Oxford Instruments plc
half-year results 2024/25
Good performance with
positive momentum into H2
In line with full-year
expectations
Oxford
Instruments plc, a leading provider of high technology products and
systems for industry and research, today (12 November 2024)
announces its interim results for the six months to 30 September
2024.
Richard Tyson, Chief Executive Officer of Oxford Instruments
plc, said:
"The Group has delivered a good first half
performance, with both divisions growing, reflecting strong demand
in our semiconductor and materials analysis markets which more than
offset the well-documented softer demand from the healthcare &
life science market. I would like to thank the incredibly talented
team across the Group for their significant contribution to these
results and the transformation that is underway as we unlock Oxford
Instruments' full potential.
"Order intake for the first half has been robust, with
underlying book-to-bill above one, and our healthy order book
provides good visibility, although the timing of the recovery in
our healthcare & life science market remains
uncertain. As expected, margin was
impacted by currency and the mix effect of strong growth in
Advanced Technologies. However, at constant currency, Group profit
improved and Imaging & Analysis (more than 95% of FY24 profit)
margins were stable at over 23%.
We
expect to deliver our typical stronger trading performance in the
second half, supported by delivery of some larger orders in
Advanced Technologies and efficiency improvements. As a result, we
expect to report a performance for the full year in line with
expectations on a constant currency basis."
"We have made good progress with our medium-term strategic
priorities. Our actions to rebalance our regional activity are
driving strong growth, particularly in North America and Asia
ex-China, the simplification of the business is well underway, and
the first phases of our operational performance programme have
identified further value creation opportunities ahead. This
underlines our confidence that we can improve the returns from the
business in the medium term."
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Adjusted1
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Half year
2024/25
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Half year
2023/24
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% change
reported
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% change
constant currency4
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Revenue
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£225.8m
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£209.7m
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+7.7%
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+10.4%
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Adjusted operating profit
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£33.9m
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£36.5m
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(7.1%)
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+3.6%
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Adjusted operating profit
margin
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15.0%
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17.4%
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(240bps)
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(110bps)
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Adjusted profit before
taxation
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£34.6m
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£37.5m
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(7.7%)
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Adjusted basic earnings per
share
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44.7p
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49.4p
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(9.5%)
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Normalised cash
conversion2
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17%
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41%
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Net cash3
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£39.3m
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£79.1m
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Statutory
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Half year
2024/25
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Half year
2023/24
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% change
reported
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Revenue
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£225.8m
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£209.7m
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+7.7%
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Operating profit
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£31.1m
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£28.6m
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+8.7%
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Operating profit margin
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13.8%
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13.6%
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+20bps
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Profit before taxation
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£31.7m
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£29.6m
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+7.1%
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Basic earnings per share
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41.6p
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38.6p
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+7.8%
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Dividend per share
(interim)
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5.1p
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4.9p
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+4.1%
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Financial highlights
· Strong revenue growth of
10.4% at constant currency ('CC')
· Orders up 2.6% (CC) with
underlying book-to-bill of 1.01 (Imaging & Analysis:
1.04)
· Adjusted operating profit up
3.6% at CC (2023: £36.5m)
· CC adjusted operating profit
margin of 16.3% (2023: 17.4%), reflecting:
- Imaging & Analysis CC margin of 24.6%
maintained
- mix effect of stronger growth from Advanced
Technologies
- continued investment in operational improvement
· Growth in both
divisions:
- Imaging & Analysis: 6.0% CC revenue growth with strong
margins maintained
- Advanced Technologies: 21.4% CC revenue growth with good
visibility of margin improvements
· Strong balance sheet with
£39.3m net cash and cash conversion expected to improve in
H2
- Low normalised cash conversion of 17% reflects normal
seasonality and increased working capital due to timing of quantum
contract cash receipts; improvement expected in H2
· Growth in interim dividend of
4.1% to 5.1p reflects confidence in the future
Significant strategic progress
· Regional rebalancing driving
strong revenue growth in North
America (up 32.2% at constant currency) and Asia ex-China,
offsetting impact of pivot to new markets in China
· Investment in new products
and market-leading technology driving strong CC revenue
growth in semiconductor (+26.9%) and
materials analysis (+9.6%) offsetting softer healthcare & life
science market (-17.3%)
· Imaging and Analysis
simplified with operational transformation well
underway
- Four business units integrated to one, with reduced operating
costs
- First wave of operational transformation underway; second wave
on track
- Acquisition of nanoindentation tools developer FemtoTools
completed, enhancing capabilities in materials research and
semiconductor applications
· Good progress towards return
to profitability in Advanced Technologies
- 'Fix, improve and grow' programme progressing well, with new
reference customers added
- New compound semiconductor facility ramping up as planned,
with strong double digit revenue growth, a strong pipeline and
customer demo requests up 60% year on year
- Good progress made towards returning quantum business to
profitability with first deliveries to a key global technology
customer, order book rebuilt and costs reduced
Order book and efficiency improvements provide good visibility
for the full year
· Order book of £294.9m (31
March 2024: £301.5m)
- Expect continued strong demand in semiconductors and materials
analysis, stabilised healthcare & life science order demand and
larger orders in Advanced Technologies
Notes
1. Adjusted items
exclude the amortisation and impairment of acquired intangible
assets, acquisition items, business reorganisation costs, other
significant non‑recurring items, and the mark-to-market movement of financial
derivatives. A full definition of adjusted numbers can be found in
the finance review and Note 3.
2. Normalised cash
conversion measures the percentage of adjusted cash from operations
to adjusted operating profit, as set out in the finance
review.
3. Net cash includes
total borrowings, cash at bank and bank overdrafts but excludes
IFRS 16 lease liabilities.
4. Constant currency
numbers are prepared on a month-by-month basis using the
translational and transactional exchange rates which prevailed in
the previous year rather than the actual exchange rates which
prevailed in the year. Transactional exchange rates include the
effect of our hedging programme.
The financial information in this
preliminary announcement has been prepared in accordance with UK
adopted international accounting standards and IAS 34 interim
financial reporting. The Group has applied all accounting standards
and interpretations issued relevant to its operations and effective
for accounting periods beginning on 1 April 2024. The UK adopted
IFRS accounting policies have been applied consistently to all
periods.
LEI: 213800J364EZD6UCE231
Oxford Instruments management will
present its half-year results at Deutsche Numis, 45 Gresham Street,
London EC2V 7BF, to analysts and investors at 10.00 today (12
November 2024). The presentation will be streamed live at
https://brrmedia.news/OXIG_IR24/25
and a recording will be made available later today
at
www.oxinst.com/investors-content/financial-reports-and-presentations.
Enquiries:
Oxford Instruments plc
Richard Tyson, Chief Executive
Officer
Gavin Hill, Chief Financial
Officer
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07776 433916
Stephen.lamacraft@oxinst.com
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Stephen Lamacraft, Head of Investor
Relations
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MHP
Group
Katie Hunt/Tim Rowntree/Eleni
Menikou/Veronica Farah
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07710 117517
oxfordinstruments@mhpgroup.com
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Notes to Editors
About Oxford Instruments
plc
Oxford Instruments provides academic
and commercial organisations worldwide with market-leading
scientific technology and expertise across its key market segments:
materials analysis, semiconductors, and healthcare & life
science.
Innovation is the driving force
behind Oxford Instruments' growth and success, supporting its core
purpose to accelerate the breakthroughs that create a brighter
future for our world. The vigorous search for new ways to make our
world greener, healthier and more productive is driving
unprecedented levels of R&D investment in new materials and
techniques to support productivity and decarbonisation worldwide,
creating a significant opportunity for Oxford Instruments to
grow.
Oxford Instruments holds a unique
position to anticipate global drivers and connect academic
researchers with commercial applications engineers, acting as a
catalyst that powers real world progress.
Founded in 1959 as the first
technology business to be spun out from Oxford University, Oxford Instruments is now
a global, FTSE250 company listed on the London Stock Exchange
(OXIG).
For more information, visit
www.oxinst.com
Chief Executive Officer's Review
Good half-year performance with positive progress made on
organisational transformation
I am pleased to report a good
performance for the half. We have delivered 10.4% revenue growth at
constant currency, primarily driven by growth in our semiconductor
and materials analysis markets, more than offsetting a softer
performance in healthcare & life science. Both divisions
delivered revenue growth (Imaging & Analysis up 6.0% and
Advanced Technologies up 21.4%, both at constant
currency).
Our strong revenue performance
supported growth in adjusted operating profit of 3.6% at constant
currency. Imaging & Analysis maintained its excellent margins
and, as anticipated, the mix effect of stronger revenue growth in
Advanced Technologies, together with ongoing strategic investment,
resulted in a 110bps reduction in adjusted operating margin at
constant currency to 16.3% (2023: 17.4%).
Demand has been robust. Order intake
of £224.6m (2023: £224.3m), was 2.6% ahead of the prior year on a
constant currency basis, with growth in semiconductor orders,
healthcare & life science broadly flat in a challenging
external market, and materials analysis slightly behind prior year.
The orderbook provides good visibility for the remainder of the
year, supported by strong pipelines in all markets and
geographies.
Group
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Half year
2024/25
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Half year
2023/24
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% change reported
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% change constant currency
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Orders
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£224.6m
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£224.3m
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+0.1%
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+2.6%
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Revenue
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£225.8m
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£209.7m
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+7.7%
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+10.4%
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Adjusted operating profit
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£33.9m
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£36.5m
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(7.1%)
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+3.6%
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Adjusted operating margin
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15.0%
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17.4%
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(240bps)
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(110bps)
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Positive operational and strategic progress
A year on from joining Oxford
Instruments, I am encouraged by the initial progress we have made
on the delivery of our medium-term strategic priorities, including
the restructure of the Group into two new divisions: Imaging & Analysis and Advanced Technologies. Our new
divisional structure streamlines and simplifies the Group's
operations, providing greater transparency on performance and,
crucially, facilitating the delivery of profitable
growth.
Imaging & Analysis
(95%+ FY24 operating profit) has delivered a strong performance in the half, with revenue
and adjusted operating profit up 6.0% and 5.4% respectively at
constant currency, and with the division's excellent margin
maintained. This is a particularly pleasing outcome in the context
of softer healthcare & life science revenue. Ongoing demand for
our differentiated product range remains strong, with 6% order
growth and book-to-bill positive, at 1.04.
Advanced Technologies has made good
progress towards a return to profitability, with 21.4% revenue
growth, reduced overheads and good order book
visibility.
Both divisions have taken tangible
actions in line with the priorities we set out in June, with the
benefits of the reductions in their cost bases expected to be
realised in the second half. Our operational transformation
programme is underway, and early insights indicate further
opportunities for future value creation.
From a market perspective, we are
focused on three core markets. We have seen strong growth in
semiconductor, with
reported revenue of £69.5m (up 26.9% at constant currency),
stemming from both silicon and compound semiconductor applications,
and benefiting both divisions. We delivered 9.6% constant
currency revenue growth to £95.7m in materials analysis, reflecting the
strength of our differentiated product portfolio, and pleasing
progress on adoption of new product lines. Growth in these markets
more than offset reduced revenue of £34.8m in healthcare & life science, which
reflected a reduction in orders from key original equipment
manufacturers (OEM) combined with wider destocking, now
stabilising. In other markets, Advanced Technologies made the first
deliveries of quantum orders to a key global technology customer,
marking the beginning of an ongoing partnership.
Sales to commercial and industrial
customers were up by 23% on the prior year, reflecting our focus on
making further inroads into applications for commercial applied
R&D and production markets. Academic revenue was broadly flat
year on year.
Regionally, our actions to rebalance
our focus, including the reconfiguring of the Americas team, and
increased investment in marketing in the region, has delivered
strong revenue growth in North America (up 32% at constant
currency). This combined with strong growth in Japan and elsewhere
in Asia, and continued good growth in Europe, has more than offset
the anticipated reduction in China revenue which resulted from our
decision to pivot to new markets both within and beyond the
country. We are continuing to share best practice and streamline
processes in our regional sales and marketing structures with a
view to generating further efficiencies.
Underlying book-to-bill of 1.01
(1.04 in Imaging & Analysis), meant we had a healthy
order book of £294.9m at the end of the
half year (31 March 2024: £301.5m), giving
good visibility for the remainder of the year.
People at the centre of our success
I am grateful to my colleagues for
their significant contribution to these results, and their support
for the transformation that is underway as we seek to unlock the
full potential of Oxford Instruments. The leadership of the
business has engaged at pace with the delivery of our strategic
priorities. I have also been impressed with the adaptability and
agility colleagues have shown Group-wide as we have forged ahead
with structural change, simplification and the pursuit of
operational excellence, while continuing to focus on our core
strengths. Our talented teams are fundamental to Oxford
Instruments' ongoing success.
To support the delivery of our
strategic programme, we have bolstered our senior leadership with
new hires, including the appointment of a new Chief Information
Officer, a Group Programmes Director, new leadership for our EMEA-I
region and new senior hires in the USA.
New
divisional structure and market focus
Our exceptional technology, strong
talent base, well-distributed regional infrastructure and choice of
markets give us a strong platform from which to grow. We
highlighted in June the significant opportunities ahead - and the
fact that to capture them in full and achieve industry-leading
margins, we needed to structure Oxford Instruments differently.
During the half we have restructured the business into the two new
divisions we set out in June: Imaging & Analysis and Advanced
Technologies.
Imaging & Analysis comprises our
microscopy and cameras business (Andor and our materials analysis
businesses Asylum Research, Magnetic Resonance, NanoAnalysis and
WITec), with recent adjusted operating profit margin history
22-24%. The division represents c. 70% of group revenue, and the
businesses within it have strong existing synergies and a track
record of success. They provide similar relatively small-scale
imaging and analysis equipment and software, have common business
models, go to market strategies and margins, and they address a
similar client base in their three key markets in materials
analysis, healthcare & life science, and
semiconductors.
Our new Advanced Technologies
division (representing c. 30% of Group revenue) comprises our
compound semiconductor business Plasma Technology and our
quantum-focused business NanoScience, together with the much
smaller X-Ray Technology business (recent adjusted operating profit
margin history 0-4%). They sell much lower volumes of larger-scale
complex systems into very specialised markets with unique growth
drivers and principally separate customer bases. These businesses
require a dedicated, focused approach to leverage their
well-invested base, deliver improved margins and achieve their full
growth and margin potential.
Our deep dive strategic review
highlighted that 90% of our revenue is generated in three primary markets - materials analysis,
semiconductors, and healthcare & life science. All
three have clear sustainability drivers with high single digit
structural growth potential. Quantum technology, a much smaller
contributor to our current revenue, also represents a growth
opportunity, though its trajectory is less linear.
Imaging & Analysis
The
Imaging & Analysis division develops and manufactures
microscopes, scientific cameras, analytical instruments and
software, with manufacturing bases in the UK (High Wycombe and
Belfast), Europe (Aix-en-Provence, Ulm and Zurich) and the USA
(Santa Barbara).
Key highlights
Imaging & Analysis
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Half year 2024/25
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Half year 2023/24
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% change reported
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% change constant
currency1
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Orders
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£157.5m
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£152.8m
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+3.1%
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+6.0%
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Revenue
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£153.9m
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£149.4m
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+3.0%
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+6.0%
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Adjusted2 operating
profit
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£35.9m
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£37.0m
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(3,0%)
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+5.4%
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Adjusted2 operating
margin
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23.3%
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24.8%
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(150bps)
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(20bps)
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1. For
definition refer to note on page 2.
2. Details of adjusting items can be found in note 3 to the
half-year financial statements.
We have delivered robust growth in
Imaging & Analysis (which represents 68% of group revenue),
with 6.0% constant currency growth in both revenue and orders. The
division's strong margin performance was maintained at constant
currency, with the reported decline of 150bps resulting from
currency headwind.
Revenue growth was underpinned by a
notably strong performance in semiconductor, up 39% year on year at
constant currency (primarily into silicon semiconductor
applications) and good growth in materials analysis, up 12% at
constant currency. Both markets saw growth in sales of products
relating to electron and Raman microscopy.
Revenue performance in healthcare
& life science was below last year, as a weaker market
translated into a reduction in OEM sales, and wider destocking.
This impacted profitability in our primary life science business in
Belfast, including the trading performance of our recent
acquisition First Light. As a result, we have undertaken a cost
reduction programme to rightsize the business. Orders in the market
segment were slightly up year on year, with strong demand for
microscopy products offsetting lower demand from OEMs.
Activity in the half has focused on
the delivery of the strategic priorities intended to take the
division from 'good to great', including simplification,
streamlining and implementing a step change in operational
performance, together with the sharing of best go-to-market
practice across regions.
Four existing business units have
been consolidated under one leadership team, with associated cost
savings driven by delayering. An early priority for the new team
will be to create a shared R&D route map and consolidated
product portfolio, as well as continuing to identify and exploit
cross-selling opportunities, given similar customer base and routes
to market. In a further move to simplify previous structures, we
have instigated a new marketing centre of excellence for Imaging
& Analysis. This initiative will create a single cross-division
function to replace individual business unit marketing teams, with
the intention of better serving our customers while removing
duplication.
Actions taken to strengthen the
Group's position in North America, as part of the wider rebalancing
of our regional position, have had a positive impact on revenue in
Imaging & Analysis, with double digit year-on-year growth in
the region. The division has also delivered strong double digit
growth in Japan and South East Asia, and a good performance in
Europe.
Our operational transformation
programme is well underway, currently focusing on the cameras
workstream at our microscopy and scientific camera facility in
Belfast. Led by our Chief Transformation Officer, the programme
team is upskilling colleagues, designing more efficient production
processes and reconfiguring production areas. We have made
significant progress to date:
- teams have been trained in the fundamentals of performance
management, with the introduction of daily, weekly and monthly
review meetings;
- the layout of the factory floor is being reorganised and
equipment enhancements are underway;
- root cause problem solving has been introduced;
- improved sales and operations planning has been put in place,
supporting a reduction in stock levels with associated cost
efficiencies and working capital benefits.
The actions taken to date have
delivered a 30%+ improvement in labour productivity, together with
a 27% reduction in in-process failures, and the programme is on
track to deliver a 10% reduction in inventory by the end of the
financial year.
Maturity assessments and detailed
on-site investigations carried out since the start of the programme
have identified significantly greater opportunity for improvement
than had been anticipated. While this will require more work than
we expected, it also provides more scope for productivity, revenue
and margin enhancement. Wave two of the programme, beginning in
January, will cover two areas, one remaining focused on Belfast to
address systems capabilities, with the second getting underway in
our Advanced Technologies quantum facility in Oxford.
We were pleased to augment our
strong capabilities in materials analysis with the acquisition of
nanoindentation instrumentation developer FemtoTools for £15.8m,
completed during the period. This bolt-on acquisition has
introduced a new technique for Oxford Instruments, as well as
giving FemtoTools access to our much broader customer base.
FemtoTools will be integrated into our material analysis product
lines, taking advantage of the wider streamlining and restructuring
underway in this part of the business.
Imaging & Analysis market dynamics
The division focuses on our three
core markets: materials analysis, semiconductor and healthcare
& life science, with strong positions in each thanks to our
differentiated product ranges and ongoing investment in
innovation.
We have delivered a strong
performance in semiconductor, with revenue up 39% at
constant currency. In this division, our focus is primarily on
silicon semiconductor applications, where the breadth of our
capabilities, from supporting early stage academic research through
to quality assurance and failure analysis in production settings,
provides resilience to the inherent cyclicality of the silicon
semiconductor market. Our technology is a key differentiator here:
this year, we have made good progress on adoption of our new Unity
detector for electron microscopy into semiconductor applications,
such as the rapid identification of nickel contamination for a tier
1 commercial customer. Our new semiconductor-specific Raman
microscope, capable of analysing 300mm wafers, has also been
adopted by tier 1 commercial customers in the US and
Japan.
With strong double digit growth in
commercial semiconductor customers, representing the majority of
semiconductor revenue in the division, we have also seen notably
strong growth (over 80% year on year) to academic
customers.
Materials analysis has
performed well, with 12% revenue growth, underpinned by growth in
sales to commercial customers. We have seen strong growth in
structural materials analysis and the analysis of metals, alloys
and composites, together with applications in energy and
environment including safety applications for nuclear energy. The
successful use of Unity in a mineral analysis application led to it
being cited, for the first time, in an academic paper, for enabling
researchers to acquire their samples 18 times faster than via the
traditional method.
In healthcare & life science, revenue
for the half was down 17% in a softer market, and against a strong
comparator, primarily as a result of lower OEM orders and wider
destocking relating to our Belfast microscopy and scientific
cameras facility. We have responded to this by rightsizing the
Belfast facility and pausing planned expansion.
Healthcare & life science orders
were marginally up year on year, with continued strong demand for
microscopes and broader life science applications, and an uptick in
sales of our Dragonfly confocal microscope. Sales of our Imaris
software were maintained at previous robust levels. The structural
growth drivers for this market remain in place, supporting our view
on medium-term growth rates.
Overall, assuming continuation
of current demand and pipeline conversion, our positive book to
bill and healthy order book, combined with the realisation of cost
efficiencies, support a stronger second half revenue and profit
weighting in this division.
Advanced Technologies
The
Advanced Technologies division develops and manufactures compound
semiconductor fabrication capital equipment (Severn Beach, UK),
cryogenic and superconducting magnet technology (Oxford, UK), and
X-ray tubes (Scotts Valley, USA).
Key highlights
Advanced Technologies
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Half year 2024/25
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Half year 2023/24
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% change
reported
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% change constant
currency1
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Orders
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£67.1m
|
£71.5m
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(6.2%)
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(4.8%)
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Revenue
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£71.9m
|
£60.3m
|
+19.2%
|
+21.4%
|
Adjusted2 operating
profit
|
(£2.0m)
|
(£0.5m)
|
(300.0%)
|
(140.0%)
|
Adjusted2 operating
margin
|
(2.8%)
|
(0.8%)
|
(200bps)
|
(80bps)
|
|
|
|
|
|
1. For definition
refer to note on page 2.
2. Details of
adjusting items can be found in note 3 to the half-year financial
statements.
The two larger businesses in this
division each benefit from a dedicated, focused approach to reflect
their specialist markets (compound semiconductor and quantum),
unique growth drivers and principally separate customer bases. Both
are making good progress with actions to 'fix, improve and grow'
the division, resulting in strong revenue growth, up 21.4% for the
half. This performance reflects the ramp up in our new compound
semiconductor facility and the first deliveries of an ongoing
series of orders to a key customer in quantum. The increase in the
half-year loss relates primarily to a standardisation of stock
provisioning. The actions taken and the positive progress made in
the first half give us confidence in the return to profitability
for the full year.
Regionally, revenue has grown
strongly in North America and Europe, more than offsetting a
reduction in revenue from China, following the withdrawal from
quantum commercial activities and some sensitive compound
semiconductor applications in the country.
Orders overall were slightly behind
last year, largely reflecting the lumpy order profile of the large
capital equipment typically sold in the division.
Compound semiconductor operational developments and market
dynamics
Our new compound semiconductor
facility at Severn Beach, near Bristol, UK, continues to scale,
with revenue and manufacturing output in line with plans. The
business has continued to deliver strong double digit revenue
growth as it takes advantage of the improved layout and process
flow at the purpose-built facility versus the legacy site, and the
increasingly modular approach to assembly which continues to
support lead time improvements.
The facility is on track to be fully
operational within the financial year, with its new
state-of-the-art cleanroom having reached specification, and the
first systems being installed in January 2025, while final bids are
under consideration for the sale of our legacy site. The business
is focused on driving efficiencies and improving customer service,
which has already delivered a significant improvement (up by more
than 40 percentage points) in the volume of spares being shipped to
customers within 24 hours.
Our ability to carry out atomic
scale processing, etching and deposing layers in semiconductor
devices atom by atom, is a key differentiator for our compound
semiconductor operations. We enable next generation device
architectures for better performance, helping our production
customers to improve wafer performance, yield and therefore cost
per wafer. Our advanced capabilities are attracting attention from
tier 1 technology companies in applications including augmented
reality, next generation power devices, hyperscale data centres and
new developments in bio-sensing. We were particularly pleased to
secure a key customer within the Nvidia supply chain for a
fibreoptic laser application in the half, deploying our equipment
to drive the development of hyperscale data centres for
power-hungry AI applications. This continues to be a growth area
for the business. Trials for a silicon carbide atomic layer
deposition application with a Tier 1 power device manufacturer for
the automotive supply chain have been successfully completed.
Gallium nitride orders made last year are now being installed,
ramping capacity for next generation power devices in USB-C fast
chargers.
Sample demonstration requests, a key
leading indicator for the business, are up by over 60% year on
year, with several of the world's top technology companies engaged
in trials. These requests reflect growing engagement with the
production customers we are increasingly targeting. With commercial
customers taking longer, on average, to convert than academic
customers, we continue to focus on growing our pipeline and
building our understanding of sales cycles.
From a regional perspective, we have
seen strong revenue growth in the US, Europe and South East Asia,
supported by US CHIPs Act funding and parallel stimulus programmes
elsewhere.
With good order book cover for the
remainder of FY24/25 and a record pipeline, the new facility is in
a strong position to continue to deliver revenue growth at the full
year and beyond.
Quantum operational developments and market
dynamics
Our quantum business, based outside
Oxford, is making good progress towards a return to profitability.
As set out above, we have delivered the first two of our modular
Proteox QX systems to a high-profile technology customer as part of
an ongoing partnership. Further deliveries are anticipated in the
second half. With its square shape, the QX is designed for
scalability and flexibility, with customers easily able to join
multiple systems together. Its modular design is a key
differentiator which will allow customers to control more qubits
(quantum bits) than ever before. This significant milestone will
enable our customer to scale significantly past current cryogenic
refrigeration limitations to deliver its quantum
roadmap.
Our partnership with Oxford Quantum
Circuits continues, with preparations underway for additional
'quantum as a service' data centre roll outs to follow those which
are already operational in Tokyo, Japan, Galicia, Spain, and
Reading, UK. Here, our dilution refrigerators provide vital cooling
for quantum systems which are available on a commercial basis, with
customers able to buy time for their quantum research. Together
with the dilution refrigerators, we also support 24-7 uptime with a
comprehensive service package.
We are well placed to support
customers across the spectrum in quantum, with our range of
products extending from compact refrigerators, which can easily be
accommodated in small laboratory settings, to large systems for
commercial customers, as referenced above. With growing demand for
our products in this fast-paced, but unpredictable market, orders
are up 9% year on year. This reflected strong growth in North
America, Europe and Japan, which has more than offset our
withdrawal from new quantum sales into China, which was previously
an important market for the business.
A key focus for this business is to
continue to address the operational and productivity challenges
which have hampered growth in recent years, in order to restore
profitability and enable scaling. Over the first half year, we have
made progress with productivity initiatives, and have also
addressed supply chain management and inventory challenges which
became apparent following the introduction of a new ERP system.
This has allowed us to strengthen output through the first
half.
Tiger teams have worked to improve
product quality, optimise the new ERP system, and expedite
procurement timelines. With support from the Group's new Programmes
Director, the team have also targeted front end processes to
accelerate release to operations. Early progress on value
engineering has highlighted further opportunities to drive
efficiencies, and we have engaged an external consultant to support
us with this project, beginning in November. From January 2025,
this facility will be the focus of Wave 2 of the operational
transformation programme, which is currently underway at our
Belfast Imaging & Analysis facility, with significant
productivity enhancements expected.
Positive impact and progress to net zero
Our deep scientific expertise and
our market-leading technology means we are well placed to deliver
on our purpose: to accelerate the breakthroughs that create a
brighter future for our world. In common with all my colleagues, I
am very proud of the contribution our products make to enabling
global progress, from the development of personalised treatments
for cancer to facilitating the path to decarbonisation through our
extensive role in the battery ecosystem.
We want to support a brighter future
through the way we run our organisation too. Earlier this year, we
set a new target to achieve net zero in Scopes 1 and 2 by 2030, and
sooner if we can. I am pleased today to announce our commitment to
cut our Scope 3 emissions by 25% by the same date, against a
2023/24 baseline. We have set out how we will reach our ambitious
targets in our Net Zero Transition Plan, created in line with the
guidelines provided by the Transition Plan Taskforce, and published
today. We are now in the process of submitting our targets to the
Science Based Targets initiative for validation.
Our commitment to operating
sustainably encompasses not just the environmental commitments we
make, but also the social impact we have on our employees and our
communities, and our ethical approach to doing business. We have
reconfirmed our approach to each of these areas through the launch
of our new Code of Conduct earlier this month.
Board changes
Anticipating the departure of Mary
Waldner after nine years' service as Director in February 2025, in
line with best practice in relation to her tenure and independence,
we acted to ensure smooth succession for the role of Audit and Risk
Committee Chair, held by Mary until the annual general meeting
(AGM) on 25 July 2024. We were pleased to appoint Hannah Nichols as
Chair of the Audit and Risk Committee, with effect from the
conclusion of the AGM. Hannah joined Oxford Instruments as a
Non-Executive Director on 1 January 2024, and with her strong
financial expertise, extensive international experience and track
record of driving transformational change, she is well placed to
fulfil this role.
Reshma Ramachandran stood down as a
Non-Executive Director with effect from the conclusion of the AGM,
due to her appointment to a new executive role externally, which
restricted the amount of time she was able to commit to her role
with Oxford Instruments. The Board sincerely thanks Reshma for the
valuable contributions she made during her time as a
Director.
Dividend
The Board is declaring an interim
dividend of 5.1p per share, (2023: 4.9p per share), a 4.1%
increase, reflecting confidence in the future.
Summary and outlook
Having joined Oxford Instruments
just over a year ago, I am pleased with the progress we are making,
both in terms of in-year delivery and the longer-term
transformation of the business.
The Group has delivered a good first
half performance, with both divisions growing, reflecting strong
demand in our semiconductor and materials analysis markets which
more than offset the well-documented softer demand from the
healthcare & life science market. I would like to thank the
incredibly talented team across the Group for their significant
contribution to these results and the transformation that is
underway as we unlock Oxford Instruments' full
potential.
Order intake for the first half has
been robust, with underlying book-to-bill above one, and our
healthy order book provides good visibility, although the timing of
the recovery in our healthcare & life science market remains
uncertain. As expected, margin was
impacted by currency and the mix effect of strong growth in
Advanced Technologies. However, at constant currency, Group profit
improved and Imaging & Analysis (more than 95% of FY24 profit)
margins were stable at over 23%.
We expect to deliver our typical
stronger trading performance in the second half, supported by
delivery of some larger orders in Advanced Technologies and
efficiency improvements. As a result, we expect to report a
performance for the full year in line with expectations on a
constant currency basis.
We have made good progress with our
medium-term strategic priorities. Our actions to rebalance our
regional activity are driving strong growth, particularly in North
America and Asia ex-China, the simplification of the business is
well underway, and the first phases of our operational performance
programme have identified further value creation opportunities
ahead. This underlines our confidence that we can improve the
returns from the business in the medium term.
Richard Tyson
Chief Executive Officer
11 November 2024
Finance Review
Summary
Reported orders were broadly flat at
£224.6m (2023: £224.3m), an increase of 2.6% at constant currency.
Revenue increased by 7.7% to £225.8m (2023: £209.7m). Revenue at
constant currency increased by 10.4%.
Adjusted operating profit at
constant currency increased by 3.6%. Due to a currency headwind of
£3.9m, adjusted operating profit decreased by 7.1% to £33.9m (2023:
£36.5m). As expected, adjusted operating margin at constant
currency decreased by 110 basis points to 16.3% reflecting the mix
effect of stronger revenue growth from Advanced Technologies and
ongoing investment in operational improvement. Reported adjusted
operating margin, after currency effects, decreased by 240 basis
points to 15.0% (2023: 17.4%).
Statutory operating profit increased
by 8.7% to £31.1m (2023: £28.6m). This includes amortisation of
acquired intangibles of £4.7m,
net non-recurring charges of £0.8m and a credit of
£2.7m relating to the
movement in the mark-to-market valuation of financial
derivatives.
Adjusted profit before tax fell by
7.7% to £34.6m (2023: £37.5m), representing a margin of 15.3%
(2023: 17.9%). Statutory profit before tax grew by 7.1% to £31.7m
(2023: £29.6m).
The adjusted effective tax rate
increased to 25.1% (2023: 24.0%) due to a change in the
geographical mix of profits. A lower adjusted operating profit due
to currency effects and the higher tax rate resulted in a fall in
adjusted basic earnings per share of 9.5% to 44.7p (2023: 49.4p).
Basic earnings per share was 41.6p (2023: 38.6p), an increase of
7.8%.
Cash generated from operations was
lower at £4.6m (2023: £7.4m), primarily due to seasonality and an
increase in working capital, as outlined below, representing
negative cash conversion of 1% (2023: negative 21%). Normalised
cash conversion was 17%. Net cash after borrowings fell from £83.8m
on 31 March
2024 to £39.3m on 30 September 2024. The Group has
approximately £191m of committed facilities, representing total
headroom of circa £230m, including net cash on the balance
sheet.
Consolidated Statement of Income
The Group's Condensed Consolidated
Statement of Income is summarised below:
£m
|
Half
year
2024/25
|
Half
year
2023/24
|
Change
%
|
Revenue
|
225.8
|
209.7
|
+7.7%
|
Adjusted operating
profit
|
33.9
|
36.5
|
(7.1%)
|
Amortisation of acquired intangible
assets
|
(4.7)
|
(4.6)
|
|
Non-recurring
items
|
(2.9)
|
(0.9)
|
|
Mark-to-market of currency
hedges
|
2.7
|
(2.4)
|
|
Release of contingent
consideration
|
2.1
|
-
|
|
Statutory operating
profit
|
31.1
|
28.6
|
+8.7%
|
Net finance
income1
|
0.6
|
1.0
|
|
|
|
|
|
Adjusted profit before
taxation
|
34.6
|
37.5
|
(7.7%)
|
Statutory profit before
taxation
|
31.7
|
29.6
|
+7.1%
|
|
|
|
|
Adjusted effective tax
rate
|
25.1%
|
24.0%
|
|
Effective tax
rate
|
24.0%
|
24.7%
|
|
|
|
|
|
Adjusted earnings per share -
basic
|
44.7p
|
49.4p
|
(9.5%)
|
Earnings per share -
basic
|
41.6p
|
38.6p
|
+7.8%
|
|
|
|
|
Dividend per share
(interim)
|
5.1p
|
4.9p
|
+4.1%
|
1. Net finance
income for 2024 includes a non-cash charge of £0.1m against the
unwind of discount on FemtoTools contingent
consideration
Orders and
revenue
Orders of £224.6m (2023: £224.3m)
grew by 2.6% at constant currency. A strengthening in sterling
resulted in orders being broadly flat on last year. In Imaging
& Analysis, constant currency orders grew by 6.0% with good
growth across our electron microscopy range of products,
particularly into semiconductor applications. In Advanced
Technologies, we saw a small decline in constant currency orders of
4.8% due primarily to a deferral of framework orders within our
X-Ray Technology business. Orders for our semiconductor processing
systems were in line with last year, and we delivered order growth
for our cryogenic systems, which are used in quantum computing
applications.
Revenue of £225.8m (2023: £209.7m)
grew by 10.4% at constant currency. A strengthening in sterling
resulted in a currency headwind of £5.8m, with reported growth of
7.7%. Constant currency revenue increased by 6.0% for Imaging &
Analysis with strong demand for our electron microscopy range
offsetting fewer shipments of our imaging and microscopy products
due to weakness in life science markets.
Strong demand for our semiconductor
processing systems, alongside the successful achievement of
specific milestones on the first part of a large order for bespoke
cryogenic systems to a key customer for quantum computing
applications, drove constant currency growth of 21.4% for Advanced
Technologies.
The total underlying book-to-bill
ratio (orders received to goods and services billed in the period)
for the half year was 1.01 times (2023: 1.07 times), with a
positive underlying book-to-bill of 1.04 times in Imaging &
Analysis. Underlying book-to-bill removes the impact of prior year
orders to China cancelled due to UK export licence
restrictions.
Geographic revenue growth
|
Half year
2024/25
£m
|
Half
year
2024/25
% of
total
|
Half
year
2023/24
£m
|
Half year
2023/24
% of total
|
Change
£m
|
Change
%
|
Constant currency
change
%
|
Europe
|
53.3
|
24%
|
48.9
|
24%
|
+4.4
|
+9.0%
|
+11.2%
|
North America
|
70.5
|
31%
|
54.6
|
26%
|
+15.9
|
+29.1%
|
+32.2%
|
Asia
|
97.2
|
43%
|
101.6
|
48%
|
(4.4)
|
(4.3%)
|
(1.5%)
|
Rest of World
|
4.8
|
2%
|
4.6
|
2%
|
+0.2
|
+4.3%
|
+6.5%
|
|
225.8
|
100%
|
209.7
|
100%
|
+16.1
|
+7.7%
|
+10.4%
|
On a geographical basis, revenue
grew by 9.0% in Europe (+11.2% at constant currency), supported by
additional deliveries of semiconductor processing systems. Orders
declined by 11.8% at constant currency, with fewer orders for
semiconductor processing systems, where orders tend to be lumpy in
nature, and a fall in orders for our X-Ray tubes as we see an
adjustment for over-stocking from some of our larger OEM
customers.
Revenue for North America grew by
29.1% on a reported basis and 32.2% at constant currency, with good
growth across our electron microscopy range of products and
semiconductor processing systems. Orders increased by 20.0% at
constant currency.
Asia remains our largest region by
revenue, with China constituting 51% of regional revenue and 22% of
total Group revenue, a lower proportion than last year. Fewer
shipments and the withdrawal from certain markets in China resulted
in Asia revenue falling by 4.3% (-1.5% at constant currency), with
strong demand for our electron microscopy products mitigating fewer
shipments of semiconductor processing tools and lower revenue from
life science OEM customers. Orders for the region increased by 2.3%
at constant currency, with demand from south-east Asia and Japan
offsetting a decline in China. Orders for China constituted 22% of
Group orders in the half year against 26% last
year.
The total reported order book of
£294.9m fell by 2.2% (+0.7% at constant currency) compared to 31
March 2024. The order book, compared to 31 March 2024, increased by 2.8%
for Imaging & Analysis. Advanced Technologies' order book fell
by 6.5%, due to the timing of deliveries of some large capital
items and phasing of OEM orders for our X-Ray
tubes.
£m
|
Imaging &
Analysis
|
Advanced
Technologies
|
Total
|
Revenue: half year
2023/24
|
149.4
|
60.3
|
209.7
|
Constant currency
growth
|
9.0
|
12.9
|
21.9
|
Currency
|
(4.5)
|
(1.3)
|
(5.8)
|
Revenue: half year 2024/25
|
153.9
|
71.9
|
225.8
|
|
|
|
|
Revenue growth:
reported
|
3.0%
|
19.2%
|
7.7%
|
Revenue growth: constant
currency
|
6.0%
|
21.4%
|
10.4%
|
Adjusted operating profit and
margin
Adjusted operating profit at
constant currency increased by 3.6%. A currency headwind of £3.9m
resulted in reported adjusted operating profit decreasing by 7.1%
to £33.9m (2023: £36.5m). Constant currency adjusted operating
margin decreased by 110 basis points to 16.3% reflecting the mix
effect of stronger revenue growth from Advanced Technologies and
investment. After currency effects, the adjusted operating margin
decreased by 240 basis points to 15.0% (2023:
17.4%).
Imaging & Analysis adjusted
operating profit at constant currency increased by 5.4%. After
currency, reported margin was broadly flat at 24.6% (2023: 24.8%).
Strong demand for our electron microscopy products more than offset
a decline in shipments of imaging cameras to the Life Science OEM
market and weakness in demand for imaging and microscopy products.
This impacted profitability within our primary life science
business in Belfast, including the recently acquired First Light
business.
We have instigated a restructuring
programme across the new division to improve efficiencies and drive
productivity. In addition, we are removing cost from our primary
life science business cost base in response to the weakness in
demand, while also continuing to invest in operational
improvements. These actions are expected to support an improvement
in the second half trading performance.
While we have seen an increase in
revenue from our semiconductor processing systems, profit growth
has been tempered by the absorption of additional costs of the new
semiconductor processing systems facility and dual costs of
operating both facilities in the half year. Good progress on the
cryogenic platforms for a large quantum customer supported a lower
loss within our principal quantum business. As a result, Advanced
Technologies recorded a loss of £1.2m, against a loss of £0.5m last
year, with lower losses made in our primary cryogenic platform
business being offset by a deferral of framework orders for our
X-Ray Technology business and an increase to the inventory
provision following a standardisation of policy across the Group.
The strong order book, continued milestone progress against a large
quantum project, restructuring actions and an operational
improvement programme, are expected to support an improvement in
the run rate profitability of the business in the second half of
the year.
£m
|
Imaging &
Analysis
|
Advanced
Technologies
|
Total
|
Adjusted operating profit: half year
2023/24
|
37.0
|
(0.5)
|
36.5
|
Constant currency (CC)
growth
|
2.0
|
(0.7)
|
1.3
|
Currency
|
(3.1)
|
(0.8)
|
(3.9)
|
Adjusted operating profit: half year
2024/25
|
35.9
|
(2.0)
|
33.9
|
Adjusted operating
margin1 half year 2023/24
|
24.8%
|
(0.8%)
|
17.4%
|
Adjusted operating
margin1 half year 2024/25
|
23.3%
|
(2.8%)
|
15.0%
|
Adjusted operating
margin1 (CC): half year 2024/25
|
24.6%
|
(1.6%)
|
16.3%
|
1. Adjusted
operating margin is calculated as adjusted operating profit divided
by revenue.
Adjusted operating margin at
constant currency is defined as adjusted operating profit at
constant currency divided by revenue at constant
currency.
Statutory operating profit
and margin
Statutory operating profit grew by
8.7% to £31.1m (2023: £28.6m), representing an operating profit
margin of 13.8%. The increase in statutory operating profit has
been supported by a reduction in non-recurring charges that is
offsetting a decline in reported adjusted operating profit, due to
a currency headwind.
Adjusting
items
Amortisation of acquired intangibles
of £4.7m relates to intangible assets recognised on acquisitions,
being the value of technology, customer relationships and
brands.
During the first half the Group
commenced a restructuring programme to deliver productivity and
efficiency benefits following the new divisional structure, as well
as yielding cost savings where we are seeing short-term order
weakness. This resulted in restructuring costs of £2.2m.
Non-recurring items within operating profit also comprise costs of
£0.7m on transactions over the first half and a £2.1m release of
contingent consideration against the acquisition of First
Light.
The Group uses derivative products
to hedge its short-term exposure to fluctuations in foreign
exchange rates. The Group's policy is to have in place at the
beginning of the financial year hedging instruments to cover up to
80% of its forecast transactional exposure for the following twelve
months and, subject to pricing, up to 20% of exposures for the next
six months. The Group does not use hedge accounting for these
derivatives.
Net movements on mark-to-market
derivatives in respect of transactional currency exposures of the
Group in future periods are disclosed in the income statement as
foreign exchange and excluded from our calculation of adjusted
profit before tax. In the half year this amounted to a credit of
£2.7m (2023: £2.4m charge).
Net finance
costs
The Group's recorded net interest
income was lower at £0.6m (2023: £1.0), due to lower bank interest
and an unwind of discount on contingent acquisition
consideration.
Adjusted profit before tax
and margin
Adjusted profit before tax decreased
by 7.7% to £34.6m (2023: £37.5m). The adjusted profit before tax
margin of 15.3% (2023: 17.9%) was lower than last year primarily due to
the mix effects of higher growth in Advanced Technologies,
investment and a currency headwind on operating
profit.
|
Half year
2024/25
|
Half year
2023/24
|
Reconciliation of statutory profit
before tax to adjusted profit before tax
|
£m
|
£m
|
Statutory profit before tax
|
31.7
|
29.6
|
Add back:
|
|
|
Amortisation of acquired intangible
assets
|
4.7
|
4.6
|
Non-recurring items (note
3)
|
0.9
|
0.9
|
Mark-to-market of currency
hedges
|
(2.7)
|
2.4
|
Adjusted profit before tax
|
34.6
|
37.5
|
Statutory profit before tax
and margin
Statutory profit before tax
increased by 7.1% to £31.7m (2023: £29.6m). The statutory profit
before tax margin of 14.0% (2023: 14.1%) was flat on last year due to the
mark-to-market valuation movement on financial derivatives offset
by adverse currency effects.
Taxation
The adjusted tax charge of £8.7m
(2023: £9.0m) represents an effective tax rate of 25.1%
(2023: 24.0%) due
to a change in the geographical mix of profits. The statutory tax
charge of £7.6m
(2023: £7.3m)
represents an effective tax rate of 24.0% (2023: 24.7%). The half-year tax rate has
been calculated based on the expected effective tax rate for the
year of 24.5% (having made certain assumptions about where profits
will arise).
Earnings per
share
Adjusted basic earnings per share
decreased by 9.5% to 44.7p (2023: 49.4p) primarily due to currency
headwind on operating profit and the higher effective tax rate;
adjusted diluted earnings per share fell by 9.4% to 44.1p (2023:
48.7p). Basic and diluted earnings per share increased by 7.8% to
41.6p (2023: 38.6p) and 7.9% to 41.1p (2023: 38.1p)
respectively.
The number of undiluted weighted
average shares increased to 58.0m (2023: 57.7m) following vesting
and issuance of share options.
Currency
The Group faces transactional and
translational currency exposure, most notably against the US
Dollar, Euro and Japanese Yen.
The Group's foreign currency
exposure for the half year is summarised
below.
£m (equivalent)
|
Revenue
|
Adjusted operating
profit
|
Sterling
|
27.9
|
(92.0)
|
US Dollar
|
124.2
|
88.4
|
Euro
|
49.9
|
25.1
|
Japanese Yen
|
14.4
|
7.8
|
Chinese
Renminbi
|
3.6
|
3.2
|
Other
|
5.8
|
1.4
|
|
225.8
|
33.9
|
The Group maintains a hedging
programme against its net transactional exposure using internal
projections of currency trading transactions expected to arise over
a period extending from 12 to 24 months. On 30 September 2024, the
Group had currency hedges in place extending up to 18 months
forward.
For the full year 2024/25, our
assessment of the currency impact is, based on hedges currently in
place and forecast currency rates, a headwind of approximately
£13.3m to revenue, and £8.3m to profit. Forecast currency rates for
the year on unhedged positions are: GBP:USD 1.30; GBP:EUR 1.20;
GBP:JPY 199.
Looking further ahead to the
financial year 2025/26, based on the above currency assumptions, we
would expect currency effects to have a headwind of approximately
£2.2m to revenue, and £2.8m to profit.
Acquisition of First Light
Imaging SAS
On 9 January 2024 the Group
completed the purchase of 100% of the shared capital of First Light
Imaging SAS for consideration of €16.3m. Additional consideration
of €3.0m, conditional on trading performance over the first year
following completion, is no longer expected to be payable due to
delays in two large OEM programmes and Life Science market weakness
in China. During the half year, the business contributed revenue of
£1.4m and an operating loss of £0.5m.
Acquisition of FemtoTools
AG
On 28 June 2024 the Group completed
the purchase of 100% of the shared capital of FemtoTools AG for
consideration of CHF 17.9m. Additional consideration of up to CHF
5.5m is conditional on trading performance over a period of 33
months following completion. During the period under ownership the
business contributed revenue of £2.2m and operating profit of
£0.6m.
Dividend
The Group's policy on the dividend
considers changes to underlying earnings, dividend cover, movements
in currency and
demands on our cash. The Board remains confident in the long-term
performance of the business and has declared an interim dividend of
5.1p per share (2023: 4.9p per share), growth of 4.1%. The interim
dividend will be paid on 10 January 2025 to shareholders on the
register as of 29 November 2024.
Consolidated statement of cash flows
The Group's consolidated statement
of cash flow is summarised below.
|
Half
year
2024/25
|
Half
year
2023/24
|
|
£m
|
£m
|
Adjusted operating profit
|
33.9
|
36.5
|
Depreciation and
amortisation
|
5.8
|
5.4
|
Adjusted1 EBITDA
|
39.7
|
41.9
|
Working capital
movement
|
(29.6)
|
(31.6)
|
Non-recurring costs
|
(2.9)
|
-
|
Equity settled share
schemes
|
1.5
|
1.1
|
Pension scheme payments above charge
to operating profit
|
(4.1)
|
(4.0)
|
Cash from operations
|
4.6
|
7.4
|
Interest
|
0.6
|
1.2
|
Tax
|
(11.3)
|
(7.9)
|
Capitalised development
expenditure
|
(0.7)
|
(0.3)
|
Expenditure on tangible and
intangible assets
|
(8.8)
|
(16.7)
|
Acquisition of
subsidiaries
|
(15.4)
|
-
|
Dividends
paid
|
(9.2)
|
-
|
Proceeds from issue of share capital
and exercise of share options
|
-
|
0.1
|
Payments made in respect of lease
liabilities
|
(2.6)
|
(2.6)
|
Decrease in
borrowings
|
(0.6)
|
(0.1)
|
Net
decrease in cash and cash
equivalents
|
(43.4)
|
(18.9)
|
|
|
| |
1. Adjusted
EBITDA is defined as adjusted operating profit before depreciation
and amortisation of capitalised development
costs.
Cash from operations of £4.6m (2023:
£7.4m) represents negative cash conversion of 1% (2023: negative
21%). During the first half we incurred expenditure of £4.5m on the
final stage of the semiconductor systems facility in Bristol, dual
running costs of the two semiconductor systems facilities of £0.5m,
and £0.3m on the Belfast facility, where fit-out has been suspended
temporarily. In addition, £0.9m of customer deposits were refunded
following export licence rejections and we booked business
reorganisation and transaction costs of £2.9m. On a normalised
basis, which excludes these costs, cash conversion was 17% (2023:
41%). Cash conversion is defined as cash from
operations before business reorganisation costs, transaction costs
and pension scheme payments above charge to operating profit, less
capitalised development expenditure, capital expenditure and
payments made in respect of lease liabilities divided by adjusted
operating profit.
|
Half
year
2024/25
|
Half year
2023/24
|
Reconciliation of cash generated
from operations to adjusted operating cash
flow
|
£m
|
£m
|
Cash from operations
|
4.6
|
7.4
|
Add back:
|
|
|
Non-recurring items
|
2.9
|
0.7
|
Pension scheme payments above charge
to operating profit
|
4.1
|
4.0
|
Capitalised development
expenditure
|
(0.7)
|
(0.3)
|
Expenditure on tangible and
intangible assets
|
(8.8)
|
(16.7)
|
Payments made in respect of lease
liabilities
|
(2.6)
|
(2.6)
|
Adjusted cash from operations
|
(0.5)
|
(7.5)
|
Cash conversion % (adjusted cash from operations/adjusted
operating profit)
|
(1%)
|
(21%)
|
Cash conversion %
(normalised1)
|
17%
|
41%
|
1. Cash
conversion calculated on a normalised basis excludes expenditure in
the half year of £5.3m on facility capacity expansion, and £0.9m on
customer deposits returned due to UK export licence
rejections
Working capital increased by £29.6m;
inventories and receivables increased by £9.0m and £4.1m
respectively, and payables fell by £16.5m. The increase in
inventory reflects a high level of work-in-progress to support
shipments in Q3. Our focus on inventory control is expected to
deliver a reduction in inventory during the second half of the
year.
Other movements reflect phasing of
cash receipts on a long-term quantum contract. During the half year
we shipped the first of several cryogenic systems and recognised
revenue on the achievement of factory acceptance testing on two
other systems. The timing of these orders is such that customer
deposits were received in previous years, and payments on shipment
and customer acceptance will be received over the next 18 months.
The total working capital impact of this long-term contract in the
half-year is £8.3m. In addition, a larger proportion of shipments
were made towards the end of the half year. This has resulted in an
increase in receivables, which is expected to fully unwind in the
second half.
Pension
Pension recovery payments above
charge to operating profit total £4.1m (2023:
£4.0m).
Interest
Net interest received was £0.6m
(2023: £1.2m), reflecting interest received on our foreign currency
cash balances, partially offset by overdraft balances on our main
sterling accounts due to timing of foreign currency
hedges.
Tax
Tax paid was £11.3m (2023: £7.9m);
the increase relating to higher payments on account following the
increase in the UK corporation tax
rate.
Investment in Research and
Development (R&D)
Total cash spend on R&D in the
half year was £20.7m, equivalent to 9.2% of sales (2023: £19.7m,
9.4% of sales). A reconciliation between the adjusted amounts
charged to the consolidated statement of income and the cash spent
is given below:
|
Half
year
2024/25
|
Half year
2023/24
|
|
£m
|
£m
|
R&D expense charged to the
consolidated statement of income
|
20.3
|
19.7
|
Amortisation and impairment of
R&D costs capitalised as intangibles
|
(0.3)
|
(0.3)
|
Amounts capitalised as intangible
assets
|
0.7
|
0.3
|
Total cash spent on R&D during the
year
|
20.7
|
19.7
|
Net
cash and funding
Net
cash
Cash from operations in the full
year was offset by capital expenditure and initial consideration of
£15.4m paid on the acquisition of FemtoTools. After tax and
dividend payments, the Group's net cash position decreased from
£83.8m on 31 March 2024 to £39.3m on 30 September
2024.
Movement in net
cash
|
£m
|
Net cash after borrowings on 31
March 2024
|
83.8
|
Cash generated from
operations
|
4.6
|
Interest
|
0.6
|
Tax
|
(11.3)
|
Capitalised development
expenditure
|
(0.7)
|
Capital expenditure on tangible and
intangible assets
|
(8.8)
|
Acquisition of
subsidiaries
|
(15.4)
|
Payments made in respect of lease
obligations
|
(2.6)
|
Dividends
paid
|
(9.2)
|
Other items and FX
|
(1.7)
|
Net
cash after borrowings on 30 September
2024
|
39.3
|
|
Half year
2024/25
|
Half
year
2023/24
|
Net cash including lease
liabilities
|
£m
|
£m
|
Net cash after
borrowings
|
39.3
|
79.1
|
Lease
liabilities
|
(31.2)
|
(34.8)
|
Net
cash and lease liabilities after
borrowings
|
8.1
|
44.3
|
Funding
The Group has a four-year unsecured
multi-currency revolving facility agreement, with two extension
options, comprising a euro-denominated multi‑currency facility of
€95.0m (£79m) and a US Dollar-denominated multi‑currency facility
of $150.0m (£112m). Debt covenants are net debt to EBITDA less than
3.0 times and EBITDA to interest greater than 4.0 times. At 30
September 2024 the
business had net cash.
Pensions
The Group has a defined benefit
pension scheme in the UK. This has been closed to new entrants
since 2001 and closed to future accrual from
2010.
On an IAS 19 basis, the surplus
arising from our defined benefit pension Scheme obligations on 30
September 2024 was £19.2m (31 March 2024: £16.1m). The Scheme's
assets are hedged against gilt yields, whereas the accounting
liabilities are valued based on corporate bond yields. The small
improvement in the surplus from 31 March 2024 reflects company
contributions paid over the period. The value of scheme assets
decreased to £237.8m (31 March 2024: £239.7m) and scheme
liabilities decreased to £218.6m (31 March 2024:
£223.6m).
The scheme's actuarial valuation
review, rather than the accounting basis, determines our cash
payments into the scheme. The cash contributions into the scheme
are expected to continue until 31 March 2025, at which point we
expect, based on current assumptions, the scheme to achieve
self-sufficiency. Following this date we have agreed with the
trustees to continue voluntary contributions as we explore buy-out
options for the scheme. The scheme rules provide that in the event
of a surplus remaining after settling contractual obligations to
members, the Group may determine how the surplus is
utilised.
Going concern
The Group's business activities,
together with the factors likely to affect its future development,
performance and position, are set out in the performance highlights
and Chief Executive Officer's review sections of this half year
report. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the
finance review.
Trading for the Group has been good
during the half year. The Group has prepared and reviewed a number
of scenarios for the Group based on key risks noted for the
business and the potential impact on orders, trading and cash flow
performance. In addition, the Group has overlaid the risk of
long-term adverse movements in currency rates to our cash flow
forecasts. The Board is satisfied, having considered the
sensitivity analysis, as well as its funding facilities, that the
Group has adequate resources to continue in operational existence
for the foreseeable future.
Forward-looking statements
This document contains certain
forward-looking statements. The forward-looking statements reflect
the knowledge and information available to the company during the
preparation and up to the publication of this document. By their
very nature, these statements depend upon circumstances and relate
to events that may occur in the future, thereby involving a degree
of uncertainty. Therefore, nothing in this document should be
construed as a profit forecast by the
company.
Gavin Hill
Chief Financial
Officer
11 November 2024
Condensed consolidated statement of income
Half year ended 30 September 2024
|
|
Half year to 30 September
2024
|
|
Half year
to 30 September 2023
|
|
|
Adjusted
|
Adjusting items (note
3)
|
Total
|
|
Adjusted
|
Adjusting
items (note 3)
|
Total
|
|
Note
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
Revenue
|
2
|
225.8
|
-
|
225.8
|
|
209.7
|
-
|
209.7
|
Cost of sales
|
|
(108.5)
|
-
|
(108.5)
|
|
(98.7)
|
-
|
(98.7)
|
Gross profit
|
|
117.3
|
-
|
117.3
|
|
111.0
|
-
|
111.0
|
Research and development
|
4
|
(20.3)
|
-
|
(20.3)
|
|
(19.7)
|
-
|
(19.7)
|
Selling and marketing
|
|
(37.9)
|
-
|
(37.9)
|
|
(34.2)
|
-
|
(34.2)
|
Administration and shared
services
|
(26.1)
|
(5.5)
|
(31.6)
|
|
(28.2)
|
(5.5)
|
(33.7)
|
Foreign exchange
gain/(loss)
|
|
0.9
|
2.7
|
3.6
|
|
7.6
|
(2.4)
|
5.2
|
Operating profit
|
|
33.9
|
(2.8)
|
31.1
|
|
36.5
|
(7.9)
|
28.6
|
Financial income
|
|
1.6
|
-
|
1.6
|
|
1.9
|
-
|
1.9
|
Financial expenditure
|
|
(0.9)
|
(0.1)
|
(1.0)
|
|
(0.9)
|
-
|
(0.9)
|
Profit/(loss) before income tax
|
3
|
34.6
|
(2.9)
|
31.7
|
|
37.5
|
(7.9)
|
29.6
|
Income tax
(expense)/credit
|
|
(8.7)
|
1.1
|
(7.6)
|
|
(9.0)
|
1.7
|
(7.3)
|
Profit/(loss) for the period attributable to equity
shareholders of the parent
|
|
25.9
|
(1.8)
|
24.1
|
|
28.5
|
(6.2)
|
22.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
pence
|
|
pence
|
|
pence
|
|
pence
|
Basic earnings per
share
|
7
|
|
|
|
|
|
|
|
From profit for the
period
|
|
44.7
|
|
41.6
|
|
49.4
|
|
38.6
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
7
|
|
|
|
|
|
|
|
From profit for the
period
|
|
44.1
|
|
41.1
|
|
48.7
|
|
38.1
|
The attached notes form part of
these Financial Statements.
Condensed consolidated statement of comprehensive
income
Half year ended 30 September 2024
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
£m
|
£m
|
Profit for the period
|
24.1
|
22.3
|
|
|
|
Other comprehensive (expense)/income:
|
|
|
Items that may be reclassified subsequently to condensed
consolidated statement of income
|
|
|
Foreign exchange translation
differences
|
(4.4)
|
(0.2)
|
|
|
|
Items that will not be reclassified to condensed consolidated
statement of income
|
|
|
Remeasurement loss in respect of
post-retirement benefits
|
(1.4)
|
(19.4)
|
Tax credit on items that will not be
reclassified to condensed consolidated statement of
income
|
0.4
|
4.8
|
Total other comprehensive expense
|
(5.4)
|
(14.8)
|
|
|
|
Total comprehensive income for the period attributable to
equity shareholders of the parent
|
18.7
|
7.5
|
|
|
|
Condensed consolidated statement of financial
position
As
at 30 September 2024
|
|
As at
30 September
2024
|
As at
31 March
2024
as restated
(1)
|
|
Note
|
£m
|
£m
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Property, plant and
equipment
|
|
86.4
|
80.5
|
Intangible assets
|
|
152.4
|
138.2
|
Right-of-use assets
|
|
29.7
|
32.4
|
Long-term receivables
|
|
1.2
|
1.3
|
Derivative financial
instruments
|
10
|
0.6
|
0.2
|
Retirement benefit asset
|
11
|
19.2
|
16.1
|
Deferred tax assets
|
|
11.9
|
13.7
|
|
|
301.4
|
282.4
|
Current assets
|
|
|
|
Inventories
|
|
116.4
|
108.1
|
Trade and other
receivables
|
|
113.9
|
114.7
|
Current income tax
receivable
|
|
3.1
|
1.0
|
Derivative financial
instruments
|
10
|
4.6
|
2.3
|
Cash and cash equivalents
|
|
53.0
|
97.8
|
|
|
291.0
|
323.9
|
|
|
|
|
Total assets
|
|
592.4
|
606.3
|
|
|
|
|
Equity
|
|
|
|
Capital and reserves attributable to the company's equity
shareholders
|
|
|
|
Share capital
|
|
2.9
|
2.9
|
Share premium
|
|
62.6
|
62.6
|
Other reserves
|
|
0.2
|
0.2
|
Translation reserve
|
|
3.0
|
7.4
|
Retained earnings
|
|
308.0
|
292.6
|
|
|
376.7
|
365.7
|
Liabilities
|
|
|
|
Non-current liabilities
|
|
|
|
Bank loans
|
|
0.7
|
0.9
|
Lease payables
|
|
27.0
|
28.6
|
Retirement benefit
obligations
|
11
|
0.3
|
-
|
Derivative financial
instruments
|
10
|
-
|
-
|
Deferred tax liabilities
|
|
14.8
|
12.9
|
|
|
42.8
|
42.4
|
Current liabilities
|
|
|
|
Bank loans and overdrafts
|
|
13.0
|
13.1
|
Trade and other payables
|
|
144.7
|
166.2
|
Lease payables
|
|
4.2
|
4.8
|
Current income tax
payables
|
|
4.2
|
7.6
|
Derivative financial
instruments
|
10
|
0.1
|
0.1
|
Provisions
|
|
6.7
|
6.4
|
|
|
172.9
|
198.2
|
|
|
|
|
Total liabilities
|
|
215.7
|
240.6
|
|
|
|
|
Total liabilities and equity
|
|
592.4
|
606.3
|
(1) Details of restatement of prior
period numbers can be found in note 8.
Condensed consolidated statement of changes in
equity
Half year ended 30 September 2024
|
Share
capital
|
Share
premium
|
Other
reserves
|
Translation
reserve
|
Retained
earnings
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
As at 1 April 2024
|
2.9
|
62.6
|
0.2
|
7.4
|
292.6
|
365.7
|
|
|
|
|
|
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
24.1
|
24.1
|
Foreign exchange translation
differences
|
-
|
-
|
-
|
(4.4)
|
-
|
(4.4)
|
Remeasurement loss in respect of
post-retirement benefits
|
-
|
-
|
-
|
-
|
(1.4)
|
(1.4)
|
Tax credit on items that will not be
reclassified to condensed consolidated statement of
income
|
-
|
-
|
-
|
-
|
0.4
|
0.4
|
Total comprehensive (expense)/income
|
-
|
-
|
-
|
(4.4)
|
23.1
|
18.7
|
|
|
|
|
|
|
|
Share-based payment
transactions
|
-
|
-
|
-
|
-
|
1.5
|
1.5
|
Income tax on share-based payment
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
Dividends
|
-
|
-
|
-
|
-
|
(9.2)
|
(9.2)
|
Total transactions with owners:
|
-
|
-
|
-
|
-
|
(7.7)
|
(7.7)
|
|
|
|
|
|
|
|
As
at 30 September 2024
|
2.9
|
62.6
|
0.2
|
3.0
|
308.0
|
376.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 April 2023
|
2.9
|
62.6
|
0.2
|
12.9
|
265.4
|
344.0
|
|
|
|
|
|
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
22.3
|
22.3
|
Foreign exchange translation
differences
|
-
|
-
|
-
|
(0.2)
|
-
|
(0.2)
|
Remeasurement loss in respect of
post-retirement benefits
|
-
|
-
|
-
|
-
|
(19.4)
|
(19.4)
|
Tax credit on items that will not be
reclassified to condensed consolidated statement of
income
|
-
|
-
|
-
|
-
|
4.8
|
4.8
|
Total comprehensive (expense)/income
|
-
|
-
|
-
|
(0.2)
|
7.7
|
7.5
|
|
|
|
|
|
|
|
Share-based payment
transactions
|
-
|
-
|
-
|
-
|
1.1
|
1.1
|
Income tax on share-based payment
transactions
|
-
|
-
|
-
|
-
|
(1.0)
|
(1.0)
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
Total transactions with owners:
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
|
|
|
|
|
|
|
As
at 30 September 2023
|
2.9
|
62.6
|
0.2
|
12.7
|
273.2
|
351.6
|
|
|
|
|
|
|
|
Condensed consolidated statement of cash
flows
Half year ended 30 September 2024
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
Profit for the period
|
24.1
|
22.3
|
Adjustments for:
|
|
|
Income tax expense
|
7.6
|
7.3
|
Net financial income
|
(0.6)
|
(1.0)
|
Fair value movement on financial
derivatives
|
(2.7)
|
2.4
|
Release of contingent
consideration
|
(2.1)
|
-
|
Amortisation of right-of-use
assets
|
2.5
|
2.7
|
Depreciation of property, plant and
equipment
|
3.0
|
2.4
|
Amortisation of intangible
assets
|
5.0
|
4.9
|
Charge in respect of equity settled
employee share schemes
|
1.5
|
1.1
|
Contributions paid to the pension
scheme more than the charge to operating profit
|
(4.1)
|
(4.0)
|
Increase in inventories
|
(9.0)
|
(22.9)
|
(Increase)/decrease in
receivables
|
(4.1)
|
3.8
|
Decrease in payables and
provisions
|
(12.8)
|
(17.2)
|
(Decrease)/increase in customer
deposits
|
(3.7)
|
5.6
|
Cash generated from operations
|
4.6
|
7.4
|
Interest paid
|
(0.6)
|
(0.5)
|
Income taxes paid
|
(11.3)
|
(7.9)
|
Net
cash (used in)/from operating activities
|
(7.3)
|
(1.0)
|
|
|
|
Cash flows from investing activities
|
|
|
Proceeds from sale of property,
plant and equipment
|
0.1
|
0.1
|
Acquisition of property, plant and
equipment
|
(8.9)
|
(16.5)
|
Acquisition of intangible
assets
|
-
|
(0.3)
|
Acquisition of subsidiaries, net of
cash acquired
|
(15.4)
|
-
|
Capitalised development
expenditure
|
(0.7)
|
(0.3)
|
Interest received
|
1.2
|
1.7
|
Net
cash used in investing activities
|
(23.7)
|
(15.3)
|
|
|
|
Cash flows from financing activities
|
|
|
Proceeds from issue of share
capital
|
-
|
0.1
|
Interest paid on lease
payables
|
(0.3)
|
(0.4)
|
Repayment of lease
payables
|
(2.3)
|
(2.2)
|
Repayment of borrowings
|
(0.6)
|
(0.1)
|
Dividends paid
|
(9.2)
|
-
|
Net
cash used in financing activities
|
(12.4)
|
(2.6)
|
|
|
|
Change in cash and cash
equivalents
|
(43.4)
|
(18.9)
|
Cash and cash equivalents at
beginning of the year
|
85.5
|
101.5
|
Effect of exchange rate fluctuations
on cash held
|
(1.7)
|
(2.3)
|
Cash and cash equivalents at end of the
period
|
40.4
|
80.3
|
Comprised of:
|
|
|
|
Cash and cash equivalents as per the
condensed consolidated statement of financial position
|
|
53.0
|
101.7
|
Bank overdrafts
|
|
(12.6)
|
(21.4)
|
|
|
40.4
|
80.3
|
Notes to the half-year financial statements
Half year ended 30 September 2024
1
Basis of preparation
Reporting
entity
Oxford Instruments plc is a company
incorporated in England and Wales. The condensed consolidated
half-year set of 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 UK adopted IAS 34 Interim Financial Reporting. 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 2024. The Group Financial Statements were prepared in
accordance with UK adopted International Accounting Standards (IAS)
in conformity with the requirements of the Companies Act 2006 and
interpretations issued by the IFRS Interpretations Committee
(IFRIC) applicable to companies reporting under UK adopted
IFRS.
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 2024 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 Board of Directors approved the
Condensed Consolidated Interim Financial Statements on 11 November
2024.
Significant accounting
policies
As required by the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority,
the condensed set of Financial Statements has been prepared
applying the accounting policies and presentation that were applied
in the preparation of the Company's published consolidated
Financial Statements for the year ended 31 March 2024.
Changes in accounting
standards
The IASB (International Accounting
Standards Board) issued a new Standard, IFRS 18 Presentation and
Disclosure in Financial Statements, on 9 April 2024 that will
replace IAS 1 Presentation of Financial Statements. The purpose of
the new standard is to provide more consistent presentation of
financial information across preparers as it is acknowledged that
existing standards have given flexibility to present information in
different ways. IFRS 18 will not impact the recognition or
measurement of items in the financial statements. Many of the
existing presentation principles in IAS 1 are retained, but there
are some more specific requirements that will require the Group to
make some changes in its future Annual Report and Interim Financial
Statements.
The new Standard is not yet endorsed
by the UK Endorsement Board 'UKEB' but is expected to be applicable
for reporting periods beginning on or after 1 January 2027.
Comparative information for 2026 will need to be restated when the
2027 Interim Financial Statements and Annual Report and Accounts
are published and early adoption is expected to be
permitted.
The Group has started an initial
review of the Standard and expects changes to the presentation of
the income statement. The process of assessing the financial impact
on the Consolidated Financial Statements will continue during 2024
and 2025.
There are no other new standards or
interpretations issued by the IASB that had a significant impact on
the Consolidated Financial Statements.
There are no standards or amendments
that are not yet effective and that would be expected to have a
material impact on the Group in the current or future reporting
periods and on foreseeable future transactions.
Estimates
The preparation of half-year
Financial Statements requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these
estimates.
In preparing these half-year
Financial Statements, the significant judgements made by management
in applying the Group's accounting policies and key sources of
estimation uncertainty were the same as those that applied to the
Consolidated Financial Statements as at and for the year ended 31
March 2024, other than one key new area:
Acquisition of FemtoTools AG (FemtoTools)
On the acquisition of a business in
order to comply with IFRS 3 (Revised) Business Combinations it is
necessary to reflect the assets and liabilities acquired at their
fair value. This requires certain estimates and assumptions in
relation to, inter alia, the forecast performance of the acquired
business, the expected life of certain intangible assets and the
likely future customer base of the business. In order to assist in
undertaking this Fair Value exercise, the Group appointed an
external firm of advisors. The exercise is incomplete as at the
date of this report so the fair value adjustments are reported on a
provisional basis. The provisional fair value adjustments arising
from this review are set out in Note 8.
Going
concern
The Financial Statements have been
prepared on a going concern basis based on the Directors' opinion,
after making reasonable enquiries, that the Group has adequate
resources to continue in operational existence for the foreseeable
future.
The Finance Review discloses
information relevant to the Group's financial position, its cash
flows, borrowing facilities and liquidity.
The directors have considered the
appropriateness of the going concern basis of preparation following
a detailed assessment of the risks to the Group as outlined above,
and have a reasonable expectation that the Group will be able to
continue operating and meet its liabilities as they fall due over a
period of 12 months from approval of these half year financial
statements.
On 19 March 2024 the Group entered
into a new multi-currency revolving facility agreement, which is
committed until March 2028 with 15-month and 12-month extension
options at the end of the first and second years respectively. The
facility has been entered into with four banks and comprises a
Euro-denominated multi-currency facility of €95m and a US Dollar
denominated multi-currency facility of $150m. Debt covenants are
net debt to EBITDA less than 3.0 times and EBITDA to interest
greater than 4.0 times. At the date of approving these financial
statements, the facility remains undrawn.
The relatively diverse nature of the
Group together with its current financial strength provides a solid
foundation. In its going concern assessment, the directors
considered several scenarios, including base case and downside
scenarios. The assessment is based on board approved budget,
incorporating severe but plausible scenarios in the forecast. These
scenarios reflected a 25% reduction in group's performance, a 25%
increase in working capital and a third scenario of incorporating
both. In each scenario the Group's cash balances remained positive
and the facility remains undrawn throughout the going concern
period to 12 November 2025.
Based on this assessment,
incorporating a review of current position, the scenarios, the
principal risks and mitigation, the Directors have a reasonable
expectation that the group will be able to continue operating and
meet its liabilities as they fall due over a period of 12 months
from approval of these half year financial statements and there are
no material uncertainties which may cast significant doubt over its
ability to continue as a going concern.
2
Segment information
The Group's operating segments were
previously combined into three aggregated operating segments;
Materials & Characterisation, Research & Discovery, and
Service & Healthcare. From 1 April 2024, these have now been
combined into two new 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 two aggregated operating segments is a
reportable segment. In the previous structure, service revenue for
operating segments was reported within Service & Healthcare, in
the new structure service revenue is reported within each
respective operating segment. The aggregated operating segments are
as follows:
- the Imaging & Analysis
segment comprises a group of businesses focussing on microscopy,
cameras, analytical instruments and software; and
- the Advanced Technologies
segment comprises a group of businesses focussing on compound
semiconductor fabrication equipment, cryogenic and superconducting
magnet technology and X-ray tubes.
Prior period results have been
adjusted to reflect the new operating segments.
The Group's internal management
structure and financial reporting systems differentiate the two
aggregated operating segments based on the economic characteristics
discussed above.
Reportable segment results include
items directly attributable to a segment as well as those which can
be allocated on a reasonable basis. The operating results of each
are regularly reviewed by the Chief Operating Decision Maker, which
is deemed to be the Executive Directors. Discrete financial
information is available for each segment and used by the Executive
Directors for decisions on resource allocation and to assess
performance. No asset information is presented below as this
information is not presented in reporting to the Group's Executive
Directors.
On 9th January 2024, the Group
acquired 100% of the issued share capital of First Light Imaging
which has been integrated into the Imaging & Analysis segment.
On 28th June 2024, the Group acquired 100% of the issued share
capital of FemtoTools which has been integrated into the Imaging
& Analysis segment. Further information can be found in Note
8.
Results
Half year to 30 September 2024
|
Imaging &
Analysis
|
Advanced
Technologies
|
Total
|
|
£m
|
£m
|
£m
|
External product revenue
|
126.0
|
60.5
|
186.5
|
External service revenue
|
27.9
|
11.4
|
39.3
|
Total external revenue
|
153.9
|
71.9
|
225.8
|
Inter-segment product
revenue
|
-
|
0.6
|
|
Total segment revenue
|
153.9
|
72.5
|
|
Segment adjusted operating
profit
|
35.9
|
(2.0)
|
33.9
|
Half year to 30 September
2023
|
Imaging
& Analysis
|
Advanced
Technologies
|
Total
|
|
£m
|
£m
|
£m
|
External product revenue
|
124.9
|
51.2
|
176.1
|
External service revenue
|
24.5
|
9.1
|
33.6
|
Total external revenue
|
149.4
|
60.3
|
209.7
|
Inter-segment product
revenue
|
-
|
0.8
|
|
Total segment revenue
|
149.4
|
61.1
|
|
Segment adjusted operating
profit
|
37.0
|
(0.5)
|
36.5
|
Revenue in the Imaging &
Analysis and Advanced Technologies segments represents the sale of
products and service income. No individual customer accounts for
more than 10% of revenue.
Reconciliation of reportable segment profit
Half year to 30 September 2024
|
Imaging &
Analysis
|
Advanced
Technologies
|
Unallocated Group
items
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
Segment adjusted operating
profit/(loss)
|
35.9
|
(2.0)
|
-
|
33.9
|
Restructuring costs and charges
associated with management changes
|
(1.6)
|
(0.4)
|
(0.2)
|
(2.2)
|
Transaction-related costs
|
(0.5)
|
(0.2)
|
-
|
(0.7)
|
Amortisation and impairment of
acquired intangibles
|
(4.7)
|
-
|
-
|
(4.7)
|
Fair value movement on financial
derivatives
|
-
|
-
|
2.7
|
2.7
|
Financial income
|
-
|
-
|
1.6
|
1.6
|
Financial expenditure
|
-
|
-
|
(1.0)
|
(1.0)
|
Release of contingent
consideration
|
2.1
|
-
|
-
|
2.1
|
Profit/(loss) before income
tax
|
31.2
|
(2.6)
|
3.1
|
31.7
|
Half year to 30 September
2023
|
Imaging
& Analysis
|
Advanced
Technologies
|
Unallocated Group items
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
Segment adjusted operating
profit/(loss)
|
37.0
|
(0.5)
|
-
|
36.5
|
Transaction-related costs
|
(0.4)
|
(0.3)
|
-
|
(0.7)
|
Intellectual property
litigation
|
-
|
(0.2)
|
-
|
(0.2)
|
Amortisation and impairment of
acquired intangibles
|
(4.6)
|
-
|
-
|
(4.6)
|
Fair value movement on financial
derivatives
|
-
|
-
|
(2.4)
|
(2.4)
|
Financial income
|
-
|
-
|
1.9
|
1.9
|
Financial expenditure
|
-
|
-
|
(0.9)
|
(0.9)
|
Profit/(loss) before income
tax
|
32.0
|
(1.0)
|
(1.4)
|
29.6
|
The Group's revenue by destination
of the end user is as follows:
Revenue
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
£m
|
£m
|
UK
|
8.9
|
12.8
|
China
|
49.4
|
65.1
|
Japan
|
15.1
|
16.0
|
USA
|
64.6
|
51.2
|
Germany
|
21.2
|
15.4
|
Rest of Europe
|
23.2
|
20.7
|
Rest of Asia
|
32.7
|
20.5
|
Rest of World
|
10.7
|
8.0
|
|
225.8
|
209.7
|
3
Adjusting items
In the preparation of adjusted
numbers, the Directors exclude certain items in order to assist
with comparability between peers and to give what they consider to
be a better indication of the underlying performance of the
business. In determining whether an event or transaction is an
adjusting item, the Directors consider quantitative as well as
qualitative factors such as the frequency or predictability of
occurrence.
These adjusting items are excluded
in the calculation of adjusted operating profit, adjusted profit
before tax, adjusted profit for the period, adjusted EBITDA
(defined as adjusted operating profit before depreciation and
amortisation of capitalised development costs), adjusted EPS,
adjusted cash conversion and adjusted effective tax rate. Details
of adjusting items are given below.
Adjusted EBITDA is calculated by
adding back depreciation of property, plant and equipment,
amortisation of right-of-use assets and amortisation of intangible
assets to adjusted operating profit, and can be found in the
condensed consolidated statement of cash flows. The calculation of
adjusted EPS can be found in Note 7. Adjusted effective tax rate is
calculated by dividing the share of tax attributable to adjusted
profit before tax by adjusted profit before tax. The definition of
cash conversion is set out in the Finance Review.
Reconciliation between operating profit and profit before
income tax and adjusted profit
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
Operating
profit
|
Profit before income
tax
|
Operating
profit
|
Profit
before income tax
|
|
£m
|
£m
|
£m
|
£m
|
Statutory measure
|
31.1
|
31.7
|
28.6
|
29.6
|
|
|
|
|
|
Intellectual property litigation
settlement
|
-
|
-
|
-
|
-
|
Adjustments relating to defined
benefit pension schemes
|
-
|
-
|
-
|
-
|
Transaction-related costs
|
0.7
|
0.7
|
0.7
|
0.7
|
Restructuring costs and charges
associated with management changes
|
2.2
|
2.2
|
-
|
-
|
Intellectual property litigation
costs
|
-
|
-
|
0.2
|
0.2
|
Amortisation and impairment of
acquired intangibles
|
4.7
|
4.7
|
4.6
|
4.6
|
Fair value movement on financial
derivatives
|
(2.7)
|
(2.7)
|
2.4
|
2.4
|
Unwind of discount in respect of
contingent consideration
|
-
|
0.1
|
-
|
-
|
Release of contingent
consideration
|
(2.1)
|
(2.1)
|
-
|
-
|
Total adjusting items
|
2.8
|
2.9
|
7.9
|
7.9
|
|
|
|
|
|
Adjusted measure
|
33.9
|
34.6
|
36.5
|
37.5
|
Adjusted income tax
expense
|
|
(8.7)
|
|
(9.0)
|
Adjusted profit
|
33.9
|
25.9
|
36.5
|
28.5
|
Adjusted effective tax
rates
|
|
25.1%
|
|
24.0%
|
Intellectual property litigation settlement
This represents one-off settlement
income in the Advanced Technologies segment from defending our
intellectual property.
Adjustments relating to defined benefit pension
schemes
During the prior year, the Group
recognised a one-off charge of £0.4m in respect of removing the
pension increase exchange at retirement option for deferred
members.
Transaction-related costs
These represent the costs of one-off
charges incurred at the balance sheet date relating to
transactional work.
Restructuring costs and charges associated with management
changes
In the current year, these represent
the costs of one-off restructuring within the group. In the prior
year, these represent £1.7m of costs associated with the relocation
of production facilities within the semiconductor business and
charges of £2.0m incurred in respect of the recruitment of the CEO
and one-off dual-running costs associated with this
appointment.
Intellectual property litigation costs
These represent one-off legal costs
to defend our intellectual property.
Amortisation and impairment of acquired
intangibles
Adjusted profit excludes the
non-cash amortisation and impairment of acquired intangible
assets.
Fair value movement on financial derivatives
Under IFRS 9, 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 IFRS 9 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 period is stated before changes in the valuation of
these instruments so that the underlying performance of the Group
can be more clearly seen.
Unwind of discount in respect of contingent
consideration
This represents the unwind of the
discount in respect of the contingent consideration on the
acquisition of FemtoTools (Note 8).
Release of contingent consideration
This represents the release of the
earn-out provision in respect of the acquisition of First Light
Imaging.
Adjusted income tax expense
Statutory income tax is adjusted for
the income tax impact on the adjusting items described above. In
the prior year, adjusted income tax also includes a prior year
adjustment in relation to deferred tax recognised on the Asylum
intangibles.
Reconciliation of changes in cash and cash equivalents to
movement in net cash after borrowings
|
Half year
to
30 September
2024
|
Year to
31
March
2024
|
|
£m
|
£m
|
Net decrease in cash and cash
equivalents
|
(43.4)
|
(13.1)
|
Effect of exchange rate fluctuations
on cash held
|
(1.7)
|
(2.9)
|
Movement in net cash in the
year
|
(45.1)
|
(16.0)
|
Bank loans at First Light Imaging
acquired
|
-
|
(2.2)
|
Repayment of borrowings
|
0.6
|
1.8
|
Net cash after borrowings at the
start of the period
|
83.8
|
100.2
|
Net
cash after borrowings at the end of the period
|
39.3
|
83.8
|
Reconciliation of net cash after borrowings to Statement of
Financial Position
|
Half year
to
30 September
2024
|
Year to
31
March
2024
|
|
£m
|
£m
|
Bank loans at First Light
Imaging
|
(0.4)
|
(0.8)
|
Covid-19 loan at WITec
|
(0.7)
|
(0.9)
|
Overdrafts
|
(12.6)
|
(12.3)
|
Cash and cash equivalents
|
53.0
|
97.8
|
Net
cash after borrowings at the end of the period
|
39.3
|
83.8
|
4
Research and development (R&D)
The total research and development
spend by the Group is as follows:
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
£m
|
£m
|
R&D expense charged to the
condensed consolidated statement of income
|
20.3
|
19.7
|
Less: amortisation of R&D costs
previously capitalised as intangibles
|
(0.3)
|
(0.3)
|
Add: amounts capitalised as
intangible assets
|
0.7
|
0.3
|
Total cash spent on R&D during the
period
|
20.7
|
19.7
|
5
Taxation
The total effective tax rate on
profits for the half year is 24.0% (prior half year: 24.7%). The
weighted average tax rate in respect of adjusted profit before tax
(see Note 3) for the half year is 25.1% (prior half year:
24.0%).
For the full year the Group expects
the tax rate in respect of adjusted profit before tax to be
24.5%.
6
Dividends
The following dividends per share
were paid by the Group:
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
pence
|
pence
|
Previous period final
dividend
|
15.9
|
-
|
Current period interim
dividend
|
-
|
-
|
|
15.9
|
-
|
The following dividends per share
were proposed by the Group in respect of each accounting period
presented:
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
pence
|
pence
|
Interim dividend
|
5.1
|
4.9
|
Final dividend
|
-
|
-
|
|
5.1
|
4.9
|
The interim dividend for the year to
31 March 2024 of 4.9 pence was approved by a sub-committee of the
Board on 13 November 2023 and was paid on 12 January 2024. The
final dividend for the year to 31 March 2024 of 15.9 pence per
share was approved by Shareholders at the Annual General Meeting on
25 July 2024 and was paid on 20 August 2024.
The interim dividend for the year to
31 March 2025 of 5.1 pence per share was approved by a
sub-committee of the Board on 5 November 2024 and has not been
included as a liability as at 30 September 2024. The interim
dividend is expected to be paid on 10 January 2025 to Shareholders
on the register on the record date of 29 November 2024, with an
ex-dividend date of 28 November 2024 and with the last date of
election for the Dividend Reinvestment Plan (DRIP) being 17
December 2024.
7
Earnings per share
Basic earnings per ordinary share
(EPS) is calculated by dividing the profit attributable to equity
shareholders of the parent by the weighted average number of
ordinary shares in issue during the period, excluding ordinary
shares held by the Employee Benefit Trust, which have been treated
as if they had been cancelled.
For the purposes of calculating
diluted and diluted adjusted EPS, the weighted average number of
ordinary shares is adjusted to include the weighted average number
of ordinary shares that would be issued on the conversion of all
potentially dilutive ordinary shares expected to vest, relating to
the company's share-based payment plans. Potential ordinary shares
are only treated as dilutive when their conversion to ordinary
shares would decrease EPS.
The following table shows the weight
average number of shares used in the calculation and the effect of
share options on the calculation of diluted earnings per
share:
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
Shares
|
Shares
|
|
million
|
million
|
Weighted average number of shares used in calculation of basic
earnings per share
|
58.0
|
57.7
|
Effect of shares under
option
|
0.7
|
0.8
|
Number of ordinary shares per diluted earnings per share
calculations
|
58.7
|
58.5
|
Basic and diluted EPS are based on
the profit for the period attributable to equity shareholders of
the parent, as reported in the consolidated statement of income.
Adjusted and diluted adjusted EPS are based on adjusted profit for
the period, as reported in Note 3:
|
Half year
to
30 September
2024
|
Half year
to
30
September 2023
|
|
|
|
|
|
|
£m
|
Pence
|
£m
|
Pence
|
Profit attributable to equity shareholders of the parent/Basic
EPS
|
24.1
|
41.6
|
22.3
|
38.6
|
Total underlying adjustments to
profit before tax (Note 3)
|
2.9
|
5.0
|
7.9
|
13.7
|
Related tax effects
|
(1.1)
|
(1.9)
|
(1.7)
|
(2.9)
|
Adjusted profit attributable to equity shareholders of the
parent/adjusted EPS
|
25.9
|
44.7
|
28.5
|
49.4
|
Diluted basic EPS
|
|
41.1
|
|
38.1
|
Diluted adjusted EPS
|
|
44.1
|
|
48.7
|
8
Acquisitions
Acquisition of First Light Imaging
On 9 January 2024, the Group
acquired 100% of the issued share capital of First Light Imaging
SAS ("First Light Imaging") on a cash-free, debt-free basis for
consideration of €19.3m (£16.6m), of which €3.0m (£2.5m) was
conditional on trading performance over a period of twelve months
from the acquisition. The conditions for the contingent
consideration were meeting certain revenue, order and margin
thresholds. In the calculations below, it was assumed that these
thresholds were to be met.
Retrospective adjustment for
prior year business combination accounting
A restatement has been made in the
prior year, in relation to a fair value adjustment to inventory at
acquisition of First Light Imaging.
In the consolidated financial
statements for the year ended 31 March 2024, provisional values for
the book and fair value of the assets and liabilities acquired were
used because the initial acquisition accounting was incomplete as
at the date of the report. A fair value adjustment has been made to
the provisionally reported amounts, reducing inventory by £0.3m
with a corresponding increase in goodwill. The book and fair value
of the assets and liabilities acquired given in the table below,
are no longer provisional.
As a result, the condensed
consolidated statement of financial position as at 31 March 2024
has been restated as follows:
|
31 March
2024
|
Restatement
|
31 March
2024 (restated)
|
|
£m
|
£m
|
£m
|
Condensed consolidated statement of financial
position
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
137.9
|
0.3
|
138.2
|
Current assets
|
|
|
|
Inventories
|
108.4
|
(0.3)
|
108.1
|
The restatement did not result in
any change to reported profit, earnings per share, net assets or
net cash from operating activities reported in the 2024 full-year
financial statements.
The book and fair value of the
assets and liabilities acquired is given in the table below. Fair
value adjustments have been made to better align the accounting
policies of the acquired business with the Group accounting
policies and to reflect the fair value of assets and liabilities
acquired.
|
Book value
|
Adjustments
|
Fair value
|
|
£m
|
£m
|
£m
|
Intangible assets
|
0.1
|
10.3
|
10.4
|
Property, plant and
equipment
|
0.5
|
-
|
0.5
|
Right-of-use assets
|
0.7
|
-
|
0.7
|
Inventories
|
1.7
|
(0.3)
|
1.4
|
Trade and other
receivables
|
2.9
|
-
|
2.9
|
Deferred tax
|
-
|
(2.6)
|
(2.6)
|
Trade and other payables
|
(2.1)
|
-
|
(2.1)
|
Lease liabilities
|
(0.7)
|
-
|
(0.7)
|
Bank loans
|
(2.2)
|
-
|
(2.2)
|
Cash
|
0.6
|
-
|
0.6
|
Net
assets acquired
|
1.5
|
7.4
|
8.9
|
Goodwill
|
|
|
5.7
|
Total consideration
|
|
|
14.6
|
Net debt acquired
|
|
|
1.6
|
Contingent consideration after
discounting to transaction date
|
|
(2.3)
|
Net
cash outflow relating to the acquisition
|
|
|
13.9
|
The goodwill arising is considered
to represent the value of the acquired workforce and the value of
technology that has not been individually fair valued.
Acquisition related costs in the
period of £0.1m were expensed to the condensed consolidated
statement of income as an adjusting item in the administration and
shared services cost line. Acquisition related costs in the prior
year of £0.7m were expensed to the condensed consolidated statement
of income as an adjusting item in the administration and shared
services cost line.
The acquisition contributed revenue
of £0.6m, adjusted operating loss of £0.6m and a statutory loss
before tax of £0.6m to the Group's profit for the prior
year.
If the acquisition had occurred on
the first day of the prior year the acquisition would have
contributed revenue of £5.7m, adjusted operating profit of £0.3m
and a statutory result before tax of £0.3m for the year ended 31
March 2024.
During the period, £0.5m of deferred
consideration in relation to a net asset adjustment was paid. This
is included within "acquisition net of subsidiaries, net of cash
acquired" in the period in the condensed consolidated statement of
cash flows.
It is now expected that the
thresholds to pay the remaining contingent consideration will not
be met and the payable has been released to the condensed
consolidated statement of income (Note 3).
Acquisition of FemtoTools
On 28 June 2024, the Group acquired
100% of the issued share capital of FemtoTools AG ("FemtoTools") on
a cash-free, debt-free basis for consideration of CHF 17.9m
(£15.8m), with a further CHF 5.5m (£4.8m) was conditional on
trading performance over a period of 33 months from the
acquisition. The conditions for the contingent consideration were
meeting certain revenue, order and margin thresholds. In the
calculations below, it has been assumed that these thresholds will
be met.
The book and provisional fair value
of the assets and liabilities acquired is given in the table below.
Provisional values have been used for all assets and liabilities,
including contingent tax, because the initial acquisition
accounting is incomplete at the date of this report. Fair value
adjustments have been made to better align the accounting policies
of the acquired business with the Group accounting policies and to
reflect the fair value of assets and liabilities
acquired.
|
Book value
|
Provisional
adjustments
|
Provisional fair
value
|
|
£m
|
£m
|
£m
|
Intangible assets
|
-
|
11.3
|
11.3
|
Property, plant and
equipment
|
0.3
|
-
|
0.3
|
Inventories
|
0.6
|
-
|
0.6
|
Trade and other
receivables
|
0.9
|
-
|
0.9
|
Deferred tax
|
0.1
|
(2.3)
|
(2.2)
|
Trade and other payables
|
(0.8)
|
-
|
(0.8)
|
Retirement benefit
obligations
|
(0.3)
|
-
|
(0.3)
|
Provisions
|
(0.1)
|
-
|
(0.1)
|
Cash
|
1.1
|
-
|
1.1
|
Net
assets acquired
|
1.8
|
9.0
|
10.8
|
Goodwill
|
|
|
8.8
|
Total consideration
|
|
|
19.6
|
Net cash acquired
|
|
|
(1.1)
|
Contingent consideration after
discounting to transaction date
|
|
|
(3.6)
|
Net
cash outflow relating to the acquisition
|
|
|
14.9
|
The goodwill arising is considered
to represent the value of the acquired workforce and the value of
technology that has not been individually fair valued.
Acquisition related costs in the
period of £0.3m were expensed to the condensed consolidated
statement of income as an adjusting item in the administration and
shared services cost line. There were no acquisition related costs
in the prior year in relation to this acquisition.
The acquisition contributed revenue
of £2.2m, adjusted operating profit of £0.6m and a statutory loss
before tax of £0.8m in the period.
If the acquisition had occurred on
the first day of the year the acquisition would have contributed
revenue of £3.5m, adjusted operating profit of £0.4m and a
statutory result before tax of £0.4m in the period.
9
Goodwill
|
Goodwill
|
|
£m
|
Cost
|
|
Balance at 1 April 2023
|
124.6
|
Additions - business combinations
(as restated Note 8)
|
5.7
|
Effect of movements in foreign
exchange rates
|
(0.8)
|
Balance at 31 March 2024 and 1 April
2024 as restated (Note 8)
|
129.5
|
|
|
Additions - business
combinations
|
8.8
|
Effect of movements in foreign
exchange rates
|
(1.7)
|
Balance at 30 September 2024
|
136.6
|
|
|
Impairment losses
|
|
Balance at 1 April 2023
|
22.9
|
Effect of movements in foreign
exchange rates
|
(0.3)
|
Balance at 31 March 2024 and 1 April
2024
|
22.6
|
|
|
Effect of movements in foreign
exchange rates
|
(0.7)
|
Balance at 30 September 2024
|
21.9
|
|
|
Carrying amounts
|
|
Balance at 1 April 2023
|
101.7
|
Balance at 31 March 2024 and 1 April
2024 as restated (Note 8)
|
106.9
|
Balance at 30 September 2024
|
114.7
|
Goodwill acquired in a business
combination is allocated, at acquisition, to the cash generating
units ("CGUs") that are expected to benefit from that business
combination. The carrying amount of goodwill was allocated to
individual CGUs as follows:
|
Half year
to
30 September
2024
|
As
at
31 March
2024
as
restated (1)
|
|
£m
|
£m
|
Imaging & Analysis
|
|
|
NanoAnalysis
|
9.8
|
9.9
|
Magnetic Resonance
|
2.3
|
2.3
|
WITec
|
20.4
|
21.0
|
Andor
|
66.8
|
67.0
|
FemtoTools
|
8.8
|
-
|
Advanced Technologies
|
|
|
NanoScience
|
6.6
|
6.7
|
|
114.7
|
106.9
|
(1) Details of restatement of
prior period numbers can be found in note 8.
In the current and prior period,
Andor includes a goodwill amount of £5.7m relating to the
acquisition of First Light Imaging as shown in Note 8. In the
current period, a provisional goodwill amount of £8.8m relates to
the acquisition of FemtoTools as also shown in Note 8. All other
movements in the year relate to changes in exchange
rates.
10
Financial instruments
Fair values of financial assets and
liabilities
The following table shows the
carrying amounts and fair values of financial assets and financial
liabilities, including their levels in the fair value hierarchy. It
does not include fair value information for financial assets and
financial liabilities not measured at fair value if the carrying
amount is a reasonable approximation of fair value.
|
|
As at
30 September
2024
|
Year
to
31 March
2024
|
|
Fair value
hierarchy
|
Carrying
amount
|
Fair value
|
Carrying
amount
|
Fair
value
|
|
|
£m
|
£m
|
£m
|
£m
|
Financial assets measured at fair value
|
|
|
|
|
|
Derivative financial
assets:
|
|
|
|
|
|
- Foreign currency
contracts
|
2
|
5.2
|
5.2
|
2.5
|
2.5
|
Financial assets measured at amortised cost
|
|
|
|
|
|
Long-term receivables
|
|
1.2
|
|
1.3
|
|
Trade receivables
|
|
82.2
|
|
84.9
|
|
Other receivables and accrued
income
|
|
16.9
|
|
15.1
|
|
Cash and cash equivalents
|
|
53.0
|
|
97.8
|
|
|
|
|
|
|
|
Financial liabilities measured at fair value
|
|
|
|
|
|
Derivative financial
liabilities:
|
|
|
|
|
|
- Foreign currency
contracts
|
2
|
(0.1)
|
(0.1)
|
(0.1)
|
(0.1)
|
- Contingent
consideration
|
3
|
(3.6)
|
(3.6)
|
(2.8)
|
(2.8)
|
Financial liabilities measured at amortised
cost
|
|
|
|
|
|
Trade and other payables
|
|
(58.4)
|
|
(75.8)
|
|
Bank overdrafts
|
|
(12.6)
|
|
(12.3)
|
|
Borrowings
|
|
(1.1)
|
|
(1.7)
|
|
Lease payables
|
|
(31.2)
|
|
(33.4)
|
|
The following summarises the major
methods and assumptions used in estimating the fair values of
financial instruments reflected in the above table.
Derivative financial instruments
Derivative financial instruments are
marked-to-market using market prices.
Fixed and floating rate borrowings
The fair value of fixed and floating
rate borrowings is estimated by discounting the future contracted
principal and interest cash flows using the market rate of interest
at the reporting date.
Trade and other receivables/payables
For receivables/payables with a
remaining life of less than one year, the carrying amount is deemed
to reflect the fair value. All other receivables/payables are
discounted to determine their fair value. Advances received are
excluded from other payables above as these are not considered to
be financial liabilities. Tax related receivables and payables are
excluded from the above table as these are not considered to be
financial assets and liabilities.
Lease payables
The lease liability is measured at
amortised cost using the effective interest method.
Fair value hierarchy
The table above gives details of the
valuation method used in arriving at the fair value of financial
instruments. The different levels have been identified as
follows:
- Level 1: quoted prices
(unadjusted) in active markets for identical assets and
liabilities;
- Level 2: inputs other than quoted
prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
- Level 3: inputs for the asset or
liability that are not based on observable market data.
There have been no transfers between
levels during the period.
11
Retirement benefit assets and obligations
The Group operates a defined benefit
plan in the UK. A full actuarial valuation of the UK plan was
carried out as at 31 March 2021 which, for reporting purposes, has
been updated to 30 September 2024 by a qualified independent
actuary.
At 31 March 2024, the scheme actuary
calculated a retirement benefit asset of £16.1m, being the net of
£239.7m of assets and a present value of future liabilities of
£223.6m.
In the period to 30 September 2024,
there has been an increase in the discount rate from 4.8% to 5.0%
and changes to market conditions have reduced the value of the
scheme's obligations. The impact of these changes has decreased the
benefit obligation to £218.6m (31 March 2024: £223.6m). There have
been no material changes to the demographic assumptions associated
with the scheme.
The Group has agreed a basis for
deficit recovery payments with the trustees of the UK pension
scheme. The deficit recovery payments are payable through to and
including 2026 and will rise by approximately 3% per annum. The
deficit recovery payment for the period was £4.4m (year to 31 March
2024: £8.5m). However, changes in market conditions reduced the
scheme's assets during the period. As a result, the fair value of
plan assets decreased to £237.8m (31 March 2024:
£239.7m).
The overall effect is that for the
purposes of IAS 19 the surplus on the scheme increased from £16.1m
to £19.2m.
On acquisition of FemtoTools AG on
28 June 2024, the Group now operates a defined benefit pension
scheme in Switzerland. At 30 September 2024 the overall position of
the scheme is a deficit of £0.3m which comprises a defined benefit
obligation of £1.9m and a fair value of plan assets of
£1.6m.
12
Related parties
There have been no related party
transactions in the first 6 months of the current financial year
which have materially affected the financial position or
performance of the Group.
Related parties are consistent with
those disclosed in the Group's annual report for the year ended 31
March 2024.
Principal risks and uncertainties
Information regarding the risk
management process in place at the Group is set out on pages 70 to
73 of the 2024 Report and Financial Statements.
The principal risks and uncertainties
identified through that process are set out on pages 73 to 78 of
the 2024 Report and Financial Statements and can be found on the
Group's website at www.oxinst.com.
In keeping with the risk management
process, the Group has performed a quarterly update of its risk
register as at 30 September 2024. It has evaluated the disclosures
made on pages 73 to 78 of the 2024 Report and Financial Statements
and has concluded that all of the risks identified continue to be
relevant for the remainder of the year ending 31 March
2025.
Further it considers that there are
no additional significant risks to be disclosed.
A summary of the risks and
uncertainties identified in the 2024 Report and Financial
Statements is set out below:
· Geopolitical risk
· Operational transformation risk
· Supply
chain risk
· Routes
to market risk
· New
Product Introduction risk
· Macroeconomic risk
· Cyber
/ Information Technology risk
· Legal
and regulatory compliance risk
· People
and capability risk
· Business interruption risk
· Climate change risk
The Board has reviewed the risk
ratings set out on page 73 and considers that no update is required
based on either the potential impact or likelihood of the risk
materialising.
Responsibility statement of the directors in respect of the
half-year financial statements
The Directors confirm that, to the
best of their knowledge:
· the
condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the UK; and
· the
interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure
Guidance 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 consolidated
interim 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
Guidance 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.
Richard Tyson
|
Gavin Hill
|
Chief Executive Officer
|
Chief Financial Officer
|
11 November 2024
Independent review report to Oxford Instruments
Plc
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 2024 is not prepared, in all
material respects, in accordance with UK adopted IAS 34 Interim
Financial Reporting and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct
Authority.
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
2024 which comprises the condensed consolidated statement of
income, 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.
Basis for conclusion
We conducted our review in
accordance with Revised International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK)
2410 (Revised)"). 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 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.
As disclosed in Note 1, the annual
financial statements of the group are prepared in accordance with
UK adopted International Accounting Standards (IAS) in conformity
with the requirements of the Companies Act 2006 and interpretations
issued by the IFRS Interpretations Committee (IFRIC) applicable to
companies reporting under UK adopted IFRS. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with UK adopted IAS 34 Interim
Financial Reporting.
Conclusions relating to going concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately
disclosed.
This conclusion is based on the
review procedures performed in accordance with ISRE (UK) 2410
(Revised), however future events or conditions may cause the group
to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report,
we are responsible for expressing to the Company a conclusion on
the condensed set of financial statement in the half-yearly
financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use
of our report
Our report has been prepared in
accordance with the terms of our engagement to assist the Company
in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this
report unless such a person is a person entitled to rely upon this
report by virtue of and for the purpose of our terms of engagement
or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
Reading, UK
11 November 2024
BDO LLP is a limited liability
partnership registered in England and Wales (with registered number
OC305127).