22nd Nov 2005 07:01
Oxford Instruments PLC22 November 2005 22 November 2005 Oxford Instruments plcAnnouncement of interim results for 2005/06 Oxford Instruments plc ("Oxford Instruments" or "The Company"), the advancedinstrumentation business, today announced interim results for the six months to30 September 2005. • Revenue of £75.3m (2004 £66.8m) reflected the increase in orders to £80.9m (2004 £68.1m) • Recent acquisitions contributed to both revenue and profit from operations • The product innovation programme is delivering results with the HyperSense DNP-NMR programme ahead of milestones • Loss before income tax but after amortisation of acquired intangibles, restructuring and other non-recurring costs and financial income and expenditure was £0.3m (2004 loss £0.9m) • Total loss per share 0.6p (2004 loss 2.2p) reflects absence of restructuring and other costs • Net cash, after all bank borrowings, at the end of the half was £12.6m (2004 £10.5m) • Recommended interim dividend of 2.4p, unchanged from last year • As separately announced today, Charles Holroyd and Steven Parker are appointed to the Group Board • The current review indicates higher Group revenue in the second half that should result in the outcome for the full year being in line with expectations Jonathan Flint, Chief Executive of Oxford Instruments plc, said: "Our new strategic thrust is starting to deliver top line growth and our new organisational structure will provide a focus for improved customer service and innovation. Actions are now underway to accelerate new product development, open up new routes to market and increase efficiencies across our operations, aimed at providing growth in profitability." Enquiries: Oxford Instruments plc Tel: 01865 881437 Fax: 01865 884045 Jonathan Flint, Chief Executive Martin Lamaison, Financial Director Hogarth Partnership Limited Tel: 020 7357 9477 Fax: 020 7357 8533 Rachel Hirst Andrew Jaques For further copies of this Interim Results announcement, please contact Lynn Shepherd at the Company's registered office at Old Station Way, Eynsham, Witney Oxon OX29 4TL (email:[email protected]). Interim Results Announcement for the six months ended 30 September 2005 Chairman's Statement Nigel Keen, Chairman of Oxford Instruments plc, said today: As announced earlier this year, Oxford Instruments is focusing its strategy onbeing the leading provider of a new generation of tools and systems for work at the atomic and molecular level. This strategy exploits our technological capability to serve the needs of customers in the physical and biosciencesectors. We aim to grow by introducing a range of innovative new systems as well as by improving our existing products. Our new instruments will increasingly be sold direct to end-users. The related ongoing service and support activities toour customers will deliver a growing percentage of revenues going forward. In addition to focusing on organic growth we plan to undertake selective acquisitions which will accelerate the achievement of our strategic goals. Financial Summary The Group has previously presented its results in accordance with UK GAAP. As is now required, these results, together with comparative information, have been determined and presented under International Financial Reporting Standards (IFRS). A full report on the transition to IFRS was published on the Group'swebsite (www. oxford-instruments.com) on 12 October 2005. This shows the main changes that IFRS made to the reporting of the Group's results. Orders for the six months to 30 September 2005 were £80.9 million, up £12.8 million on the first half last year, and finished ahead of internal forecasts. Revenue for the half was £75.3 million, up £8.5 million on the same period last year. There was a loss from operations of £0.2 million (2004 profit £2.5 million). The reduction in profits for the period compared with the first half of the previous year reflected our planned investment in innovative new products and markets, lower revenues and margins at Magnet Technology and at Plasma Technology, pricecompetition in the NanoAnalysis market, one off costs of Superconductivity patent litigation, now settled, and the impact on overheads following the sale of the Medical business at the end of 2005. Gross expenditure on R&D increased during the period to £6.5 million comparedwith £5.1 million in the prior year. Of this amount £1.3 million was capitalisedunder the new IFRS rules offset by a charge of £0.4 million for amortisation ofR&D expenditure, which had been capitalised and included on the opening IFRSbalance sheet. The resulting P&L charge for the half was £5.6 million. This netdifference of £0.9 million is the only substantial difference between theresults shown above prepared under IFRS and those which would have beenpresented previously under UK GAAP. The increase in R & D expenditure on innovative new products across the Group,coupled with the increased spend on accelerated routes to market for our magnetproducts, amounted to £1.5 million. This forms part of the expected annualspending of up to £5 million referred to in our announcement in June 2005. The loss before income tax, but after amortisation of acquired intangibles,restructuring and other non-recurring costs and financial income and expenditurewas £0.3 million, compared with a loss of £0.9 million in the prior year. Net cash, after all bank borrowing, decreased to £12.6 million, an outflow of£13.9 million in the half year. This reflected the seasonal pattern as well as£3.1 million spent on acquisitions. The Directors have recommended an interim dividend of 2.4 pence, unchanged fromthe previous year, payable on 6th April 2006. The results for the first half of the year were in line with the guidanceincluded in the September AGM statement and, as in previous years, a strongersecond half is expected. Operational Review Analytical The Analytical group of businesses now comprises NanoAnalysis, formerly ourMicroAnalysis business, Plasma Technology and Industrial Analysis, whichincludes X-ray Technology. In the first half, the Analytical group had higher orders of £39.3 million (2004£31.2 million) and higher revenue of £35.1 million (2004 £30.0 million). Theincrease in sales came from the recent Metorex and HKL acquisitions, both ofwhich contributed to profit in the first half. Despite this, profit fromoperations of £2.0 million (2004 £2.7 million) was lower, reflecting lowerrevenue at Plasma Technology, increasing price competition in the nanoanalysismarket and the impact on overheads following the disposal of the Medicalbusiness. The NanoAnalysis business has been so named because the high resolutioncapabilities of our systems match our customers' need to operate at the smallestlevel. Our recently launched range of INCADryCool products for the electronmicroscope now offers customers high performance, without the expense and safetyissues of handling liquid nitrogen. The business has just completed an importantsale to Oxford University of an integrated suite of detector products. This isthe first system that combines the HKL electron backscatter diffraction product,acquired earlier this year, with our energy and wavelength dispersive products.Full benefits from integrating HKL will start in the second half. In our Plasma Technology business, orders were higher than last year, with anumber of significant orders for the high brightness light emitting diodesmarket. These semiconducting devices are expected to replace many forms oftraditional lighting over the next decade due to their low energy consumptionand longevity. However, since the traditional semiconductor market of thisbusiness remains slow, we took action, in October, to reduce the cost base, andthis will benefit ongoing trading. Our Industrial Analysis business, consisting of our operations in High Wycombe,Helsinki, Chicago and Scotts Valley, has now been organised as a single entity.This will improve our ability to address the sizeable industrial analyticalmarket, particularly the growing environmental sector, with renewed focus. InJune, we launched two new products to help customers comply with increasinglystringent environmental legislation around the world. This half year also sawthe successful launch of the revised Horizon Isotope product in France formonitoring lead in paint, and we successfully installed our first threeX-Strata960 units for thickness measurement of surface layers. Superconductivity The Superconductivity group of businesses now includes Physical Sciences, MagnetTechnology, Superconducting Wire, MRI magnet service and Austin Scientific. In the first half, the Superconductivity group had higher orders of £41.6million (2004 £36.9 million) and higher revenue of £40.2 million (2004 £36.8million). The loss from operations of £2.2 million (2004 £0.2 million) includesgood performances from superconducting wire, MRI service and Austin Scientific,but this has been offset by expenditure on the new product development programmereferred to below and trading losses due to revenue shortfall at MagnetTechnology. Physical Sciences, which provides magnet and cryogenic systems for appliedresearch customers, experienced improving orders. In particular, the cryocoolerarea benefited from the growing interest in research into nanotechnology andquantum computing. Our Magnet Technology business continues to have a difficult time. It makes NMR,ICR and MRI magnet systems for third parties, which then supply end users withinstrument systems, of which the magnet is a major component. Volumes of NMRmagnets sold through OEMs have reduced in the half year, however a number ofinitiatives are underway to reposition the business closer to end usercustomers. In particular, we have launched 'Magnets Direct', a programme thatprovides an opportunity for end users to purchase superconducting magnets directfrom Oxford Instruments, instead of through the system integrators. Althoughthere is much to be done before the new routes to market are confirmed, initialcustomer reaction has been positive. The superconducting wire business had a good half year with volumes at recordlevels. Progress is being made in preparation for the international ITER fusionproject. With European qualification of our wire achieved and US qualificationwell advanced, plans to accommodate the potentially significant increase involumes of wire are being finalised. Our new generation of high performanceconductor, known as RRP, achieved its first commercial application in an OxfordInstruments' NMR magnet. At the same time a world record of 950 MHz for NMRfield strength was established. We also made further progress in the productionof a commercially usable high temperature superconducting wire, which is used inmuch the same way as conventional superconducting wire. The Austin Scientificcryogenic component business had a strong half. Although order intake of the Superconductivity business overall in the firsthalf has been promising, there remain a number of risks in the second half year,in particular the development of new routes to market for the Magnet Technologybusiness. Asia The commitment we have made to Asia means that we are well placed to participatein the expected growth in the region. Orders generated by our sales and service organisation in China continued togrow. In addition, our new Shanghai factory is working with our US manufacturingoperations to take on low-cost production of selected products, initially forthe Chinese market. In Japan, sales and service to the MRI market continued to grow, whilst sales ofother Group products remained steady. With our strong reputation in the researchmarket, we are in a good position to benefit from the improved confidence withinthe Japanese economy. New product development and acquisition programme The Oxford Instruments Innovation group, formed at the beginning of thefinancial year to spearhead radical new product development, is alreadydelivering results. The first of our major new products, HyperSense, has beensuccessfully launched with higher than expected customer interest. HyperSense isthe first commercial implementation of Dynamic Nuclear Polarisation for NMR. Thenew system has the potential to improve dramatically the sensitivity of NMRexperiments in a number of research and industrial environments. The firstHyperSense unit has successfully passed factory acceptance testing and isundergoing installation at Queen Mary's College, London. Two more HyperSensesystems are being installed at Birmingham University and Pfizer over the comingweeks. In addition to these BETA site implementations, we received our firstrevenue generating HyperSense order, ahead of schedule, for delivery in February2006. Good progress has been made with two major new developments in thenanotechnology area. These are scheduled for launch in the first half of 2006. We are also implementing a vigorous programme to evolve and enhance ourportfolio of traditional products. Our first 950 MHz NMR magnet incorporatingour new high performance RRP superconducting wire was delivered and is beinginstalled at Oxford University. In April, the Group acquired HKL Technology A/S, a specialist in electronbackscatter diffraction (EBSD), which strengthens our current market leadingNanoAnalysis product range. Group Structure and Board We have taken important steps to implement a new organisational structure, withthe aim of reinforcing central strategic decision making and major new productdevelopment. As part of that restructuring, we are announcing today two newappointments to the Group Board. Charles Holroyd, in addition to his continuingresponsibilities for Analytical businesses, has been appointed Group OperationsDirector. Steven Parker, in addition to his continuing US Superconductivityresponsibilities, has been appointed Group Commercial Director. In their newroles, Charles and Steven will support the Board in harnessing the capabilitiesthat exist across the Group. Outlook and Prospects Much progress has been achieved towards laying the foundations for deliveringenhanced and sustainable growth. Actions are now underway to accelerate newproduct development, open up new routes to market and increase efficienciesacross our operations, aimed at providing growth in profitability. Our current review indicates higher Group revenue in the second half that shouldresult in the outcome for the full year being in line with expectations. Nigel Keen Chairman22 November 2005 Group Income StatementHalf year ended 30 September 2005 - unaudited Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 Notes £m £m £m---------------------------------------------------------------------------Revenue 2 75.3 66.8 154.8Cost of sales (53.6) (46.4) (110.4)---------------------------------------------------------------------------Gross profit 21.7 20.4 44.4Net operating expenses (21.9) (17.9) (37.0)---------------------------------------------------------------------------(Loss)/profit from operations 2 (0.2) 2.5 7.4 Amortisation of acquiredintangibles (0.1) (0.1) (1.3)Restructuring and othernon-recurring costs 3 0.1 (3.3) (6.0)--------------------------------------------------------------------------- Operating (loss)/profit (0.2) (0.9) 0.1Financial income 4 4.1 2.9 5.3Financial expenditure 5 (4.2) (2.9) (5.3)---------------------------------------------------------------------------(Loss)/profit before income tax (0.3) (0.9) 0.1Income tax expense 6 - (0.2) (1.7)---------------------------------------------------------------------------Loss after taxation Profit from discontinued (0.3) (1.1) (1.6)operations after tax 2 - 0.1 7.2 ---------------------------------------------------------------------------(Loss)/profit for the period (0.3) (1.0) 5.6 --------------------------------------------------------------------------- pence pence pence---------------------------------------------------------------------------Earnings per share - continuing 7 Basic earnings per share (0.6) (2.4) (3.0)Diluted earnings per share (0.6) (2.4) (3.1) Earnings per share - total Basic earnings per share (0.6) (2.2) 12.2Diluted earnings per share (0.6) (2.2) 12.0 Dividends Dividends paid 8 - - 33.4Dividends proposed 8 2.4 2.4 33.4--------------------------------------------------------------------------- Group Statement of Recognised Income and ExpenseHalf year ended 30 September 2005 - unaudited Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 Notes £m £m £m---------------------------------------------------------------------------Foreign exchangetranslation differences 0.4 0.1 -Cash flow hedges -effective portion (0.3) - -Deferred tax on the above 0.1 - -Actuarial loss in respectof post 9 - (3.1) (6.1)retirement benefitsDeferred tax on the above - 1.0 1.9---------------------------------------------------------------------------Net income recogniseddirectly in equity 0.2 (2.0) (4.2)(Loss)/profit for the period (0.3) (1.0) 5.6--------------------------------------------------------------------------- Total - current period items (0.1) (3.0) 1.4Adoption of IAS 32 and IAS 39 12b 0.2 - ----------------------------------------------------------------------------Total recognised income/(expense) for the period 11 0.1 (3.0) 1.4 --------------------------------------------------------------------------- Group Balance SheetHalf year ended 30 September 2005 - unaudited As at As at As at 30 Sept 30 Sept 31 March 2005 2004 2005 Notes £m £m £m-----------------------------------------------------------------Assets Non-current assets Property, plant and equipment 23.1 26.5 23.0Intangible assets 10 15.8 13.9 12.5Investments 1.6 1.6 1.6Deferred income tax assets 16.6 15.9 15.1----------------------------------------------------------------- 57.1 57.9 52.2 Current assetsInventories 29.7 31.7 23.9Trade and other receivables 39.7 54.9 46.8Derivative financial instruments 0.6 - -Cash and cash equivalents 18.7 18.1 29.7Held for sale assets 5.5 5.9 5.4----------------------------------------------------------------- 94.2 110.6 105.8-----------------------------------------------------------------Total assets 151.3 168.5 158.0----------------------------------------------------------------- Equity Capital and reservesattributable to theCompany's equityholdersShare capital 20.1 18.7 19.1Other reserves 16.0 16.0 16.0Translation reserve 0.4 0.1 -Retained earnings 22.5 34.0 22.9----------------------------------------------------------------- 59.0 68.8 58.0----------------------------------------------------------------- Liabilities Non-currentliabilities Borrowings 0.8 1.7 1.1Retirement benefit obligations 44.0 40.8 43.3----------------------------------------------------------------- 44.8 42.5 44.4 Current liabilities Borrowings 2.8 4.1 2.1Bank overdrafts 3.3 3.5 1.1Trade and other payables 35.0 43.9 44.3Current income tax liabilities 1.8 1.0 1.3Derivative financial instruments 0.3 - -Provisions for other liabilities and charges 4.3 4.7 6.8----------------------------------------------------------------- 47.5 57.2 55.6-----------------------------------------------------------------Total liabilities 92.3 99.7 100.0-----------------------------------------------------------------Total liabilities and equity 151.3 168.5 158.0----------------------------------------------------------------- Group Statement of Cash Flows under Direct MethodHalf year ended 30 September 2005 - unaudited Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m--------------------------------------------------------------------Cash flows from operatingactivitiesCash receipts from customers 80.1 88.4 185.9Cash paid to suppliers and employees (88.0) (90.8) (177.6)--------------------------------------------------------------------Cash generated from operations (7.9) (2.4) 8.3Interest paid (0.3) (0.1) (0.2)Income taxes paid (1.1) (1.7) (2.2)--------------------------------------------------------------------Net cash from operating activities (9.3) (4.2) 5.9-------------------------------------------------------------------- Cash flows from investing activities Proceeds from sale ofproperty, plant and equipment 0.2 0.1 0.8Proceeds from sale of investment 0.1 - -Interest received 0.5 0.4 0.7Disposal of subsidiary, netof cash disposed - - 24.0Acquisition of subsidiaries,net of cash acquired (3.1) (4.7) (5.8)Acquisition of property,plant and equipment (1.8) (1.5) (3.2)Development expenditure (1.3) (0.4) (1.2)--------------------------------------------------------------------Net cash from investing activities (5.4) (6.1) 15.3-------------------------------------------------------------------- Cash flows from financingactivities Proceeds from issue of share capital 0.6 0.1 0.4Proceeds from the disposalof own shares 0.1 - -Proceeds from increase inshort term borrowings 0.7 2.5 0.6Dividends paid - - (15.7)--------------------------------------------------------------------Net cash from financing activities 1.4 2.6 (14.7)-------------------------------------------------------------------- Net (decrease)/increase incash equivalents (13.3) (7.7) 6.5Cash and cash equivalents atbeginning of the period 28.6 22.3 22.3Revaluation of cash balanceson adoption of IAS 32 and IAS 39 (0.1) - -Effect of exchange ratefluctuations on cash held 0.2 - (0.2)--------------------------------------------------------------------Cash and cash equivalents atend of the period 15.4 14.6 28.6-------------------------------------------------------------------- Notes on the Interim Financial StatementsHalf year ended 30 September 2005 - unaudited 1. Basis of presentation of accounts and transition from UK GAAP to IFRS accounting policies The Group's consolidated financial statements were prepared in accordance withUK Generally Accepted Accounting Principles (UK GAAP) until 31 March 2005. EUlaw (IAS Regulation EC 1606/2002) requires that the next annual consolidatedfinancial statements of the Group, for the year ending 31 March 2006, beprepared in accordance with International Financial Reporting Standards (IFRS)adopted for use in the EU ("adopted IFRS"). On 12 October 2005 the Group published a report "Oxford Instruments plc -Conversion to IFRS". This report sets out the Group's IFRS accounting policiesand the disclosures required by IFRS 1 concerning the transition from UK GAAP toIFRS. The report is available on the investor section of the Group's website (www.oxford-instruments.com). Printed copies can be obtained from the CompanySecretary's office at Company Secretary, Oxford Instruments plc, Old StationWay, Eynsham, Witney, Oxon OX29 4TL. In addition Note 12 providesreconciliations between the equity and profit for the period as previouslyreported under UK GAAP and IFRS. This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRS in issue that either areendorsed by the EU and effective (or available for early adoption) at 31 March2005 or are expected to be endorsed and effective (or available for earlyadoption) at 31 March 2006, the Group's first annual reporting date at which itis required to use adopted IFRS. Based on these adopted and unadopted IFRS, thedirectors have made assumptions about the accounting policies expected to beapplied, which are as set out in the report mentioned above "Oxford Instrumentsplc - Conversion to IFRS", when the first annual IFRS financial statements areprepared for the year ending 31 March 2006. In particular, the directors have assumed that IAS 19 'Employee Benefits' issuedby the International Accounting Standards Board will be adopted by the EU insufficient time that it will be available for use in the annual IFRS financialstatements for the year ending 31 March 2006. In addition, the adopted IFRS that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 March 2006are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 March 2006. The policies set out in the report "Oxford Instruments plc - Conversion to IFRS"have been consistently applied to all the years presented except for thoserelating to the classification and measurement of financial instruments. TheGroup has made use of the exemption available under IFRS 1 to only apply IAS 32and IAS 39 from 1 April 2005. The comparative figures have not been restated forIAS 32 and IAS 39. IFRS 5 'Non-current assets held for sale and discontinuedoperations' has been adopted voluntarily in the comparative periods. The comparative figures for the financial year ended 31 March 2005 are not theCompany's statutory accounts for the financial year. Those amounts, which wereprepared under UK GAAP, have been reported on by the Company's auditors anddelivered to the registrar of companies. The report of the auditors wasunqualified and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. The principal exchange rates used to translate the Group's overseas results wereas follows: Half year to Half year to Year to 30 Sept 2005 30 Sept 2004 31 March 2005 Period Period Year Average end Average end Average end----------------------------------------------------------------------US Dollar 1.82 1.77 1.79 1.81 1.85 1.89Euro 1.46 1.47 1.48 1.46 1.47 1.45Yen 200 201 198 199 198 202---------------------------------------------------------------------- 2. Results by business Segment information is presented in the consolidated interim financialstatements in respect of the Group's business segments, which are the primarybasis of segment reporting. The business segment reporting reflects the Group'smanagement structure. Segment results include items directly attributable to a segment as well asthose which can be allocated on a reasonable basis. Half year to 30 September 2005 Analytical Superconductivity Total £m £m £m----------------------------------------------------------------------------Revenue 35.1 40.2 75.3---------------------------------------------------------------------------- Profit/(loss) from operations 2.0 (2.2) (0.2)Amortisation of acquired intangibles - (0.1) (0.1)Restructuring and other non-recurring costs - 0.1 0.1 ----------------------------------------------------------------------------Operating profit/(loss) 2.0 (2.2) (0.2)Net financing expense (0.1)Income tax expense - ----------Loss for the period (0.3) ---------- Net operating assets 27.3 33.6 60.9---------------------------------------------------------------------------- Half year to 30 September 2004 Analytical Superconductivity Total £m £m £m----------------------------------------------------------------------------Revenue 30.0 36.8 66.8---------------------------------------------------------------------------- Profit/(loss) from 2.7 (0.2) 2.5operationsAmortisation of acquired intangibles (0.1) - (0.1)Restructuring and other non-recurring costs (0.8) (2.5) (3.3)----------------------------------------------------------------------------Operating profit/(loss) 1.8 (2.7) (0.9)Net financing expense -Income tax expense (0.2) ----------Loss for the period before discontinuedoperations (1.1)Profit from discontinued operations 0.1 ----------Loss for the period (1.0) ---------- Net operating assets 24.1 32.3 56.4---------------------------------------------------------------------------- Year to 31 March 2005 Analytical Superconductivity Total £m £m £m----------------------------------------------------------------------------Revenue 68.8 86.0 154.8---------------------------------------------------------------------------- Profit from operations 6.8 0.6 7.4Amortisation of acquired intangibles (1.2) (0.1) (1.3)Restructuring and other non-recurring costs (2.7) (3.3) (6.0)----------------------------------------------------------------------------Operating profit/(loss) 2.9 (2.8) 0.1Net financing expense -Income tax expense (1.7) ----------Loss for the period before discontinuedoperations (1.6)Profit from discontinued operations 7.2 ----------Profit for the period 5.6 ---------- Net operating assets 22.9 26.9 49.8---------------------------------------------------------------------------- Discontinued operations The results of the Medical business prior to its disposal on 1 March 2005 were as follows: Half year to Year to 30 Sept 31 March 2004 2005 £m £m------------------------------------------------------------Revenue 14.5 25.6------------------------------------------------------------ Profit from operations 0.2 -Net finance expense (0.1) (0.2)Profit on sale of business - 8.1------------------------------------------------------------Profit before tax 0.1 7.9Income tax expense - (0.7)------------------------------------------------------------Profit for the period from discontinued operations 0.1 7.2------------------------------------------------------------ pence pence Basic earnings per share - discontinued operations 0.2 15.2Diluted earnings per share - discontinued operations 0.2 15.1------------------------------------------------------------ 3. Restructuring and other non-recurring costs Restructuring and other non-recurring costs can be analysed as follows: Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m------------------------------------------------------------------Superconducting wire quality issues - 1.5 1.5Redundancy costs - 0.7 3.0Post acquisition restructuring - 1.1 1.2Impairment of held for sale assets - - 0.5Profit on disposal of property - - (0.2)Profit on disposal of investment (0.1) - ------------------------------------------------------------------- (0.1) 3.3 6.0------------------------------------------------------------------ 4. Financial income Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m------------------------------------------------------------------Interest receivable 0.5 0.4 0.7Expected return onpension scheme assets 3.6 2.5 4.6------------------------------------------------------------------ 4.1 2.9 5.3------------------------------------------------------------------ 5. Financial expenditure Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m------------------------------------------------------------------Interest payable andsimilar charges on bank loans andoverdrafts 0.3 0.1 0.2Interest charge onpension scheme liabilities 3.9 2.8 5.1------------------------------------------------------------------Total interest payable 4.2 2.9 5.3------------------------------------------------------------------ 6. Taxation The Group estimates that its weighted average tax rate for the full year will be60%. Due to the loss during the first half, no net tax has been provided at 30September 2005. A liability in respect of overseas tax of £1.6m arose during theperiod. A corresponding deferred tax asset in relation to UK losses has beenrecognised which will reverse during the second half of the year. The weightedaverage rate reflects the inability to offset taxable losses arising in onejurisdiction against taxable profits arising in other jurisdictions. 7. Earnings per share a) Basic The calculation of total basic earnings per share is based on the profit for theperiod and a weighted average number of ordinary shares outstanding during theperiod, excluding shares held by the Employee Share Ownership Trust, as follows: Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m------------------------------------------------------------------(Loss)/profit for the period (0.3) (1.0) 5.6------------------------------------------------------------------ Shares Shares Shares million million million------------------------------------------------------------------Weighted average numberof shares outstanding 48.4 48.1 48.1Less shares held by Employee Share Ownership Trust 0.9 1.0 1.0------------------------------------------------------------------Weighted average numberof shares used in calculation of earnings per share 47.5 47.1 47.1------------------------------------------------------------------ Continuing earnings per share have been based on the profit after tax but before discontinued operations as disclosed in the income statement. b) Adjusted Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m------------------------------------------------------------------Basic earnings per sharebefore amortisation of acquired intangibles, restructuring and other non-recurring costs and discontinued operations (0.6) 3.1 10.3------------------------------------------------------------------ A reconciliation of the profit for the periods used to calculate basic earnings per share to the adjusted profit used to calculate the adjusted earnings per share shown above is set out below: Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m------------------------------------------------------------------(Loss)/profit for the period (0.3) (1.0) 5.6Amortisation of acquiredintangible assets 0.1 0.1 1.3Restructuring and othernon-recurring costs (0.1) 3.3 6.0Tax impact of the above - (0.8) (0.8)Profit after tax inrespect of discontinued operations - (0.1) (7.2)------------------------------------------------------------------Adjusted (loss)/profit (0.3) 1.5 4.9------------------------------------------------------------------ c) Diluted Diluted earnings per share have been calculated using the same numerators as set out in (a) and b) above and by reference to the following number of shares: Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 Shares Shares Shares million million million------------------------------------------------------------------Number of ordinary sharesper basic earnings per sharecalculations 47.5 47.1 47.1Effect of shares under option 0.5 0.4 0.5------------------------------------------------------------------Number or ordinary sharesper diluted earnings per sharecalculations 48.0 47.5 47.6------------------------------------------------------------------ 8. Dividends per share The following dividends per share were paid by the Group: Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 pence pence pence------------------------- ----------- ----------- -----------Previous period final dividend - - 6.0Current period interim dividend - - 2.4Special dividend - - 25.0------------------------- ----------- ----------- ----------- - - 33.4------------------------- ----------- ----------- ----------- The following dividends per share were proposed by the Group in respect of each accounting period presented: Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 pence pence pence------------------------- ----------- ----------- -----------Interim dividend 2.4 2.4 2.4Special dividend - - 25.0Final dividend - - 6.0------------------------- ----------- ----------- ----------- 2.4 2.4 33.4------------------------- ----------- ----------- ----------- The special dividend relates to a one off return of capital to shareholders following the disposal of the Group's Medical business. The interim dividend for the year to 31 March 2006 of 2.4 pence per share was approved by the Board on 22 November 2005 and has not been included as a liability as at 30 September 2005. This interim dividend will be paid on 6 April 2006 to shareholders on the register at the close of business on 10 March 2006. 9. PensionsThe Group does not acquire actuarial valuations at the half year unless a particularly significant event has occurred during that period. The Group has applied actuarial assumptions at 30 September 2005 consistent with those used at 31 March 2005. Accordingly, no actuarial gain or loss arises in respect ofpensions. The actuarial assumptions will be reviewed at 31 March 2006 and it is expected that an actuarial gain or loss will arise for the full year. When the Group released its first half comparative figures under IFRS in October 2005 the actuarial loss for the year to 31 March 2005 was established by independent actuaries and half of this was apportioned to the first halfof that year. 10. Acquisitions HKL Technologies A/S The Group acquired HKL Technologies A/S based in Hobro, Denmark on 4 April 2005for a net cash consideration of £2.1m. Further consideration of up to €1m ispayable based on post acquisition sales. The Group's best estimate of thisdeferred consideration at the current time is £0.3m. HKL contributed turnover of£0.7m and profit before income tax of £0.1m to the Group in the period to 30September 2005. Accounting policy Fair value Book value adjustments to the Group £m £m £m--------------------------- ---------- ---------- ----------Property, plant and equipment 0.2 (0.1) 0.1Inventories 0.3 (0.1) 0.2Receivables 0.6 - 0.6Payables (0.7) - (0.7)--------------------------- ---------- ---------- ----------Total net assets/ (liabilities) 0.4 (0.2) 0.2Goodwill 2.2 ----------Total purchase cost 2.4Less consideration deferred (0.3) ----------Net cash outflow in respectof the purchase * 2.1Less net cash acquired - ----------Net cash outflow on acquisition 2.1 ----------* Includes costs associated with the acquisitionof £0.1m. The book value of the assets acquired are based on the management accounts atthe date of acquisition. The accounting policy adjustments reflect the alignmentof accounting policies in respect of stock provisioning and project basedcontracts. There were no fair value adjustments. The goodwill is recorded on the balance sheet as a component of intangibleassets. 11. Group statement of changes in equity Half year to Half year to Year to 30 Sept 30 Sept 31 March 2005 2004 2005 £m £m £m-------------------------- ---------- ---------- ----------Total recognised income/(expense) for the period 0.1 (3.0) 1.4Credit in respect ofemployee servicecosts settled by award of share options 0.2 0.1 0.2Proceeds from shares issued 0.6 - 0.4Disposal of own shares held 0.1 - -Dividends paid - - (15.7)Opening equity shareholders' funds 58.0 71.7 71.7 ---------- ---------- ---------- Closing equity shareholders' funds 59.0 68.8 58.0 ---------- ---------- ---------- 12. Transition to IFRSa) Reconciliation of total equity Year to Half year to As at 31 March 30 Sept 1 April 2005 2004 2004 £m £m £m-------------------------- ---------- ---------- ----------Total equity as previouslyreported under UK GAAP 82.0 90.0 92.1 Adjustments on adoption ofIFRS:Retirement benefit obligations (40.4) (40.0) (36.5)Capitalised development costs 4.0 4.9 4.7Goodwill and intangible assets (0.8) (0.1) (0.4)Proposed dividends 2.9 3.9 2.8Deferred tax 11.3 10.7 9.7Other (1.0) (0.6) (0.7)-------------------------- ---------- ---------- ----------Total equity under IFRS 58.0 68.8 71.7-------------------------- ---------- ---------- ---------- b) Reconciliation of total equity at 1 April2005 following adoption of IAS 32 and IAS 39 1 April 2005 £m------------------------------------------- -----------Total equity as previously reported under 58.0IFRS as at 31 March 2005 Adjustments on adoption of IAS 32 and IAS 39:Cashflow hedges - derivative instruments 0.3Deferred tax on the above (0.1)------------------------------------------- -----------Total equity under IFRS at 1 April 2005 58.2------------------------------------------- ----------- c) Reconciliation of profit for the period Year to Half year to 31 March 30 Sept 2005 2004 £m £m----------------------------------- ---------- ----------Profit/(loss) for the period under UK GAAP 1.6 (1.2)Amortisation of goodwill and other intangibles (0.2) 0.3Held for sale assets (0.3) 0.1Capitalised development costs (0.2) 0.3Discontinued operations 5.0 (0.1)Pensions - finance charge (0.5) (0.3)Taxation 0.2 0.1Other - (0.2) Profit/(loss) for the period under IFRS 5.6 (1.0)----------------------------------- ---------- ---------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Oxford Instruments