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Oxford Instruments OXIG Half Yearly Report


Attachment:

  Oxford Instruments (OXIG) - Half Yearly Report

RNS Number : 9243Q
Oxford Instruments PLC
13 November 2012
 



 Release Date: 7am Tuesday 13^th November 2012

 

Oxford Instruments plc

Announcement of Half Year Results for 2012/13

 

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 2012.

 

 Highlights:

·      Good progress in the first half, in line with meeting our 14 Cubed
growth plan objectives

·      Revenue up 7.4% to £170.8 million (2011: £159.1 million)

·      Adjusted profit before tax* up 23.5% to £23.1 million (2011: £18.7
million)

·      Adjusted EPS* up 20.2% to 33.9 pence (2011: 28.2 pence)

·      Reported EPS up 25.1% to 20.9 pence (2011: 16.7 pence)

·      Continued increase in global demand for nanotechnology tools

·      Focused R&D programme continued to underpin organic growth

·      New product pipeline remains strong

·      Net cash of £37.1 million at period end (2011: £11.9 million)

·      Interim dividend increased by 10.1% to 3.05 pence (2011: 2.77 pence)

 

*Adjusted numbers are stated to give a better understanding of the  underlying 
business. Details of adjusting items can be found in Note 2.

 

Jonathan Flint, Chief Executive of Oxford Instruments plc, said: 

 

"We have delivered a strong result in the first half in line with our 14 Cubed
objectives. We have a broad  spread of geographies and technologies,  exposure 
to markets with long term structural growth, a strong pipeline of new products
and a focus on improving efficiency.   These factors should help us to  remain 
resilient against a backdrop of sustained global economic uncertainty. We  are 
continuing our  pursuit of  acquisitions that  have the  potential to  enhance 
shareholder value and add to our range of technical capabilities. 

 

The Board  remains  confident in  the  continued growth  prospects  of  Oxford 
Instruments and the Group's ability to deliver shareholder value."

 

Enquiries:

 

Oxford                                                             Instruments 
plc                                                              Tel:    01865 
393200

Jonathan Flint, Chief Executive

Kevin Boyd, Group Finance Director

 

MHP Communications                                                            
Tel:  020 3128 8100

Rachel Hirst

Ian Payne

Number of pages: 22

 

For further copies of this Half Year Results Announcement, please contact Lynn
Shepherd at the Group's registered office at Tubney Woods, Abingdon, Oxon OX13
5QX (email: lynn.shepherd@oxinst.com)

 

 

 

 

Half Year Statement

 

Introduction

The Group continued  to make good  progress in  the first half  driven by  new 
product introductions and  long term  structural global growth  in demand  for 
Nanotech tools. Revenue grew by 7.4% to £170.8 million (2011: £159.1 million),
with constant currency organic growth of 5.8%. Adjusted profit before tax grew
by 23.5% to £23.1 million (2011: £18.7 million). Our adjusted operating margin
continued to increase, rising to 13.9% from 11.9% in the prior year.

 

Overall, demand for our products remained strong, despite some softness in the
industrial sector  as reported  in our  AGM statement  in September  2012.  We 
maintained pricing in the period, supported  by the strength of our brand  and 
the quality of our technology. Our organic growth continues to be  underpinned 
by our focused R&D  programme.  In the  half year, we  increased our R&D  cash 
spend by 7% to £12.1 million, reflecting the opportunities we see to  increase 
market share through the introduction of innovative new products.

 

Developed markets showed robustness as customers used our equipment to work at
the frontiers  of  science  and  improve the  efficiency  of  high  technology 
production facilities.  Growth in  North  America and  Europe  was 3%  and  1% 
respectively.  Sales growth in Asia was strong at 23% supported by a number of
initiatives including a branch office in  Korea and the opening of our  Indian 
subsidiary led by a new senior Country Manager. 

 

October 2012 marked the half way point of our 14 Cubed growth plan to  deliver 
an average compound annual  growth rate in  sales of 14% and  a net return  on 
sales of  14%  by 2014.   Progress  to date  is  in line  with  meeting  these 
objectives.

 

The Directors declare an interim dividend  of 3.05 pence, 10% higher than  the 
previous year, payable on 8 April 2013 to shareholders who are on the register
on 8 March 2013.

 

 

Nanotechnology Tools Sector

                 2012 2011
                   £m   £m
Revenue          80.9 70.4
Operating profit 10.4  7.3

 

In our Nanotechnology  Tools sector,  which represents 47%  of Group  revenue, 
profits grew by  42% and operating  profit margins increased  to 12.9%  (2011: 
10.4%). The sector comprises four businesses: NanoAnalysis, Plasma Technology,
NanoScience  and  Omicron   NanoTechnology.  It   produces  high   performance 
instruments and systems for customers working in scientific research and  with 
advanced industrial processes.   We have seen  no evidence of  a reduction  in 
research funding from governments worldwide.

 

Sales of  our  new  material characterisation  system  comprising  our  latest 
generation nanoanalysis detector hardware  and multi-tasking Aztec^®  software 
have been strong. A  series of software upgrades  has firmly established  this 
product as the world's leading material characterisation system and sales have
exceeded expectations.  Three new product introductions in the first half have
further enhanced the position of  NanoAnalysis as technology leaders with  the 
new X-MAX^n series  of large  area detectors setting  a new  benchmark in  the 
measurement and quantification of materials at the nanoscale. The  acquisition 
of Omniprobe in  June 2011  has broadened  our NanoAnalysis  product range  by 
offering innovative nano-manipulation tools for sample preparation on electron
and ion  beam  microscopes.   The  launch of  a  new  nano-manipulation  tool, 
Omniprobe400, has supported Omniprobe's growing contribution to the Group.

 

Our Plasma Technology business produces equipment for nanofabrication and  has 
performed well. We have  seen good growth in  markets such as next  generation 
photovoltaics, power  semiconductors  and MEMS  (Micro  Electrical  Mechanical 
Systems),  sales  of  which  have  increased  following  the  launch  of   our 
PlasmaPro100 system. As previously reported, over-capacity in the HBLED market
has led to a softening in demand for our HBLED fabrication tools over the last
18 months. However we maintain a strong technological position in this  market 
and we are well placed to benefit when demand begins to strengthen again.

 

Omicron NanoTechnology,  which  we acquired  in  June 2011,  offers  customers 
working  at  the   cutting-edge  of   physics  research  a   broad  range   of 
sophisticated,  multi-technique   systems.   These  include   Scanning   Probe 
Microscopy (SPM), Electron Spectroscopy and Ultra High Vacuum solutions.  Some 
weakness in orders in the second half of last year has now reversed and  order 
intake in the period has been strong, including the largest order Omicron  has 
ever taken.  However, the long lead times associated with its complex products
mean that it  will take another  year to  bring this business  up to  expected 
levels of performance.  In line with our integration plan we have appointed  a 
new Managing Director to drive this  growth.  He replaces the founder who,  as 
planned, has retired.

 

Our NanoScience business is the world's leading supplier of cryogenic  systems 
for  nano-characterisation  and  measurement  at  low  temperatures  and  high 
magnetic fields.  Our Triton^® dilution refrigerator continues to be a  market 
leading product for this business. Six systems were recently installed in  the 
newly opened  Centre  for Quantum  Devices  at  the Niels  Bohr  Institute  in 
Copenhagen.  The growth of the consultancy business has continued with a range
of  contracts  including  one  with  fusion  technology  specialists   Tokamak 
Solutions.

 

 

Industrial Products Sector

                 2012 2011
                   £m   £m
Revenue          61.5 64.7
Operating profit  7.6  6.6

 

In our  Industrial Products  sector, which  represents 36%  of Group  revenue, 
profits grew by 15%.  The businesses  which make up this sector are  unchanged 
but have been  regrouped into Industrial  Analysis and Industrial  Components. 
This sector supplies analytical systems for quality control, environmental and
compliance testing and  components for industry  and research. The  Industrial 
Analysis business comprises X-ray Fluorescence, Optical Emission  Spectroscopy 
and Magnetic Resonance. Industrial Components comprises Superconducting  Wire, 
Austin Scientific and X-Ray Technology.

 

Emerging markets, particularly  India, continue to  offer an important  growth 
opportunity for Industrial Products, although  in general visibility is  lower 
than last year. Prior year comparators include revenues from a product line we
disposed of  last  year and  a  large  one-off order  in  Austin  Scientific.  
Excluding these items, revenues  increased.  Operating profit margins  further 
improved to 12.4% (2011: 10.2%).

 

In Industrial Analysis,  new  portable and  hand-held analysers launched  this 
half  have  generated  considerable  interest  from  both  new  and   existing 
customers, offering an  innovative user interface  and improved ergonomics  in 
response to  customer feedback.  Our bench  top products  have benefited  from 
strong demand. We have continued to build  a strong position in the rock  core 
analysis market  where our  magnetic resonance  analyser is  a market  leader. 
 Magnetic resonance is gaining recognition  as a crucial technique in  helping 
to understand recently discovered natural resources such as oil in shale.

 

In Industrial Components,  the increasing demand  for next generation,  higher 
magnetic field MRI scanners continues  to drive growth in our  Superconducting 
Wire business where  we have  invested in  new facilities  which will  improve 
efficiency in the  core MRI  business.  Deliveries to  the international  ITER 
energy programme remain on track with completion scheduled for the end of  the 
financial year.  In  our  X-Ray Technology  business,  important  new  product 
innovations include the use of a novel X-ray source in a radiography system to
advance the treatment of breast cancer and  on the NASA Mars Rover. At  Austin 
Scientific, sales  to  a large  semiconductor  manufacturer have  reduced,  as 
anticipated, following a  large contract  win last  year. Austin  Scientific's 
move to new premises has been completed successfully.

 

 

Service Sector

                 2012 2011
                   £m   £m
Revenue          29.3 24.9
Operating profit  5.8  5.0

 

Our Service business represents 17% of Group revenue and profits grew by 16%. 
It comprises activities in the United States and Japan servicing MRI machines,
together with  the aftermarket  revenues  associated with  our  Nanotechnology 
Tools and  Industrial  Products  sectors. Operating  profit  margins  remained 
strong at 19.8% (2011: 20.1%).

 

The aftermarket revenues  associated with  our two  manufacturing sectors  are 
split into  three main  revenue streams:  service contracts  (where  customers 
purchase unlimited  support  for  a fixed  period);  billable  service  (where 
customers are billed for time and materials); and the sale of spare parts  and 
consumables.   To  support  these  activities,   we  are  also  investing   in 
e-commerce,  new  training  packages,  hardware  and  software  upgrades   and 
increased personnel.

 

In November  2011 we  acquired  Platinum Medical  Imaging, an  established  US 
company providing high quality parts and services for MRI (Magnetic  Resonance 
Imaging) and CT (Computed Tomography) medical imaging instruments. There is  a 
growing opportunity in the US  market following healthcare reforms which  have 
encouraged the transfer of medical  imaging facilities to more cost  effective 
third party  service  providers.  The  combination  of  Platinum  with  Oxford 
Instruments' MRI Service business  in North America significantly  strengthens 
the  Group's  Service  Sector  by  providing  a  broader  range  of   services 
internationally. For example, we have recently received regulatory approval to
provide refurbished CT and MR equipment to companies in South Korea.

 

Financial Review

Orders in the period were £169.8 million (2011: £174.8 million) and the  order 
book for future deliveries was £142.8 million at the end of the period.

 

Revenues in the half year grew by 7.4% (£11.7 million) to £170.8 million.  The
increase in revenues between the two periods due to acquisitions and disposals
was £3.7 million.  Adverse  foreign currency exchange  rate movements  reduced 
sales by £1.2 million giving organic volume growth of 5.8%.  

 

The implementation of the Business Improvement Plan, one of the three elements
of our 14  Cubed medium term  plan has  helped grow gross  margins across  the 
Group from 42.7%  to 44.6%.  Constant currency  operating expenses,  excluding 
acquisitions, were held at the same level as the prior year.  

 

Adjusted operating profit increased by  £4.9 million to £23.8 million,  giving 
an adjusted operating profit margin of 13.9% (2011: 11.9%).  Net bank interest
reduced by £0.2 million to a charge  of £0.3 million, and net interest on  the 
pension fund changed from a credit of £0.3 million to a charge of £0.4 million
due to the increased deficit at the end of March 2012 and the reduced rate  of 
return from gilt related assets.  As a result adjusted profit before tax  rose 
£4.4 million to £23.1 million.

 

The ability to  utilise brought  forward tax  losses in  the UK  has kept  the 
adjusted tax rate low at 18% (2011: 20%) which leads to adjusted earnings  per 
share (EPS) of 33.9 pence, an increase of 5.7 pence.  Reported EPS rose by 4.2
pence to 20.9 pence.  The difference is due  to the items detailed in note  2, 
primarily acquisition costs,  amortisation of acquired  intangible assets  and 
the utilisation  of  the large  deferred  tax  asset that  was  excluded  from 
adjusted earnings in the prior year.

 

Earnings  before  interest,  tax,   depreciation  and  amortisation   (EBITDA) 
increased by 19.5% to £28.2 million.  As expected working capital expanded  in 
the period  but  remains  controlled  at 7%  of  the  previous  twelve  months 
sales.  Capital expenditure  increased  to  £4.2  million  from  £2.1  million 
primarily due to increased investment in our superconducting wire facility.

 

At the period end net  cash was £37.1 million  (31 March 2012: £35.1  million, 
2011: £11.9 million).  Cash inflow in the period was £2.0 million (2011:  £1.2 
million outflow).  The  Group has  a committed  £50 million  revolving  credit 
facility with a club  of banks, extendable to  £70 million by mutual  consent, 
which expires in December 2014.

 

As calculated under IAS19, the  defined benefit pension deficit has  increased 
by £5.7 million  to £40.9 million  since 31 March  2012.  Since 31 March  2012 
assets have risen by 2.3% to  £184.4 million while liabilities have  increased 
by 4.6% to £225.3 million due mainly to the reduction in corporate bond yields
used to discount liabilities.      

 

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 in the above Financial Review section.

 

The diverse nature of the Group  combined with its current financial  strength 
provides a solid foundation  for a sustainable  business.  The Directors  have 
reviewed the Group's forecasts and considered a number of potential  scenarios 
relating to changes  in trading  performance. The Directors  believe that  the 
Group will be able to operate within its existing debt facility which  expires 
in December 2014.  This review also considered hedging arrangements in place. 
As a  consequence, the  Directors believe  that the  Group is  well placed  to 
manage its business risks successfully.

 

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 principle risks  in the business  are considered the  Principal Risks  and 
Uncertainties section of this Half Year Report.

 

People

A high technology business relies on the skills and expertise of its  people.  
We therefore recognise the importance of ensuring a sustainable business going
forward through an inclusive strategy  of managing, developing and  recruiting 
people who  support our  company values  and contribute  to our  growth.   Our 
wholehearted thanks go to all our people for their commitment, energy and hard
work.

 

Outlook

We have delivered a strong result in the first half in line with our 14  Cubed 
objectives. We have a broad  spread of geographies and technologies,  exposure 
to markets with long term structural growth, a strong pipeline of new products
and a focus on improving efficiency.   These factors should help us to  remain 
resilient against a backdrop of sustained global economic uncertainty. We  are 
continuing our  pursuit of  acquisitions that  have the  potential to  enhance 
shareholder value and add to our range of technical capabilities. 

 

The Board  remains  confident in  the  continued growth  prospects  of  Oxford 
Instruments and the Group's ability to deliver shareholder value.

 

Jonathan Flint

Chief Executive

 

13 November 2012

 

 

Condensed Consolidated Statement of Income - unaudited

 

                        Half Year to 30 Sept 2012  Half Year to 30 Sept 2011
                                                                              
                                                             As restated and
                                                              re-presented**
                       Adjusted* Adjusting  Total Adjusted* Adjusting  Total
                                    items*                     items*         
                                                                            
                 Notes        £m        £m     £m        £m        £m     £m  
  Revenue          3       170.8         -  170.8     159.1         -  159.1  
  Cost of sales           (94.6)     (0.2) (94.8)    (91.1)     (1.0) (92.1)  
  Gross profit              76.2     (0.2)   76.0      68.0     (1.0)   67.0  
  Research and                                                                
  development      4      (12.1)         - (12.1)    (12.6)         - (12.6)
  Selling and                                                                 
  marketing               (25.1)         - (25.1)    (22.3)         - (22.3)
  Administration
  and shared                                                                  
  services                (16.3)     (6.0) (22.3)    (14.4)     (5.0) (19.4)
  Other
  operating                                                                   
  income                       -         -      -         -         -      -
  Foreign
  exchange                                                                    
  gain/(loss)                1.1         -    1.1       0.2         -    0.2
  Operating                                                                   
  profit                    23.8     (6.2)   17.6      18.9     (6.0)   12.9
                                                                              
  Expected
  return on
  pension scheme
  assets                     4.8         -    4.8       5.4         -    5.4
  Other
  financial
  income                     0.2         -    0.2         -       0.4    0.4
  Financial                                                              5.8
  income                     5.0         -    5.0       5.4       0.4
  Interest
  charge on
  pension scheme
  liabilities              (5.2)         -  (5.2)     (5.1)            (5.1)

  Other                                                                     
  financial
  expenditure              (0.5)         -  (0.5)     (0.5)         -  (0.5)
  Financial
  expenditure              (5.7)         -  (5.7)     (5.6)         -  (5.6)
                                                                              
  Profit before                                                               
  income tax       3        23.1     (6.2)   16.9      18.7     (5.6)   13.1
                                                                              
  Income tax                                                                  
  expense          6       (4.1)     (1.1)  (5.2)     (3.8)     (0.4)  (4.2)
  Profit for the
  period
  attributable                                                                
  to equity
  shareholders
  of the parent             19.0     (7.3)   11.7      14.9     (6.0)    8.9
                                                                              
                           pence            pence     pence            Pence  
  Earnings per                                                                
  share
                                                                            
  Basic earnings                                                              
  per share        7        33.9             20.9      28.2             16.7
  Diluted                                                                   
  earnings per                                                                
  share            7        33.4             20.6      27.4             16.2
                                                                              
  Dividends per                                                               
  share
  Dividends paid   8                         2.77                       2.52  
  Dividends                                                             2.77  
  proposed         8                         3.05

 

* 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.

** See Note 1 of this Half Year Report for details of restatement and
re-presentation of comparative information.

 

 

 

Condensed Consolidated Statement of Income - unaudited

 

                                                       Year to 31 March 2012  
                                          Adjusted* Adjusting items*   Total
                                                                              
                                               
                                    Notes        £m               £m      £m  
  Revenue                             3       337.3                -   337.3  
  Cost of sales                             (188.3)            (1.7) (190.0)  
  Gross profit                                149.0            (1.7)   147.3  
  Research and development            4      (25.8)                -  (25.8)  
  Selling and marketing                      (48.7)                -  (48.7)  
  Administration and shared                  (32.1)           (12.7)  (44.8)  
  services
  Other operating income                          -              7.0     7.0  
  Foreign exchange gain/(loss)                (0.3)                -   (0.3)  
  Operating profit                             42.1            (7.4)    34.7  
  Expected return on pension scheme            10.9                -    10.9
  assets
  Other financial income                        0.2              1.5     1.7
  Financial income                             11.1              1.5    12.6  
                                                                              
  Interest charge on pension scheme          (10.2)                -  (10.2)
  liabilities
                                              (1.0)                -   (1.0)
  Other financial expenditure
  Financial expenditure                      (11.2)                -  (11.2)
                                                                              
  Profit before income tax            3        42.0            (5.9)    36.1  
                                                                              
  Income tax expense                  6       (8.8)            (2.5)  (11.3)  
  Profit for the period                        33.2            (8.4)    24.8
  attributable to equity                                                      
  shareholders of the parent
                                                                              
                                              pence                    pence  
  Earnings per share                                                          
  Basic earnings per share            7        61.6                     46.0  
  Diluted earnings per share          7        60.3                     45.0  
                                                                              
  Dividends per share                                                         
  Dividends paid                      8                                  9.0  
  Dividends proposed                  8                                 10.0  

 

* 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 Comprehensive Income - unaudited

 

                                        Half year to     Half year to  Year to
                                             30 Sept          30 Sept 31 March
                                                2012             2011     2012
                                                     as re-presented*         

                                                                   £m         

                                                  £m                        £m
Profit for the period                           11.7              8.9     24.8
                                                                              

                                                                              
Other comprehensive (expense)/income                                          
Foreign exchange translation
differences                                    (2.6)              0.5    (2.6)
Actuarial loss in respect of post
retirement benefits                            (7.7)           (20.4)   (28.6)
Net loss on effective portion of
changes in fair value of cash flow
hedges, net of amounts recycled                    -            (1.2)    (0.4)
Tax on items recognised directly in
other comprehensive income                       1.6              5.5      7.2
Total other comprehensive
(expense)/income                               (8.7)           (15.6)   (24.4)
                                                                              
Total comprehensive income/(expense)
for the period attributable to equity
shareholders of the parent                       3.0            (6.7)      0.4

 

* See note 1 for details of re-presentation of comparative information.

 

 

Condensed Consolidated Statement of Changes in Equity - unaudited

 

                                                        Foreign
                                     Share             exchange
                             Share premium    Other translation Retained
                           capital account reserves     reserve earnings Total
                                £m      £m       £m          £m       £m    £m
Balance at 1 April 2012        2.8    60.2      0.1         0.6     63.4 127.1
Total comprehensive
income/(expense)
attributable to equity
shareholders of the parent

-Profit for the period           -       -        -           -     11.7  11.7
-Other comprehensive
income                           -       -        -       (2.6)    (6.1) (8.7)
                                 -       -        -       (2.6)      5.6   3.0
Transactions recorded
directly in equity:

-  Credit in respect of
employee service costs
settled by award of share
options                          -       -        -           -      0.6   0.6
- Tax credit in respect of
share options                    -       -        -           -     1.3    1.3
-  Proceeds from shares
issued                           -     0.1        -           -        -   0.1
-  Dividends paid and
accrued                          -       -        -           -    (5.6) (5.6)
Total contributions by and
distributions to equity
shareholders                     -     0.1        -           -    (3.7) (3.6)
Balance at 30 September
2012                           2.8    60.3      0.1       (2.0)     65.3 126.5

 

                                                  Foreign   Retained
                               Share             exchange   Earnings     Total
                       Share Premium    Other translation         as        as
                     capital Account reserves     reserve  restated* restated*
                          £m      £m       £m          £m         £m        £m
Balance at 1 April
2011                     2.5    22.5      0.4         3.2       64.9      93.5
Total comprehensive
income/(expense)
attributable to
equity shareholders
of the parent
-Profit for the
period (as
re-presented*)             -       -        -           -        8.9       8.9
-Other comprehensive
income                     -       -    (0.8)         0.5     (15.3)    (15.6)
                           -       -    (0.8)         0.5      (6.4)     (6.7)
Transactions
recorded directly in
equity:

-  Credit in respect
of employee service
costs settled by
award of share              
options
                           -       -        -           -        0.3       0.3
-  Proceeds from
shares issued            0.3    37.3        -           -          -      37.6
-  Dividends paid
and accrued (as
restated*)                 -       -        -           -      (4.8)     (4.8)
Total contributions
by and distributions
to equity
shareholders             0.3    37.3        -           -      (4.5)      33.1
Balance at 30
September 2011           2.8    59.8    (0.4)         3.7       54.0     119.9

 

* See note 1 for details of restatement of comparative information.

 

                                                       Foreign
                                    Share             exchange
                            Share Premium    Other translation Retained
                          capital Account reserves     reserve earnings  Total
                               £m      £m       £m          £m       £m     £m
Balance at 1 April 2011       2.5    22.5      0.4         3.2     64.9   93.5
Total comprehensive
income/(expense)
attributable to equity
shareholders of the
parent
-Profit for the period          -       -        -           -     24.8   24.8
-Other comprehensive
income                          -       -    (0.3)       (2.6)   (21.5) (24.4)
                                -       -    (0.3)       (2.6)      3.3    0.4
Transactions recorded
directly in equity:

-  Credit in respect of
employee service costs
settled by award of share
options                          

- Tax charge in respect         -       -        -           -      1.0    1.0
of share options
                                -       -        -           -    (1.0)  (1.0)
-  Proceeds from shares
issued                        0.3    37.7        -           -        -   38.0
-  Dividends paid               -       -        -           -    (4.8)  (4.8)
Total contributions by
and distributions to
equity shareholders           0.3    37.7        -           -    (4.8)   33.2
Balance at 31 March 2012      2.8    60.2      0.1         0.6     63.4  127.1

 

 

Condensed Consolidated Statement of Financial Position - unaudited

 

                                                As at           As at    As at
                                              30 Sept         30 Sept 31 March
                                                 2012            2011     2012
                                                   £m              £m       £m

                                                      as restated and
                                                        re-presented*
Assets                                                                        
Non-current assets                                                            
Property, plant and equipment                    29.9            28.0     28.2
Intangible assets                                70.8            75.5     78.1
Deferred tax assets                              21.0            21.0     19.3
                                                121.7           124.5    125.6
                                                                     
Current assets                                                       
Inventories                                      60.9            64.5     59.3
Trade and other receivables                      64.2            67.0     61.0
Current income tax recoverable                    1.0             1.4      1.3
Derivative financial instruments                  2.2             2.1      2.4
Cash and cash equivalents                        37.9            19.5     35.1
                                                166.2           154.5    159.1
                                                                     
Total assets                                    287.9           279.0    284.7
                                                                              
Equity                                                                        
Capital and reserves attributable to the                             
Company's equity shareholders                                                 
Share capital                                     2.8             2.8      2.8
Share premium                                    60.3            59.8     60.2
Other reserves                                    0.1           (0.4)      0.1
Translation reserve                             (2.0)             3.7      0.6
Retained earnings                                65.3            54.0     63.4
                                                126.5           119.9    127.1
                                                                     
Liabilities                                                          
Non-current liabilities                                              
Bank loans                                        0.7             7.0        -
Other payables                                    3.8             0.7      2.8
Retirement benefit obligations                   40.9            29.7     35.2
Deferred tax liabilities                          7.2             9.5      7.0
                                                 52.6            46.9     45.0
                                                                     
Current liabilities                                                  
Bank loans                                        0.1             0.1        -
Bank overdrafts                                     -             0.5        -
Trade and other payables                         91.4            94.9     96.4
Current income tax payables                       3.5             3.4      6.0
Accrued dividend                                  4.0             3.5        -
Derivative financial instruments                  0.4             2.6      1.2
Provisions                                        9.4             7.2      9.0
                                                108.8           112.2    112.6
                                                                     
Total liabilities                               161.4           159.1    157.6
                                                                     
Total liabilities and equity                    287.9           279.0    284.7

 

*See note 1 for details of restatement and re-presentation of comparative
information.

 

 

Condensed Consolidated Statement of Cash Flows- unaudited

 

                                        Half year to     Half year to  Year to
                                             30 Sept          30 Sept 31 March
                                                2012             2011     2012
                                                  £m               £m       £m

                                                     as re-presented*
Profit for the period                           11.7              8.9     24.8
Adjustments for:
Income tax expense                               5.2              4.2     11.3
Net financial expense/(income)                   0.7            (0.2)    (1.4)
Other operating income                             -                -    (7.0)
Reversal of acquisition related fair                                       1.7
value adjustments                                0.2              1.0
Acquisition related costs                        0.6              0.7      1.5
Amortisation of acquired intangibles             5.4              4.3     11.2
Depreciation of property, plant and                                        4.8
equipment                                        2.3              2.3
Amortisation and impairment of                                             5.2
capitalised development costs                    2.1              2.4
                                                                              
Earnings before interest, tax,
depreciation and amortisation                   28.2             23.6     52.1
Loss on disposal of plant, property and                                    0.5
equipment                                          -                -
Cost of equity settled employee share                                      1.0
schemes                                          0.6              0.3
Acquisition related costs paid                     -            (0.5)    (1.0)
Cash payments to the pension scheme
more than the charge to operating
profit                                         (2.4)            (2.1)    (4.5)
                                                                              
Operating cash flows before movements
in working capital                              26.4             21.3     48.1
Increase in inventories                        (2.2)            (4.8)    (0.2)
Increase in receivables                        (4.7)            (7.9)    (1.7)
(Decrease)/increase in payables and                                        5.7
provisions                                     (4.6)            (2.8)
Increase/(decrease) in customer                                          (1.4)
deposits                                         0.4              4.9
Cash generated by operations                    15.3             10.7     50.5
Interest paid                                  (0.5)            (1.2)    (1.1)
Income taxes paid                              (5.8)            (3.4)    (7.8)
Net cash from operating activities               9.0              6.1     41.6
Cash flows from investing activities
Proceeds from sale of property, plant                                      0.1
and equipment                                      -                -
Proceeds from sale of product line and                                     7.3
subsidiary                                       1.0                -
Interest received                                0.2                -        -
Acquisition of subsidiaries, net of                                     (51.6)
cash acquired                                  (0.2)           (40.7)
Acquisition of property, plant and                                       (5.6)
equipment                                      (4.2)            (2.1)
Capitalised development expenditure            (1.8)            (0.9)    (2.4)
Net cash used in investing activities          (5.0)           (43.7)   (52.2)
Cash flows from financing activities
Proceeds from issue of share capital             0.1             37.6     38.0
Repayment of borrowings                            -            (6.0)   (13.1)
Increase in borrowings                           0.8              2.5      2.5
Dividends paid                                 (1.6)            (1.3)    (4.8)
Net cash (used in)/from financing                                         22.6
activities                                     (0.7)             32.8
Net increase/(decrease) in cash and                                       12.0
cash equivalents                                 3.3            (4.8)
Cash and cash equivalents at beginning                                    23.7
of the period                                   35.1             23.7
Effect of exchange rate fluctuations on                                  (0.6)
cash held                                      (0.5)              0.1
Cash and cash equivalents at end of the                                   35.1
period                                          37.9             19.0

 

Reconciliation of changes in cash and cash equivalents to movement in net cash

 
                                            Half year to Half year to  Year to
                                                 30 Sept      30 Sept 31 March
                                                    2012         2011     2012
                                                      £m           £m       £m

                                                                     
Increase/(decrease) in cash and cash
equivalents                                          3.3        (4.8)     12.0
Effect of foreign exchange rate changes on
cash and cash equivalents                          (0.5)          0.1    (0.6)
                                                     2.8        (4.7)     11.4
Cash outflow from decrease in debt                     -          6.0     13.1
Cash inflow from increase in debt                  (0.8)        (2.5)    (2.5)
Movement in net cash in the period                   2.0        (1.2)     22.0
Net cash at start of the period                     35.1         13.1     13.1
Net cash at the end of the period                   37.1         11.9     35.1

 

*See note 1 for details of re-presentation of comparative information.

 

 

Notes on the Half Year Financial Statements - unaudited

 

1     BASIS OF PREparATION OF ACCOUNTS

 

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 2012.

 

As required by the Disclosure and Transparency Rules of the Financial Services
Authority, the half year financial information has been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Group's consolidated financial statements for the year ended 31 March
2012, except as noted below.  Additional information has been included in the
Condensed Consolidated Statement of Income in the form of an adjusting items
column which in the opinion of the Directors enables the performance of the
business to be more clearly seen.

 

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 2012 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.

 

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.

 

In its Financial Statements to 31 March 2012 the Group reclassified certain
engineering costs incurred in relation to one-off special customer orders.
Such costs are now treated as research and development costs, rather than
costs of sales. This is considered to be a treatment consistent with the
Group's Industry peers. The effect on the Consolidated Income Statement for
the half year to 30 September 2011 was to reduce costs of sales by £1.5m and
increase research and development costs by the same amount, see note 4.

 

As required by IFRS3 the accounts as at 30 September 2011 have been
re-presented in respect of the finalisation of the acquisition accounting
which was provisional at the time the 30 September 2011 accounts were
published.  Furthermore the Group has noted that the final dividend for the
year to 31 March 2011 should have been recorded as a liability at 30 September
2011 since it was approved by shareholders on 13 September 2011.  Accordingly,
the accounts at that date have been restated to include an amount of £3.5
million as a current liability.  Equity at that date has been reduced by the
same amount.  There was no impact on the consolidated statement of financial
position at 31 March 2011 or 2012.

 

The principal exchange rates used to translate the Group's overseas results
were as follows:

 

Period end rates               Half year to Half year to  Year to
                                    30 Sept      30 Sept 31 March
                                       2012         2011     2012
US Dollar                              1.61         1.56     1.60
Euro                                   1.26         1.16     1.20
Yen                                     126          120      131
                                                                 
Average translation rates         US Dollar         Euro      Yen
Half year to 30 September 2012                                   
Quarter 1                              1.58         1.23      127
Quarter 2                              1.59         1.26      125
                                                                 
Year to 31 March 2012                                            
Quarter 1                              1.63         1.13      132
Quarter 2                              1.60         1.14      125
Quarter 3                              1.57         1.17      121
Quarter 4                              1.58         1.19      125

 

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 to     Half year to  Year to
                                             30 Sept          30 Sept 31 March
                                                2012             2011     2012
                                                  £m               £m       £m

                                                     as re-presented*
Profit before income tax                        16.9             13.1     36.1
Reversal of acquisition related fair
value adjustments to inventory                   0.2              1.0      1.7
Gain on disposal of product line                   -                -    (7.0)
Acquisition related costs                        0.6              0.7      1.5
Amortisation of acquired intangibles             5.4              4.3     11.2
Mark to market gain in respect of
derivative financial instruments                   -            (0.4)    (1.5)
Adjusted profit before income tax               23.1             18.7     42.0
Share of taxation                              (4.1)            (3.8)    (8.8)
Adjusted profit                                 19.0             14.9     33.2

 

*See note 1 for details of re-presentation of comparative information 

 

Adjusted profit before tax excludes the reversal of acquisition related fair
value adjustments to inventory to provide an adjusted profit measure that will
include results from acquired businesses on a consistent basis over time to
assist comparison of performance.  Acquisition related costs comprise
professional fees incurred in relation to mergers and acquisitions activity
and any consideration which, under IFRS3 (revised), falls to be treated as a
post acquisition employment expense.

 

On 20 October 2011 the Group disposed of a product line for a consideration of
£8.1m.  £1.0m of the consideration was deferred and was received during the
current period.  The product line was part of the Industrial Products
segment.  The profit on disposal was £7.0m.

 

On 21 March 2012 the Group transferred its ownership of Technologies and
Devices Inc (TDI) to Ostendo, a privately owned company based in California. 
The Group has received 650,000 shares of Ostendo common stock plus $0.7m in
cash of which $0.2m was received in October 2012. The Group considers the fair
value of the shares to be nil.  The profit on disposal was nil. 

 

Under IAS 39, all derivative financial instruments are recognised initially at
fair value.  Subsequent to initial recognition, they are also measured at fair
value.  In respect of instruments used to hedge foreign exchange risk and
interest rate risk the Group does not take advantage of the hedge accounting
rules provided for in IAS 39 since that standard requires certain stringent
criteria to be met in order to hedge account, which, in the particular
circumstances of the Group, are considered by the Board not to bring any
significant economic benefit.  Accordingly, the Group accounts for these
derivative financial instruments at fair value through profit or loss.  To the
extent that instruments are hedges of future transactions, adjusted profit for
the year is stated before changes in the valuation of these instruments so
that the underlying performance of the Group can more clearly be seen.

 

In calculating the share of tax attributable to adjusted profit before tax in
the year ended 31 March 2011 a one-off recognition of deferred tax assets
relating to the Group's UK businesses of £11.3m 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 ended 31 March 2012
deferred tax of £4.6m was reversed. In the current period deferred tax of
£3.2m has reversed and consequently been excluded from the tax attributable to
adjusted profit before tax.

 

3     SEGMENT Information

 

The Group has seven operating segments.  These operating segments have been
combined into three aggregated operating segments to the extent that they have
similar economic characteristics, with relevance to products and services,
type and class of customer, methods of sale and distribution and the
regulatory environment in which they operate.  Each of these three aggregated
operating segments is a reportable segment.

 

The Group's internal management structure and financial reporting systems
differentiate the three aggregated operating segments on the basis of the
economic characteristics discussed below.

 

- The Nanotechnology Tools segment contains a group of businesses supplying
similar products, characterised by a high degree of customisation and high
unit prices. These are the Group's highest technology products serving
research customers in both the public and private sectors.

 

- The Industrial Products segment contains a group of businesses supplying
high technology products and components manufactured in medium volume for
industrial customers.

 

- The Service segment contains the Group's service business as well as service
revenues from other parts of the Group.

 

Reportable segment results include items directly attributable to a segment as
well as those which can be allocated on a reasonable basis. Inter-segment
pricing is determined on an arm's length basis.  The operating results of each
are regularly reviewed by the Chief Operating Decision Maker, which is deemed
to be the Board of Directors. Discrete financial information is available for
each segment and used by the Board of Directors for decisions on resource
allocation and to assess performance.  No asset information is presented below
as this information is not allocated to operating segments in reporting to the
Group's Board of Directors.

 

Half year to 30 September 2012

                         Nanotechnology Industrial              
                                  Tools   Products Service Total
                                     £m         £m      £m    £m
External revenue                   80.7       60.9    29.2 170.8
Inter-segment revenue               0.2        0.6     0.1
Total segment revenue              80.9       61.5    29.3
 
Segment operating profit           10.4        7.6     5.8  23.8

 

Half year to 30 September 2011

                         Nanotechnology Industrial              
                                  Tools   Products Service Total
                                     £m         £m      £m    £m
External revenue                   70.0       64.2    24.9 159.1
Inter-segment revenue               0.4        0.5       -
Total segment revenue              70.4       64.7    24.9
 
Segment operating profit            7.3        6.6     5.0  18.9

 

3     SEGMENT Information (continued)

 

Year to 31 March 2012

                         Nanotechnology Industrial              
                                  Tools   Products Service Total
                                     £m         £m      £m    £m
External revenue                  153.3      128.0    56.0 337.3
Inter-segment revenue               0.6        1.1     0.3      
Total segment revenue             153.9      129.1    56.3      
                                                                
Segment operating profit           17.3       13.8    11.0  42.1

 

Reconciliation of reportable segment profit

 

                                        Half year to     Half year to  Year to
                                             30 Sept          30 Sept 31 March
                                                2012             2011     2012
                                                  £m               £m       £m

                                                     as re-presented*
Operating profit for reportable
segments                                        23.8             18.9     42.1
  Other operating income                           -                -      7.0
  Reversal of acquisition related fair
  value adjustments to inventory               (0.2)            (1.0)    (1.7)
  Acquisition related costs                    (0.6)            (0.7)    (1.5)
  Amortisation of acquired intangibles         (5.4)            (4.3)   (11.2)
  Financial income                               5.0              5.8     12.6
  Financial expenditure                        (5.7)            (5.6)   (11.2)
  Profit before income tax                      16.9             13.1     36.1

 

* See note 1 for details of re-presentation of comparative information.

 

4          RESEARCH AND DEVELOPMENT

 

Total research and development spend by the Group is as follows:

 

                                        Half year to Half year to      Year to
                                             30 Sept      30 Sept     31 March
                                                2012         2011         2012

                                                     as restated* as restated*
                                                  £m           £m           £m
Research and development expense
charged to the consolidated statement
of income                                       12.1         12.6         25.8
Less: depreciation of R&D related fixed
assets                                         (0.1)        (0.1)        (0.2)
Add: amounts capitalised as fixed
assets                                           0.4          0.3          0.9
Less: amortisation and impairment of
R&D costs previously capitalised as
intangibles                                    (2.1)        (2.4)        (5.2)
Add: amounts capitalised as intangible
assets                                           1.8          0.9          2.4
Total cash spent on research and
development during the period                   12.1         11.3         23.7

 

* See Note 1 for details of the change in presentation in respect of Research
and Development expenditure.  In addition the Group has discovered that
certain depreciation and capital expenditures were double counted in the
calculation of cash spent in the prior year on research and development.  This
has been corrected in the above table resulting in an increase in the reported
cash spent on research and development by £0.3 million in the half year to 30
September 2011 and £1.0 million in the year to 31 March 2012.

 

5     ACQUISITIONS

 

Platinum Medical Imaging LLC

 

On 3 November 2011 the Group acquired 100% of the share capital of Platinum
Medical Imaging LLC for an initial cash consideration of £11.0m.

 

Further contingent consideration is payable each year until the third
anniversary of the acquisition dependent on post acquisition earnings.  The
amount of this consideration could be between zero and £19.4m.  The fair value
of the amount likely to be paid is £2.6m and is based on management forecasts
of future profitability.

 

Platinum Medical Imaging LLC is an established US company providing high
quality parts and services for MRI (Magnetic Resonance Imaging) and CT
(Computed Tomography) medical imaging instruments.  It operates from sites in
Florida and California from which the business sells parts, carries out
service and maintenance and performs system rebuilds.

 

The book and fair value of the assets and liabilities acquired is given in the
table below. The business has been acquired for the purpose of integrating
into the Service segment.

 

 

                                             Book value Adjustments Fair Value
                                                     £m          £m         £m
Intangible fixed assets                               -        12.5       12.5

Tangible fixed assets                               0.5       (0.2)        0.3

Inventories                                         0.9         0.8        1.7

Trade and other receivables                         0.6       (0.3)        0.3

Trade and other payables                          (0.4)       (0.4)      (0.8)

Customer deposits                                 (0.4)       (0.3)      (0.7)

Deferred tax                                          -       (0.2)      (0.2)

Overdraft                                         (0.1)           -      (0.1)
Net assets acquired                                 1.1        11.9       13.0

Goodwill                                                                   0.6
Total consideration                                                       13.6

Overdraft acquired                                                         0.1

Contingent consideration                                                 (2.6)
Net cash outflow relating to the acquisition                              11.1

 

The goodwill arising is tax deductible in full and is considered to represent
the value of the acquired work force and expected synergies arising from the
integration with the Group's existing service business.

 

The book value of receivables given in the table above represents the gross
contractual amounts receivable.  The fair value adjustment to receivables
represents the best estimate at the acquisition date of the cash flows not
expected to be collected.

 

6     TAXATION

 

The total effective tax rate on profits for the half year is 31% (2011: 32%). 
The weighted average tax  rate in respect of  adjusted profit before tax  (see 
note 2) for the half year is 18% (2011: 20%).

 

The Group estimates that its full year weighted average tax rate in respect of
adjusted profit before tax will be 18% (2011: 20%).

 

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 to Half year to  Year to
                                                 30 Sept      30 Sept 31 March
                                                    2012         2011     2012
                                                  Shares       Shares   Shares
                                                 million      million  million
Weighted average number of shares
outstanding                                         56.2         53.0     54.2
Less: weighted average number of shares
held by Employee Share Ownership Trust             (0.2)        (0.4)    (0.2)
Weighted average number of shares used in
calculation of earnings per share                   56.0         52.6     54.0

 

 

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 to Half year to  Year to
                                                 30 Sept      30 Sept 31 March
                                                    2012         2011     2012
                                                  Shares       Shares   Shares
                                                 million      million  million
Number of ordinary shares per basic
earnings per share calculations                     56.0         52.6     54.0
Effect of shares under option                        1.0          1.6      1.1
Number of ordinary shares per diluted
earnings per share calculations                     57.0         54.2     55.1

 

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
                                         2012         2011     2012
                                        pence        pence    pence
Previous period interim dividend        2.772         2.52     2.52
Previous period final dividend              -            -     6.48
                                        2.772         2.52     9.00

 

 

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
                              2012         2011     2012
                             pence        pence    pence
Interim dividend              3.05         2.77    2.772
Final dividend                 -              -    7.228
                              3.05         2.77   10.000

 

The final dividend for the year to 31 March 2012 was approved by shareholders
at the Annual General Meeting held on 11 September 2012. Accordingly is it no
longer at the discretion of the company and has been included as a liability
as at 30 September 2012.  It was paid on 25 October 2012.

 

The interim dividend for the year to 31 March 2013 of 3.05 pence was approved
by the Board on 13 November 2012, 10% higher than the previous year and has
not been included as a liability as at 30 September 2012. The interim dividend
will be paid on 8 April 2013 to shareholders on the register at the close of
business on 8 March 2013.

 

 

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 22 and 23 of its 2012 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 Risk    Context                 Risk                Possible Impact

                                                              
Technical Risk   The Group provides high Failure of the      • Lower
                                         advanced            profitability
                 technology equipment
                 and                     technologies        and financial
                                         applied by the      returns.
                 systems to its
                 customers.              Group to produce    • Negative impact
                                         commercial          on the

                                         products, capable   Group's
                                         of being            reputation.

                                         manufactured and     
                                         sold profitably.
Economic         The recent global       Demand for the      • Lower
Environment      recession               Group's             profitability

                 and prevailing economic products may be     and financial
                                         lower               returns.
                 downturn have resulted
                 in cuts to both         than anticipated.    
                 government and private
                 sector spending.         
Acquisitions     Part of the growth of   Appropriate         • Lower
                                         acquisition targets profitability
                 Oxford Instruments'     may not be
                 plans is                available in the    and financial
                                         necessary           returns.
                 to come from            timescale.
                 acquisitions                                • Management
                                         Alternatively, once focus taken
                 which provide the Group acquired,
                 with                                        away from the
                                         targets may fail to core
                 complementary           provide
                 technologies.                               business in order
                                         the planned value.  to
                  
                                                             manage
                                                             integration
                                                             issues.
Foreign exchange A significant           The Group's profit  • Lower
                 proportion              levels are          profitability
volatility
                 of the Group's profit   exposed to          and financial
                 is made                 fluctuations in     returns.

                 in foreign currencies.  exchange rates.
Outsourcing      The Group's strategic   Failures in the     • Disruption to
                 plan                    supply chain        customers.
 
                 includes the            impacting sales.    • Negative impact
                 outsourcing of                              on the
                                          
                 a significantly higher                      Group's
                 proportion of the costs                     reputation.
                 of its products to
                 benefit from economies                       
                 of scale and natural
                 currency hedges.
Raw material     The Group relies on the If these price      • Lower
volatility                               rises can not be    profitability.
                 purchase of a           passed on to
                 significant             customers as copper • Occasional
                                         prices rise,        disruption
                 amount of copper for    profitability
                 the                     falls.              to production.

                 production of its                            
                 superconducting wire.
Pensions         The Group's calculated  Movements in the    • Additional cash
                                         actuarial           required
                 pension deficit is
                 sensitive               assumptions may     by the Group to
                                         have an             fund
                 to changes in the
                 actuarial               appreciable effect  the deficit.
                                         on the
                 assumptions.                                • Reduction in
                                         reported pension    net assets.
                                         deficit.
People           A number of the Group's One critical or a   • Performance
                                         number of key       does not meet
                 employees are business  employees in an
                 critical. The Group's   associated work     expectations.
                 growth plan requires    area leave the
                 people and structure    Group.              • Disruption to
                 capable of managing the                     customers.
                 increasing size and      
                 complexity of the                           • Lower
                 business.                                   profitability

                                                             and financial
                                                             returns.

                                                              

 

 

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

13 November 2012

 

 

Independent Review Report by KPMG Audit Plc 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 2012 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 Services Authority
("the UK FSA"). 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 FSA.

 

As disclosed in note 1, 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 2012 is not prepared,
in all material respects, in accordance with IAS 34 as adopted by the EU and
the DTR of the UK FSA.

 

 

 

S Haydn-Jones
for and on behalf of KPMG Audit Plc
Chartered Accountants
One Snowhill, Snow Hill Queensway

Birmingham, B4 6GH
13 November 2012

 

 

 

Notes to Editors  

Oxford Instruments designs, supplies and supports high-technology tools and
systems with a focus on research and industrial applications. It provides
solutions needed to advance fundamental physics research and its transfer into
commercial nanotechnology applications. Innovation has been the driving force
behind Oxford Instruments' growth and success for over 50 years, and its
strategy is to effect the successful commercialisation of these ideas by
bringing them to market in a timely and customer-focused fashion. 

The first technology business to be spun out from Oxford University over fifty
years ago, Oxford Instruments is now a global company with over 1900 staff
worldwide and is listed on the FTSE250 index of the London Stock Exchange
(OXIG).  Its objective is to be the leading provider of new generation tools
and systems for the research and industrial sectors.

This involves the combination of core technologies in areas such as low
temperature, high magnetic field and ultra high vacuum environments,
Nuclear Magnetic Resonance, X-ray, electron and optical based metrology, and
advanced growth, deposition and etching.

Oxford Instruments aims to pursue responsible development and deeper
understanding of our world through science and technology. Its products,
expertise, and ideas address global issues such as energy, environment,
security and health.  

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
IR BLBDBGGBBGDD -0- Nov/13/2012 07:00 GMT
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