REG - Oxford Instruments - Final Results <Origin Href="QuoteRef">MASAM.L</Origin> <Origin Href="QuoteRef">OXIG.L</Origin> - Part 2
06/09/2014 02:05
- Part 2: For the preceding part double click ID:nRSJ2050Ja
Profit for the year 18.2 21.0
Adjustments for:
Income tax expense 5.8 7.4
Net financial expense - 4.5
Acquisition related fair value adjustments to inventory 3.7 0.5
Acquisition related costs 7.8 2.1
Settlement loss on US pension scheme 0.1 -
Amortisation and impairment of acquired intangibles 14.7 13.8
Depreciation of property, plant and equipment 5.0 4.6
Amortisation and impairment of capitalised development costs 3.9 3.9
Adjusted earnings before interest, tax, depreciation and amortisation 59.2 57.8
Loss on disposal of property, plant and equipment 0.3 0.2
Cost of equity settled employee share schemes 1.6 1.4
Acquisition related costs paid (6.4) (1.2)
Cash payments to the pension scheme more than the charge to operating profit (5.4) (4.9)
Operating cash flows before movements in working capital 49.3 53.3
(Increase)/decrease in inventories (2.9) 4.7
Increase in receivables (3.8) (9.4)
(Decrease)/Increase in payables and provisions (3.3) 2.8
Decrease in customer deposits (10.9) (1.0)
Cash generated from operations 28.4 50.4
Interest paid (1.0) (0.5)
Income taxes paid (6.2) (8.4)
Net cash from operating activities 21.2 41.5
Cash flows from investing activities
Proceeds from sale of product line and subsidiary - 1.0
Acquisition of subsidiaries, net of cash acquired (165.7) (20.1)
Acquisition of property, plant and equipment (6.8) (8.6)
Capitalised development expenditure (5.4) (4.6)
Net cash used in investing activities (177.9) (32.3)
Cash flows from financing activities
Proceeds from issue of share capital 0.8 0.4
Increase in borrowings 156.9 -
Dividends paid (6.4) (5.6)
Net cash from financing activities 151.3 (5.2)
Net (decrease)/increase in cash and cash equivalents (5.4) 4.0
Cash and cash equivalents at beginning of the year 39.2 35.1
Effect of exchange rate fluctuations on cash held (1.2) 0.1
Cash and cash equivalents at end of the year 32.6 39.2
Reconciliation of changes in cash and cash equivalents to movement in net debt
(Decrease)/Increase in cash and cash equivalents (5.4) 4.0
Effect of foreign exchange rate changes on cash and cash equivalents (1.2) 0.1
(6.6) 4.1
Cash inflow from increase in debt (156.9) -
Movement in net cash in the year (163.5) 4.1
Net cash at start of the year 39.2 35.1
Net (debt)/cash at the end of the year (124.3) 39.2
*See note 8 for details of restatement of comparative information.
1 NON-GAAP MEASURES
The Directors present the following non-GAAP measures as they consider that
they give a better indication of the underlying performance of the business.
Reconciliation between profit before income tax and adjusted profit
2014£m 2013 (Restated)*£m
Profit before income tax 24.0 28.4
Reversal of acquisition related fair value adjustments to inventory 3.7 0.5
Acquisition related costs 7.8 2.1
Amortisation and impairment of acquired intangibles 14.7 13.8
Unwind of discount in respect of deferred consideration 0.9 0.2
Mark to market (gain)/loss in respect of derivative financial instruments (4.1) 2.0
Settlement loss on US pension scheme 0.1 -
Adjusted profit before income tax 47.1 47.0
Share of taxation (8.7) (9.7)
Adjusted profit for the year 38.4 37.3
*See note 8 for details of restatement of comparative information.
The reversal of acquisition related fair value adjustments to inventory are
excluded from adjusted profit to provide a measure that includes results from
acquired businesses on a consistent basis over time to assist comparison of
performance.
Acquisition related costs comprise professional fees incurred in relation to
mergers and acquisitions activity, post acquisition restructuring costs and
any consideration which, under IFRS 3 (revised), falls to be treated as a
post-acquisition employment expense.
In common with a number of other companies adjusted profit excludes the
non-cash amortisation and impairment of acquired intangible assets and
goodwill, along with the unwind of discounts in respect of deferred
consideration.
During the year the Group purchased annuities for 27 members of the US defined
benefit pension scheme. A settlement loss of £0.1m crystallised on purchase.
Under IAS 39, all derivative financial instruments are recognised initially at
fair value. Subsequent to initial recognition, they are also measured at fair
value. In respect of instruments used to hedge foreign exchange risk and
interest rate risk the Group does not take advantage of the hedge accounting
rules provided for in IAS 39 since that standard requires certain stringent
criteria to be met in order to hedge account, which, in the particular
circumstances of the Group, are considered by the Board not to bring any
significant economic benefit. Accordingly, the Group accounts for these
derivative financial instruments at fair value through profit or loss. To the
extent that instruments are hedges of future transactions, adjusted profit for
the year is stated before changes in the valuation of these instruments so
that the underlying performance of the Group can be more clearly seen.
In calculating the share of tax attributable to adjusted profit before tax in
2011 a one-off recognition of deferred tax assets relating to the Group's UK
businesses of £11.3m was excluded. At that time the Group announced its
intention to exclude the reversal of this deferred tax from the calculation of
the share of tax attributable to adjusted profit before tax in the years in
which it reverses. In the current period deferred tax of £2.2m (2013: £3.3m)
has reversed and consequently been excluded from the tax attributable to
adjusted profit before tax.
2 earnings per share
The calculation of basic and adjusted earnings per share is based on the
profit for the year as shown in the Consolidated Statement of Income and the
adjusted profit for the year as shown in note 1 respectively. Basic and
adjusted earnings are divided by the weighted average number of ordinary
shares outstanding during the year, excluding shares held by the Employee
Share Ownership Trust.
2014£m 2013(Restated)* £m
Basic earnings 18.2 21.0
Adjusted earnings (note 1) 38.4 37.3
Weighted average number of shares 56.8 56.2
pence pence
Basic earnings per share 32.1 37.4
Adjusted earnings per share 67.7 66.5
*See note 8 for details of restatement of comparative information.
The weighted average number of shares used in the calculation excludes shares
held by the Employee Share Ownership Trust, as follows:
2014Sharesmillion 2013Sharesmillion
Weighted average number of shares outstanding 57.0 56.4
Less shares held by Employee Share Ownership Trust (0.2) (0.2)
Weighted average number of shares used in calculation of basic earnings per share 56.8 56.2
The following table shows the effect of share options on the calculation of
diluted earnings per share:
2014Sharesmillion 2013Sharesmillion
Weighted average number of ordinary shares per basic earnings per share calculations 56.8 56.2
Effect of shares under option 0.4 0.6
Weighted average number of ordinary shares per diluted earnings per share calculations 57.2 56.8
3 SEGMENT Information
The Group has seven operating segments. These operating segments have been
combined into three aggregated operating segments to the extent that they have
similar economic characteristics, with relevance to products and services,
type and class of customer, methods of sale and distribution and the
regulatory environment in which they operate. Each of these three aggregated
operating segments is a reportable segment.
The Group's internal management structure and financial reporting systems
differentiate the three aggregated operating segments on the basis of the
economic characteristics discussed below:
· the Nanotechnology Tools segment contains a group of businesses
supplying similar products, characterised by a high degree of customisation
and high unit prices. These are the Group's highest technology products
serving research customers in both the public and private sectors. The results
of Andor Technology, acquired during the year, are included in this segment;
· the Industrial Products segment contains a group of businesses
supplying high technology products and components manufactured in medium
volume for industrial customers; and
· the Service segment contains the Group's service business as well as
service revenues from other parts of the Group.
3 SEGMENT Information CONT'D
Reportable segment results include items directly attributable to a segment as
well as those which can be allocated on a reasonable basis. Inter-segment
pricing is determined on an arm's length basis. The operating results of each
are regularly reviewed by the Chief Operating Decision Maker, which is deemed
to be the Board of Directors. Discrete financial information is available for
each segment and used by the Board of Directors for decisions on resource
allocation and to assess performance. No asset information is presented below
as this information is not presented in reporting to the Group's Board of
Directors.
a) Analysis by business
Year to 31 March 2014 NanotechnologyTools£m IndustrialProducts£m Service£m Total£m
External revenue 180.5 113.3 66.3 360.1
Inter-segment revenue 0.1 1.4 0.1
Total segment revenue 180.6 114.7 66.4
Segment adjusted operating profit 21.2 15.6 13.5 50.3
Year to 31 March 2013 NanotechnologyTools£m IndustrialProducts£m Service£m Total£m
External revenue 165.8 124.5 60.5 350.8
Inter-segment revenue 0.3 0.6 0.1
Total segment revenue 166.1 125.1 60.6
Segment adjusted operating profit (restated*) 20.6 17.3 11.4 49.3
*See note 8 for details of restatement of comparative information.
Reconciliation of reportable segment profit
2014£m 2013(restated)*£m
Adjusted profit for reportable segments 50.3 49.3
Acquisition related costs (7.8) (2.1)
Settlement loss on US pension scheme (0.1) -
Reversal of acquisition related fair value adjustments to inventory (3.7) (0.5)
Amortisation and impairment of acquired intangibles (14.7) (13.8)
Financial income 4.4 0.3
Financial expenditure (4.4) (4.8)
Profit before income tax 24.0 28.4
*See note 8 for details of restatement of comparative information.
4 RESEARCH AND DEVELOPMENT
The total R&D spend by the Group is as follows:
2014 2013
NanotechnologyTools£m IndustrialProducts£m Total£m NanotechnologyTools£m IndustrialProducts£m Total£m
R&D expense charged to the Consolidated Statement of Income 17.6 7.5 25.1 17.0 7.3 24.3
Less: depreciation of R&D related fixed assets (0.2) (0.6) (0.8) (0.2) (0.5) (0.7)
Add: amounts capitalised as fixed assets 0.6 1.5 2.1 0.1 0.7 0.8
Less: amortisation of R&D costs previously capitalised as intangibles (3.0) (0.9) (3.9) (2.9) (1.0) (3.9)
Add: amounts capitalised as intangible assets 3.8 1.6 5.4 2.7 1.9 4.6
Total cash spent on R&D during the year 18.8 9.1 27.9 16.7 8.4 25.1
5 ACQUISITIONS
Andor Technology plc
On 21 January 2014 the Group acquired 100% of the issued listed share capital
of Andor Technology plc for a net cash consideration of £158.1m. Andor is a
market leading supplier of high performance optical cameras, microscope
systems and software.
The book and provisional fair values of the assets and liabilities acquired
are given in the table below. Fair value adjustments have been made to better
align the accounting policies of the acquired business with the Group
accounting policies and to reflect the fair value of assets and liabilities
acquired. The business has been acquired for the purpose of integrating into
the Nanotechnology Tools segment where it is believed that synergies can be
obtained particularly in respect of routes to market.
Book value£m Provisional Adjustments£m Provisional Fair value£m
Intangible fixed assets 9.4 70.2 79.6
Tangible fixed assets 6.0 (4.0) 2.0
Inventories 11.1 3.0 14.1
Trade and other receivables 10.3 - 10.3
Trade and other payables (13.5) (1.3) (14.8)
Deferred tax (0.5) (15.6) (16.1)
Cash 17.2 - 17.2
Net assets acquired 40.0 52.3 92.3
Goodwill 83.0
Total consideration 175.3
Cash acquired (17.2)
Net cash outflow relating to the acquisition 158.1
The goodwill arising is not tax deductible and is considered to represent the
value of the acquired workforce and synergistic benefits expected to arise
from the acquisition.
The fair values shown are provisional in respect of deferred tax assets and
liabilities and provisions relating to certain claims since at the time of
publication of these financial statements it has not been possible to fully
ascertain all information necessary to compute the amounts which should be
included in the opening balance sheet.
RoentgenAnalytik Systeme GmbH
On 31 December 2013 the Group acquired 100% of the issued share capital of
Roentgenanalytik Systeme GmbH for a net cash consideration of £1.6m.The
company specialises in designing and supplying instruments for coating
thickness measurement and material analysis, using X-ray fluorescence (XRF).
The book and provisional fair values of the assets and liabilities acquired
are given in the table below. Fair value adjustments have been made to better
align the accounting policies of the acquired business with the Group
accounting policies and to reflect the fair value of assets and liabilities
acquired. The business has been acquired to strengthen Oxford Instruments'
range of X-ray Fluorescence (XRF) materials and coating thickness analysers.
Book value£m Provisional Adjustments£m Provisional Fair value£m
Intangible fixed assets - 1.2 1.2
Inventories 0.2 - 0.2
Trade and other receivables 0.1 - 0.1
Trade and other payables (0.3) 0.2 (0.1)
Cash 0.1 - 0.1
Net assets acquired 0.1 1.4 1.5
Goodwill 0.2
Total consideration 1.7
Cash acquired (0.1)
Net cash outflow relating to the acquisition 1.6
The goodwill arising is tax deductible in full and is considered to represent
the value of the acquired workforce and synergistic benefits expected to arise
from the acquisition. The fair values shown are provisional in respect of
provisions relating to certain claims since at the time of publication of
these financial statements it has not been possible to fully ascertain all
information necessary to compute the amounts which should be included in the
opening balance sheet.
RMG Technology Ltd
On 8 November 2013 the Group acquired 100% of the issued share capital of RMG
Technology Limited for an initial net cash consideration of £5.7m. RMG is a UK
business specialising in Laser Induced Breakdown Spectrography.
The book and provisional fair values of the assets and liabilities acquired
are given in the table below. Fair value adjustments have been made to better
align the accounting policies of the acquired business with the Group
accounting policies. The business has been acquired for the purpose of
integrating into the Industrial Analysis segment where it will add a unique
hand-held analyser to the Group's product portfolio.
Book value£m Provisional Adjustments£m Provisional Fair value£m
Intangible fixed assets - 8.2 8.2
Inventories 0.1 - 0.1
Trade and other receivables 0.2 - 0.2
Trade and other payables (0.3) - (0.3)
Deferred tax - (1.6) (1.6)
Cash 0.4 - 0.4
Net assets acquired 0.4 6.6 7.0
Goodwill 0.5
Total consideration 7.5
Cash acquired (0.4)
Contingent consideration (1.4)
Net cash outflow relating to the acquisition 5.7
The goodwill arising is not tax deductible and is considered to represent the
value of the acquired workforce and synergistic benefits expected to arise
from the acquisition. Further contingent consideration of up to £4m is
payable based on revenue of the acquired business in the year to 31 March
2015.
The fair values shown are provisional in respect of provisions relating to
certain claims since at the time of publication of these financial statements
it has not been possible to fully ascertain all information necessary to
compute the amounts which should be included in the opening balance sheet.
The three acquisitions above contributed revenue of £15.3m and a reported
operating profit of £2.9m to the Group's result for the period. Had the
acquisitions taken place on 1 April 2013 the equivalent Group numbers would
have been revenue of £409.1m and a reported operating profit of £28.6m.
Acquisition costs of £4.0m, £0.1m and £0.1m have been charged to the
consolidated statement of income as adjusting items in respect of the
purchases of Andor Technology plc, RoentgenAnalytik Systeme GmbH and RMG
Technology Ltd respectively.
The book value of receivables in the tables above represent the gross
contractual amounts receivable. The fair value adjustments to receivables
represent the best estimate at the acquisition date of the cash flows not
expected to be collected.
Asylum Research Corporation
On 19 December 2012 the Group acquired the trade and certain assets of Asylum
Research Corporation for an initial cash consideration of £19.8m. Further
contingent consideration of between £2.0m and £31.6m is payable based on post
acquisition business performance. At 31 March 2014 £6.5m is provided in the
accounts in respect of this contingent consideration being the fair value of
the contingent consideration payable. Asylum Research is a leading
manufacturer of atomic force and scanning probe microscopes and is
headquartered in Santa Barbara, USA with subsidiaries in the UK, Germany and
Taiwan.
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. The business has been acquired for the purpose of integrating into
the Nanotechnology Tools segment where it is believed that synergies can be
obtained particularly in respect of routes to market.
Book value£m Adjustments£m Fair value£m
Intangible fixed assets - 14.4 14.4
Tangible fixed assets 0.4 (0.1) 0.3
Inventories 2.4 (0.3) 2.1
Trade and other receivables 1.7 - 1.7
Trade and other payables (2.3) (0.2) (2.5)
Deferred tax - 0.3 0.3
Net assets acquired 2.2 14.1 16.3
Goodwill 9.3
Total consideration 25.6
Contingent consideration at acquisition (5.8)
Net cash outflow relating to the acquisition 19.8
The goodwill arising is tax deductible in full and is considered to represent
the value of the acquired workforce and synergistic benefits expected to arise
from the acquisition.
6 INCOME TAX EXPENSE
Recognised in the Consolidated Statement of Income
2014£m 2013(Restated)*£m
Current tax expense
Current year 6.5 8.8
Adjustment in respect of prior years (0.1) (1.0)
6.4 7.8
Deferred tax expense
Origination and reversal of temporary differences 0.2 (0.4)
Recognition of deferred tax not previously recognised - (0.2)
Adjustment in respect of prior years (0.8) 0.2
(0.6) (0.4)
Total tax expense 5.8 7.4
Reconciliation of effective tax rate
Profit before income tax 24.0 28.4
Income tax using the UK corporation tax rate of 23% (2013: 24%) 5.5 6.8
Effect of:
Tax rates other than the UK standard rate 1.7 1.9
Change in rate at which deferred tax recognised (0.2) (0.3)
Non-taxable income and expenses (0.1) 0.8
Tax incentives not recognised in the Consolidated Statement of Income (0.4) (1.2)
Recognition of deferred tax not previously recognised - (0.2)
Movement in unrecognised deferred tax 0.2 0.4
Adjustment in respect of prior years (0.9) (0.8)
Total tax expense 5.8 7.4
Taxation charge/(credit) recognised in other comprehensive income
Deferred tax - relating to employee benefits 1.0 (3.5)
1.0 (3.5)
Taxation charge/(credit) recognised directly in equity
Deferred tax - relating to share options 0.4 (2.2)
*See note 8 for details of restatement of comparative information.
On 20 March 2013 the Chancellor announced that the UK corporation tax rate
will reduce to 20% by 1 April 2015.
Reductions in the UK corporation tax rate from 26% to 24% (effective from 1
April 2012) and to 23% (effective 1 April 2013)weresubstantively enacted on26
March 2012 and 3 July 2012 respectively. Further reductions to 21% (effective
from 1 April 2014)and 20% (effective from 1 April 2015) weresubstantively
enacted on2July 2013. The UK deferred tax balances at 31 March 2014 have been
calculated based on the rate of 20% which was substantively enacted at the
balance sheet date.
7 dividends per share
The following dividends per share were paid by the Group:
2014pence 2013pence
Previous year interim dividend 3.05 2.772
Previous year final dividend 8.15 7.228
11.20 10.000
The following dividends per share were proposed by the Group in respect of
each accounting year presented:
2014pence 2013pence
Interim dividend 3.36 3.05
Final dividend 9.04 8.15
12.40 11.20
The interim dividend was not provided for at the year end and was paid on 7
April 2014. The payment of the interim dividend remains discretionary until it
is paid. The final proposed dividend of 9.04p per share (2013: 8.15p) was not
provided at the year end and will be paid on 23 October 2014 subject to
authorisation by the shareholders at the forthcoming Annual General Meeting.
8 BASIS OF PREPARATION
Except as noted below, this preliminary statement has been prepared under the
same accounting policies as those used to prepare the 2013 Report and
Financial Statements.
IAS 19 restatement
As a result of the amendments to IAS 19 Employee Benefits, the Group has
changed its accounting policy with respect to determining the income or
expense related to its defined benefit pension scheme. The standard prescribes
that an interest expense or income is calculated on the net defined benefit
liability by applying the discount rate to the net defined benefit liability.
This replaces the interest expense on the defined benefit obligation and the
expected return on plan assets. In addition, the revised standard clarifies
the treatment for scheme administration expenses. The revised standard
requires retrospective application therefore the table below reflects the
adjustments made to the comparative amounts for the year ended 31 March 2013.
The restatements in the year ended 31 March 2013 comprise the reversal of the
interest expense on the defined benefit obligation of £10.4m and the interest
income on pension scheme assets of £9.5m to be replaced by a net interest
expense of £1.7m and an increase in the scheme administration expenses charged
to the consolidated income statement of £0.4m. The associated income tax has
been restated accordingly. Actuarial losses recognised in the consolidated
statement of comprehensive income of £16.9m have been restated into a
remeasurement loss of £15.7m with the associated income tax also restated.
31 March 2013£m
Consolidated income statement
Increase in administrative and shared service expenses (0.4)
Decrease in finance expense 8.7
Decrease in finance income (9.5)
Decrease in income tax expense 0.2
Decrease in profit for the period (1.0)
Decrease in basic and diluted earnings per share (1.8p)
Consolidated statement of comprehensive income
Other comprehensive income:
Decrease in re-measurement of defined benefit plans 1.2
Decrease in income tax on other comprehensive income (0.2)
Increase in other comprehensive income 1.0
The revised standard stipulates that remeasurement gains and losses are
recognised immediately in the periods in which they occur. The Group already
adopted this policy and therefore there are no changes to the consolidated
balance sheet and consolidated cash flow statement.
In the current year, the revised standard has had the effect of reducing the
Group's profit after tax by £2.0m and reducing the remeasurement loss on
post-retirement benefits by the same amount.
The principal exchange rates used to translate the Group's overseas results
were as follows:
Year end rates 2014 2013
US Dollar 1.67 1.52
Euro 1.21 1.18
Yen 172 143
Average translation rates 2014 US Dollar Euro Yen
April 2013 1.53 1.19 147
May 1.53 1.18 152
June 1.52 1.17 152
July 1.53 1.16 151
August 1.54 1.17 151
September 1.58 1.18 155
October 1.62 1.18 158
November 1.63 1.19 163
December 1.65 1.20 171
January 2014 1.65 1.21 171
February 1.66 1.22 169
March 1.67 1.21 171
Average translation rates 2013 US Dollar Euro Yen
Quarter 1 1.58 1.23 127
Quarter 2 1.59 1.26 125
Quarter 3 1.61 1.24 132
Quarter 4 1.56 1.19 142
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 March 2014 or 2013. Statutory
accounts for 2013 have been delivered to the registrar of companies, and those
for 2014 will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include a reference
to any matters to which the auditor 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 Company is registered in England Number 775598.
9 The Annual General Meeting
The Annual General Meeting will be held on Tuesday, 9 September 2013 at 2.30
pm at Group Head Office, Tubney Woods, Abingdon, Oxfordshire, OX13 5QX.
PRINCIPAL RISKS
Specific Risk Context Risk Possible Impact Associated strategic priorities Mitigation
Technical Risk The Group provides high technology equipment and systems to its customers. Failure of the advanced technologies applied by the Group to produce commercial products, capable of being manufactured and sold profitably. Lower profitability and financial returns.Negative impact on the Group's reputation. 'Realising the Brand' - Using 'Voice of the Customer' to drive rapid new product development. 'Liberate Cash' - Support and develop our employees to maximise their value add. The Group has moved away from large scale, single customer development programmes
towards more commercially orientated products. The New Product Introduction programme
that any new R&D projects must pass through provides a framework within which the
commercial viability of projects are scrutinised and assessed.
Economic Environment The recent global recession and prevailing economic downturn have resulted in cuts to both government and private sector spending. Demand for the Group's products may be lower than anticipated. Lower profitability and financial returns. 'Realising the Brand' - Developing a strong brand in existing and developing markets. 'Delivering Shareholder Value' - Focus on balanced and attractive global markets. The Group has a broad spread of customers, applications and geographical markets. The
Group is expanding in the so called BRIC nations, whose markets have been more
resilient during the economic downturn.
Acquisitions Part of the growth of Oxford Instruments is planned to come from acquisitions which provide the Group with complementary technologies. Appropriate acquisition targets may not be available in the necessary timescale.Alternatively, once acquired, targets may fail to provide the planned value. Lower profitability and financial returns.Management focus taken away from the core business in order to manage integration issues. 'Realising the Brand' - Developing a strong brand in existing and developing markets. 'Inventing the Future' - Using "Voice of the Customer" to drive rapid new product development. 'Adding Personal Value' - Supporting and developing our employees. Extensive financial and technical due diligence is undertaken by the Group during any
acquisition programmes. Each transaction has a comprehensive post acquisition
integration plan which is reviewed at the highest level.
Foreign exchange volatility A significant proportion of the Group's profit is made in foreign currencies. The Group's profit levels are exposed to fluctuations in exchange rates. Lower profitability and financial returns 'Delivering Shareholder Value' - Focus on balanced and attractive global markets. 'Liberating Cash' -Developing a competitive global supply base that supports our growth. The Group seeks to mitigate the exposure to transactional risk by the use of natural
hedges wherever possible. The remaining transactional foreign exchange risk in any
year is mitigated through the use of forward and non-premium based option exchange
contracts.
Outsourcing The Group's strategic plan includes the outsourcing of a significantly higher proportion of the costs of its products to benefit from economies of scale and natural currency hedges. Failures in the supply chain impacting sales. Disruption to customers.Negative impact on the Group's reputation. 'Liberating Cash' - Developing a competitive global supply base that supports our growth. 'Realising the Brand' - Developing a strong brand in existing and developing markets. Relationships with outsourcing businesses are monitored closely and any potential
issues are acted upon swiftly to avoid disruption. Where practical dual sources are
used for key components and services.
Pensions The Group's calculated pension deficit is sensitive to changes in the actuarial assumptions. Movements in the actuarial assumptions may have an appreciable effect on the reported pension deficit. Additional cash required by the Group to fund the deficit.Reduction in net assets. 'Delivering Shareholder Value' - Focus on balanced and attractive global markets. 'Liberating Cash' - Developing a competitive global supply base that supports our growth. The Group has closed its defined benefit pension schemes in the UK and US to future
accrual. The Group has a funding plan in place to reduce the pension deficit over
the short to medium term.
People A number of the Group's employees are business critical. The employee leaves the Group. Lower profitability and financial returns. 'Adding Personal Value' - Supporting and developing our employees. 'Inventing the Future' - Providing an environment for inventing and innovation. The Group undertakes a regular employee survey and implements and reviews resulting
action plans. A comprehensive succession planning process is in place, together with
a talent network which identifies and manages contacts with people who could provide
external succession for critical current and future roles. A management development
- More to follow, for following part double click ID:nRSJ2050JcRecent news on Oxford Instruments
See all newsREG-Oxford Instruments Plc: Holding(s) in Company
AnnouncementREG-Oxford Instruments Plc: Holding(s) in Company
AnnouncementREG - Oxford Instruments - Trading Update
AnnouncementREG-Oxford Instruments Plc: Holding(s) in Company
AnnouncementREG-Oxford Instruments Plc: Director/PDMR Shareholding
Announcement