RNS Number:2476B
Oxford Instruments PLC
23 November 1999
ANNOUNCEMENT OF 1999/2000 INTERIM RESULTS
Oxford Instruments plc, the advanced instrumentation company, today announced
Consolidated Interim Results (Unaudited) for the half year to 30 September
1999 as follows:
Half year to Half year to
30 Sep 1999 30 Sep 1998
* Group turnover, excluding share of joint #76.4 million #78.7 million
venture
* Profit of continuing operations, before #0.5 million #5.7 million
exceptional items and taxation
* Exceptional reorganisation costs #(6.5) million nil
* Closing net cash #5.4 million #9.4 million
* Earnings per share from continuing 0.7 pence 7.7 pence
operations, excluding exceptional items
* (Losses) earnings per share (basic and (31.3)pence 7.0 pence
diluted)
* Dividend per share 2.4 pence 2.4 pence
* Net assets per share 197.4 pence 201.2 pence
Enquiries: Oxford Instruments plc Tel: 01865 881437
Andrew Mackintosh, Chief Executive
Martin Lamaison, Financial Director
Citigate Dewe Rogerson Tel: 0171 638 9571
John Rudofsky
Chairman's statement
Nigel Keen, Chairman of Oxford Instruments plc, said today:-
In my first statement as Chairman of Oxford Instruments I can report
substantial progress in reshaping the Group to improve our service to
customers from a reduced cost base. The first phase of our business
reorganisation, which was announced in September 1999, is substantially
complete and we can now accelerate work on key areas for operational
improvement helped by the new business structure. We remain on track to
deliver the substantial improvements outlined in September. The poor results
for the last six months emphasise the critical importance of this major
initiative for the business.
Financial summary
Our overall orders for continuing operations were up 1% on the equivalent
period last year, with the moving annual total (excluding our Oxford Magnet
Technology joint venture with Siemens) now #167 million This is despite very
subdued demand for our products in Japan. Turnover in the first half from the
continuing operations was stable at #76 million. Margins remain tight as a
result of continued competitive pressure and increased costs as we work
through a number of projects delayed by technical difficulties.
The operating loss from the wholly-owned businesses is balanced by our share
of the operating profit of the joint venture. The result is a pre-exceptional
pre-tax profit from continuing operations of #0.5 million.
An exceptional charge of #6.5 million has been taken to cover the costs of the
reorganisation announced in September 1999.
Our results also include, as previously announced, the profit on the sale of
the Nuclear Measurements business of #2.9 million and also the recognition of
the write off through the Profit and Loss Account of goodwill previously
written off against reserves of #12 million in respect of both this disposal
and the closure of our scanning probe microscopy business. In the latter case
we have entered into an agreement with a leading supplier to this market to
provide it with key proprietary components.
There was a net cash outflow of #0.6 million following the sale and purchase
of businesses. The Directors have recommended an Interim Dividend of 2.4
pence per share, unchanged from last year.
Operational review
Oxford Magnet Technology
As forecast, Oxford Magnet Technology (OMT) has continued its strong
performance, with the moving annual total of shipments now #108 million.
Market conditions remained buoyant, though not quite at the record levels of
last year and OMT's main customers are maintaining their positions in the
market place. As previously reported, shipments last year were inflated by the
large opening backlog, however the business is now meeting all customer
delivery requirements.
We continue to invest in joint projects between our Superconductivity business
and OMT and the creation of a single UK management team in the former will
accelerate this process.
Instrumentation
Overall turnover from continuing businesses was down 5%, with strong growth
from our telecommunications markets offset by weak demand from other
industries. Margins continue to be under pressure, but remained stable.
We have successfully transferred to the UK the bulk of the 'Auburn' US-based
business acquired in April 1999. This resulted in significantly increased
costs in the first half as we invest in this business. Customers are
including Auburn products in their capital cycle planning for next year and we
remain confident about these opportunities.
As part of the restructuring we have announced the consolidation of our
manufacturing activity in Fremont, California back to the UK, but our other US
west coast activities are unaffected. Looking forward, we are planning
additional site rationalisation in the UK, under the recently appointed
Managing Director, although this will not affect our Bristol-based Plasma
Technology business.
As previously announced we have recently formed a technology and marketing
relationship with Horiba Ltd., a Japanese market leader in analytical
instruments. This opens up new distribution channels for products from both
companies from next year.
Superconductivity
Orders for this business fell by 10% compared with the prior year, reflecting
reduced government funding for research in Japan and an increased focus on
market profitability and technical risk assessment which has led us to reject
some potential orders.
Turnover increased by 4%. Our programmes aimed at increasing internal
efficiency are showing some improvements in operations and the new single UK
management structure for the Superconductivity business created through our
'TopFlight' reorganisation programme will accelerate progress. Margins will
remain depressed while we continue to incur costs associated with finishing
certain technically complex projects. However margins on new business are
improving.
Our superconducting wire business delivered another steady performance on the
back of the continued demand from its MRI magnet customers.
Medical Systems
Orders increased by 6% on the same period in the prior year, helped by strong
third-party sales and the successful launch of a portable version of our
'Synergy' product used for the measurement of muscle voltages. Margins
continued to be affected by changes in product and territory mix. Under the
new management team installed as part of the restructuring we will complete
the integration of the acquired Vickers neurology business by consolidating
all our UK activities onto one site in Old Woking, UK. This programme will be
complete by the end of June 2000 and will result in lower costs and a more
integrated business base from which we can drive forward.
Board and senior management changes
In line with the management changes and business reorganisation of the last
few months, including the appointment of three new managing directors for the
UK businesses, we have strengthened the Board by the appointment of two new
independent non-executive directors, as announced last week. Peter Morgan
and Peter Hill will bring broad business experience and additional commercial
focus to the Company.
Prospects
Through the first phase of the 'TopFlight' programme we have put in place a
new management structure in the operating businesses with an increased
emphasis on customers, production efficiencies and a lower cost base.
Disruption to the business is being kept to a minimum as we work through the
programme.
The new structure will allow us better to lever the synergies that exist
across the Group, to enable rapid improvement in key processes and to improve
allocation of scarce resources. Our priority remains to achieve significant
operational improvements and we are focussing in particular on procurement and
manufacturing yield savings as well as accelerating our new product
introduction and increasing sales channel efficiency.
Compared to the first half, we expect performance in the second half to
recover although the cost savings from the restructuring will not make a
significant contribution until next year. We have new management in place and
through the recent changes we have created a stronger base from which to build
the business.
Group Profit and Loss Account
Half year ended 30 September 1999 (Unaudited)
Half year to 30 September 1999
Continuing Exceptional Discontinued Total
operations Items operations
Notes #000 #000 #000 #000
-----------------------------------------------------------------------------
Turnover
1 Group and share of joint 96,617 - 532 97,149
venture turnover
3 Less: share of joint (20,792) - - (20,792)
venture's turnover ----------------------------------------------
2 Group turnover 75,825 - 532 76,357
Cost of sales (51,602) - (646) (52,248)
----------------------------------------------
Gross profit 24,223 - (114) 24,109
4 Net operating expenses (26,713) (6,500) (103) (33,316)
----------------------------------------------
2 Group operating loss (2,490) (6,500) (217) (9,207)
3 Share of operating profit of 2,813 - - 2,813
joint venture ----------------------------------------------
Total operating profit (loss): 323 (6,500) (217) (6,394)
Group and share of joint venture
5 Profit on sale of discontinued - - 2,858 2,858
business
5 Goodwill previously written off - - (11,986) (11,986)
to reserves
Net interest receivable(payable) 214 - (16) 198
---------------------------------------------
Profit (loss) before taxation 537 (6,500) (9,361) (15,324)
6 Tax on profit (loss) on (188) 1,640 (913) 539
ordinary activities ---------------------------------------------
7 Profit (loss) for the period 349 (4,860) (10,274) (14,785)
attributable to shareholders -----------------------------------
8 Dividend (1,138)
--------
Retained loss for the period (15,923)
--------
pence pence pence pence
---------------------------------------------
7 Earnings (losses) per share - 0.7 (10.3) (21.7) (31.3)
basic and diluted
Group Profit and Loss Account
Half year ended 30 September 1998 (Unaudited)
Half year to 30 September 1998 Year to
Continuing Discontinued Total 31 Mar 99
operations operations
Notes #000 #000 #000 #000
----------------------------------------------------------------------------
Turnover
1 Group and share of joint 100,126 3,610 103,736 217,031
venture turnover
3 Less: share of joint (25,026) - (25,026) (49,220)
venture's turnover ---------------------------------------------
2 Group turnover 75,100 3,610 78,710 167,811
Cost of sales (48,561) (2,771) (51,332) (110,222)
---------------------------------------------
Gross profit 26,539 839 27,378 57,589
Net operating expenses (24,714) (1,322) (26,036) (53,610)
---------------------------------------------
2 Group operating profit (loss) 1,825 (483) 1,342 3,979
3 Share of operating profit of 3,660 - 3,660 7,165
joint venture ---------------------------------------------
Total operating profit (loss): 5,485 (483) 5,002 11,144
Group and share of joint venture
5 Profit on sale of discontinued - - - -
business
5 Goodwill previously written off - - - -
to reserves
Net interest receivable(payable) 205 (67) 138 375
----------------------------------------------
Profit (loss) before taxation 5,690 (550) 5,140 11,519
6 Tax on profit (loss) on (1,849) 176 (1,673) (3,670)
ordinary activities ----------------------------------------------
7 Profit (loss) for the period 3,841 (374) 3,467 7,849
attributable to shareholders -----------------------
8 Dividend (1,138) (3,971)
--------------------
Retained profit for the period 2,329 3,878
--------------------
pence pence pence pence
---------------------------------------------
7 Earnings (losses) per share - 7.7 (0.7) 7.0 16.2
basic and diluted
Group Statement of Total Recognised Gains and Losses
Half year ended 30 September 1999 (Unaudited)
Half year to Half year to Year to
30 Sep 1999 30 Sep 1998 31 Mar 1999
#000 #000 #000
------------------------------------------------------------------------------
(Loss) profit after tax for the period (14,785) 3,467 7,849
Exchange differences on foreign (568) (386) 1,014
currency net investments -------------------------------------
Total recognised gains and losses for (15,353) 3,081 8,863
the period -------------------------------------
Group Balance Sheet
Half year ended 30 September 1999 (Unaudited)
As at As at As at
30 Sep 1999 30 Sep 1998 31 Mar 1999
#000 #000 #000
Notes-------------------------------------------------------------------------
Fixed assets
Intangible assets - goodwill 2,442 - -
Intangible assets - negative goodwill (1,408) - (1,624)
Tangible assets 41,977 43,314 42,749
Investments
Share of gross assets of joint 14,225 15,483 13,266
venture
Share of gross liabilities of joint (8,237) (10,733) (9,263)
venture -------------------------------------
Net investment in joint venture 5,988 4,750 4,003
Other investments 1,147 813 1,059
-------------------------------------
7,135 5,563 5,062
-------------------------------------
Total fixed assets 50,146 48,877 46,187
Current assets
Stocks 37,403 34,070 34,481
Debtors 60,786 55,287 63,867
Cash at bank and in hand 7,913 11,015 9,130
-------------------------------------
106,102 100,372 107,478
-------------------------------------
Creditors: amounts falling due within one year
Bank loans and overdrafts (2,492) (1,606) (3,099)
Other creditors (48,502) (46,774) (47,214)
-------------------------------------
(50,994) (48,380) (50,313)
-------------------------------------
Net current assets
Due within one year 55,108 50,221 57,165
Debtors due after more than one year - 1,771 -
-------------------------------------
55,108 51,992 57,165
-------------------------------------
Total assets less current liabilities 105,254 100,869 103,352
Provisions for liabilities and charges (10,917) (4,813) (4,441)
-------------------------------------
Net assets employed 94,337 96,056 98,911
-------------------------------------
9 Shareholders' funds 94,337 96,056 98,911
-------------------------------------
The Group Balance Sheet as at 30 September 1998 has been restated to reflect
FRS12.
Group Cash Flow Statement
Half year ended 30 September 1999 (Unaudited)
Half year to Half year to Year to
30 Sep 1999 30 Sep 1998 31 Mar 1999
#000 #000 #000
Notes-------------------------------------------------------------------------
10 Net cash inflow from operating 46 8,140 12,908
activities
Dividend from joint venture - - 3,087
10 Returns on investments and servicing 477 627 643
of finance
Taxation (639) (1,444) (7,485)
10 Capital expenditure and financial (2,424) (3,992) (6,247)
investment
Acquisitions (2,876) - (149)
Disposals 5,901 - -
Equity dividends paid (1,138) - (2,896)
-------------------------------------
Cash (outflow) inflow before (653) 3,331 (139)
management of liquid resources and financing
10 Management of liquid resources 791 482 (182)
10 Financing 13 (5,271) (5,239)
-------------------------------------
Increase (decrease) in cash in the 151 (1,458) (5,560)
period -------------------------------------
Reconciliation of Net Cash Flow to Movement in Net Funds
Half year ended 30 September 1999 (Unaudited)
Half year to Half year to Year to
30 Sep 1999 30 Sep 1998 31 Mar 1999
#000 #000 #000
Notes-------------------------------------------------------------------------
Increase (decrease) in cash in the period 151 (1,458) (5,560)
Change in liquid resources (791) (482) 182
Translation difference 30 33 93
-----------------------------------
Movement in net funds in the period (610) (1,907) (5,285)
Opening net funds 6,031 11,316 11,316
-----------------------------------
11 Closing net funds 5,421 9,409 6,031
-----------------------------------
Notes on the Interim Financial Statements
Half year ended 30 September 1999 (Unaudited)
1. Basis of preparation of accounts
The Group profit and loss account and balance sheet for the half years ended
30 September 1999 and 30 September 1998 have been prepared on a basis
consistent with the accounting policies disclosed in the Group's Report and
Accounts 1999. The operations of Nuclear Measurements in Oak Ridge, Tennessee
and the scanning probe microscopy business in Cambridge, UK were discontinued
on 1 April 1999 and 30 September 1999 respectively, see note 5 below. 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 99 30 Sep 98 31 Mar 99
Average Period End Average Period End Average Period End
-----------------------------------------------------------------------------
US Dollar 1.61 1.65 1.66 1.70 1.65 1.61
Euro 1.52 1.55 1.51 1.45 1.47 1.50
Yen 187 175 231 231 213 191
-----------------------------------------------------------------------------
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 1999 30 Sep 1998 30 Sep 1999 30 Sep 1998
#000 #000 #000 #000
------------------------------------------------------------------------------
Superconductivity 35,573 34,261 (590) 562
Instrumentation 20,917 21,954 (1,295) 658
Medical 19,335 18,885 (605) 605
------------------------------------------------------
75,825 75,100 (2,490) 1,825
Share of OMT jv (49%) 20,792 25,026 2,813 3,660
------------------------------------------------------
96,617 100,126 323 5,485
------------------------------------------------------
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.
4. Exceptional items
Exceptional items relate to continuing activities and include the costs
currently expected to be incurred during the current financial year in
connection with the reorganisation of the Group's businesses into a simplified
operational structure as announced in September 1999, as well as the costs of
reorganising the Group's Board and senior management.
5. Loss on disposal of businesses
The disposal of the Nuclear Measurements business produced a profit on sale of
net tangible assets of #2,858,000. Goodwill previously written off to
reserves of #11,450,000 was written off through the Profit & Loss Account.
The closure of the Cambridge based scanning probe microscopy business resulted
in goodwill of #536,000, previously written off to reserves, being written off
through the Profit & Loss Account.
6. Taxation
The tax charge for the half year ended 30 September 1999 has been based on the
estimated effective rate applicable to each significant category of income and
cost for the full year.
7. Earnings per share
Earnings per share (EPS) has been calculated using losses of #14,785,000 (1998
earnings of #3,467,000) and weighted average shares of 47,210,514 (1998
49,577,137) for basic EPS and 47,292,747 (1998 49,720,002) for diluted EPS
respectively.
8. Dividends per share
An interim dividend of 2.4p (1998 2.4p) will be paid on 29 March 2000 to
shareholders registered at the close of business on 25 February 2000, the
record date. The shares will be marked 'ex-dividend' on 21 February 2000.
9. Movements in equity shareholders' funds
Half year to Half year to Year to
30 Sep 1999 30 Sep 1998 31 Mar 1999
#000 #000 #000
------------------------------------------------------------------------------
(Loss) profit for the period (14,785) 3,467 7,849
Dividends paid and proposed (1,138) (1,138) (3,971)
Shares repurchased and cancelled in - (5,309) (5,323)
the period
Exchange differences on foreign currency (568) (386) 1,014
net investments
New share capital subscribed 13 38 84
Goodwill written off during the period (82) (23) (149)
Goodwill written back to profit and loss 11,986 - -
account ------------------------------------
Net reduction in equity shareholders' funds (4,574) (3,351) (496)
Opening equity shareholders' funds 98,911 99,407 99,407
------------------------------------
Closing equity shareholders' funds 94,337 96,056 98,911
------------------------------------
10. Cash flows netted in the consolidated cash flow statement
Half year to Half year to Year to
30 Sep 1999 30 Sep 1998 31 Mar 1999
#000 #000 #000
------------------------------------------------------------------------------
Operating (loss)profit (9,207) 1,342 3,979
Depreciation charges and amortisation 2,751 2,572 4,998
Change in stocks (4,695) (291) (69)
Change in debtors 3,371 7,046 3,410
Change in creditors 7,826 (2,529) 590
-------------------------------------
Net cash inflow from operating activities 46 8,140 12,908
-------------------------------------
Interest received 529 665 952
Interest paid (52) (38) (309)
-------------------------------------
Net cash inflow from returns on investments 477 627 643
and servicing of finance -------------------------------------
Purchase of fixed assets (2,379) (3,638) (5,683)
Sale of fixed assets 144 177 345
Investments acquired (189) (531) (909)
-------------------------------------
Net cash outflow for capital expenditure (2,424) (3,992) (6,247)
and financial investment -------------------------------------
Decrease in term deposits 1,059 2,000 1,459
Decrease in term loans (268) (1,518) (1,641)
-------------------------------------
Net cash inflow (outflow) from management 791 482 (182)
of liquid resources -------------------------------------
Issue of ordinary shares including share 13 38 84
premium
Repurchase of own shares - (5,309) (5,323)
-------------------------------------
Net cash inflow (outflow) from financing 13 (5,271) (5,239)
-------------------------------------
11. Movements in net funds
As at Exchange Cash As at
30 Sep 99 rate movement in 31 Mar 99
effect period
#000 #000 #000 #000
-----------------------------------------------------------------------------
Cash at bank on demand 2,431 64 (222) 2,589
Bank overdrafts (1,922) 19 373 (2,314)
----------------------------------------------
Net cash 509 83 151 275
Cash on deposit 5,482 - (1,059) 6,541
Debt due within one year (570) (53) 268 (785)
----------------------------------------------
Net funds 5,421 30 (640) 6,031
----------------------------------------------
12. Report and Accounts 1999
The comparative figures for the financial year ended 31 March 1999 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 1999 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.
19/11/99 10:14
END
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