TIDMOXIG
RNS Number : 6598W
Oxford Instruments PLC
11 November 2014
Release Date: 7am Tuesday 11(th) November 2014
Oxford Instruments plc
Announcement of Half Year Results for 2014/2015
Oxford Instruments plc, a leading provider of high technology
tools and systems for industry and research, today announces its
Half Year Results for the six months to 30 September 2014.
Highlights:
-- First half orders up 19.9% to GBP201.5 million (2013:
GBP168.0 million); on a constant currency organic basis, orders up
7.4%.
-- First half revenue up 7.3% to GBP178.5 million (2013:
GBP166.3 million); on a constant currency organic basis revenues
down 5.9%.
-- Adjusted operating profit* of GBP18.9 million (2013: GBP22.0 million).
-- Adjusted EPS of 20.9 pence (2013: 28.6 pence).
-- Andor Technology acquisition integrating well and performing
ahead of expectations; integration of RMG and RoentgenAnalytik
acquisitions also proceeding to plan.
-- Investment in R&D up 41% to GBP18.3 million with
sustained momentum in new product introductions and strong new
product pipeline.
-- Interim dividend increased by 10.1% to 3.7 pence per share (2013: 3.36 pence).
*Adjusted numbers are stated to give a better understanding of
the underlying business performance. Details of adjusting items can
be found in Note 2.
Jonathan Flint, Chief Executive of Oxford Instruments plc, said
"We will continue to focus on developing innovative new products
and growing market share in our core areas of physical science. Our
strategy will extend our reach into adjacent new markets by
applying our tools and technologies to life science research and
analysis, thus extending the reach and reputation of the Oxford
Instruments brand worldwide."
Enquiries:
Oxford Instruments plc Tel: 01865 393200
Jonathan Flint, Chief Executive
Kevin Boyd, Group Finance Director
MHP Communications Tel: 020 3128 8100
Rachel Hirst/ Rory King
Half Year Statement
Overview
The strengthening markets and improving order trend reported
earlier in the year continued throughout the half year. Orders were
up 19.9% to GBP201.5 million (2013: GBP168.0 million), growing the
order book by 17.3% to GBP147.9 million in the half. On a constant
currency organic basis, orders grew by 7.4%.
Revenues grew by 7.3% to GBP178.5 million (2013: GBP166.3
million) supported by a strong contribution from Andor Technology
which we acquired in January 2014. On a constant currency organic
basis, revenues fell by 5.9%. This reflects the successful
completion of the ITER contract, where sales in the comparator
period amounted to GBP3.0 million, and tougher trading conditions
in our Plasma Technology business, as outlined in the Sector
Overview below.
Adjusted Operating Profit was GBP18.9 million (2013: GBP22.0
million). Acquisitions in the period contributed GBP4.1 million
which countered a GBP2.1 million currency headwind.
Andor Technology has performed ahead of expectations and we
expect it to be a key pillar of our future growth. The Andor brand
has facilitated access for the entire group into the Life Sciences
market. The convergence of the sciences offers Oxford Instruments a
unique opportunity to access new markets as the life sciences
increasingly use the analytical tools and methodologies of physics
and engineering. For example, our EDS spectrometers are now being
used by biologists to investigate the effects of nano particles on
human biology, the bio-fortification of crops and pesticide
protection of arable plants. This is due to the high performance
and sensitivity of our X-MAX150 scanning electron microscope
detectors that, for the first time, enable this type of
bio-analysis.
Our two smaller acquisitions in the Industrial Products sector,
RMG and RoentgenAnalytik, completed this time last year, have
broadened our product offering to our industrial customers and
their integration is proceeding to plan.
We experienced strong growth in North America where organic
order growth was 28.7%. This growth was seen in both the
Nanotechnology Tools and Industrial Products sectors as customers'
budgets for high technology products have increased following two
slow years. In Europe, we saw an improving position with organic
orders increasing by 12.7%. In Asia, organic orders fell 13.8%,
reflecting weaker demand in Japan despite growth in China.
We continue to invest in our customer focused R&D programme
with sustained momentum in new product introductions. In the first
half, our R&D spend increased by 41%. Our strong brand and
technological leadership underpinned our success in maintaining
pricing and we continued to strengthen our competitive position.
The percentage of revenue that is made up of products less than
three years old is a key indicator of the vitality of our new
product development and currently stands at 46%.
For the half year, the Directors are proposing an interim
dividend of 3.7 pence per share (2013: 3.36 pence), a 10.1%
increase. This represents the seventh consecutive half year of
double digit dividend growth.
Sector Overview
We operate in three sectors: Nanotechnology Tools, Industrial
Products and Service.
NanoTechnology Tools
2014 2013 Growth CER* Organic
Growth
GBPm GBPm
----------------- ---- ---- ------ ------------
Revenue 92.8 77.1 20.4% -13.7%
---- ------ ------------
Operating profit 6.6 7.4
----------------- ---- ----
*Constant Exchange Rate
This sector produces our highest technology products and
comprises two divisions. NanoCharacterisation is made up of our
NanoAnalysis, Asylum Research and Andor Technology businesses.
NanoSolutions comprises our Omicron, NanoScience and
PlasmaTechnology businesses. Revenue grew by 20.4%, reflecting a
strong contribution from Andor. However, profit was impacted by a
currency headwind, a softening in demand in Japan and Russia across
the sector, and a weaker performance from Plasma Technology.
Performance in our Omicron business unit improved in the half
year.
Our Plasma Technology business saw reduced order intake during
the second half of the prior year. This flowed through to weaker
revenues in the reported half. However, the business has now seen a
marked recovery in orders, supported by a broad based market
improvement in both research and production applications. Within
production markets, there has been encouraging activity within the
High Brightness LED sector, and we have also launched a new etch
tool aimed at next generation single wafer technology. One order of
note came from the UK National Graphene Institute at The University
of Manchester, which ordered systems for graphene research from
both our Plasma Technology and NanoScience businesses.
We are increasingly involved in the development and commercial
exploitation of components for the emerging quantum information
processing industry. For example, our Triton(R) dilution
refrigerators are being used for scaling up quantum computers
towards practical machines, and our NanoScience business has
strengthened its relationship with D-Wave, the first company to
exploit the enormous commercial potential offered by Quantum
Computing.
This year, the winners of the Nobel Prize for both chemistry and
physics were Oxford Instruments customers. The Nobel Prize for
Chemistry was won for the work with Super Resolution Microscopy,
using Andor's advanced scientific cameras. As a result, we can now,
understand better what is happening inside cells, including the
potential to block HIV infection and to interfere with the
mechanisms for type 2 diabetes. The winners of the Prize for
Physics used our AZtec Analysis software with our electron
backscatter diffraction hardware in analysing the illumination
efficiency and defect density of a semiconductor device for next
generation LED development.
Asylum Research's MFP-3D-Bio Atomic Force Microscope is being
used to undertake research into whether cells are malignant or
benign offering the possibility not only to detect cancerous cells
but also to grade them in terms of how aggressively they may
spread.
Andor Technology has performed well. A new Managing Director was
appointed in May 2014, an internal promotion. The integration of
the company into the Group continues to proceed to plan. Spectral
Imaging and Apogee, two acquisitions made by Andor immediately
prior to joining Oxford Instruments, are also integrating well into
the Group.
Seven new products were launched during the period, with the
high resolution Zyla HF creating significant customer interest.
This camera is the fastest X-ray detection camera in the market,
allowing the user to visualise samples in real time in a
non-destructive manner.
Industrial Products
2014 2013 Growth CER Organic
Growth
GBPm GBPm
----------------- ---- ---- ------ -----------
Revenue 54.5 58.0 -6.0% -0.7%
---- ------ -----------
Operating profit 5.5 8.1
----------------- ---- ----
This sector supplies analytical systems for quality control,
environmental and compliance testing, and components for industry
and research. It comprises two divisions: Industrial Analysis and
Industrial Components.
Reported revenue fell by 6%. However on a constant currency
organic basis and excluding revenues from the ITER contract which
concluded in the prior year, underlying growth was 4.5%. The
completion of the ITER contract meant that profits were included in
the comparator period but not in the reporting period and this, as
well as adverse foreign currency exchange rates, impacted
profits.
In September, we launched the X-MET8000 hand-held X-ray
Fluorescence analyser. This offers significant opportunities to
take market share from our competitors in the metals recycling and
Positive Material Identification markets. The product, which is
used to identify the composition of the material being analysed,
has a unique and particularly robust design, making it ideal for
industrial applications. Orders for this product have exceeded
expectations in the first few weeks since launch.
The PMI MasterSmart mobile metals analyser launched at the end
of the last financial year has been successful, opening up new
markets in the power plant and wind industry and the offshore
petrochemical and refineries markets.
Our magnetic resonance MQC analyser continues to be the
preferred quality control (QC) tool for the snack food industry.
Industrial Analysis has recently fulfilled a large order for
replacement, updated analysers to a major international snack food
manufacturer for QC testing. The market for Magnetic Resonance's
rock core application also continues to grow, increasing its reach
into South Africa and Australia.
Our acquisitions, RMG and RoentgenAnalytik, continue to
integrate well. We extended the addressable market for RMG's mPulse
LIBS (laser induced breakdown spectroscopy) instrument to include
Asia and the US. LIBS offers customers in the recycling markets
rapid metal sorting and is free from the regulatory constraints
usually associated with alternative x-ray based systems.
RoentgenAnalytik has just launched its new coating thickness
analyser, Maxxi6. It can for the first time determine phosphorous
in nickel coatings, a key requirement for customers who employ
sophisticated new metals plating methods in the electronics
industry.
Our superconducting wire, X-ray Technology and Austin businesses
make up Industrial Components division. This part of the business
delivered a steady performance. The wire business has an improved
order book due to continued healthy demand from customers producing
MRI machines.
Austin has delivered a range of rugged compressors to the South
African MeerKAT project, which is aimed at installing sixty four
high-tech, highly sensitive, radio telescopes. These compressors
feature unique electronics, sensors and controls which have been
specifically designed for operation in harsh environments. In
October 2014, GT Advanced Technologies Inc (GTAT) who had in the
past, been a major customer for Austin, filed for bankruptcy court
protection under Chapter 11 of the US bankruptcy code. Anticipated
sales to GTAT in the second half of this year were GBP0.9
million.
Service Sector
2014 2013 Growth CER Organic
Growth
GBPm GBPm
----------------- ---- ---- ------ -----------
Revenue 31.7 32.3 -1.9% 1.9%
---- ------ -----------
Operating profit 6.8 6.5
----------------- ---- ----
Our Service sector comprises our service, support training,
refurbishment, consumables and accessories elements of our business
and our MRI and CT third party service business in the US and
Japan. Revenues were slightly down reflecting the slower trading
conditions reported above. However, margins improved due to the
growth of our third party service business which has been renamed
Oxford Instruments Healthcare to better reflect its market focus.
This business delivered an increase in revenue, due in part to a
successful entry into the US veterinary market.
In the US, the Affordable Care Act continues to be a major
influence in the healthcare marketplace. Payments to health care
providers have been cut and incentives provided to consolidate
healthcare provision. This is causing health care providers to
re-think how they purchase service solutions for their imaging
equipment. As a result, they are moving towards more responsive and
flexible partners such as Oxford Instruments Healthcare.
The general service teams are performing well across all revenue
streams. China, in particular, has shown good growth in service
contracts and spares for the NanoAnalysis and Industrial Analysis
businesses. A dedicated service repair centre was opened in India
to strengthen our capability in the region.
Balance Sheet
At the half year end, net debt was GBP137.5 million (2013: net
cash GBP32.2 million). Cash outflow in the period was GBP13.2
million (2013: GBP7.0 million). The Group has total committed
facilities of GBP169.5 million. This comprises GBP100 million in
the form of a revolving credit facility with a club of banks, a
GBP25 million 7 year fixed interest loan with the European
Investment Bank which was drawn down in August 2013, and a GBP44.5
million 7 year fixed interest loan from Pricoa which was drawn down
in March 2014. The revolving credit facility is extendable to
GBP150 million by mutual consent, and expires in December 2018.
As calculated under IAS19, the defined benefit pension deficit
has increased by GBP8.4 million to GBP54.7 million since 31 March
2014. Since then, assets have increased by 6.8% to GBP209.9 million
while liabilities have increased by 8.9% to GBP264.6 million as a
result of the decrease in interest rates since the half year
end.
Taxation and Earnings Per Share
In the UK, the Group benefits from the patent box tax regime and
the ability to utilise brought forward tax losses. These mitigate
the impact of higher tax rates in the Group's other major
territories of operation. The combination of these factors gives a
half year adjusted tax rate of 23% (2013: 21%). For the full year
it is anticipated that the adjusted tax rate will be at a similar
level. This is the final year in which the Group expects to benefit
from brought forward tax losses.
Adjusted basic earnings per share (EPS) is 20.9 pence (2012:
28.6 pence). Reported EPS was 2.9 pence (2012: 23.2 pence). The
significant reduction in reported EPS is mainly due to amortisation
charges which have increased significantly following the
acquisition of Andor Technology in January 2014.
Dividends
In 2011, the Group moved to a progressive dividend policy,
whereby we seek to raise dividends as annual adjusted earnings per
share increase, 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 half
year just ended, the Directors are proposing an interim dividend of
3.7 pence per share (2013: 3.36 pence), payable on 9 April 2015 to
shareholders who are on the register on 6 March 2015.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out above. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are described
above.
The diverse nature of the Group 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 facilities.
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.
This Half Year Report has 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.
Principal Risks
The principal risks in the business are considered above in the
Principal Risks and Uncertainties section of this Half Year
Report.
Board Changes
Professor Sir Michael Brady retired from the Board at our recent
AGM. Mike's technical and business skills have been a fantastic
asset to the Group over many years and his wise counsel was greatly
valued. To provide continuing specialist advice on high technology
issues, Professor Sir Richard Friend joined the Board on 1
September 2014. Richard is Cavendish Professor of Physics at
Cambridge University.
People
The success of our business relies on the diversity of skills
and expertise and the high calibre of people worldwide. We would
like to thank them for their high standards of professionalism,
their commitment and valuable contribution to the business.
Current Trading and Outlook
We expect the improved economic conditions in the US and UK, and
the momentum of new product introductions to yield a significantly
improved operating profit in the second half. Second half results
are also expected to be ahead of the comparable period last year.
Our confidence is underpinned by the strengthening order book built
up during the first half. However for the full year, given
relatively weak trading in the first half, we anticipate
performance around the lower end of market expectations.
Looking ahead, we will continue to focus on developing
innovative new products and growing market share in our core areas
of physical science. Our strategy will extend our reach into
adjacent new markets by applying our tools and technologies to life
science research and analysis, thus extending the reach and
reputation of the Oxford Instruments brand worldwide.
Forward-looking statements
This document contains certain forward looking statements. The
forward-looking statements reflect the knowledge and information
available to the Company during the preparation and up to the
publication of this document. By their very nature, these
statements depend upon circumstances and relate to events that may
occur in the future thereby involving a degree of uncertainty.
Therefore, nothing in this document should be construed as a profit
forecast by the Company.
Jonathan Flint
Chief Executive
11 November 2014
Condensed Consolidated Statement of Income
Half year ended 30 September 2014 - unaudited
Half Year to 30 Half Year to 30
Sept 2014 Sept 2013
Before adjusting Adjusting Total Before adjusting Adjusting Total
items* items* items* items*
Notes GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
Revenue 3 178.5 - 178.5 166.3 - 166.3
Cost of sales (99.8) (0.2) (100.0) (91.4) - (91.4)
-------------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
Gross profit 78.7 (0.2) 78.5 74.9 - 74.9
Research and development 4 (14.3) - (14.3) (12.0) - (12.0)
Selling and marketing (31.8) - (31.8) (26.9) - (26.9)
Administration and
shared services (15.1) (11.8) (26.9) (14.2) (5.9) (20.1)
Other operating
income - 1.4 1.4 - - -
Foreign exchange
gain 1.4 - 1.4 0.2 - 0.2
-------------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
Operating profit 18.9 (10.6) 8.3 22.0 (5.9) 16.1
Other financial
income 0.1 - 0.1 0.2 3.5 3.7
---- --------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
Financial income 0.1 - 0.1 0.2 3.5 3.7
Interest charge
on pension scheme
net liabilities (1.0) - (1.0) (1.2) - (1.2)
Other financial
expenditure (2.6) (2.1) (4.7) (0.4) (0.5) (0.9)
----
Financial
expenditure (3.6) (2.1) (5.7) (1.6) (0.5) (2.1)
Profit before income
tax 3 15.4 (12.7) 2.7 20.6 (2.9) 17.7
Income tax
(expense)/credit 6 (3.5) 2.5 (1.0) (4.4) (0.1) (4.5)
-------------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
Profit for the period
attributable to
equity shareholders
of the parent 11.9 (10.2) 1.7 16.2 (3.0) 13.2
-------------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
pence pence pence pence
-------------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
Earnings per share
Basic earnings per
share 7 20.9 2.9 28.6 23.2
Diluted earnings
per share 7 20.8 2.9 28.3 23.1
Dividends per share
Dividends paid 8 3.36 3.05
Dividends proposed 8 3.70 3.36
-------------------------- ------ ----------------- ---------- -------- ----------------- ---------- -------
* Adjusting numbers are stated to give a better understanding of
the underlying business performance. Details of adjusting items can
be found in note 2 of this Half Year Report.
Condensed Consolidated Statement of Income
Half year ended 30 September 2014 - unaudited
Year to 31 March 2014
Before Adjusting Total
adjusting items*
items*
Notes GBPm GBPm GBPm
----------------------------------- ------ ----------- ---------- --------
Revenue 3 360.1 - 360.1
Cost of sales (196.6) (3.7) (200.3)
----------------------------------- ------ ----------- ---------- --------
Gross profit 163.5 (3.7) 159.8
Research and development 4 (25.1) - (25.1)
Selling and marketing (56.7) - (56.7)
Administration and shared
services (33.1) (22.6) (55.7)
Foreign exchange gain 1.7 - 1.7
----------------------------------- ------ ----------- ---------- --------
Operating profit 50.3 (26.3) 24.0
---- ------------------------------ ------ ----------- ---------- --------
Other financial income 0.3 4.1 4.4
---- ------------------------------ ------ ----------- ---------- --------
Financial income 0.3 4.1 4.4
Interest charge on pension (2.0) - (2.0)
scheme net liabilities
Other financial expenditure (1.5) (0.9) (2.4)
--------
Financial expenditure (3.5) (0.9) (4.4)
Profit before income
tax 47.1 (23.1) 24.0
Income tax (expense)/credit 6 (8.7) 2.9 (5.8)
------------------------------ ------ ----------- ---------- --------
Profit for the period
attributable to equity
shareholders of the parent 38.4 (20.2) 18.2
------------------------------ ------ ----------- ---------- --------
pence pence
------------------------------ ------ ----------- ---------- --------
Earnings per share
Basic earnings per share 7 67.7 32.1
Diluted earnings per
share 7 67.3 31.9
Dividends per share
Dividends paid 8 11.2
Dividends proposed 8 12.4
------------------------------ ------ ----------- ---------- --------
*Adjusted numbers are stated to give a better understanding of
the underlying business performance. Details of adjusting items can
be found in note 2 of this Half Year Report.
Condensed Consolidated Statement of Comprehensive Income
Half year ended 30 September 2014 - unaudited
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
GBPm GBPm GBPm
--------------------------------------------- ---------- ---------- ---------
Profit for the period 1.7 13.2 18.2
Other comprehensive (expense)/income:
Items that may be reclassified subsequently
to profit or loss
Foreign exchange translation differences 0.5 (5.5) (8.4)
Gain on effective portion of changes
in fair value of cash flow hedges,
net of amounts recycled - 0.1 -
Tax on items that may be reclassified
to profit or loss - - -
Items that will not be reclassified
subsequently to profit or loss
Remeasurement (loss)/gain in respect
of post retirement benefits (10.1) 3.6 (1.9)
Tax on items that will not be reclassified
to profit or loss 2.1 (2.2) (1.0)
--------------------------------------------- ---------- ---------- ---------
Total other comprehensive expense (7.5) (4.0) (11.3)
Total comprehensive (expense)/income
for the period attributable to equity
shareholders of the parent (5.8) 9.2 6.9
--------------------------------------------- ---------- ---------- ---------
Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2014 - unaudited
Foreign
Share exchange
Share premium Other translation Retained
capital account reserves reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------------ ------- ------- -------- ----------- -------- ------
Balance at 1 April 2014 2.9 61.3 0.1 (4.4) 80.3 140.2
------------------------------------------------------------ ------- ------- -------- ----------- -------- ------
Total comprehensive income:
Profit for the year - - - - 1.7 1.7
Other comprehensive income:
* Foreign exchange translation differences - - - 0.5 - 0.5
* Gain on effective portion of changes in fair value of
cash flow hedges, net of amounts recycled - - - - - -
* Remeasurement loss in respect of post-retirement
benefits - - - - (10.1) (10.1)
* Tax on items recognised directly in other
comprehensive income - - - - 2.1 2.1
------------------------------------------------------------
Total comprehensive income/(expense)
attributable to equity shareholders
of the parent - - - 0.5 (6.3) (5.8)
Transactions with owners recorded
directly in equity:
* Debit in respect of employee service costs settled by
award of share options - - - - (0.2) (0.2)
* Tax charge in respect of share options - - - - (0.2) (0.2)
* Proceeds from shares issued - 0.1 - - - 0.1
* Dividends paid - - - - (7.1) (7.1)
------------------------------------------------------------ ------- ------- -------- ----------- -------- ------
Total transactions with owners recorded
directly in equity: - 0.1 - - (7.5) (7.4)
------------------------------------------------------------ ------- ------- -------- ----------- -------- ------
Balance at 30 September 2014 2.9 61.4 0.1 (3.9) 66.5 127.0
------------------------------------------------------------ ------- ------- -------- ----------- -------- ------
Foreign
Share exchange
Share premium Other translation Retained
capital account reserves reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Balance at 1 April 2013 2.8 60.6 0.1 4.0 70.2 137.7
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Total comprehensive income:
Profit for the year - - - - 13.2 13.2
Other comprehensive income:
* Foreign exchange translation differences - - - (5.5) - (5.5)
* Gain on effective portion of changes in fair value of
cash flow hedges, net of amounts recycled - - 0.1 - - 0.1
* Remeasurement loss in respect of post-retirement
benefits - - - - 3.6 3.6
* Tax on items recognised directly in other
comprehensive income - - - - (2.2) (2.2)
------------------------------------------------------------
Total comprehensive income/(expense)
attributable to equity shareholders
of the parent - - 0.1 (5.5) 14.6 9.2
Transactions with owners recorded
directly in equity:
* Credit in respect of employee service costs settled
by award of share options - - - - 0.8 0.8
* Tax charge in respect of share options - - - - (0.7) (0.7)
* Proceeds from shares issued - 0.1 - - - 0.1
* Dividends paid - - - - (6.4) (6.4)
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Total transactions with owners recorded
directly in equity: - 0.1 - - (6.3) (6.2)
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Balance at 30 September 2013 2.8 60.7 0.2 (1.5) 78.5 140.7
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2014 - unaudited continued
Foreign
Share exchange
Share premium Other translation Retained
capital account reserves reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Balance at 1 April 2013 2.8 60.6 0.1 4.0 70.2 137.7
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Total comprehensive income:
Profit for the year - - - - 18.2 18.2
Other comprehensive income:
* Foreign exchange translation differences - - - (8.4) - (8.4)
* Gain on effective portion of changes in fair value of
cash flow hedges, net of amounts recycled - - - - - -
* Remeasurement loss in respect of post-retirement
benefits - - - - (1.9) (1.9)
* Tax on items recognised directly in other
comprehensive income - - - - (1.0) (1.0)
------------------------------------------------------------
Total comprehensive (expense)/income
attributable to equity shareholders
of the parent - - - (8.4) 15.3 6.9
Transactions with owners recorded
directly in equity:
* Credit in respect of employee service costs settled
by award of share options - - - - 1.6 1.6
* Tax charge in respect of share options - - - - (0.4) (0.4)
* Proceeds from shares issued 0.1 0.7 - - - 0.8
* Dividends paid - - - - (6.4) (6.4)
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Total transactions with owners recorded
directly in equity: 0.1 0.7 - - (5.2) (4.4)
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Balance at 31 March 2014 2.9 61.3 0.1 (4.4) 80.3 140.2
------------------------------------------------------------ ------- ------- -------- ----------- -------- -----
Condensed Consolidated Statement of Financial Position
As at 30 September 2014 - unaudited
As at As at As at
30 Sept 30 Sept 31 March
2014 2013 2014
GBPm GBPm GBPm
as re-presented**
Assets
Non-current assets
Property, plant and equipment 34.5 32.1 34.4
Intangible assets 240.7 84.1 249.0
Deferred tax assets 12.8 19.3 11.4
288.0 135.5 294.8
Current assets
Inventories 77.2 61.0 67.8
Trade and other receivables 79.6 70.3 80.9
Current income tax recoverable 1.2 0.1 1.5
Derivative financial instruments 3.9 4.2 5.3
Cash and cash equivalents 18.9 56.9 32.6
180.8 192.5 188.1
Total assets 468.8 328.0 482.9
---------------------------------------- -------- -------- ------------------
Equity
Capital and reserves attributable
to the Company's equity shareholders
Share capital 2.9 2.8 2.9
Share premium 61.4 60.7 61.3
Other reserves 0.1 0.2 0.1
Translation reserve (3.9) (1.5) (4.4)
Retained earnings 66.5 78.5 80.3
127.0 140.7 140.2
Liabilities
Non-current liabilities
Bank loans 156.4 24.7 141.4
Other payables 8.0 11.4 13.1
Retirement benefit obligations 54.7 42.6 46.3
Deferred tax liabilities 9.4 5.1 12.6
---------------------------------------- -------- -------- ------------------
228.5 83.8 213.4
Current liabilities
Bank loans - - 15.5
Trade and other payables 95.5 84.3 99.2
Current income tax payables 2.3 4.4 3.7
Accrued dividend 5.2 4.6 -
Derivative financial instruments 1.1 0.4 0.5
Provisions 9.2 9.8 10.4
---------------------------------------- -------- -------- ------------------
113.3 103.5 129.3
Total liabilities 341.8 187.3 342.7
Total liabilities and equity 468.8 328.0 482.9
---------------------------------------- -------- -------- ------------------
**See note 1 for details of re-presentation of comparative
information
Condensed Consolidated Statement of Cash Flows half year ended 30 September 2014 - unaudited
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
GBPm GBPm GBPm
-------------------------------------------- ---------- ---------- ---------
Profit for the period 1.7 13.2 18.2
Adjustments for:
Income tax expense 1.0 4.5 5.8
Net financial expense/(income) 5.6 (1.6) -
Reversal of acquisition related fair
value adjustments 0.2 - 3.7
Acquisition related costs 0.9 0.8 7.8
Contingent consideration deemed no
longer payable (1.4) - -
Settlement loss on US pension scheme - - 0.1
Amortisation of acquired intangibles 10.9 5.1 14.7
Depreciation of property, plant and
equipment 2.6 2.3 5.0
Amortisation and impairment of capitalised
development costs 1.7 1.8 3.9
-------------------------------------------- ---------- ---------- ---------
Adjusted earnings before interest,
tax, depreciation and amortisation 23.2 26.1 59.2
Loss on disposal of plant, property
and equipment 0.1 0.2 0.3
Cost of equity settled employee share
schemes (0.2) 0.8 1.6
Acquisition related costs paid (1.3) (0.1) (6.4)
Cash payments to the pension scheme
more than the charge to operating
profit (2.9) (2.4) (5.4)
-------------------------------------------- ---------- ---------- ---------
Operating cash flows before movements
in working capital 18.9 24.6 49.3
(Increase)/decrease in inventories (9.6) (5.0) (2.9)
Increase in receivables 1.6 (1.2) (3.8)
(Decrease)/increase in payables and
provisions (11.1) (10.3) (3.3)
(Decrease)/increase in customer deposits 3.9 (4.3) (10.9)
Cash generated by operations 3.7 3.8 28.4
Interest paid (2.4) (0.3) (1.0)
Income taxes paid (4.4) (3.0) (6.2)
-------------------------------------------- ---------- ---------- ---------
Net cash from operating activities (3.1) 0.5 21.2
-------------------------------------------- ---------- ---------- ---------
Cash flows from investing activities
Acquisition of subsidiaries, net
of cash acquired (0.8) (0.3) (165.7)
Acquisition of property, plant and
equipment (3.3) (2.4) (6.8)
Capitalised development expenditure (4.5) (2.4) (5.4)
-------------------------------------------- ---------- ---------- ---------
Net cash used in investing activities (8.6) (5.1) (177.9)
-------------------------------------------- ---------- ---------- ---------
Cash flows from financing activities
Proceeds from issue of share capital 0.1 0.1 0.8
Increase in borrowings 15.0 24.7 156.9
Repayment of borrowings (15.5) - -
Dividends paid (1.9) (1.7) (6.4)
-------------------------------------------- ---------- ---------- ---------
Net cash (used in)/from financing
activities (2.3) 23.1 151.3
-------------------------------------------- ---------- ---------- ---------
Net increase in cash and cash equivalents (14.0) 18.5 (5.4)
Cash and cash equivalents at beginning
of the period 32.6 39.2 39.2
Effect of exchange rate fluctuations
on cash held 0.3 (0.8) (1.2)
-------------------------------------------- ---------- ---------- ---------
Cash and cash equivalents at end
of the period 18.9 56.9 32.6
-------------------------------------------- ---------- ---------- ---------
Reconciliation of changes in cash and cash equivalents to movement
in net (debt)/cash
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
GBPm GBPm GBPm
----------------------------------------- ---------- ---------- ---------
(Decrease)/increase in cash and cash
equivalents (14.0) 18.5 (5.4)
Effect of foreign exchange rate changes
on cash and cash equivalents 0.3 (0.8) (1.2)
----------------------------------------- ---------- ---------- ---------
(13.7) 17.7 (6.6)
Cash inflow from increase in debt (15.0) (24.7) (156.9)
Cash outflow from decrease in debt 15.5 - -
Movement in net cash in the period (13.2) (7.0) (163.5)
Net cash at start of the period (124.3) 39.2 39.2
----------------------------------------- ---------- ---------- ---------
Net (debt)/cash at the end of the
period (137.5) 32.2 (124.3)
----------------------------------------- ---------- ---------- ---------
Notes on the Half Year Financial Statements
Half year ended 30 September 2014 - unaudited
1 BASIS OF PREparATION OF ACCOUNTS
Reporting entity
Oxford Instruments plc (the Company) is a company incorporated
in England and Wales. The condensed consolidated half year
financial statements consolidate the results of the Company and its
subsidiaries (together referred to as the Group). They have been
prepared and approved by the Directors in accordance with
International Financial Reporting Standard (IFRS) IAS 34 Interim
Financial Reporting as adopted by the EU. They do not include all
of the information required for full annual financial statements,
and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 March 2014.
The financial information contained herein is unaudited and does
not constitute statutory accounts as defined by Section 435 of the
Companies Act 2006. The comparative figures for the financial year
ended 31 March 2014 are not 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 (i) unqualified, (ii) did not include a
reference to any matters to which the auditors 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.
Significant accounting policies
As required by the Disclosure and Transparency Rules of the
Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's
published consolidated financial statements for the year ended 31
March 2014, except as explained below.
Adoption of new and revised standards
The following standards and interpretations are applicable to
the Group and have been adopted as they are mandatory for the year
ended 31 March 2015.
IFRS 10 - Consolidated financial statements: This new standard
provides a single model to be applied in the control analysis for
all investees, including entities that currently are SPEs in the
scope of SIC-12. The adoption of this standard has had no
significant impact.
Amendments to IAS 36 - Impairment of assets and recoverable
amount disclosures for non-financial assets: The amendments reverse
the unintended requirement in IFRS 13 Fair Value Measurement to
disclose the recoverable amount of every cash-generating unit to
which significant goodwill or indefinite-lived intangible assets
have been allocated. Under the amendments, recoverable amount is
required to be disclosed only when an impairment loss has been
recognised or reversed. The adoption of this standard has had no
significant impact.
Amendments to IAS 32 - Offsetting Financial Assets and Financial
Liabilities: The amendments clarify the offsetting criteria,
specifically when an entity currently has a legal right of set off;
and when gross settlement is equivalent to net settlement. The
adoption of this standard has had no significant impact.
At present, there are no other new standards, amendments to
standards or interpretations mandatory for the first time for the
year ending 31 March 2015.
Estimates
The preparation of half year financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these Half Year Financial Statements, the
significant judgements made by management in applying the group's
accounting policies and key sources of estimation uncertainty were
the same as those that applied to the Consolidated Financial
Statements as at and for the year ended 31 March 2014.
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
1 BASIS OF PREparATION OF ACCOUNTS continued
Going concern
The condensed consolidated half year 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.
Re-presentation of comparative information
As required by IFRS3 the accounts as at 31 March 2014 have been
re-resented in respect of the finalisation of the acquisition
accounting which was provisional at the time the 31 March 2014
accounts were published.
Exchange rates
The principal exchange rates used to translate the Group's
overseas results were as follows:
Half year Half year
Period end rates to to Year to
30 Sept 30 Sept 31 March
2014 2013 2014
US Dollar 1.62 1.62 1.67
Euro 1.28 1.20 1.21
Yen 178 159 172
-------------------------------- ---------- ---------- ---------
Average translation rates US Dollar Euro Yen
-------------------------------- ---------- ---------- ---------
Half year to 30 September 2014
April 1.68 1.21 172
May 1.68 1.22 172
June 1.70 1.24 172
July 1.68 1.25 173
August 1.66 1.26 173
September 1.62 1.27 175
-------------------------------- ---------- ---------- ---------
Average translation rates 2014 US Dollar Euro Yen
April 1.53 1.19 147
May 1.53 1.18 152
June 1.52 1.17 152
July 1.53 1.16 151
August 1.54 1.17 151
September 1.58 1.18 155
October 1.62 1.18 158
November 1.63 1.19 163
December 1.65 1.20 171
January 1.65 1.21 171
February 1.66 1.22 169
March 1.67 1.21 171
-------------------------------- ---------- ----- ----
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
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
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
GBPm GBPm GBPm
----------------------------------------- ---------- ---------- ---------
Profit before income tax 2.7 17.7 24.0
Reversal of acquisition related fair
value adjustments to inventory 0.2 - 3.7
Acquisition related costs 0.9 0.8 7.8
Amortisation and impairment of acquired
intangibles 10.9 5.1 14.7
Contingent consideration deemed no
longer payable (1.4) - -
Unwind of discount in respect of
deferred consideration 0.5 0.5 0.9
Mark to market (gain)/loss in respect
of derivative financial instruments 1.6 (3.5) (4.1)
Settlement loss on US pension scheme - - 0.1
----------------------------------------- ---------- ---------- ---------
Adjusted profit before income tax 15.4 20.6 47.1
Share of taxation (3.5) (4.4) (8.7)
----------------------------------------- ---------- ---------- ---------
Adjusted profit 11.9 16.2 38.4
----------------------------------------- ---------- ---------- ---------
The reversal of acquisition related fair value adjustments to
inventory are excluded from adjusted profit to provide a measure
that includes 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 IFRS 3 (revised), falls to be treated as a
post-acquisition employment expense.
In common with a number of other companies adjusted profit
excludes the non-cash amortisation and impairment of acquired
intangible assets and the unwind of discounts in respect of
contingent consideration relating to business combinations. In the
current period, GBP1.4m relating to contingent consideration on the
acquisition of RMG Technology Limited which the directors no longer
consider will be payable, has been released to other operating
income.
In calculating the share of tax attributable to adjusted profit
before tax in 2011 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 year to 31 March 2014 deferred tax of GBP2.2m was
reversed. In the current period deferred tax of GBP0.8m (2013:
GBP1.2m) has reversed and consequently been excluded from the tax
attributable to adjusted profit before tax.
In the year to 31 March 2014, the Group purchased annuities for
27 members of the US defined benefit pension scheme. A loss of
GBP0.1m crystallised on purchase.
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 be more clearly
seen.
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
3 SEGMENT Information
The Group has five 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; and
-- 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 presented in
reporting to the Group's Board of Directors.
Half year to 30 September 2014
Nanotechnology Industrial
Tools Products Service Total
GBPm GBPm GBPm GBPm
------------------------- -------------- ---------- ------- -----
External revenue 92.7 54.1 31.7 178.5
Inter-segment revenue 0.1 0.4 -
------------------------- -------------- ---------- -------
Total segment revenue 92.8 54.5 31.7
Segment operating profit 6.6 5.5 6.8 18.9
------------------------- -------------- ---------- ------- -----
Half year to 30 September 2013
Nanotechnology Industrial
Tools Products Service Total
GBPm GBPm GBPm GBPm
------------------------- -------------- ---------- ------- -----
External revenue 77.0 57.0 32.3 166.3
Inter-segment revenue 0.1 1.0 -
------------------------- -------------- ---------- -------
Total segment revenue 77.1 58.0 32.3
Segment operating profit 7.4 8.1 6.5 22.0
------------------------- -------------- ---------- ------- -----
Year to 31 March 2014
Nanotechnology Industrial
Tools Products Service Total
GBPm GBPm GBPm GBPm
------------------------- -------------- ---------- ------- -----
External revenue 180.5 113.3 66.3 360.1
Inter-segment revenue 0.1 1.4 0.1
------------------------- -------------- ---------- -------
Total segment revenue 180.6 114.7 66.4
Segment operating profit 21.2 15.6 13.5 50.3
------------------------- -------------- ---------- ------- -----
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
Reconciliation of reportable segment profit
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
GBPm GBPm GBPm
------------------------------------------- ---------- ---------- ----------
Operating profit for reportable segments 18.9 22.0 50.3
Reversal of acquisition related fair
value adjustments to inventory (0.2) - (3.7)
Acquisition related costs (0.9) (0.8) (7.8)
Settlement loss on US pension scheme - - (0.1)
Amortisation of acquired intangibles (10.9) (5.1) (14.7)
Contingent consideration deemed no
longer payable 1.4 - -
Financial income 0.1 3.7 4.4
Financial expenditure (5.7) (2.1) (4.4)
------------------------------------------ ---------- ---------- ----------
Profit before income tax 2.7 17.7 24.0
------------------------------------------ ---------- ---------- ----------
4 RESEARCH AND DEVELOPMENT
Total research and development spend by the Group is as
follows:
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
GBPm GBPm GBPm
---------------------------------------- ---------- ---------- ---------
Research and development expense
charged to the consolidated statement
of income 14.3 12.0 25.1
Less: depreciation of R&D related
fixed assets (0.4) (0.3) (0.8)
Add: amounts capitalised as fixed
assets 1.6 0.7 2.1
Less: amortisation and impairment
of R&D costs previously capitalised
as intangibles (1.7) (1.8) (3.9)
Add: amounts capitalised as intangible
assets 4.5 2.4 5.4
Total cash spent on research and
development during the period 18.3 13.0 27.9
---------------------------------------- ---------- ---------- ---------
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
5 ACQUISITIONS
Andor Technology plc
On 21 January 2014 the Group acquired 100% of the issued listed
share capital of Andor Technology plc for a net cash consideration
of GBP158.1m. Andor is a market leading supplier of high
performance optical cameras, microscope systems and software.
The book and fair values of the assets and liabilities acquired
are given in the table below. Fair value adjustments have been made
to better align the accounting policies of the acquired business
with the Group accounting policies and to reflect the fair value of
assets and liabilities acquired. The business has been acquired for
the purpose of integrating into the Nanotechnology Tools segment
where it is believed that synergies can be obtained particularly in
respect of routes to market.
Book value Adjustments Fair value
GBPm GBPm GBPm
--------------------------------------------- ---------- ----------- ----------
Intangible fixed assets 9.4 70.2 79.6
Tangible fixed assets 6.0 (4.0) 2.0
Inventories 11.1 2.5 13.6
Trade and other receivables 10.3 0.5 10.8
Trade and other payables (13.5) (2.0) (15.5)
Deferred tax (0.5) (16.0) (16.5)
Cash 17.2 - 17.2
--------------------------------------------- ---------- ----------- ----------
Net assets acquired 40.0 51.2 91.2
Goodwill 84.1
--------------------------------------------- ---------- ----------- ----------
Total consideration 175.3
Cash acquired (17.2)
Net cash outflow relating to the acquisition 158.1
--------------------------------------------- ---------- ----------- ----------
The goodwill arising is not tax deductible and is considered to
represent the value of the acquired workforce and synergistic
benefits expected to arise from the acquisition.
RoentgenAnalytik Systeme GmbH
On 31 December 2013 the Group acquired 100% of the issued share
capital of Roentgenanalytik Systeme GmbH for a net cash
consideration of GBP1.6m.The company specialises in designing and
supplying instruments for coating thickness measurement and
material analysis, using X-ray fluorescence (XRF).
The book and fair values of the assets and liabilities acquired
are given in the table below. Fair value adjustments have been made
to better align the accounting policies of the acquired business
with the Group accounting policies and to reflect the fair value of
assets and liabilities acquired. The business has been acquired to
strengthen Oxford Instruments' range of X-ray Fluorescence (XRF)
materials and coating thickness analysers.
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
Book value Adjustments Fair value
GBPm GBPm GBPm
--------------------------------------------- ---------- ----------- ----------
Intangible fixed assets - 1.2 1.2
Inventories 0.2 - 0.2
Trade and other receivables 0.1 - 0.1
Trade and other payables (0.3) 0.2 (0.1)
Cash 0.1 - 0.1
Net assets acquired 0.1 1.4 1.5
Goodwill 0.2
--------------------------------------------- ---------- ----------- ----------
Total consideration 1.7
Cash acquired (0.1)
Net cash outflow relating to the acquisition 1.6
--------------------------------------------- ---------- ----------- ----------
The goodwill arising is tax deductible in full and is considered
to represent the value of the acquired workforce and synergistic
benefits expected to arise from the acquisition.
RMG Technology Ltd
On 8 November 2013 the Group acquired 100% of the issued share
capital of RMG Technology Limited for an initial net cash
consideration of GBP5.7m. RMG is a UK business specialising in
Laser Induced Breakdown Spectrography.
The book and fair values of the assets and liabilities acquired
are given in the table below. Fair value adjustments have been made
to better align the accounting policies of the acquired business
with the Group accounting policies. The business has been acquired
for the purpose of integrating into the Industrial Analysis segment
where it will add a unique hand-held analyser to the Group's
product portfolio.
Book value Adjustments Fair value
GBPm GBPm GBPm
--------------------------------------------- ---------- ----------- ----------
Intangible fixed assets - 8.2 8.2
Inventories 0.1 - 0.1
Trade and other receivables 0.2 - 0.2
Trade and other payables (0.3) - (0.3)
Deferred tax - (1.6) (1.6)
Cash 0.4 - 0.4
--------------------------------------------- ---------- ----------- ----------
Net assets acquired 0.4 6.6 7.0
Goodwill 0.5
--------------------------------------------- ---------- ----------- ----------
Total consideration 7.5
Cash acquired (0.4)
Contingent consideration at acquisition (1.4)
--------------------------------------------- ---------- ----------- ----------
Net cash outflow relating to the acquisition 5.7
--------------------------------------------- ---------- ----------- ----------
The goodwill arising is not tax deductible and is considered to
represent the value of the acquired workforce and synergistic
benefits expected to arise from the acquisition. Further contingent
consideration of up to GBP4m is payable based on revenue of the
acquired business in the year to 31 March 2015.
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
6 TAXATION
The total effective tax rate on profits for the half year is 36%
(2013: 25%). The weighted average tax rate in respect of adjusted
profit before tax (see note 2) for the half year is 23% (2013:
21%).
7 earnings per share
a) Basic
The calculation of basic earnings per share is based on the
profit or loss for the period after taxation and a weighted average
number of ordinary shares outstanding during the period, excluding
shares held by the Employee Share Ownership Trust, as follows:
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
Shares Shares Shares
million million million
------------------------------------------ ---------- ---------- ---------
Weighted average number of shares
outstanding 57.1 56.9 57.0
Less: weighted average number of
shares held by Employee Share Ownership
Trust (0.2) (0.2) (0.2)
------------------------------------------ ---------- ---------- ---------
Weighted average number of shares
used in calculation of earnings
per share 56.9 56.7 56.8
------------------------------------------ ---------- ---------- ---------
b) Diluted
The following table shows the effect of share options on the
calculation of both adjusted and unadjusted diluted basic earnings
per share.
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
Shares Shares Shares
million million million
--------------------------------------- ---------- ---------- ---------
Number of ordinary shares per basic
earnings per share calculations 56.9 56.7 56.8
Effect of shares under option 0.4 0.5 0.4
--------------------------------------- ---------- ---------- ---------
Number of ordinary shares per diluted
earnings per share calculations 57.3 57.2 57.2
--------------------------------------- ---------- ---------- ---------
Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 - unaudited
8 dividends per share
The following dividends per share were paid by the Group:
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
pence pence pence
---------------------------------- ---------- ---------- ---------
Previous period interim dividend 3.36 3.05 3.05
Previous period final dividend - - 8.15
---------------------------------- ---------- ---------- ---------
3.36 3.05 11.20
---------------------------------- ---------- ---------- ---------
The following dividends per share were proposed by the Group in
respect of each accounting period presented:
Half year Half year Year to
to to
30 Sept 30 Sept 31 March
2014 2013 2014
pence pence pence
------------------ ---------- ---------- ---------
Interim dividend 3.70 3.36 3.36
Final dividend - - 9.04
------------------ ---------- ---------- ---------
3.70 3.36 12.40
------------------ ---------- ---------- ---------
The final dividend for the year to 31 March 2014 was approved by
shareholders at the Annual General Meeting held on 9 September
2014. Accordingly is it no longer at the discretion of the company
and has been included as a liability as at 30 September 2014. It
was paid on 23 October 2014.
The interim dividend for the year to 31 March 2015 of 3.7 pence
was approved by the Board on 11 November 2014, 10.1% higher than
the previous year and has not been included as a liability as at 30
September 2014. The interim dividend will be paid on 9 April 2015
to shareholders on the register at the close of business on 6 March
2015.
Principal Risks and Uncertainties
The Group has in place a risk management structure and internal
controls which are designed to identify, manage and mitigate
risk.
In common with all businesses, Oxford Instruments faces a number
of risks and uncertainties which could have a material impact on
the Group's long term performance.
On pages 16 and 17 of its 2014 Annual Report and Accounts (a
copy of which is available at www.oxford-instruments.com), the
Company set out what the Directors regarded as being the principal
risks and uncertainties facing the Group's long term performance
and these are reproduced in the table below. Many of these risks
are inherent to Oxford Instruments as a global business and they
remain valid as regards their potential impact during the remainder
of the second half of the year.
Specific Context Risk Possible Associated Mitigation
Risk Impact strategic
priorities
------------- ------------------- ------------------- ------------------- ------------------- -------------------
Technical The Group Failure Lower 'Realising The Group has
Risk provides high of the advanced profitability the Brand' moved
technology technologies and financial - Using 'Voice away from large
equipment applied returns. of the Customer' scale, single
and systems by the Group Negative to drive rapid customer
to its customers. to produce impact new product development
commercial on the development. programmes
products, Group's towards more
capable reputation. 'Liberate Cash' commercially
of being - Support and orientated
manufactured develop our products.
and sold employees to
profitably. maximise their The New Product
value add. Introduction
programme
that any new R&D
projects must pass
through provides
a framework within
which the
commercial
viability of
projects
are scrutinised
and assessed.
------------- ------------------- ------------------- ------------------- ------------------- -------------------
Economic The recent Demand for Lower 'Realising The Group has a
Environment global recession the Group's profitability the Brand' broad spread of
and prevailing products and financial - Developing customers,
economic downturn may be lower returns. a strong brand applications
have resulted than anticipated. in existing and geographical
in cuts to and developing markets.
both government markets.
and private The Group is
sector spending. 'Delivering expanding
Shareholder in the so called
Value' - Focus BRIC nations,
on balanced whose
and attractive markets have been
global markets. more resilient
during the
economic
downturn.
------------- ------------------- ------------------- ------------------- ------------------- -------------------
Acquisitions Part of the Appropriate Lower 'Realising Extensive
growth of acquisition profitability the Brand' financial
Oxford Instruments targets and financial - Developing and technical due
is planned may not returns. a strong brand diligence is
to come from be available Management in existing undertaken
acquisitions in the necessary focus taken and developing by the Group
which provide timescale. away from markets. during
the Group Alternatively, the core any acquisition
with complementary once acquired, business 'Inventing programmes.
technologies. targets in order the Future'
may fail to manage - Using "Voice Each transaction
to provide integration of the Customer" has a
the planned issues. to drive rapid comprehensive
value. new product post acquisition
development. integration plan
which is reviewed
'Adding Personal at the highest
Value' - level.
Supporting
and developing
our employees.
------------- ------------------- ------------------- ------------------- ------------------- -------------------
Foreign A significant The Group's Lower 'Delivering The Group seeks
exchange proportion profit levels profitability Shareholder to mitigate the
volatility of the Group's are exposed and financial Value' - Focus exposure to
profit is to fluctuations returns on balanced transactional
made in foreign in exchange and attractive risk by the use
currencies. rates. global markets. of natural hedges
wherever possible.
'Liberating
Cash' -Developing The remaining
a competitive transactional
global supply foreign exchange
base that supports risk in any year
our growth. is mitigated
through
the use of forward
and non-premium
based option
exchange
contracts.
------------- ------------------- ------------------- ------------------- ------------------- -------------------
Outsourcing The Group's Failures Disruption 'Liberating Relationships with
strategic in the supply to customers. Cash' - outsourcing
plan includes chain impacting Negative Developing businesses
the outsourcing sales. impact a competitive are monitored
of a significantly on the global supply closely
higher proportion Group's base that and any potential
of the costs reputation. supports issues are acted
of its products our growth. upon swiftly to
to benefit avoid disruption.
from economies 'Realising
of scale and the Brand' Where practical
natural currency - Developing dual sources are
hedges. a strong used for key
brand components
in existing and services.
and
developing
markets.
------------- ------------------- ------------------- ------------------- ------------------- -------------------
Pensions The Group's Movements Additional 'Delivering The Group has
calculated in the actuarial cash required Shareholder closed
pension deficit assumptions by the Value' - Focus its defined
is sensitive may have Group to on balanced benefit
to changes an appreciable fund the and attractive pension schemes
in the actuarial effect on deficit. global markets. in the UK and US
assumptions. the reported Reduction to future accrual.
pension in net 'Liberating
deficit. assets. Cash' - Developing The Group has a
a competitive funding plan in
global supply place to reduce
base that supports the pension
our growth. deficit
over the short
to medium term.
------------- ------------------- ------------------- ------------------- ------------------- -------------------
People A number of The employee Lower 'Adding Personal The Group
the Group's leaves the profitability Value' - undertakes
employees Group. and financial Supporting a regular employee
are business returns. and developing survey and
critical. our employees. implements
and reviews
'Inventing resulting
the Future' action plans.
- Providing
an environment A comprehensive
for inventing succession
and innovation. planning
process is in
place,
together with a
talent network
which identifies
and manages
contacts
with people who
could provide
external
succession for
critical current
and future roles.
A management
development
programme provides
exposure to key
skills needed for
growth. Regular
individual
performance
reviews take
place.
------------- ------------------- ------------------- ------------------- ------------------- -------------------
Routes In some instances The systems Lower 'Inventing Use of the stage
to market the Group's integrator profitability the Future' gate process and
products are switches and financial - Developing 'Voice of the
components supplier returns. products that Customer'
of higher denying offer the best to make sure that
level systems the Group's technical the Group's
and thus the route to solution. products
Group does market. are the best in
not control 'Realising the market.
its route the Brand'
to market. - Ensuring Co-marketing with
that end customers system integrators
appreciate to promote the
the benefits merits of the
of Oxford Group's
Instruments products to end
technology. customers.
Seeking to
increase
the number of
integrators
supplied by the
Group .
------------- ------------------- ------------------- ------------------- ------------------- -------------------
The impact of the economic and end market environments in which
the Group's businesses operate are considered in the Half Year
Statement of this Half Year Report, together with an indication if
management is aware of any likely change in this situation.
Responsibility Statement of the Directors in respect of the Half
Year Financial Statements
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Jonathan Flint, Chief Executive Kevin Boyd, Group Finance Director
11 November 2014
Independent review report to Oxford Instruments plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2014 which comprises the Condensed
Consolidated Statement of Income, the Condensed Consolidated
Statement of Comprehensive Income, Condensed Consolidated Statement
of Financial Position, Condensed Consolidated Statement of Changes
in Equity, Condensed Consolidated Statement of Cash Flows and the
related explanatory notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the company those
matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we
have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
The annual financial statements of the group are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2014 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU and the DTR of the UK
FCA.
Greg Watts
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill, Snow Hill Queensway
Birmingham, B4 6GH
11 November 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DBBDBIUBBGSG
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