
to our customers from a lower cost base.
Our strategic initiatives are now generating highly innovative solutions within
our three chosen sectors. In the life sciences, our licensing arrangement with
GE Healthcare and our recent acquisition of Resonance Instruments provide a
platform for delivering new solutions to customers in drug discovery and related
markets. Secondly, in the area of environmental measurement, the recently
announced acquisition of Metorex strengthens our position in the market for
chemical analysis products used in industrial quality control. Thirdly, the
purchase last year of VG Semicon increases our range of solutions for the
nanotechnology and specialist semiconductor sectors.
We see a number of additional opportunities to continue strengthening our
solutions business in our chosen areas and to enhance shareholder value, while
at the same time improving the efficiency of our balance sheet.
Financial Summary
Orders for the six months to 30 September 2004 of £82.6m (2003: £87.4m) were
close to internal forecasts. As communicated in June 2004, reduced volumes of
magnet business from Varian as they adjusted their magnet inventory were
primarily responsible for the decrease in orders. Turnover of £81.9m (2003:
£87.3m) reflected the order level.
Profit before tax, exceptional items and goodwill amortisation was £2.8m (2003:
£2.7m). This was a good result given the reduced turnover and was achieved with
overheads that were 7% lower than last year.
Our reported turnover and operating profit were both adversely affected by the
impact of currency translation. At constant currency rates, turnover would have
been £5.3m higher and operating profit £1.2m higher.
Net cash decreased to £10.5m, an outflow of £10.2m in the half year of which
£4.7m related to the two acquisitions.
The directors have recommended an interim dividend of 2.4p, unchanged from last
year.
Operational Review
Analytical
First half turnover of £30.4m (2003: £28.6m) reflected a stabilisation in our
semiconductor business, as well as a contribution from the VG Semicon products
acquired a year ago. Orders have shown an encouraging trend over the past few
months.
Operating profits increased by 50% to £2.4m (2003: £1.6m) driven by the higher
volume and tight overhead control.
As previously announced, Metorex, a supplier of advanced instrumentation for
chemical analysis in environmental and quality control applications, was
acquired in September 2004 for an initial cash consideration of £2.9m, plus a
deferred cash consideration of up to £4.7m. The acquisition is expected to be
earnings neutral in the second half and earnings enhancing thereafter. This
acquisition creates for us a leading position in the market for chemical
analysis using compact X-ray based instrumentation. Integration is proceeding
smoothly.
In October 2004 we initiated the launch of a new product platform, the
X-Strata960, used for the quality control measurement of metal coatings in the
electronics and metals finishing industry. We are looking for early orders from
Asia for this product and will be using our newly-opened sales and service
office in Guangzhou, China, to support this initiative.
In the specialist semiconductor market, we have launched a new 'ClusterLab'
product, which brings together a unique set of semiconductor wafer processing
capabilities under a common vacuum, reducing contamination and leading to
improved semiconductor device performance.
Medical
Turnover of £14.5m (2003: £17.7m) reflected the ongoing reduction in third party
product volumes as we continue to focus on our core products.
Operating profit improved to £0.2m (2003: £0.1m). This was an encouraging result
on lower turnover and with an adverse foreign exchange environment as gross
margins improved significantly and overheads were lower following the
simplification of the structure of the organisation into discrete product groups
last year.
Both our cardiology and obstetrics product lines improved their performance in
the period. In September 2004 we launched 'Medilog Darwin', a new digital
product for the rapid and accurate analysis of long-term electrocardiogram (ECG)
data and we expect this to contribute to the continued strength of that product
line. After a quiet first quarter, the market for our neurology products has
recently improved.
While we maintain our focus on improving operating performance, we are
continuing to review our strategic options to ensure that we generate an
acceptable return for our shareholders from this business.
Superconductivity
Turnover of £37.0m (2003: £41.0m) reflected a weakness in some end-user markets
and customer inventory adjustments as previously reported. The lower turnover
contributed to an operating loss of £0.1m (2003: £1.1m profit). The
restructuring of our magnet business announced in June 2004 into three
market-facing product groups is generating increased customer focus, as well as
lower costs as we move into the second half. An exceptional charge of £0.7m has
been taken in the half against this reorganisation.
We have continued to make successful deliveries of our flagship 'Discovery'
magnet, used for drug discovery. Two more units have been installed at customer
sites in the past six months and two more are currently being installed after
successful magnet testing in our factory.
We now have control over the quality problems previously reported in the supply
base of our wire business, which affected one specific product used only by
Siemens. As previously announced, an exceptional charge of £1.5m has been taken
in the first half to cover costs associated with this.
We have made good progress in developing the novel magnet-based sample
preparation technology licensed from GE Healthcare for use in the life sciences
market. Our development spend is running higher than last year to support this
potentially large product opportunity, as well as a pipeline of new magnet and
cryogenic products being launched over the next year.
Resonance Instruments, a leader in low-resolution nuclear magnetic resonance
(NMR) instrumentation, was acquired in September 2004 for a total consideration
of up to £3.1m. This strengthens our range of similar products sold to end users
for quality control applications and gives us important complementary skills to
support the commercialisation of the GE Healthcare technology. We expect the
acquisition to be slightly earnings enhancing in the current year.
We have agreed an extension to our supply contract with Varian, a magnet
customer, specifying ongoing minimum volumes of NMR magnet business until March
2006, with a provision for an annual agreement to renew those volumes for a
subsequent two years. Separately, Varian has recently announced the purchase of
its supplier of magnets used in magnetic resonance imaging (MRI) systems for
research applications. Within the framework of our supply contract extension and
beyond, our ongoing investment both in technology and operational effectiveness
is focussed on maintaining our position as a highly competitive supplier of
superconducting magnets to all magnet customers.
Board Changes
We have separately announced today that Dr Andrew Mackintosh, Chief Executive,
will be leaving the Group. He relinquishes his duties as Chief Executive with
immediate effect and I shall assume the day-to-day responsibility for running
the Group until we have a new Chief Executive in place who will add momentum to
the future development of our business.
We thank Andrew for the central part he has played in establishing a strong
operational platform across the Group's businesses. Under his leadership, we
have achieved "best in class" in many areas of the business and have put in
place the tools and processes necessary for success in important disciplines
such as supply chain management and new product innovation. We wish him well in
the future.
As announced on 1 November 2004, Professor Michael Hughes has joined the Board.
With a background at GEC and Midlands Electricity, he brings broad industrial
operational experience allied with sound technical understanding.
Prospects
Our current review indicates a higher turnover in the second half, which, when
combined with a lower cost base in the Superconductivity and Medical businesses
from actions already taken earlier this year, should result in the outcome for
the full year being in line with expectations.
Group Profit and Loss Account
Half year ended 30 September 2004 - unaudited
Half year to 30 September 2004
Continuing operations
Before
exceptional Exceptional
items items Total
Notes £ million £ million £ million
-------------------------------------------------------------------------------------------------------------
Turnover
Group and share of joint venture turnover 81.9 - 81.9
Less share of joint venture turnover - - -
-------------------------------------------------------------------------------------------------------------
Group turnover (including acquisition of £0.4m) 2 81.9 - 81.9
Cost of sales 3 (55.0) (1.9) (56.9)
-------------------------------------------------------------------------------------------------------------
Gross profit 26.9 (1.9) 25.0
Net operating expenses 3 (24.8) (1.4) (26.2)
-------------------------------------------------------------------------------------------------------------
Group operating profit/(loss) before goodwill amortisation 2 2.5 (3.3) (0.8)
Goodwill amortisation (0.4) - (0.4)
-------------------------------------------------------------------------------------------------------------
Group operating profit/(loss) including acquisition of £0.0m) 2 2.1 (3.3) (1.2)
Share of operating loss of joint venture - - -
-------------------------------------------------------------------------------------------------------------
Total operating profit/(loss)
Group and share of joint venture 2.1 (3.3) (1.2)
Gain on disposal of joint venture before goodwill - - -
Goodwill previously written off against reserves - - -
-------------------------------------------------------------------------------------------------------------
Profit/(loss) before interest and tax 2.1 (3.3) (1.2)
Total net interest receivable/(payable) 4 0.3 - 0.3
-------------------------------------------------------------------------------------------------------------
Profit/(loss) on ordinary activities before tax 2.4 (3.3) (0.9)
Tax on profit/(loss) on ordinary activities 5 (1.0) 0.7 (0.3)
-------------------------------------------------------------------------------------------------------------
Profit/(loss) for the period attributable to shareholders 6 1.4 (2.6) (1.2)
--------------------------------------------------------------------------------------------------
Dividends payable to shareholders 7 (1.1)
-----------
Retained (loss)/profit for the period (2.3)
-----------
pence pence pence
-------------------------------------------------------------------------------------------------------------
Earnings per share 6
Basic earnings per share before goodwill amortisation 3.7 (5.5) (1.8)
Basic and diluted earnings per share 3.0 (5.5) (2.5)
-------------------------------------------------------------------------------------------------------------
Group Profit and Loss Account
Half year ended 30 September 2003 - unaudited
Half year to 30 September 2003 Year to
Continuing operations 31 March
Before 2004
exceptional
Items and Interest in
interest in Exceptional joint
joint venture items venture Total
Notes £ million £ million £ million £ million £ million
---------------------------------------------------------------------------------------------------------------------
Turnover
Group and share of joint venture turnover 87.3 - 10.8 98.1 193.1
Less share of joint venture turnover - - (10.8) (10.8) (10.8)
---------------------------------------------------------------------------------------------------------------------
Group turnover 2 87.3 - - 87.3 182.3
Cost of sales (58.2) - - (58.2) (121.8)
---------------------------------------------------------------------------------------------------------------------
Gross profit 29.1 - - 29.1 60.5
Net operating
expenses 3 (26.6) (0.2) - (26.8) (54.8)
---------------------------------------------------------------------------------------------------------------------
Group operating profit/(loss) before
goodwill amortisation 2 2.8 (0.2) - 2.6 6.4
Goodwill amortisation (0.3) - - (0.3) (0.7)
---------------------------------------------------------------------------------------------------------------------
Group operating profit/(loss) 2 2.5 (0.2) - 2.3 5.7
Share of operating loss of joint venture 8 - - (0.2) (0.2) (0.2)
---------------------------------------------------------------------------------------------------------------------
Total operating profit/(loss)
Group and share of joint venture 2.5 (0.2) (0.2) 2.1 5.5
Gain on disposal of joint venture before
goodwill 8 - - - - 6.8
---------------------------------------------------------------------------------------------------------------------
Goodwill previously written off against
reserves - - - - (0.2)
---------------------------------------------------------------------------------------------------------------------
Profit/(loss) before interest and tax 2.5 (0.2) (0.2) 2.1 12.1
Total net interest receivable/(payable) 4 (0.1) - (0.1) (0.2) (0.2)
---------------------------------------------------------------------------------------------------------------------
Profit/(loss) on ordinary activities before
tax 2.4 (0.2) (0.3) 1.9 11.9
Tax on profit/(loss) on ordinary activities 5 (0.8) - 0.1 (0.7) (1.9)
---------------------------------------------------------------------------------------------------------------------
Profit/(loss) for the period attributable
to shareholders 6 1.6 (0.2) (0.2) 1.2 10.0
----------------------------------------------------------------------------------------------
Dividends payable to shareholders 7 (1.1) (3.9)
------------------
Retained (loss)/profit for the period 0.1 6.1
------------------
pence pence pence pence pence
---------------------------------------------------------------------------------------------------------------------
Earnings per share 6
Basic earnings per share before goodwill
amortisation 3.9 (0.4) (0.5) 3.0 22.7
Basic and diluted earnings per share 3.4 (0.4) (0.5) 2.5 21.3
---------------------------------------------------------------------------------------------------------------------
Group Statement of Total Recognised Gains and Losses
Half year ended 30 September 2004 - unaudited
Half year to Half year to Year to
30 Sept 2004 30 Sept 2003 31 March 2004
£ million £ million £ million
------------------------------------------------------------------------------------------------------------------
(Loss)/profit for the period (1.2) 1.2 10.0
Exchange differences on foreign currency net investments of the Group 0.2 (1.3) (2.8)
------------------------------------------------------------------------------------------------------------------
Total recognised gains and losses relating to the period (1.0) (0.1) 7.2
------------------------------------------------------------------------------------------------------------------
Group Balance Sheet
Half year ended 30 September 2004 - unaudited
As at As at As at
30 Sept 2004 30 Sept 2003 31 March 2004
As restated As restated
Notes £ million £ million £ million
--------------------------------------------------------------------------------------------------------
Fixed assets
Intangible assets - goodwill 9.1 2.4 2.6
Tangible assets 32.2 33.8 32.6
Investments 1.6 2.9 1.6
--------------------------------------------------------------------------------------------------------
Total fixed assets 42.9 39.1 36.8
--------------------------------------------------------------------------------------------------------
Current assets
Stocks 31.7 32.1 28.5
Debtors 53.7 55.9 58.9
Cash at bank and in hand 18.1 6.9 23.2
--------------------------------------------------------------------------------------------------------
103.5 94.9 110.6
--------------------------------------------------------------------------------------------------------
Creditors: amounts falling due within one year
Bank loans and overdrafts (7.6) (1.5) (2.5)
Other creditors (41.6) (40.1) (47.5)
--------------------------------------------------------------------------------------------------------
(49.2) (41.6) (50.0)
--------------------------------------------------------------------------------------------------------
Net current assets 54.3 53.3 60.6
--------------------------------------------------------------------------------------------------------
Total assets less current liabilities 97.2 92.4 97.4
Creditors: amounts falling due after one year (1.7) - -
Provisions for liabilities and charges (5.4) (5.3) (5.3)
--------------------------------------------------------------------------------------------------------
Net assets employed 90.1 87.1 92.1
--------------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 2.4 2.4 2.4
Share premium account 19.1 18.8 19.0
Investment in own shares 1 (2.7) (2.8) (2.7)
Other reserves 16.0 16.0 16.0
Profit and loss account 55.3 52.7 57.4
--------------------------------------------------------------------------------------------------------
Equity shareholders' funds 9 90.1 87.1 92.1
--------------------------------------------------------------------------------------------------------
Group Cash Flow Statement
Half year ended 30 September 2004 - unaudited
Half year to Half year to Year to
30 Sept 2004 30 Sept 2003 31 March 2004
Notes £ million £ million £ million
-------------------------------------------------------------------------------------------------------------
Net cash (outflow)/inflow from operating activities 10 (2.8) 4.0 17.8
Returns on investments and servicing of finance 10 0.3 (0.1) (0.1)
Taxation (1.7) (0.9) (2.4)
Capital expenditure and financial investment 10 (1.4) (0.8) (2.2)
Acquisitions and disposals 8 (4.7) - 8.3
Equity dividends paid - - (3.9)
-------------------------------------------------------------------------------------------------------------
Cash (outflow)/inflow before management
of liquid resources and financing (10.3) 2.2 17.5
Management of liquid resources 10 3.5 (2.7) (14.8)
Financing 10 0.1 - 0.2
-------------------------------------------------------------------------------------------------------------
(Decrease)/increase in cash in the period (6.7) (0.5) 2.9
-------------------------------------------------------------------------------------------------------------
Reconciliation of Net Cash Flow to Movement in Net Funds
Half year ended 30 September 2004 - unaudited
Half year to Half year to Year to
30 Sept 2004 30 Sept 2003 31 March 2004
Note £ million £ million £ million
--------------------------------------------------------------------------------------------------------
(Decrease)/increase in cash in the period (6.7) (0.5) 2.9
Change in liquid resources (3.5) 2.7 14.8
Translation difference - (0.1) (0.3)
--------------------------------------------------------------------------------------------------------
Movement in net funds in the period (10.2) 2.1 17.4
Opening net funds 20.7 3.3 3.3
--------------------------------------------------------------------------------------------------------
Closing net funds 11 10.5 5.4 20.7
--------------------------------------------------------------------------------------------------------
Notes on the Interim Financial Statements
Half year ended 30 September 2004 - unaudited
1. Basis of presentation of accounts
The Group profit and loss account and balance sheet for the half years
ended 30 September 2004 and 30 September 2003 have been prepared on a basis
consistent with the accounting policies disclosed in the Group's Report and
Accounts 2004, subject to the application of UITF 38 as discussed below.
The comparative figures for the financial year ended 31 March 2004 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 Annual Report and Accounts 2004 are
available from the Company's registered office by applying to the Company
Secretary, Oxford Instruments plc, Old Station Way, Eynsham, Witney, Oxon,
OX29 4TL. The Company is registered in England Number 775598.
The Group has adopted UITF 38 'Accounting for ESOP Trusts' and the related
amendments to UITF 17 'Employee Share Schemes' in the period. In previous
periods the purchase cost of these shares were treated as fixed asset
investments. The effect of UITF 38 has been to recognise the net carrying
value of shares held by the trust as a deduction in shareholders' funds
rather than as a fixed asset investment. The impact of the change in
accounting policy is disclosed in Note 9.
The principal exchange rates used to translate the Group's overseas results
were as follows:
Half year to Half year to Year to
30 Sept 2004 30 Sept 2003 31 March 2004
Average Period end Average Period end Average Year end
--------------------------------------------------------------------------------
US Dollar 1.79 1.81 1.62 1.66 1.69 1.84
Euro 1.48 1.46 1.43 1.43 1.45 1.50
Yen 198 199 191 186 191 191
--------------------------------------------------------------------------------
2. Results by business
The results for the wholly-owned operations before exceptional items
analysed by business were as follows:
Turnover Operating profit/(loss) Operating assets
Half year to Half year to Half year to Half year to Half year to Half year to
30 Sept 2004 30 Sept 2003 30 Sept 2004 30 Sept 2003 30 Sept 2004 30 Sept 2003
£ million £ million £ million £ million £ million £ million
----------------------------------------------------------------------------------------------------------------
Analytical 30.4 28.6 2.4 1.6 25.9 27.6
Medical 14.5 17.7 0.2 0.1 12.8 16.1
Superconductivity 37.0 41.0 (0.1) 1.1 32.4 33.5
----------------------------------------------------------------------------------------------------------------
81.9 87.3 2.5 2.8 71.1 77.2
------------------- -------------------
Goodwill amortisation (0.4) (0.3)
--------------------
2.1 2.5
--------------------
Notes on the Interim Financial Statements (Continued)
3. Exceptional items
Exceptional items can be analysed as follows:
Half year to 30 Sept 2004 Half year to
30 Sept 2003
Cost of sales Net operating Net operating
expenses expenses
£ million £ million £ million
------------------------------------------------------------------------------------
Superconducting wire quality issues (1.5) - -
Redundancy costs - (0.7) (0.2)
Post acquisition restructuring (0.4) (0.7) -
------------------------------------------------------------------------------------
(1.9) (1.4) (0.2)
------------------------------------------------------------------------------------
Exceptional items for the periods to 30 September 2004 and 2003 relate to
continuing activities. Exceptional items for the period 30 September 2004
comprise costs relating to a specific wire quality issue at the US
superconducting wire manufacturing plant, redundancy costs arising in the
Superconductivity business and restructuring costs (redundancy expenses,
stock write-off and surplus lease costs) following the acquisition of
Metorex International Oy and Resonance Instruments Limited in September
2004.
Exceptional costs in the period ended 30 September 2003 related to
redundancy costs at the Medical business.
4. Total net interest receivable/(payable)
Half year to Half year to
30 Sept 2004 30 Sept 2003
£ million £ million
-------------------------------------------------------------------------------
Interest receivable on deposits at short call 0.4 -
Interest payable and similar charges on bank
loans and overdrafts (0.1) (0.1)
-------------------------------------------------------------------------------
Group net interest receivable/(payable) 0.3 (0.1)
Share of joint venture net interest payable - (0.1)
-------------------------------------------------------------------------------
Total net interest receivable/(payable) 0.3 (0.2)
-------------------------------------------------------------------------------
5. Taxation
The tax charge for the half year ended 30 September 2004 has been based on
the estimated effective rate applicable to each significant category of
income for the full year. The high effective rate of tax arises due to the
inability to offset taxable losses arising in one jurisdiction against
taxable profits arising in other jurisdictions. Likewise some of the
exceptional costs arise in jurisdictions where there are no other suitable
profits against which to offset them. Accordingly no tax credit is
available in respect of those exceptional costs.
6. Earnings per share
Earnings per share (EPS) has been calculated using losses of £1.2 million
(2003: profits of £1.2 million) and weighted average shares of 47.1 million
(2003: 46.9 million) for basic EPS and 47.5 million (2003: 46.9 million)
for diluted EPS respectively.
7. Dividends per share
An interim dividend of 2.4p (2003: 2.4p) will be paid on 25 March 2005 to
shareholders registered at the close of business on 23 February 2005, the
record date. The shares will be marked 'ex-dividend' on 23 February 2005.
Notes on the Interim Financial Statements (Continued)
8. Acquisitions and disposals
Metorex International Oy
On 13 September 2004 the Group acquired Metorex International Oy
('Metorex') based in Helsinki, Finland. At 30 September 2004, the Group
owned 89.5% of the share capital of Metorex. The remaining 10.5% is
expected to be acquired by December 2004. Oxford Instruments paid a cash
consideration of £2.9 million on acquisition. A further £0.5 million was
paid in October 2004, with the remaining amount payable in 2006 based on
future performance. The total consideration following the purchase of the
remaining shares cannot exceed £7.6 million.
Accounting
policy Fair value
Book value adjustments to the Group
£ million £ million £ million
-----------------------------------------------------------------------------------------
Tangible fixed assets 0.1 - 0.1
Stocks 1.4 (0.6) 0.8
Debtors 1.4 - 1.4
Creditors (2.1) (0.1) (2.2)
Provisions (0.1) - (0.1)
-----------------------------------------------------------------------------------------
Total net assets/(liabilities) 0.7 (0.7) -
Goodwill 4.0
-----------------------------------------------------------------------------------------
Total purchase cost 4.0
Less consideration deferred (1.1)
-----------------------------------------------------------------------------------------
Net cash outflow in respect of the purchase 2.9
Less net cash acquired -
-----------------------------------------------------------------------------------------
Net cash outflow on acquisition 2.9
-----------------------------------------------------------------------------------------
The book value of the assets acquired are based on the management accounts
at the date of acquisition. The accounting policy adjustments reflect the
alignment of accounting policies in respect of stock provisioning and
project based contracts. There were no fair value adjustments.
Resonance Instruments Limited
The Group acquired Resonance Instruments Limited based in Witney,
Oxfordshire on 21 September 2004 for a net cash consideration of £1.8
million. A further £1.3 million payment is deferred and payable over the
next two years based on future performance and staff retention.
Book value and
fair value
to the Group
£ million
-------------------------------------------------------------------------------
Tangible fixed assets 0.1
Stocks 0.4
Debtors 0.4
Creditors (0.6)
Provisions (0.1)
-------------------------------------------------------------------------------
Net assets 0.2
Goodwill 2.9
-------------------------------------------------------------------------------
Total purchase cost 3.1
Less consideration deferred (1.3)
-------------------------------------------------------------------------------
Net cash outflow in respect of the purchase 1.8
Less net cash acquired -
-------------------------------------------------------------------------------
Net cash outflow on acquisition 1.8
-------------------------------------------------------------------------------
The book value of the assets acquired are based on the management accounts
at the date of acquisition. No material accounting policy or fair value
adjustments were required.
Oxford Magnet Technology
On 4 December 2003 the Company sold its 49% interest in Oxford Magnet
Technology ('OMT') to Siemens plc. The results of OMT were equity accounted
in accordance with FRS 9 for the three months ended 30 June 2003, up to
which date it was considered joint control existed, and from this date when
it was considered that joint control ceased until the date of disposal, the
investment was accounted for as a minority investment in accordance with
FRS 2.
Notes on the Interim Financial Statements (Continued)
9. Reconciliation of movements in equity shareholders' funds
Half year to Year to
Half year to 30 Sept 2003 31 March 2004
30 Sept 2004 As restated As restated
Note £ million £ million £ million
-----------------------------------------------------------------------------------------------------------------
(Loss)/profit for the period (1.2) 1.2 10.0
Dividends paid and proposed (1.1) (1.1) (3.9)
-----------------------------------------------------------------------------------------------------------------
Retained (loss)/profit for the period (2.3) 0.1 6.1
Exchange differences on foreign currency net investments 0.2 (1.3) (2.8)
Goodwill written back to the profit and loss account - - 0.2
Change in investment in own shares - - 0.1
New share capital subscribed 0.1 - 0.2
Net (reduction)/increase in equity (2.0) (1.2) 3.8
shareholders' funds
-----------------------------------------------------------------------------------------------------------------
Opening equity shareholders' funds - as reported 92.9 89.2 89.2
Prior year adjustment 1 (0.8) (0.9) (0.9)
-----------------------------------------------------------------------------------------------------------------
Opening equity shareholders' funds - as restated 92.1 88.3 88.3
-----------------------------------------------------------------------------------------------------------------
Closing equity shareholders' funds 90.1 87.1 92.1
-----------------------------------------------------------------------------------------------------------------
Notes on the Interim Financial Statements (Continued)
10. Net cash flow from operating activities and cash flows netted in the cash
flow statement
Half year to Half year to Year to
30 Sept 2004 30 Sept 2003 31 March 2004
£ million £ million £ million
--------------------------------------------------------------------------------------------------
Group operating (loss)/profit (1.2) 2.3 5.7
Depreciation charges 2.2 2.6 4.9
Amortisation of goodwill 0.4 0.3 0.7
Net profit on disposal of fixed assets (0.1) (0.1) (0.1)
Change in stocks (1.8) 4.0 6.9
Change in debtors 7.6 4.7 1.2
Change in creditors (9.8) (9.7) (1.4)
Change in provisions (0.1) (0.1) (0.1)
--------------------------------------------------------------------------------------------------
Net cash (outflow)/inflow from operating activities (2.8) 4.0 17.8
--------------------------------------------------------------------------------------------------
Interest received 0.4 - 0.2
Interest paid (0.1) (0.1) (0.3)
--------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) from returns on investments
and servicing of finance 0.3 (0.1) (0.1)
--------------------------------------------------------------------------------------------------
Purchase of fixed assets (1.5) (0.9) (2.4)
Sale of fixed assets 0.1 0.1 0.5
Investments acquired - - (0.3)
--------------------------------------------------------------------------------------------------
Net cash outflow for capital expenditure and
financial investment (1.4) (0.8) (2.2)
--------------------------------------------------------------------------------------------------
Decrease/(increase) in term deposits 1.0 - (14.0)
Increase/(decrease) in term loans 2.5 (2.7) (0.8)
--------------------------------------------------------------------------------------------------
Net cash outflow from management of liquid 3.5 (2.7) (14.8)
resources
--------------------------------------------------------------------------------------------------
Issue of ordinary shares including share premium 0.1 - 0.2
--------------------------------------------------------------------------------------------------
Net cash inflow from financing 0.1 - 0.2
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11. Movement in net funds
Cash
As at Exchange movement At
30 Sept 2004 rate effect in year 31 March 2004
£ million £ million £ million £ million
---------------------------------------------------------------------------------------
Cash at bank and in hand 5.1 - (4.1) 9.2
Bank overdrafts (3.5) - (2.6) (0.9)
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Net cash 1.6 - (6.7) 8.3
Cash on short-term deposit 13.0 - (1.0) 14.0
Debt due within one year (4.1) - (2.5) (1.6)
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Net funds 10.5 - (10.2) 20.7
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