TIDMOXIG
RNS Number : 1136F
Oxford Instruments PLC
12 June 2012
Release date: 7am 12 June 2012
Oxford Instruments plc
Announcement of Preliminary Results for the year to 31 March
2012
Oxford Instruments plc, a leading provider of high technology
tools and systems for industry and research, today announces its
Preliminary Results for the year to 31 March 2012.
Highlights:
-- Excellent progress in the first year of our 14 Cubed growth
plan, in line to reach our objectives
-- Revenue up 28.6% to GBP337.3 million (2011: GBP262.3 million)
-- Adjusted profit before tax* up 60.3% to GBP42.0 million (2011: GBP26.2 million)
-- Adjusted EPS* up 48.4% to 61.6 pence (2011: 41.5 pence)
-- Order intake up 23.5% to GBP337.8 million (2011: GBP273.5 million)
-- Record performance across all three business sectors, with
strong organic growth in all territories
-- Three acquisitions made during the year - Omicron
Nanotechnology, Omniprobe and Platinum Medical Imaging - all
integrating well
-- Strengthening new product pipeline, with 44% of revenue from
products launched or acquired in the last three years (2011:
34%)
-- Proposed final dividend increased by 11.6% to 7.23 pence,
giving a total dividend for the year of 10.0 pence (2011: 9.0
pence)
*Adjusted numbers are stated to give a better understanding of
the underlying business. Details of adjusting items can be found in
Note 2.
Jonathan Flint, Chief Executive of Oxford Instruments plc,
said:
"We are now two months into the second year of our 14 Cubed
plan. Trading to date has been in line with our expectations and
our markets remain strong despite continued economic uncertainty,
particularly in Europe. A healthy pipeline of new product
introductions is in place and we are investing across the business
to increase efficiency, strengthen our market positions and drive
further profitable growth. We are well positioned to build on the
opportunities presented by emerging markets and to take advantage
of new applications and technologies as they arise. We continue to
look for bolt-on acquisitions to complement our existing
businesses.
"A changing market presents interesting opportunities as well as
challenges and we are confident that we have the structure,
products and talent in place to make further progress in the
current year and beyond."
Enquiries:
Oxford Instruments plc Tel: 01865 393200
Jonathan Flint, Chief Executive
Kevin Boyd, Group Finance Director
MHP Tel: 020 3128 8100
Rachel Hirst
Ian Payne
Chairman's Statement
Oxford Instruments delivers shareholder value by providing our
customers with the most advanced tools and services. Our customers
use these products to advance the frontiers of science, manufacture
innovatively and ensure the quality of industrial processes. The
diversity of our products and markets, our clear customer focus,
our culture of innovation and our commitment to attracting the very
best talent in the industry has continued to drive the growth of
the business. The Group is now performing more strongly than at any
time in its history and was admitted into the FTSE250 index in
September 2011.
This strong performance in the first year of our 14 Cubed three
year plan has been built around organic growth, efficiency
improvements and a successful acquisition programme. Our healthy
product pipeline and exposure to growing markets has yielded good
organic revenue growth with further improvement in operating
margins. The integration of the three acquisitions we made in the
year is proceeding to plan and each is making a positive
contribution to our business.
The Group is recommending a final dividend of 7.23 pence, an
increase of 11.6% over the prior year bringing the total for the
year to 10.0 pence.
The success reflected in these results has been fostered by our
culture of inclusivity and our ability to bring together skills and
ideas from across the business to drive innovation and the delivery
of new products. These results are a credit to all our people. I
thank them on behalf of the Board for their hard work and
commitment.
We are aware that we are operating in uncertain times. We have
the right people in place to maximise the opportunities and tackle
the challenges of the coming years. As we enter the second year of
our 14 Cubed plan, it is our intention to continue to deliver value
for all our stakeholders with the wholehearted care, passion and
commitment for which Oxford Instruments is renowned.
Nigel Keen
Chairman
12 June 2012
Chief Executive's Statement
It is now a year since we announced our 14 Cubed plan to achieve
compound annual growth of 14% and a return on sales of 14% by 2014.
Achievement of our strategic objective is driven by three elements;
organic growth through innovation, continuous efficiency
improvements and targeted acquisitions, all of which have
contributed to our growth and margin improvement during the
year.
Our order intake was GBP337.8 million (2011: GBP273.5 million)
and the order book for future delivery now stands at GBP136.8
million (2011: GBP115.3 million). Our two principal end market
areas, research and industrial, both remain robust. Revenues rose
to GBP337.3 million, an increase of 28.6% of which 15.1% was
organic growth. Adjusted profit before tax grew to GBP42.0 million
(2011: GBP26.2 million) which equates to an adjusted operating
profit return on sales of 12.5% (2011: 10.7%). Adjusted earnings
per share rose to 61.6 pence (2011: 41.5 pence) and the Group ended
the year with a net positive cash balance of GBP35.1 million (2011:
GBP13.1 million).
The three acquisitions we made in the year are all performing to
expectations. Omicron Nanotechnology, acquired in June, has enabled
us to extend our offering in the Nanotechnology Tools sector and
good progress has been made integrating it into the Group.
Omniprobe, also acquired in June, has contributed to the good
performance of the NanoAnalysis business and has a strong pipeline
of new products due for launch this year. The Platinum Medical
Imaging business, acquired in November, has been able to exploit
the value of the Oxford Instruments brand to win new customers and
improve its business performance.
We continued to benefit from growth across our major geographies
with Europe up 37.4%, North America up 30.6% and Asia up 14.5%. Our
performance in developed markets benefited from sales of products
and services from our new acquisitions which were primarily exposed
to these regions. Going forward, we expect further opportunities to
emerge in Asia as we expand the reach of these products and
services. We anticipate that Asia will be our fastest growing
region over the medium to longer term.
Innovation remains at the core of the Group's culture. Our
strong performance is underpinned by continued investment in
R&D, which increased this year by 29% to GBP25.8 million (2011:
GBP20.0 million). The percentage of revenue that is made up of
products launched or acquired in the last three years is a key
indicator of the vitality of our new product development and has
increased from 34% in 2011 to 44% in 2012.
Our People
A high technology business relies on the skills and expertise of
its people. We therefore recognise the importance of ensuring a
sustainable business going forward through an inclusive strategy of
managing, developing and recruiting people who support our company
values and contribute to our growth. I am proud to lead such a
talented and committed workforce and I thank them for their
continued contribution to our success.
Outlook
We are now two months into the second year of our 14 Cubed plan.
Trading to date has been in line with our expectations and our
markets remain strong despite continued economic uncertainty,
particularly in Europe. A healthy pipeline of new product
introductions is in place and we are investing across the business
to increase efficiency, strengthen our market positions and drive
further profitable growth. We are well positioned to build on the
opportunities presented by emerging markets and to take advantage
of new applications and technologies as they arise. We continue to
look for bolt-on acquisitions to complement our existing
businesses.
A changing market presents interesting opportunities as well as
challenges and we are confident that we have the structure,
products and talent in place to make further progress in the
current year and beyond.
Jonathan Flint
Chief Executive
12 June 2012
Operational Review
We operate in three sectors: Nanotechnology Tools, Industrial
Products, and Service.
Nanotechnology Tools
GBPm 2012 2011
------------------ ------ ------
Revenue 153.9 121.8
------------------ ------ ------
Operating profit 17.3 14.6
------------------ ------ ------
The Nanotechnology Tools sector comprises our NanoAnalysis,
NanoScience, Plasma Technology and Omicron NanoTechnology
businesses. This sector produces our highest technology products
and serves research and industrial customers in both the public and
private sectors.
Our NanoAnalysis business produces leading-edge tools that
enable materials characterisation and sample manipulation at the
nanometre scale. Its products are used on electron microscopes and
ion-beam systems across academic and industrial applications
including semiconductors, renewable energy, mining, metallurgy and
forensics. This business has produced a strong performance across
all regions, driven by the launch of AZtec, a revolutionary
materials characterisation system. The integration of Omniprobe
Inc, acquired in June 2011, has enhanced our product range with
innovative nano-manipulation tools for sample preparation.
Our NanoScience business is the world's leading supplier of
cryogenic systems for nano-characterisation and measurement at low
temperatures and high magnetic fields. Its technologies are used in
applications such as characterisation of new materials and devices
at the nanoscale, data protection and storage, fusion energy and
high temperature superconductor materials. This business has
performed well in the year and is now the world's leading supplier
of cryogen-free products. The Triton cryogen-free dilution
refrigerator, with an integrated high-field superconducting magnet,
has performed strongly, particularly in the Quantum Computing
segment. The launch in the year of Mercury, a new electronics
system, further strengthened our market position offering
intelligent control of cryogenic and magnetic environments.
Our Plasma Technology business provides leading-edge tools and
processes for the fabrication of nanostructures. Our systems
provide process solutions for nanometre layer growth of compound
semiconductor material, etching of nanometre sized features and the
controlled growth of nanostructures in markets ranging from
semiconductor electronics, Micro Electro Mechanical Systems (MEMS),
High Brightness LEDs (HBLED) and photovoltaic devices. Order intake
levels were maintained and the order book is healthy, despite the
anticipated weakening in HBLED capital equipment demand. As
previously reported, sales of equipment to make HBLEDs declined due
to over capacity in the market but are forecast to pick up towards
the end of the current financial year as devices for commercial and
domestic lighting become more affordable.
In March 2012 we transferred ownership of TDI, a wholly owned
subsidiary which develops hydride vapour phase epitaxy (HVPE)
technology for use in the production of High Brightness LEDs, to
Ostendo, a privately owned
company based in California. This will maximise the value from our technology investment in HVPE.
Our Omicron NanoTechnology business supplies analytical
solutions for nanotechnology R&D, providing innovative, high
performance tools that offer unique multi-technique systems. We are
investing in additional R&D, sales and service. There has been
a trend in the market towards much larger integrated systems from
which Omicron is well placed to benefit. For example, the recent
launch of Argus, an innovative electron spectrometer, has enabled
our research customers to undertake experiments that were not
previously possible with standard detector technology.
Following the acquisitions of Omicron and Omniprobe, good
progress has been made with their integration into the Group,
growing our Nanotechnology Tools offering and leveraging sales and
brand synergies. This has significantly improved our competitive
position when bidding for multi-million dollar systems that contain
products from more than one of the Nanotechnology Tools businesses,
and we have enjoyed particular success in the fast growing BRIC
territories where brand plays an important role in the selling
process.We monitor the market's perception of our performance
through solicitation of regular feedback from our customers. We
quantify this in our Net Promoter Score metric which has improved
in the year.
Industrial Products
GBPm 2012 2011
------------------ ------ -------
Revenue 129.1 100.5
------------------ ------ -------
Operating profit 13.8 6.1
------------------ ------ -------
The Industrial Products sector contains our Industrial Analysis,
Superconducting Wire, Austin and Magnetic Resonance businesses.
This sector supplies analytical systems for quality control,
environmental and compliance testing, and components for industry
and research.
Our Industrial Analysis business supplies high quality
instruments for materials identification and thickness gauging
analysis essential for quality control. Our customers span global
industries from metals, alloy manufacturing, steel foundries and
scrap recycling through to automotive, solar, petrochemicals,
cement, recycling, and precious metals. Performance for this
business was very strong across all sectors. Our Optical Emission
Spectroscopy division performed particularly well in Asia and saw
orders rise on the back of its recently launched FoundryMaster
Xpert tool, specifically designed for the steel industry. We also
launched the XMET7500, a hand held analyser, delivering high
performance and flexibility for the rapid analysis of the widest
variety of materials from metals to soils. Sales have exceeded
expectations in all territories. In addition, process improvement
in our x-ray tube facility in California has led to significant
gains in productivity. In October 2011, we rationalised the
industrial product offering by disposing of a non-core product line
that we produced for a single customer, to that customer.
Our Superconducting Wire business is the world leader in the
provision of high performance superconducting wire for industry and
research, spanning markets that include MRI healthcare, physics
research, life sciences, fusion energy and particle accelerators.
The core business providing wire for MRI machines benefited from
robust demand from our major OEM customers. Following the major
order received in 2010, a further small order for wire for ITER,
the multinational carbon free energy programme, was received in
2011 and shipments remain on track.
Our Austin business specialises in high vacuum products, helium
gas coolers and services for the semiconductor, research, life
science and energy industries. It had a good year driven by demand
for its products from the solar industry and backed up by its core
products and services. A programme of efficiency initiatives has
reduced lead-times. The strong performance of this business has
driven a move to new premises, planned for 2012.
Our Magnetic Resonance business produces bench top Nuclear
Magnetic Resonance analysers for a broad range of industries for
quality assurance, production optimisation and research
applications. They are used for applications in agriculture, food
and beverage, textiles, polymers, petrochemicals and oil and gas
exploration. This business showed a good performance and has a
secure order book going forward. It has good profit margins and
sales of the recently launched AffirmoEX, the world's smallest
benchtop Electron Magnetic Resonance spectrometer for industrial,
scientific and educational applications, have exceeded
expectations.
Service
GBPm 2012 2011
------------------ ----- -----
Revenue 56.3 42.5
------------------ ----- -----
Operating profit 11.0 7.4
------------------ ----- -----
This sector comprises our service, support, training,
refurbishment, consumables and accessories elements of our
business. It consists of our CT and MRI Service business in North
America and Asia, and the service elements of Nanotechnology Tools
and Industrial Products sectors. The business performed well across
all territories, particularly Asia where the adoption of a service
contract model is gaining greater acceptance across a growing
installed base.
The acquisition of Platinum Medical Imaging in November 2011 has
also made a positive contribution to this sector. Platinum offers
third party servicing and support to operators of MRI and CT
scanners in North America. Structural changes in the US health care
market continue to benefit this business. Recognition of the Oxford
Instruments brand has increased customer confidence in the Platinum
offering and helped to further grow market share in North
America.
Financial Review
Trading Performance
The Group uses adjusted figures as key performance measures in
addition to those reported under adopted IFRS. Unless otherwise
stated, all profit, earnings and operating cash flow figures
referred to below are adjusted measures. A reconciliation is given
below.
Orders of GBP337.8 million were GBP64.3 million ahead of the
same period last year, an increase of 23.5%. At the end of the year
the order book for future deliveries stood at GBP136.8 million up
from GBP115.3 million at the end of the previous year.
Revenues in the year grew by 28.6% (GBP75.0 million) to GBP337.3
million. Revenues from the acquisitions less disposals in the
period were GBP35.4 million, adverse foreign currency exchange rate
movements reduced sales by GBP0.9 million while increasing copper
prices increased sales by GBP0.8 million (there was no impact on
profits as movements in the price of copper are passed on to our
customers). As a result, organic revenue growth was 15.1%.
In the Nanotechnology Tools division, sales grew by 26.4% helped
by the Omicron and Omniprobe acquisitions that took place in June.
Organic growth at 2.1% was impacted by the expected decline in
sales of systems to manufacture HBLEDs; excluding these sales,
underlying organic growth was 11.0%. Sales of equipment to make
HBLEDs declined due to over capacity in the market but it is
anticipated that demand will pick up towards the end of the current
year.
Sales in the Industrial Products sector grew by 28.5% helped by
a full year of ITER shipments, partially offset by the disposal of
a product line in October 2011. Excluding these two factors, sales
grew by 23.3% as a result of a number of product launches including
the XMET7000 series handheld analyser in Industrial Analysis, as
well as increased MRI sales and a large new contract for the Austin
business.
Service revenues increased by 32.5%, helped by the acquisition
of Platinum Medical Imaging in November 2011. Excluding this,
organic growth was 16.9% reflecting the focus on selling and
marketing service contracts.
Gross margins increased from 42.7% to 44.2% despite the
disproportionate growth of the lower margin superconducting wire
business. These improved margins were predominantly due to new
product introductions and increased efficiencies with our Value Add
Index Key Performance Indicator increasing from 1.42 to 1.49. This
measure is a reflection of the operating profit generated from each
unit of employment costs.
Operating expenses rose by GBP23.1 million of which GBP12.5
million related to the acquisitions and GBP0.7 million to foreign
exchange rate movements. Underlying constant currency growth in
operating expenses was 11.8%.
Adjusted operating profit increased by GBP14.0 million to
GBP42.1 million. The majority of this increase was a result of the
higher sales volume, with a GBP2.8 million contribution from the
acquisitions.
Adjusting Items
The Directors believe that adjusted profit before tax gives a
clearer indication of the underlying performance of the business. A
reconciliation of reported profit before tax to adjusted profit
before tax is given below:
2012 2011
GBPm GBPm
---------------------------------------------- ------ ------
Profit before income tax 36.1 26.7
Pension scheme curtailment gain - (4.1)
Shareholder earnout no longer required - (0.6)
Reversal of acquisition related fair value
adjustments to inventory 1.7 -
Gain on disposal of product line (7.0) -
Acquisition related costs 1.5 -
Impairment - 0.6
Amortisation of acquired intangibles 11.2 4.7
Mark to market gain in respect of derivative
financial instruments (1.5) (1.1)
---------------------------------------------- ------ ------
Adjusted profit before income tax 42.0 26.2
Share of taxation (8.8) (5.7)
---------------------------------------------- ------ ------
Adjusted profit 33.2 20.5
---------------------------------------------- ------ ------
Amortisation of acquired intangibles has increased by GBP6.5
million as a result of the acquisitions made in the year.
Financial income and expenditure
Within financial income and expenditure, net interest on debt
reduced by GBP0.4 million to GBP0.8 million as cash levels rose,
the majority of the remainder reflects fees related to our
revolving credit facility. The expected return on pension scheme
assets exceeded the interest charge on pension scheme liabilities
by GBP0.7 million, a swing of GBP1.4 million over the prior year.
Due to the increased pension liabilities and the very low gilt
yields at 31 March 2012, net pension interest will be a charge to
the Income Statement in the current year.
Currency hedging
The Group uses derivative products to hedge its exposure to
fluctuations in foreign exchange rates. It is Group policy to have
in place at the beginning of a financial year hedging instruments
to cover 80% of its forecast transactional exposure for that
period.
In common with a number of other companies, the Group has
decided that the additional costs of meeting the extensive
documentation requirements of IAS 39 to apply hedge accounting to
the foreign exchange hedges cannot be justified. Accordingly the
Group does not use hedge accounting for these derivatives. Net
movements on marking to market such derivatives at the balance
sheet date are disclosed in the income statement as Financial
Expenditure and excluded from our calculation of adjusted profit
before tax (note 2).
Commodity hedging
The Group also uses derivative products to hedge its exposure to
fluctuations in the price of copper, a major component for the
Superconducting Wire business. Given the small number of contracts
involved, we apply hedge accounting for these transactions and
consequently the results of marking to market are excluded from the
Income Statement.
Taxation
The underlying tax rate on the profit before tax for the Group
before adjusting items was broadly unchanged at 21% (2011:
22%).
The Group has significant tax losses in the UK available to
offset against future taxable profits. In the year ended March
2011, due to the improved performance of the Group's UK business
units, we recognised a deferred tax asset of GBP11.3 million and a
corresponding credit to the Income Statement. We believe that this
was exceptional both in nature and quantum and therefore excluded
it from our calculation of adjusted earnings per share. Of this
asset value, GBP4.6 million reversed in the year ended March 2012
and for consistency we have excluded it from the calculation of
adjusted earnings per share (see note 2).
Earnings
After a tax charge of GBP11.3 million, a swing of GBP16.8
million from the prior year primarily due to the deferred tax
discussed above, the reported net profit for the financial year was
GBP24.8 million (2011: GBP32.2 million). With a weighted average
number of shares of 54.0 million (2011: 49.3 million), the basic
earnings per share were 46.0 pence (2011: 65.3 pence).
Adjusted profit before tax (note 2), which we believe gives a
better indication of the underlying performance of the business,
grew by GBP15.8 million to GBP42.0 million which equates to an
adjusted earnings per share of 61.6 pence (2011: 41.5 pence), an
increase of 48.4%.
Dividends
In the prior year the Group moved to a progressive dividend
policy, whereby we would seek to raise dividends as adjusted
earnings per share rise, although not necessarily by the same
proportion, depending on the directors' perceived need for cash to
expand the business both organically and through acquisition. For
the year just ended the proposed final dividend of 7.23 pence per
share (2011: 6.48 pence), payable on 25 October 2012 to
shareholders who are on the register on 28 September 2012, gives a
total dividend for the year of 10.0 pence per share (2011: 9.0
pence). Dividend cover for the underlying business before adjusting
items was 6.2 times (2011: 4.6 times).
Investment in research and development (R&D)
The amount charged to the Income Statement in relation to
R&D was GBP25.8 million or 7.6% of sales (2011: GBP20.0
million, 7.6%).
During the year we changed our income statement classification
in respect of custom engineering specials. A custom engineering
special is a product designed to a specific customer order. We now
report the design costs of such products within research and
development which we consider to be more comparable.
A reconciliation between the amounts charged to the Income
Statement and the cash spent is given below:
2012 2011
GBP million GBP million
---------------------------------------------- ------------ ------------
Research and development expense charged
to the consolidated statement of income. 25.8 20.0
Less: depreciation of R&D related
fixed assets (1.6) (0.6)
Add: amounts capitalised as fixed
assets 1.3 2.3
Less: amortisation of R&D costs capitalised
as intangibles (5.2) (5.4)
Add: amounts capitalised as intangible
assets 2.4 3.0
---------------------------------------------- ------------ ------------
Total cash spent on research and development
during the year 22.7 19.3
---------------------------------------------- ------------ ------------
The net book value of capitalised R&D at the end of the
financial year was GBP11.7 million (2011: GBP15.0 million).
Balance sheet
Net assets rose from GBP93.5 million to GBP127.1 million
primarily as a result of the equity issue made in the year and the
increase in the retained profit.
Net working capital (excluding derivative financial instruments
and tax payable/receivable) reduced by GBP1.0 million in the year
to GBP14.9 million, despite GBP2.8 million of the GBP10.2 million
deposit that was received in 2009 for the ITER contract
unwinding.
Inventory turns remained constant at 3.2 while debtor days
increased from 48 days to 53 days.
Acquisitions and Disposals
On 13 June 2011 the Group made two acquisitions: Omicron
NanoTechnology GmbH for GBP28.3 million and Omniprobe Inc. for
GBP12.3 million. These were funded using the Group's resources. On
17 June, the Group raised GBP37.5 million through an equity issue
to ensure that there were sufficient internal resources to complete
the 14 Cubed plan.
On 20 October 2011 the Group disposed of a product line for
consideration of GBP8.1 million, GBP7.1 million of which was paid
on completion, with a further GBP1.0 million receivable on the
first anniversary of completion.
On 3 November 2011 the Group acquired Platinum Medical Imaging
LLC for an initial consideration of US$18 million with a contingent
element of up to US$37 million payable over three years dependent
on performance over that period.
On 22 March 2012 the Group transferred its ownership of TDI, a
wholly owned subsidiary which develops Hydride Vapour Phase Epitaxy
(HVPE) technology for use in the production of HBLEDs, to Ostendo,
a privately owned company based in California. The Group received
0.65 million shares of Ostendo common stock plus $0.65 million in
cash of which $0.15 million will be paid in September 2012. The
Group will also receive a royalty if certain HVPE reactor sales are
realised.
Pensions
The Group has defined benefit pension schemes in the UK and the
US. Both have been closed to new entrants since 2001 and closed to
future accrual from July 2010. The total IAS19 deficit, before tax,
on these pension schemes rose in the year by GBP23.5 million to
GBP35.2 million with a corresponding deferred tax asset of GBP8.7
million.
Assets of the schemes at 31 March 2012 were GBP180.2 million
(2011: GBP173.1 million), while liabilities increased from GBP184.8
million to GBP215.4 million principally as a result of the fall in
the corporate bond yield used to discount future cash flows from
5.6% to 4.9%.
The latest triennial actuarial valuation of the UK scheme was
carried out as at 31 March 2009 and resulted in an actuarial
deficit of GBP39.5 million. A long-term plan for recovering the
deficit over 14 years was agreed between the Company and the
Pension Trustee, which involved a payment of GBP3.1 million for the
year to March 2010, GBP5.3 million for the year to March 2011,
GBP4.5 million for the year to March 2012 and will comprise a
payment of GBP4.9 million for the year to March 2013. For the
subsequent 10 years the 2013 payment of GBP4.9 million will be
inflated by 2.85% per annum. Work is currently underway to produce
an actuarial valuation as at 31 March 2012. The results of this
valuation may alter the future payments to the scheme.
Cash
Earnings before interest, tax, depreciation and amortisation
(EBITDA) increased by 39% to GBP52.1 million. The working capital
movement in the year reduced by GBP2.4 million, building on the
reductions in the previous two years. Trading working capital,
which we define as inventory plus trade debtors less trade
creditors and advances received as a percentage of sales, was 15.4%
(2011: 16.3%).
Cash generated from operations was GBP50.5 million, an increase
of GBP11.3 million on the prior year. The ratio of operating cash
to operating profit was 110.5% (2011: 126.7%).
Net cash at the year-end was GBP35.1 million (2011: GBP13.1
million). The Group maintains a committed Revolving Credit Facility
with a club of three banks. The facility, which extends to December
2014, is for GBP50 million and is extendable to GBP70 million by
mutual consent. In addition, the Group has overdraft and other
facilities totalling GBP14.5 million.
Employees
The average number of people employed during the year was 1,834,
an increase of 336 over the prior year. Of this increase, 262 were
employees who joined the Group from acquired companies. Average
sales per employee increased by 5% to GBP183,900.
Share price
The closing mid-market price of the ordinary shares at the end
of the financial year was GBP12.15, compared with GBP7.03 at the
beginning of the year. The highest and lowest prices recorded in
the financial year were GBP12.62 and GBP7.03 respectively.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Chief Executive's Statement. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are described in this Financial Review.
The diverse nature of the Group combined with its current
financial strength provides a solid foundation for a sustainable
business. The Directors have reviewed the Group's forecasts and
considered a number of potential scenarios relating to changes in
trading performance. The Directors believe that the Group will be
able to operate within its existing debt facility which expires in
December 2014. This review also considered hedging arrangements in
place. As a consequence, the Directors believe that the Group is
well placed to manage its business risks successfully.
The Financial Statements have been prepared on a going concern
basis, based on the Directors' opinion, after making reasonable
enquiries, that the Group has adequate resources to continue in
operational existence for the foreseeable future.
Kevin Boyd
Group Finance Director
12 June 2012
Consolidated Statement of Income year ended 31 March 2012
Year to 31 March 2012 Year to 31 March 2011
Before Adjusting Total Before Adjusting Total
adjusting items* adjusting items* as re-stated**
items* items*
as re-stated
** GBPm
GBPm GBPm GBPm GBPm GBPm
Notes
--------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
Revenue 3 337.3 - 337.3 262.3 - 262.3
Cost of sales (188.3) (1.7) (190.0) (150.4) - (150.4)
--------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
Gross profit 149.0 (1.7) 147.3 111.9 - 111.9
Research and
development 4 (25.8) - (25.8) (20.0) - (20.0)
Selling and
marketing (48.7) - (48.7) (39.9) - (39.9)
Administration
and shared services (32.1) (12.7) (44.8) (23.3) (5.3) (28.6)
Other operating
income - 7.0 7.0 4.7 4.7
Foreign exchange (0.3) - (0.3) (0.6) - (0.6)
--------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
Operating profit 42.1 (7.4) 34.7 28.1 (0.6) 27.5
Expected return
on pension
scheme assets 10.9 - 10.9 9.9 - 9.9
Other financial
income 0.2 1.5 1.7 - 1.1 1.1
-------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
Financial income 11.1 1.5 12.6 9.9 1.1 11.0
Interest charge
on pension
scheme liabilities (10.2) - (10.2) (10.6) - (10.6)
Other financial
expenditure (1.0) - (1.0) (1.2) - (1.2)
Financial expenditure (11.2) - (11.2) (11.8) - (11.8)
Profit before
income tax 42.0 (5.9) 36.1 26.2 0.5 26.7
Income tax
(expense)/credit 6 (8.8) (2.5) (11.3) (5.7) 11.2 5.5
--------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
Profit for the
period attributable
to equity shareholders
of the parent 33.2 (8.4) 24.8 20.5 11.7 32.2
--------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
Pence pence pence Pence
--------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
Earnings per
share
Basic earnings
per share 7 61.6 46.0 41.5 65.3
Diluted earnings
per share 7 60.3 45.0 40.4 63.6
Dividends per
share
Dividends paid 8 9.0 8.4
Dividends proposed 8 10.0 9.0
--------------------------- ------ ----------- ---------- -------- -------------- ---------- ----------------
*Adjusted numbers are stated to give a better understanding of
the underlying business performance. Details of adjusting items can
be found in Note 2.
**See note 1 for details of restatement of comparative
information.
Condensed Consolidated Statement of Comprehensive Income year
ended 31 March 2012
2012 2011
As restated*
GBPm GBPm
Notes
--------------------------------------------- ------- ------- ------------
Profit for the year 24.8 32.2
Other comprehensive (expense)/income
Foreign exchange translation differences (2.6) (0.9)
Actuarial (loss)/gain in respect of post
retirement benefits (28.6) 14.4
(Loss)/gain on effective portion of changes
in fair value of cash flow hedges, net of
amounts recycled (0.4) 0.3
Tax on items recognised directly in other
comprehensive income 6 7.2 (4.6)
Total other comprehensive (expense)/income (24.4) 9.2
Total comprehensive income for the year
attributable to equity shareholders of the
parent 0.4 41.4
--------------------------------------------- ------- ------- ------------
*See note 1 for details of restatement of comparative
information.
Condensed Consolidated Statement of Changes in Equity year ended
31 March 2012
Foreign
Share exchange
Share premium Other translation Retained
capital account reserves reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------- -------- ----------- -------- -------
Balance at 1 April 2011 2.5 22.5 0.4 3.2 64.9 93.5
Total comprehensive income/(expense)
attributable to equity
shareholders of the parent
- Profit - - - - 24.8 24.8
- Other comprehensive
income - - (0.3) (2.6) (21.5) (24.4)
------------------------------------- ------- ------- -------- ----------- -------- -------
- - (0.3) (2.6) 3.3 0.4
Transactions recorded
directly in equity:
- Credit in respect of
employee service costs
settled by award of share
options - - - - 1.0 1.0
- Tax charge in respect
of share options - - - - (1.0) (1.0)
- Proceeds from shares
issued 0.3 37.7 - - - 38.0
- Dividends paid - - - - (4.8) (4.8)
------------------------------------- ------- ------- -------- ----------- -------- -------
Total contributions by
and distributions to
equity shareholders 0.3 37.7 - - (4.8) 33.2
------------------------------------- ------- ------- -------- ----------- -------- -------
Balance at 31 March 2012 2.8 60.2 0.1 0.6 63.4 127.1
------------------------------------- ------- ------- -------- ----------- -------- -------
Balance at 1 April 2010 2.5 21.6 0.2 4.1 23.8 52.2
Total comprehensive income/(expense)
attributable to equity
shareholders of the parent
- Profit - - - - 32.2 32.2
- Other comprehensive
income (as restated*) - - 0.2 (0.9) 9.9 9.2
------------------------------------- --- ---- ---- ------ ----- -----
- - 0.2 (0.9) 42.1 41.4
Transactions recorded
directly in equity:
- Credit in respect of
employee service costs
settled by award of share
options
- Tax credit recognised - - - - 0.4 0.4
in respect of share options
(as restated*) - - - - 2.7 2.7
- Proceeds from shares
issued - 0.9 - - - 0.9
- Dividends paid - - - - (4.1) (4.1)
------------------------------------- --- ---- ---- ------ ----- -----
Total contributions by
and distributions to
equity shareholders - 0.9 - - (1.0) (0.1)
------------------------------------- --- ---- ---- ------ ----- -----
Balance at 31 March 2011 2.5 22.5 0.4 3.2 64.9 93.5
------------------------------------- --- ---- ---- ------ ----- -----
Other reserves comprise the capital redemption reserve which
represents the nominal value of shares repurchased and then
cancelled during the year ended 31 March 1999, and the hedging
reserve in respect of the effective portion of changes in value of
commodity contracts.
The foreign exchange translation reserve comprises all foreign
exchange differences arising since 1 April 2004 from the
translation of the Group's net investments in foreign subsidiaries
into Sterling.
The Group holds 173,794 (2011: 433,794) of its own shares in an
employee benefit trust. The cost of these shares is included within
retained earnings.
*See note 1 for details of restatement of comparative
information.
Condensed Consolidated Statement of Financial Position year
ended 31 March 2012
2012 2011
GBPm GBPm
------------------------------------- ----- -----
Assets
Non-current assets
Property, plant and equipment 28.2 23.6
Intangible assets 78.1 41.6
Deferred tax assets 19.3 17.4
------------------------------------- ----- -----
125.6 82.6
Current assets
Inventories 59.3 46.6
Trade and other receivables 61.0 52.5
Current income tax recoverable 1.3 1.3
Derivative financial instruments 2.4 1.0
Cash and cash equivalents 35.1 24.5
------------------------------------- ----- -----
159.1 125.9
Total assets 284.7 208.5
------------------------------------- ----- -----
Equity
Capital and reserves attributable to
the Company's
equity shareholders
Share capital 2.8 2.5
Share premium 60.2 22.5
Other reserves 0.1 0.4
Translation reserve 0.6 3.2
Retained earnings 63.4 64.9
------------------------------------- ----- -----
127.1 93.5
------------------------------------- ----- -----
Liabilities
Non-current liabilities
Bank loans - 10.5
Other payables 2.8 0.1
Retirement benefit obligations 35.2 11.7
Deferred tax liabilities 7.0 4.1
------------------------------------- ----- -----
45.0 26.4
Current liabilities
Bank loans - 0.1
Bank overdrafts - 0.8
Trade and other payables 96.4 76.5
Current income tax payables 6.0 3.4
Derivative financial instruments 1.2 1.1
Provisions 9.0 6.7
------------------------------------- ----- -----
112.6 88.6
Total liabilities 157.6 115.0
Total liabilities and equity 284.7 208.5
------------------------------------- ----- -----
The financial statements were approved by the Board of Directors
on 12 June 2012 and signed on its behalf by:
Jonathan Flint Director
Kevin Boyd Director
Condensed Consolidated Statement of Cash Flows year ended 31
March 2012
2012 2011
GBPm GBPm
----------------------------------------------------- ------ ------
Profit for the year 24.8 32.2
Adjustments for:
Income tax expense/(credit) 11.3 (5.5)
Net financial (income)/expense (1.4) 0.8
Other operating income (7.0) (4.7)
Impairment - 0.6
Acquisition related fair value adjustments
to inventory 1.7 -
Acquisition related costs 1.5 -
Amortisation of acquired intangibles 11.2 4.7
Depreciation of property, plant and equipment 4.8 4.0
Amortisation and impairment of capitalised
development costs 5.2 5.4
----------------------------------------------------- ------ ------
Adjusted earnings before interest, tax, depreciation
and amortisation 52.1 37.5
Loss on disposal of plant, property and equipment 0.5 -
Cost of equity settled employee share schemes 1.0 0.4
Acquisition related costs paid (1.0) -
Cash payments to the pension scheme more than
the charge to operating profit (4.5) (5.6)
----------------------------------------------------- ------ ------
Operating cash flows before movements in working
capital 48.1 32.3
Increase in inventories (0.2) (8.2)
(Increase)/Decrease in receivables (1.7) 7.4
Increase in payables and provisions 5.7 8.8
Decrease in customer deposits (1.4) (1.1)
----------------------------------------------------- ------ ------
Cash generated from operations 50.5 39.2
Interest paid (1.1) (0.8)
Income taxes paid (7.8) (3.1)
----------------------------------------------------- ------ ------
Net cash from operating activities 41.6 35.3
----------------------------------------------------- ------ ------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 0.1 0.1
Proceeds from sale of product line and subsidiary 7.3 -
Acquisition of subsidiaries, net of cash acquired (51.6) (0.1)
Acquisition of property, plant and equipment (5.6) (5.8)
Capitalised development expenditure (2.4) (3.0)
----------------------------------------------------- ------ ------
Net cash used in investing activities (52.2) (8.8)
----------------------------------------------------- ------ ------
Cash flows from financing activities
Proceeds from issue of share capital 38.0 0.9
Repayment of borrowings (13.1) (19.1)
Increase in borrowings 2.5 10.0
Dividends paid (4.8) (4.1)
----------------------------------------------------- ------ ------
Net cash from financing activities 22.6 (12.3)
----------------------------------------------------- ------ ------
Net increase in cash and cash equivalents 12.0 14.2
Cash and cash equivalents at beginning of the
year 23.7 9.3
Effect of exchange rate fluctuations on cash
held (0.6) 0.2
----------------------------------------------------- ------ ------
Cash and cash equivalents at end of the year 35.1 23.7
----------------------------------------------------- ------ ------
Reconciliation of changes in cash and cash equivalents
to movement in net cash
Increase in cash and cash equivalents 12.0 14.2
Effect of foreign exchange rate changes
on cash and cash equivalents (0.6) 0.2
------------------------------------------------ -------- -------
11.4 14.4
Cash outflow from decrease in debt 13.1 19.1
Cash inflow from increase in debt (2.5) (10.0)
------------------------------------------------ -------- -------
Movement in net cash in the year 22.0 23.5
Net cash/(borrowing) at start of the
year 13.1 (10.4)
------------------------------------------------ -------- -------
Net cash at the end of the year 35.1 13.1
------------------------------------------------ -------- -------
1 BASIS OF PRESENTATION OF ACCOUNTS
This preliminary statement has been prepared under the same
accounting policies as those used to prepare the 2011 Annual Report
and Accounts except as noted below.
The Group has made three restatements in the period. Firstly,
the tax credit of GBP2.7m arising in respect of share options in
the prior year was, in error, reported in the Consolidated
Statement of Comprehensive Income. This has been corrected and the
credit has now been reported in the Consolidated Statement of
Changes in Equity. Secondly, the Group has reclassified certain
engineering costs incurred in relation to one-off special customer
orders. Such costs are now treated as research and development
costs rather than as costs of sales and is considered to be a
treatment consistent with the Group's industry peers. The effect on
the Consolidated Income Statement for the prior year was to reduce
cost of sales by GBP2.4 million and increase research and
development costs by the same amount. The effect on the
Consolidated Statement of Income for the current year has been to
reduce cost of sales by GBP3.1 million and increase research and
development costs by GBP3.1 million. Thirdly, due to strong growth
in its physical product sales, the Directors decided during the
period that it was no longer appropriate to regard the Austin
Scientific business as a service business. Consequently, it is now
included within the Industrial Products segment and the
comparatives have been restated accordingly. In line with the other
businesses, its service revenues will continue to be reported in
the Service segment. The effect of the restatement in the prior
year was to increase the revenue and profit of the Industrial
Products segment by GBP2.9m and GBP0.2m respectively with
corresponding reductions in the Service segment. The amounts of the
revenue and profit in the current year are GBP11.0m and GBP2.4m
respectively. No adjustment has any effect on earnings per share or
on any balance sheet previously presented. Accordingly, a revised
opening balance sheet at 1 April 2010 is not disclosed.
The principal exchange rates used to translate the Group's
overseas results were as follows:
Year end rates
2012 2011
---------- ---- ----
US Dollar 1.60 1.60
Euro 1.20 1.13
Yen 131 133
---------- ---- ----
Average translation rates 2012
US Dollar Euro Yen
--------------- --------- ---- ---
Quarter 1 2012 1.63 1.13 132
Quarter 2 2012 1.60 1.14 125
Quarter 3 2012 1.57 1.17 121
Quarter 4 2012 1.58 1.19 125
--------------- --------- ---- ---
Average translation rates 2011
US Dollar Euro Yen
--------------- --------- ---- ---
Quarter 1 2011 1.50 1.17 138
Quarter 2 2011 1.55 1.20 133
Quarter 3 2011 1.57 1.17 130
Quarter 4 2011 1.58 1.16 131
--------------- --------- ---- ---
2 NON-GAAP MEASURES
The Directors present the following non-GAAP measure as they
believe it gives a better indication of the underlying performance
of the business.
RECONCILIATION BETWEEN PROFIT BEFORE INCOME TAX AND ADJUSTED
PROFIT
Year to Year to
31 March 31 March
2012 2011
GBPm GBPm
---------------------------------------------- --------- ---------
Profit before income tax 36.1 26.7
Pension scheme curtailment gain - (4.1)
Shareholder earnout no longer required - (0.6)
Reversal of acquisition related fair value
adjustments to inventory 1.7 -
Gain on disposal of product line (7.0) -
Acquisition related costs 1.5 -
Impairment - 0.6
Amortisation of acquired intangibles 11.2 4.7
Mark to market gain in respect of derivative
financial instruments (1.5) (1.1)
---------------------------------------------- --------- ---------
Adjusted profit before income tax 42.0 26.2
Share of taxation (8.8) (5.7)
---------------------------------------------- --------- ---------
Adjusted profit 33.2 20.5
---------------------------------------------- --------- ---------
Further to the acquisitions of Omicron Nanotechnology and
Omniprobe announced in June 2011 (see Note 5), the Board decided to
modify the definition of adjusted profit before tax to exclude the
reversal of acquisition related fair value adjustments to inventory
to provide an adjusted profit measure that will include results
from acquired businesses on a consistent basis over time to assist
comparison of performance. Acquisition related costs comprise
professional fees incurred in relation to mergers and acquisitions
activity and any consideration which, under IFRS3 (revised), falls
to be treated as a post acquisition employment expense.
On 20 October 2011 the Group disposed of a product line for a
consideration of GBP8.1m. GBP1.0m of the consideration was deferred
for one year. The product line was part of the Industrial Products
segment. The profit on disposal was GBP7.0m.
On 21 March 2012 the Group transferred its ownership of
Technologies and Devices Inc (TDI) to Ostendo, a privately owned
company based in California. The Group has received 650,000 shares
of Ostendo common stock plus $0.7m in cash of which $0.2m will be
paid six months after the closing date. The Group considers the
fair value of the shares to be nil. The profit on disposal was nil.
During the prior year, the Group recognised other operating income
of GBP0.6m in relation to a shareholder earnout provided at the
time of the acquisition of TDI and which was no longer
required.
Under IAS 39, all derivative financial instruments are
recognised initially at fair value. Subsequent to initial
recognition, they are also measured at fair value. In respect of
instruments used to hedge foreign exchange risk and interest rate
risk the Group does not take advantage of the hedge accounting
rules provided for in IAS 39 since that standard requires certain
stringent criteria to be met in order to hedge account, which, in
the particular circumstances of the Group, are considered by the
Board not to bring any significant economic benefit. Accordingly,
the Group accounts for these derivative financial instruments at
fair value through profit or loss. To the extent that instruments
are hedges of future transactions, adjusted profit for the year is
stated before changes in the valuation of these instruments so that
the underlying performance of the Group can more clearly be
seen.
In calculating the share of tax attributable to adjusted profit
before tax in the prior year a one-off recognition of deferred tax
assets relating to the Group's UK businesses of GBP11.3m was
excluded. At that time the Group announced its intention to exclude
the reversal of this deferred tax from the calculation of the share
of tax attributable to adjusted profit before tax in the years in
which it reverses. In the current period deferred tax of GBP4.6m
has reversed and consequently been excluded from the tax
attributable to adjusted profit before tax.
During the prior year, the Group's defined benefit pension
schemes in the UK and US were closed to future accrual. This gave
rise to a curtailment gain under IAS 19 as the majority of active
members' accrued benefits are no longer linked to future salary
growth.
During the prior year, the Group recognised an impairment charge
of GBP0.6m against costs capitalised in relation to the planned
site move of the Plasma Technology business in the UK. This move
will now not take place in the form originally planned.
3 SEGMENT Information
The Group has nine operating segments. These operating segments
have been combined into three aggregated operating segments to the
extent that they have similar economic characteristics, with
relevance to products and services, type and class of customer,
methods of sale and distribution and the regulatory environment in
which they operate. Each of these three aggregated operating
segments is a reportable segment.
The Group's internal management structure and financial
reporting systems differentiate the three aggregated operating
segments on the basis of the economic characteristics discussed
below.
- The Nanotechnology Tools segment contains a group of
businesses supplying similar products, characterised by a high
degree of customisation and high unit prices. These are the Group's
highest technology products serving research customers in both the
public and private sectors.
- The Industrial Products segment contains a group of businesses
supplying high technology products and components manufactured in
medium volume for industrial customers.
- The Service segment contains the Group's service business as
well as service revenues from other parts of the Group.
Reportable segment results include items directly attributable
to a segment as well as those which can be allocated on a
reasonable basis. Inter-segment pricing is determined on an arm's
length basis. The operating results of each are regularly reviewed
by the Chief Operating Decision Maker, which is deemed to be the
Board of Directors. Discrete financial information is available for
each segment and used by the Board of Directors for decisions on
resource allocation and to assess performance. No asset information
is presented below as this information is not allocated to
operating segments in reporting to the Group's Board of
Directors.
Year to 31 March 2012
Nanotechnology Industrial
Tools Products Service Total
GBPm GBPm GBPm GBPm
------------------------- -------------- ---------- ------- -----
External revenue 153.3 128.0 56.0 337.3
Inter-segment revenue 0.6 1.1 0.3
------------------------- -------------- ---------- -------
Total segment revenue 153.9 129.1 56.3
Segment operating profit 17.3 13.8 11.0 42.1
------------------------- -------------- ---------- ------- -----
Year to 31 March 2011 (as restated*)
Nanotechnology Industrial
Tools Products Service Total
GBPm GBPm GBPm GBPm
------------------------- -------------- ---------- ------- -----
External revenue 121.4 98.5 42.4 262.3
Inter-segment revenue 0.4 2.0 0.1
------------------------- -------------- ---------- -------
Total segment revenue 121.8 100.5 42.5
Segment operating profit 14.6 6.1 7.4 28.1
------------------------- -------------- ---------- ------- -----
*See note 1 for details of restatement of comparative
information.
Reconciliation of reportable segment profit
2012 2011
GBPm GBPm
------------------------------------------- ------ ------
Profit for reportable segments 42.1 28.1
Other operating income 7.0 4.7
Reorganisation costs and impairment - (0.6)
Acquisition related costs (1.5) -
Reversal of acquisition related fair value
adjustments to inventory (1.7) -
Amortisation of acquired intangibles (11.2) (4.7)
Financial income 12.6 11.0
Financial expenditure (11.2) (11.8)
------------------------------------------- ------ ------
Profit before income tax 36.1 26.7
------------------------------------------- ------ ------
4 RESEARCH AND DEVELOPMENT
The total research and development spend by the Group is as
follows:
2012
Nanotechnology Industrial
Tools Products Total
GBPm GBPm GBPm
------------------------------------- -------------- ---------- -----
Research and development
expense charged to the consolidated
statement of income 16.8 9.0 25.8
Less: depreciation of R&D
related fixed assets (0.6) (1.0) (1.6)
Add: amounts capitalised
as fixed assets 0.6 0.7 1.3
Less: amortisation of R&D
costs previously capitalised
as intangibles (2.8) (2.4) (5.2)
Add: amounts capitalised
as intangible assets 1.7 0.7 2.4
------------------------------------- -------------- ---------- -----
Total cash spent on research
and development during the
year 15.7 7.0 22.7
------------------------------------- -------------- ---------- -----
2011
As restated
Nanotechnology Industrial *
Tools Products Total
GBPm GBPm GBPm
------------------------------------- --------------- ----------- -----------
Research and development
expense charged to the consolidated
statement of income 12.1 7.9 20.0
Less: depreciation of R&D
related fixed assets (0.5) (0.1) (0.6)
Add: amounts capitalised
as fixed assets 2.2 0.1 2.3
Less: amortisation of R&D
costs previously capitalised
as intangibles (2.6) (2.8) (5.4)
Add: amounts capitalised
as intangible assets 1.9 1.1 3.0
------------------------------------- --------------- ----------- -----------
Total cash spent on research
and development during the
year 13.1 6.2 19.3
------------------------------------- --------------- ----------- -----------
*See note 1 for details of restatement of comparative
information.
5 ACQUISITIONS
Omicron NanoTechnology GmbH
On 13 June 2011 the Group acquired 100% of the share capital of
Omicron NanoTechnology GmbH for cash consideration totalling
GBP29.7m. Omicron NanoTechnology GmbH specialises in the
manufacture of very high-end microscopes for nanotechnology
research and is headquartered in Taunusstein, Germany. It has a
manufacturing facility in East Grinstead, UK and sales offices in
the US, France and Japan. The book and fair value of the assets and
liabilities acquired is given in the table below. The business has
been acquired for the purpose of integrating into the
Nanotechnology Tools segment.
Book value Adjustments Fair value
GBPm GBPm GBPm
---------------------------------- ----------- ------------ -----------
Intangible fixed assets - 27.8 27.8
Tangible fixed assets 6.2 (1.7) 4.5
Inventories 14.1 (1.3) 12.8
Trade and other receivables 5.1 - 5.1
Trade and other payables (4.7) (0.2) (4.9)
Customer deposits (10.5) (0.1) (10.6)
Deferred tax liabilities - (6.8) (6.8)
Cash 1.4 - 1.4
---------------------------------- ----------- ------------ -----------
Net assets acquired 29.3
Goodwill 11.6 17.7 0.4
---------------------------------- ----------- ------------ -----------
Total consideration 29.7
Cash acquired (1.4)
---------------------------------- ----------- ------------ -----------
Net cash outflow relating to the
acquisition 28.3
---------------------------------- ----------- ------------ -----------
The goodwill arising is not tax deductible and is considered to
represent the value of the acquired workforce.
Omniprobe, Inc.
On 13 June 2011 the Group acquired 100% of the share capital of
Omniprobe, Inc. for cash consideration totalling GBP13.1m of which
GBP0.5m is deferred for 2 years. Omniprobe, Inc. designs and
manufactures nano-manipulators for use within scanning electron
microscopes and is headquartered in Dallas, USA. The book and fair
value of the assets and liabilities acquired is given in the table
below. The business has been acquired for the purpose of
integrating into the Nanotechnology Tools segment.
Book value Adjustments Fair value
GBPm GBPm GBPm
---------------------------------- ----------- ------------ -----------
Intangible fixed assets 0.2 11.3 11.5
Tangible fixed assets 0.6 (0.5) 0.1
Inventories 0.5 - 0.5
Trade and other receivables 0.6 - 0.6
Trade and other payables (0.3) (0.3) (0.6)
Cash 0.3 - 0.3
---------------------------------- ----------- ------------ -----------
Net assets acquired 12.4
Goodwill 1.9 10.5 0.7
---------------------------------- ----------- ------------ -----------
Total consideration 13.1
Cash acquired (0.3)
Deferred consideration (0.5)
---------------------------------- ----------- ------------ -----------
Net cash outflow relating to the
acquisition 12.3
---------------------------------- ----------- ------------ -----------
The goodwill arising is tax deductible in full and is considered
to represent the value of the acquired workforce and the value of
patents which it has not been possible to separately identify.
Platinum Medical Imaging LLC
On 3 November 2011 the Group acquired 100% of the share capital
of Platinum Medical Imaging LLC for an initial cash consideration
of GBP10.8m.
Further contingent consideration is payable each year up until
the third anniversary of the acquisition dependent on post
acquisition earnings. The amount of this consideration could be
between zero and GBP19.4m. The fair value of the amount likely to
be paid is GBP2.6m and is based on management forecasts of future
profitability.
Platinum Medical Imaging LLC is an established US company
providing high quality parts and services for MRI (Magnetic
Resonance Imaging) and CT (Computed Tomography) medical imaging
instruments. It operates from sites in Florida and California from
which the business sells parts, carries out service and maintenance
and performs system rebuilds.
The book and provisional fair value of the assets and
liabilities acquired is given in the table below. Provisional
values have been used to allow a new accounting team time to review
and finalise the fair value adjustments. The business has been
acquired for the purpose of integrating into the Service
segment.
Book value Provisional Provisional
adjustments fair value
GBPm GBPm GBPm
---------------------------------- ----------- ------------- ------------
Intangible fixed assets - 12.5 12.5
Tangible fixed assets 0.5 (0.2) 0.3
Inventories 0.9 0.8 1.7
Trade and other receivables 0.6 (0.3) 0.3
Trade and other payables (0.4) (0.4) (0.8)
Customer deposits (0.4) (0.3) (0.7)
Deferred tax - (0.2) (0.2)
Overdraft (0.1) - (0.1)
---------------------------------- ----------- ------------- ------------
Net assets acquired 13.0
Goodwill 1.1 11.9 0.4
---------------------------------- ----------- ------------- ------------
Total consideration 13.4
Overdraft acquired 0.1
Deferred consideration (2.6)
---------------------------------- ----------- ------------- ------------
Net cash outflow relating to the
acquisition 10.9
---------------------------------- ----------- ------------- ------------
The goodwill arising is tax deductible in full and is considered
to represent the value of the acquired work force and expected
synergies arising from the integration with the Group's existing
service business.
The book value of receivables given in the tables above
represents the gross contractual amounts receivable. The fair value
adjustment to receivables represents the best estimate at the
acquisition date of the cash flows not expected to be
collected.
These acquisitions contributed revenue of GBP27.8m, GBP4.5m and
GBP3.8m respectively and operating losses of GBP4.6m, GBP0.8m and
GBP0.7m to the Group's result for the period. Had the acquisitions
taken place on 1 April 2011 the equivalent Group numbers would have
been revenue of GBP351.2m and operating profit of GBP33.6m.
6 INCOME TAX EXPENSE
Recognised in the Consolidated Statement of Income
2012 2011
GBPm GBPm
-------------------------------------------------- ----- ------
Current tax expense
Current year 10.4 6.1
Adjustment in respect of prior years - (0.5)
-------------------------------------------------- ----- ------
10.4 5.6
-------------------------------------------------- ----- ------
Deferred tax expense
Origination and reversal of temporary differences 1.4 0.9
Recognition of deferred tax not previously
recognised (0.2) (11.9)
Adjustment in respect of prior years (0.3) (0.1)
-------------------------------------------------- ----- ------
0.9 (11.1)
-------------------------------------------------- ----- ------
Total tax expense/(credit) 11.3 (5.5)
-------------------------------------------------- ----- ------
Reconciliation of effective tax rate
Profit before income tax 36.1 26.7
Income tax using the UK corporation tax rate
of 26% (2011:28%) 9.4 7.5
Effect of:
Tax rates other than the UK standard rate 2.4 0.4
Change in rate at which deferred tax recognised 0.3 (0.2)
Non-taxable income and expenses 0.2 0.2
Tax incentives not recognised in the Consolidated
Statement of Income (0.5) (0.7)
Recognition of deferred tax not previously
recognised (0.2) (11.9)
Effect of previous tax losses now utilised - (0.2)
Adjustment in respect of prior years (0.3) (0.6)
-------------------------------------------------- ----- ------
Total tax expense/(credit) 11.3 (5.5)
-------------------------------------------------- ----- ------
Taxation expense/(credit) recognised in other
comprehensive income
Current tax - relating to employee benefits - (1.5)
Deferred tax - relating to employee benefits (7.1) 6.0
Deferred tax - relating to cash flow hedges (0.1) 0.1
(7.2) 4.6
-------------------------------------------------- ----- ------
Taxation expense/(credit) recognised directly
in equity
Deferred tax - relating to share options 1.0 (2.7)
-------------------------------------------------- ----- ------
The 2012 Budget on 21 March 2012 announced that the UK
corporation tax rate will reduce to 22% by 2014. A reduction in the
rate from 26% to 25% (effective from 1 April 2012) was
substantively enacted on 5 July 2011, and a further reduction to
24% (effective from 1 April 2012) was substantively enacted on 26
March 2012. This will reduce the Group's future current tax charge
accordingly. The deferred tax asset at 31 March 2012 has been
calculated based on the rate of 24% substantively enacted at the
balance sheet date. It has not yet been possible to quantify the
full anticipated effect of the announced further 2% rate reduction,
although this will further reduce the Group's future current tax
charge and reduce the Group's deferred tax asset accordingly.
7 earnings per share
The calculation of basic earnings per share is based on the
profit for the period as shown in the Consolidated Statement of
Income divided by the weighted average number of ordinary shares
outstanding during the year, excluding shares held by the Employee
Share Ownership Trust, as follows:
2012 2011
Shares Shares
Million Million
------------------------------------------------------ ------- -------
Weighted average number of shares outstanding 54.2 49.7
Less shares held by Employee Share Ownership
Trust (0.2) (0.4)
------------------------------------------------------ ------- -------
Weighted average number of shares used in calculation
of earnings per share 54.0 49.3
------------------------------------------------------ ------- -------
The following table shows the effect of share options on the
calculation of diluted earnings per share:
2012 2011
Shares Shares
million million
--------------------------------------------- ------- -------
Weighted average number of ordinary shares
per basic earnings per share calculations 54.0 49.3
Effect of shares under option 1.1 1.4
--------------------------------------------- ------- -------
Weighted average number of ordinary shares
per diluted earnings per share calculations 55.1 50.7
--------------------------------------------- ------- -------
8 dividends per share
The following dividends per share were paid by the Group:
2012 2011
pence pence
------------------------------- ----- -----
Previous year interim dividend 2.52 2.40
Previous year final dividend 6.48 6.00
------------------------------- ----- -----
9.00 8.40
------------------------------- ----- -----
The following dividends per share were proposed by the Group in
respect of each accounting year presented:
2012 2011
Pence pence
----------------- ------ -----
Interim dividend 2.772 2.52
Final dividend 7.228 6.48
----------------- ------ -----
10.000 9.00
----------------- ------ -----
The interim dividend was not provided for at the year end and
was paid on 10 April 2012. The final proposed dividend of 7.228
pence per share (2011: 6.48 pence) was not provided at the year end
and will be paid on 25 October 2012 subject to authorisation by the
shareholders at the forthcoming Annual General Meeting.
9 report and accounts
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 March 2012 or
2011. Statutory accounts for 2011 have been delivered to the
registrar of companies, and those for 2012 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The Company is registered in England Number 775598.
10 The Annual General Meeting
The Annual General Meeting will be held on Tuesday, 11 September
2012 at 2.30 pm at Group Head Office, Tubney Woods, Abingdon,
Oxfordshire, OX13 5QX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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