RNS No 5868p
OXFORD INSTRUMENTS PLC
10 June 1999
Oxford Instruments plc
Announcement of preliminary results for 1998/99
Oxford Instruments plc, the advanced instrumentation group, today announced
preliminary results for the year to 31 March 1999 as follows:
* Turnover up by 9% to #217 million, including the Group's share of the OMT
joint venture and a full year of the neurology business
* Profit before tax of #11.5 million (1997/98 #15.8 million)
* Final dividend of 6.0p, making the full dividend up 4% at 8.4p covered 1.9
times by earnings per share of 16.2p
* New orders at wholly owned businesses up 7% to #175 million; record orders
of #106 million at the OMT joint venture
* Business portfolio improved by disposal and acquisition of businesses
* Free cash flow of #4 million, before new investments, share buy-back and
dividends to shareholders
* Sir Peter Williams to retire as Chairman; succeeded by Nigel Keen
Chief Executive, Andrew Mackintosh, said: "The results from the wholly owned
businesses for 1998/99 do not yet reflect the very real progress we are making
to improve our operational efficiency. We are determined to succeed with the
many process improvement initiatives now under way. Together with the proven
technical and distribution strengths of the business, this will allow us to
deliver a more consistent commercial performance and exploit the wide range of
growth opportunities available to the Group."
Enquiries: Oxford Instruments plc Tel:01865 881437 Fax:01865 881944
Sir Peter Williams, Chairman
Andrew Mackintosh, Chief Executive
Martin Lamaison, Financial Director
Citigate Dewe Rogerson Tel: 0171 638 9571 Fax: 0171 282 8190
John Rudofsky
For further copies of this Preliminary Results announcement please contact
Lisa Cooper at the Company's registered office at Old Station Way, Eynsham,
Witney Oxon OX8 1TL (email: lisa.cooper@oxinst.co.uk).
Chairman's statement
Sir Peter Williams, Chairman of Oxford Instruments plc, said today:-
"This has been a challenging and somewhat disappointing year for the Group.
Excluding our share of the OMT joint venture, new orders at #175 million were
up by 7% on the corresponding figure for the prior year. However as indicated
in April, sales of #167.8 million fell behind the previous year's level of
#172.2 million by 3%. Pre-tax profits of #11.5 million were down by 27% on
last year. The closing cash balance was #6 million, down #5.3 million
reflecting the buy-back of shares in September 1998.
Changes in our world-wide markets
In most major territories capital expenditure by industry remained depressed,
with the downturn in the semiconductor industry continuing to affect sales for
one of our key products used for chemical analysis. Europe produced a
disappointing level of demand in the year and political and economic
uncertainty in countries such as Russia and Brazil has also affected
expenditure in the broad range of industrial markets we serve. Competitive
pressure increased with all suppliers chasing a larger share of a limited
market. This depressed margins in some areas.
However our research customers, both academic and industrial, have continued
to be funded at a steady level, with the US market in particular holding up
well. Business in Japan was helped by the series of government 'supplementary
budgets' which included some funding for research announced during the year.
This has resulted in stable demand for our superconductivity business
products, which are primarily used to measure the properties of new materials
for research and for product development applications.
Demand for the magnets made by our OMT joint venture and used for medical
imaging of the body has been strong, driven by growth in the US market and by
new more patient-friendly products at lower prices. These have the effect of
broadening the market and increasing our market share.
Actions to improve operational performance
We have placed increased emphasis on internal operational improvements during
the past year and will continue to do so. A number of initiatives are
starting to produce benefits.
In our UK-based Superconductivity businesses the quality and cost improvement
programmes being led by new management are making good progress and we have
set ourselves significantly improved quality targets for the current year.
Results in our Medical Systems business were adversely affected by
manufacturing yield of products in the acquired neurology business, but new
processes now in place are improving yields.
In addition we have been controlling our cost base in our Instruments and
Medical Systems business groups in order to match current market conditions.
The associated restructuring costs around the Group charged to profit during
the year were #0.5 million.
Our programme to update our management information systems across the Group is
now well under way, with two sites upgraded by March 1999 and a total cost
last year of #1.2 million. This project is not driven by 'millennium bug'
concerns but by the future benefits to the business that will come from a
modern fully integrated system. It is intended that all UK sites will be
upgraded by early 2000 at a cost in the current year of around #1.5 million.
We believe that the improvement programmes already in place will produce real
benefits, but we continue to look for other ways to increase efficiency.
Since the year end we have taken actions which will incur additional
restructuring costs and these will result in one-off charges during 1999/2000.
Refining the business portfolio
We have taken several steps to improve the strength of our business portfolio.
Since the year end we have sold our Nuclear Measurements instrumentation
business for $9.5 million in cash. This business had underperformed for many
years and despite some strong products lines was unable to compete profitably
in a static and consolidating market. Canberra Industries, the purchaser, is
a market leader and saw real value in our complementary range of products.
We have also recently completed the purchase of the business of Auburn
International Inc which increases our range of product offerings into the
industrial process control market, particularly measurements of material
flows and viscosity on the production line in the plastics industry. These
are products which generate a rapid economic return for the customer by
improving the consistency of the final product.
In accordance with the agreement for the purchase of the Vickers PLC neurology
business, #2.6 million including interest was received after the year end as
the adjustment to the consideration based on the final completion accounts.
We have recently set up a 'New Ventures Board' to filter and support the wide
range of potential new business ideas which spin off from the creativity of
our employees. This Board, chaired by the Chief Executive, will provide
additional focus on commercial opportunities that lie outside the strategic
plans of our current businesses.
We are continuing our search for acquisition targets, concentrating on
businesses in growth markets which complement our existing strengths,
particularly in our Instrumentation businesses.
Priorities for 1999/2000
Our focus on operational improvements remains our top priority and we will
continue to invest in the quality programmes already mentioned. We have
also carried out a benchmarking exercise on key functions within the UK-based
businesses in order to measure ourselves against best practice and guide our
priorities for efficiency improvement in the future.
Our new management information system is already starting to show benefits in
the two upgraded sites. The roll-out to other sites is being closely managed
to ensure minimal disruption to operations during the year.
Our business plans assume that the US market remains buoyant, but that capital
expenditure in Europe and Asia remains subdued. We are concerned about the
continuing strength of sterling, particularly against the Euro.
We will maintain our commitment to technology and new product development. We
spent #12.5 million (with a further #4.1 million at the OMT joint venture) in
the past year on new product development. Recent investment in project
management expertise in several businesses will ensure that we further improve
our commercial returns.
We will also continue to review our business portfolio and will make any
necessary changes - through acquisition, divestment or alliances - to
position the Group in markets that have long-term growth prospects. Our
technical depth, strong brands and world-wide distribution provide a powerful
base from which to launch new growth initiatives.
Dividend and share buy-back
The company's net cash position is strong and we continue to look for
effective ways to reinvest this cash for the benefit of shareholders. This
has included the 5% share buy-back during the year as well as the recent
acquisitions. The Directors have recommended a final dividend of 6.0p, making
a total for the year of 8.4p, an increase of 4% on last year.
New Chairman
After almost 17 years with Oxford Instruments, I shall be retiring from the
company at the Annual General Meeting in July in order to pursue my interests
in the world of higher education, science and technology. I am delighted to
announce that your Board has elected Nigel Keen to succeed me as Chairman,
following his appointment as a Non-Executive Director in February this year.
With his extensive operational experience of investment and management in the
high technology and major engineering sectors, Nigel is ideally placed to
guide the company through the next stage in its evolution, working closely
with Andrew Mackintosh, the Chief Executive. I would like to conclude by
thanking all my colleagues and our employees for their efforts and commitment,
not only during the past 12 months but over the whole of my years with the
company. We have made great progress during that time and I look forward to
seeing Oxford Instruments continue to grow and develop in the years ahead."
Group Profit and Loss Account
Continuing Discontinued 1999
operations operations
Notes #000 #000 #000
-------------------------------------------------------------------------
Turnover
Group and share of joint venture 210,027 7,004 217,031
3 Less: share of joint venture's turnover (49,220) - (49,220)
-----------------------------------
1 Group turnover 160,807 7,004 167,811
-----------------------------------
Cost of Sales: Ongoing (105,438) (4,784) (110,222)
Exceptional - - -
-----------------------------------
Total (105,438) (4,784) (110,222)
-----------------------------------
Gross profit 55,369 2,220 57,589
2 Net operating expenses: Ongoing (51,497) (2,113) (53,610)
Exceptional - - -
-----------------------------------
Total (51,497) (2,113) (53,610)
-----------------------------------
Group operating profit: Ongoing 3,872 107 3,979
Exceptional - - -
-----------------------------------
Total 3,872 107 3,979
3 Share of operating profit of joint venture 7,165 - 7,165
-----------------------------------
Total operating profit: Group and share of
joint venture 11,037 107 11,144
Group net interest receivable 663 (105) 558
Share of joint venture's net interest
payable (183) - (183)
-----------------------------------
Profit on ordinary activities before tax 11,517 2 11,519
-----------------------
Tax on profit on ordinary activities (3,670)
----------
Profit for the financial year attributable to shareholders 7,849
5 Dividends (3,971)
----------
Retained profit for the financial year 3,878
----------
6 Earnings per share pence
----------
Basic earnings per share:
Before exceptional items 16.2
After exceptional items 16.2
Diluted earnings per share:
Before exceptional items 16.2
After exceptional items 16.2
-----------
Continuing Discontinued 1998
operations operations
Notes #000 #000 #000
-------------------------------------------------------------------------
Turnover
Group and share of joint venture 192,682 6,654 199,336
3 Less: share of joint venture's turnover (27,126) - (27,126)
-----------------------------------
1 Group turnover 165,556 6,654 172,210
-----------------------------------
Cost of Sales: Ongoing (105,650) (4,379) (110,029)
Exceptional (1,020) - (1,020)
-----------------------------------
Total (106,670) (4,379) (111,049)
-----------------------------------
Gross profit 58,886 2,275 61,161
2 Net operating expenses: Ongoing (45,607) (2,348) (47,955)
Exceptional (1,250) - (1,250)
-----------------------------------
Total (46,857) (2,348) (49,205)
-----------------------------------
Group operating profit: Ongoing 14,299 (73) 14,226
Exceptional (2,270) - (2,270)
-----------------------------------
Total 12,029 (73) 11,956
3 Share of operating profit of joint venture 2,659 - 2,659
-----------------------------------
Total operating profit: Group and share of
joint venture 14,688 (73) 14,615
Group net interest receivable 1,420 (120) 1,300
Share of joint venture's net interest
payable (77) - (77)
-----------------------------------
Profit on ordinary activities before tax 16,031 (193) 15,838
-----------------------
Tax on profit on ordinary activities (4,801)
--------
Profit for the financial year attributable
to shareholders 11,037
5 Dividends (4,029)
--------
Retained profit for the financial year 7,008
--------
6 Earnings per share pence
--------
Basic earnings per share:
Before exceptional items 25.4
After exceptional items 22.2
Diluted earnings per share:
Before exceptional items 25.3
After exceptional items 22.1
--------
Group Statement of Total Recognised Gains and Losses
1999 1998
#000 #000
------------------------------------------------------------------------------
Profit for the financial year 7,849 11,037
Exchange differences on foreign currency net investments
of the Group 1,014 (768)
----------------
Total recognised gains and losses for the financial year 8,863 10,269
----------------
Group Balance Sheet
1999 1998
#000 #000
------------------------------------------------------------------------------
Fixed assets
Intangible assets - goodwill (1,624) -
Tangible assets 42,749 42,279
Investments:
Share of gross assets of joint venture 13,266 14,340
Share of gross liabilities of joint venture (9,263) (12,140)
-----------------
Net investment in joint venture 4,003 2,200
Other investments 1,059 460
-----------------
Total investments 5,062 2,660
-----------------
Total fixed assets 46,187 44,939
-----------------
Current assets
Stocks 34,481 33,863
Debtors 63,867 62,018
Cash at bank and in hand 9,130 14,816
-----------------
107,478 110,697
-----------------
Creditors: amounts falling due within one year
Bank loans and overdrafts (3,099) (3,500)
Other creditors (47,214) (47,797)
-----------------
(50,313) (51,297)
-----------------
Net current assets
Due within one year 57,165 58,669
Debtors due after more than one year - 731
-----------------
57,165 59,400
-----------------
Total assets less current liabilities 103,352 104,339
Provisions for liabilities and charges (4,441) (4,932)
-----------------
Net assets employed 98,911 99,407
-----------------
Capital and reserves
Called up share capital 2,389 2,512
Share premium account 18,556 18,475
Other reserves 15,930 15,804
Profit and loss account 62,036 62,616
-----------------
Equity shareholders' funds 98,911 99,407
-----------------
The 1998 balance sheet has been restated to reflect FRS 10 and 12.
Reconciliation of Movements in Equity Shareholders' Funds
1999 1998
#000 #000
------------------------------------------------------------------------------
Profit for the financial year 7,849 11,037
Dividends paid and proposed (3,971) (4,029)
Exchange differences on foreign currency net investments 1,014 (768)
New share capital subscribed 84 810
Share capital repurchased and cancelled (5,323) -
Goodwill written off during the year (149) (58)
-----------------
Net (reduction)addition to equity shareholders' funds (496) 6,992
Opening equity shareholders' funds 99,407 92,415
-----------------
Closing shareholders' funds 98,911 99,407
-----------------
Consolidated Cash Flow Statement
1999 1998
Notes #000 #000
------------------------------------------------------------------------------
- Net cash inflow from operating activities 12,908 14,580
Dividend from joint venture 3,087 2,946
- Returns on investments and servicing of finance 643 1,461
Taxation (7,485) (3,411)
- Capital expenditure and financial investment (6,247) (12,440)
Acquisitions (149) (12,993)
Equity dividends paid (2,896) (3,825)
-----------------
Cash outflow before management of liquid resources and
financing (139) (13,682)
- Management of liquid resources (182) 14,000
- Financing (5,239) 810
-----------------
(Decrease) increase in cash in the year (5,560) 1,128
-----------------
Reconciliation of Net Cash Flow to Movement in Net Funds
1999 1998
Notes #000 #000
------------------------------------------------------------------------------
(Decrease) increase in cash in the year (5,560) 1,128
Change in liquid resources 182 (14,000)
Translation difference 93 5
-----------------
Movement in net funds in the year (5,285) (12,867)
Net funds at 31 March 1998 11,316 24,183
-----------------
Net funds at 31 March 1999 6,031 11,316
-----------------
Movements in Net Funds
At Exchange Cash At
31 March rate movement 31 March
1999 effect in year 1998
#000 #000 #000 #000
-----------------------------------------------------------------------------
Cash at bank on demand 2,589 287 (4,514) 6,816
Bank overdrafts (2,314) (7) (1,046) (1,261)
-----------------------------------------
Net cash 275 280 (5,560) 5,555
Cash on deposit 6,541 - (1,459) 8,000
Debt due within one year (785) (187) 1,641 (2,239)
-----------------------------------------
Net funds 6,031 93 (5,378) 11,316
-----------------------------------------
Notes on the Preliminary Financial Statements
1. Accounting policies and results by business groups
The consolidated profit and loss account and balance sheet for the years ended
31 March 1999 and 31 March 1998 have been prepared on a basis consistent with
the accounting policies disclosed in the Group's Report and Accounts 1998. In
addition, the Company has adopted the new Financial Reporting Standards; FRS
10, FRS 11, FRS 12, FRS 13 and FRS 14. This had no significant effect on
reported results. The results analysed by business groups were as follows:-
Turnover Operating Profit (Loss)
1999 1998 1999 1998
#000 #000 #000 #000
--------------------------------------------------------------------------
Instrumentation 54,005 59,320 3,573 7,760
Superconductivity 74,676 89,971 110 5,165
Medical Systems 39,130 22,919 296 (969)
----------------------------------------
167,811 172,210 3,979 11,956
Share of OMT jv (49%) 49,220 27,126 7,165 2,659
----------------------------------------
217,031 199,336 11,144 14,615
----------------------------------------
The discontinued operation is included within the instrumentation results.
2. Net operating expenses and exceptional costs
Net operating expenses comprise:
1999 1998
#000 #000
--------------------------------------------------------------------------
Distribution costs 32,872 29,330
Research and development costs 12,524 11,011
Administrative expenses 8,214 7,614
------------------
Net operating expenses, excluding exceptional costs 53,610 47,955
Exceptional costs - 1,250
------------------
Net operating expenses 53,610 49,205
------------------
3. Joint venture
The Group owns 49% of the issued share capital of Oxford Magnet Technology
Limited ('OMT') of 3,000,000 #1 ordinary shares. It is engaged in advanced
instrumentation and is registered and operates in England. The Group has
accounted for its interest in OMT as a joint venture under Financial Reporting
Standard (FRS) 9.
4. Foreign currencies
The principal exchange rates used to translate the Group's overseas results
were as follows:-
Year to 31 March 1999 Year to 31 March 1998
Average Average Year End Average Average Year End
Contract P&L B/S Contract P&L B/S
Rate Rate Rate Rate Rate Rate
------------------------------------------------------------------------------
US Dollar 1.60 1.65 1.61 1.58 1.65 1.67
Yen 198 213 191 177 203 223
Euro 1.45 1.47 1.50 1.38 1.49 1.58
------------------------------------------------------------------------------
5. Dividends per share
Dividends per share are as follows:-
1999 1998
pence pence
-----------------------------------------------------------------------------
Interim Dividend 2.4 2.3
Final Dividend 6.0 5.8
----------------------
8.4 8.1
----------------------
The record date for the final dividend of 6.0p net per share in respect of the
year ended 31 March 1999 will be 6 September 1999, and subject to approval of
shareholders at the Annual General Meeting on 27 July 1999, payment will be
made on 5 October 1999.
6. Earnings per share
Basic and diluted earnings per share have been calculated on the weighted
average of 48,449,234 (1998 49,653,177 shares) and 48,562,938 (1998 49,987,400
shares) respectively shares in issue during the year.
7. Cash flows netted in the cash flow statement
1999 1998
#000 #000
-----------------------------------------------------------------------------
Operating profit 3,979 11,956
Depreciation charges and amortisation 4,998 4,468
Change in stocks (69) 8,790
Change in debtors 3,410 (4,008)
Change in creditors 590 (6,626)
-----------------------
Net cash inflow from operating activities 12,908 14,580
-----------------------
Interest received 952 1,627
Interest paid (309) (166)
-----------------------
Net cash inflow from returns on investments and
servicing of finance 643 1,461
-----------------------
Purchase of fixed assets (5,683) (12,445)
Sale of fixed assets 345 449
Investments acquired (909) (444)
-----------------------
Net cash outflow for capital expenditure and financial
investment (6,247) (12,440)
-----------------------
Decrease in term deposits 1,459 14,000
Decrease in term loans (1,641) -
-----------------------
Net cash (outflow) inflow from management of liquid
resources (182) 14,000
-----------------------
Repurchase and cancellation of ordinary shares (5,323) -
Issue of ordinary shares including share premium 84 810
-----------------------
Net cash (outflow) inflow from financing (5,239) 810
-----------------------
8. Report and Accounts
The financial information set out in this preliminary results announcement
does not constitute the Company's statutory accounts for the years ended 31
March 1999 or 31 March 1998 but is derived from those accounts. This
announcement was approved by the board of directors on 10 June 1999.
Statutory accounts for 1997/98 have been delivered to the Registrar of
Companies, whereas those for 1998/99 will be delivered following the Company's
Annual General Meeting. The auditors have reported on those accounts; their
reports were unqualified and did not contain statements under section 237(2)
or (3) of the Companies Act 1985.
The 1999 Report & Accounts will be sent to shareholders on 28 June 1999. The
Company is registered in England Number 775598.
9. The Annual General Meeting
The Annual General Meeting will be held on Tuesday, 27 July 1999 at 2.30pm at
Group Offices, Old Station Way, Eynsham, Witney, Oxon OX8 1TL.
END
FR AKONKKNKNRAR
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