REG - Oxford Instruments - Final Results <Origin Href="QuoteRef">OXIG.L</Origin> - Part 2
13/06/2017 07:05
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0.8 0.2
Adjusted operating cash flow 39.7 46.4
Interest (5.0) (5.6)
Tax (2.1) (3.5)
Capitalised development expenditure (7.9) (8.2)
Expenditure on tangible and intangible assets (4.1) (5.3)
Acquisition of subsidiaries, net of cash acquired (9.8) (27.1)
Proceeds from sale of subsidiary undertaking 12.2 0.6
Increase in long-term receivables - (3.0)
Dividends paid (7.4) (7.6)
Decrease/(increase) in borrowings (12.8) 4.6
Net increase/(decrease) in cash and cash equivalents from continuing operations 2.8 (8.7)
Note: Adjusted EBITDA is earnings before interest, tax, depreciation,
intangible amortisation, mark-to-market of financial derivatives and other
non-cash adjusting items
3.1 Adjusted operating Cash Flow
Adjusted operating cash flow in the year decreased by 14.4% to £39.7 million
(2016: £46.4 million). Adjusted operating cash (defined as adjusted EBITDA,
less movement in working capital, capitalised development expenditure and
capital expenditure) represents 86.1% (2016: 110.4%) of adjusted operating
profit due to an outflow of working capital over the period.
The working capital outflow of £4.4 million reflects an increase in
inventories of £1.5 million, a decrease in receivables of £0.6 million and a
decrease in payables of £3.5 million. The increase in inventories primarily
reflects a build up of refurbished imaging system inventory prior to sale or
rental. We have experienced a planned reduction in payables as we move to a
smoother phasing of payments compared to the previous year end.
3.2 Interest
Net interest paid was £5.0 million (2016: £5.6 million). The difference from
last year is primarily due to lower financing costs arising from a lower level
of average net debt compared to the comparative period.
3.3 Tax
Tax paid was £2.1 million (2016: £3.5 million), the reduction reflecting
utilisation of brought forward tax losses in Germany and the UK. Losses in
Germany arose from the Omicron business while losses in the UK related to
restructuring costs and the roll forward of R&D credits.
3.4 Investment in research and development (R&D)
Total cash spend on R&D in the year was £30.3 million, equivalent to 8.7% of
sales, (2016: £28.3 million, 8.9% of sales). A reconciliation between the
amounts charged to the Income Statement and the cash spent is given below:
Table 3: Investment in research and development (R&D)
Year ended31 March 2017£m Year ended31 March 2016£m
R&D expense charged to the Income Statement 27.8 23.6
Depreciation of R&D related fixed assets (0.1) (0.8)
Amounts capitalised as fixed assets 0.2 1.2
Amortisation and impairment of R&D costs capitalised as intangibles (5.5) (3.9)
Amounts capitalised as intangible assets 7.9 8.2
Total cash spent on R&D during the year 30.3 28.3
4 Acquisitions and Disposals
In the first half of the year acquisition payments comprised US$ 10.1 million
(£6.5 million) for the final deferred consideration on Medical Imaging
Resources, Inc ('MIR') and £0.3 million attributable to the purchase of Asylum
Research Corporation ('Asylum'). In the second half of the year £3.0 million
was paid for deferred consideration on an inherited Andor earn-out.
The Superconducting Wire business was sold on 17 November 2016 for US$ 17.5
million (£14.2 million). Cash proceeds of £12.2 million reflect deferred
consideration and cash transferred on disposal.
5 Net debt and funding
5.1 Net debt
Net debt decreased in the period from £128.2 million to £109.3 million.
Operating cash flow was £39.7 million. Expenditure of £9.8 million relates to
deferred consideration payable for MIR, Asylum and financial commitments made
by Andor prior to acquisition. Disposal proceeds of £12.2 million relate to
the sale of Superconducting Wire. The Group invested in tangible and
intangible assets of £4.1 million and capitalised development costs of £7.9
million.
Table 4: Movement in net debt
£m
Net debt as at 31 March 2016 128.2
Operating cash flow (39.7)
Interest 5.0
Tax 2.1
Capital expenditure on tangible and intangible assets 4.1
Capitalised development expenditure 7.9
Acquisitions, net of cash acquired and loan to associate 9.8
Proceeds from sale of subsidiary undertaking (12.2)
Dividends paid 7.4
Other items (3.3)
Net debt as at 31 March 2017 109.3
5.2 Funding
The Group has in place an unsecured multi-currency revolving facility
agreement which is committed until February 2020. The facility has been
entered into with a group of 3 banks and comprises a Sterling denominated
multi-currency facility of £100 million and a US Dollar denominated
multi-currency facility of $37.0 million.
The Group has also issued a bilateral private placement note of £44.5 million,
which matures in 2021 and a £25.0 million amortising fixed rate loan from the
European Investment Bank that matures in 2020. In addition, the Group has
uncommitted facilities of £20.0 million.
Debt covenants are net debt to EBITDA less than 3.0 times and EBITDA to
interest greater than 4.0 times. As at 31 March 2017 net debt to EBITDA was at
2.1 times and EBITDA to interest was 9.5 times, both comfortably within our
banking covenants.
6 Pensions
The Group has defined benefit pension schemes in the UK and USA. Both have
been closed to new entrants since 2001 and closed to future accrual from July
2010.
At 31 March 2017, the net liability arising from our defined benefit scheme
obligations was £25.1 million (2016: £35.0 million), a fall of £9.9 million.
The reduction in the deficit was due to a fall in the discount rate which was
offset by a reduction in inflation and mortality projections rates combined
with deficit recovery contributions. Total scheme assets at 31 March 2017 were
£287.9 million (2016: £239.5 million) while liabilities were £313.0 million
(2016: £274.5 million).
The annual deficit recovery payment to the UK scheme was £6.9 million for the
financial year, payable through to and including 2021. For the years up to and
including 2018, the payment will rise by the higher of inflation and growth in
dividend per share; thereafter, the payment will increase in line with
inflation.
7 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 and Strategy and Operations sections. The financial position of
the Group, its cash flows, liquidity position and borrowing facilities are
described in the Financial Review.
The diverse nature of the Group, combined with its financial strength,
provides a solid foundation for a sustainable business. The Directors have
reviewed the Group's forecasts and flexed them to incorporate a number of
potential scenarios relating to changes in trading performance. The Directors
believe that the Group will be able to operate within its existing debt
facilities. This review also considered hedging arrangements in place. The
Directors believe that the Group is well placed to manage its business risks
successfully.
The Financial Statements have been prepared on a going concern basis, based on
the Directors' opinion, after making reasonable enquires, that the Group has
adequate resources to continue in operational existence for the foreseeable
future.
8 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
Group Finance Director
13 June 2017
Consolidated Statement of Income
year ended 31 March 2017
Notes Adjusted*£m Adjustingitems*£m Total£m
Revenue 3 348.5 - 348.5
Cost of sales (166.8) - (166.8)
Gross profit 181.7 - 181.7
Research and development 4 (27.1) (0.7) (27.8)
Selling and marketing (66.3) - (66.3)
Administration and shared services (32.9) (53.4) (86.3)
Share of loss of associate, net of tax 6 (0.8) (8.4) (9.2)
Other operating income - - -
Foreign exchange (12.1) - (12.1)
Operating profit/(loss) 42.5 (62.5) (20.0)
Other financial income 0.2 1.2 1.4
Financial income 0.2 1.2 1.4
Interest charge on pension scheme net liabilities (1.1) - (1.1)
Other financial expenditure (5.6) (0.2) (5.8)
Financial expenditure (6.7) (0.2) (6.9)
Profit/(loss) before income tax 36.0 (61.5) (25.5)
Income tax (expense)/credit 8 (8.7) 9.1 0.4
Profit/(loss) for the year from continuing operations 27.3 (52.4) (25.1)
Profit from discontinued operations after tax 7 0.7 4.1 4.8
Profit/(loss) for the year attributable to equity Shareholders of the parent 28.0 (48.3) (20.3)
pence pence
Earnings per share
Basic earnings per share 2
From continuing operations 47.8 (44.0)
From discontinued operations 1.2 8.4
From profit/(loss) for the year 49.0 (35.6)
Diluted earnings per share 2
From continuing operations 47.7 (44.0)
From discontinued operations 1.2 8.4
From profit/(loss) for the year 48.9 (35.6)
Dividends per share
Dividends paid 9 13.0
Dividends proposed 9 13.0
* Adjusted numbers are stated to give a better understanding of the
underlying business performance. Details of adjusting items can be found in
Note 1 of this Preliminary Statement.
The attached notes form part of the Financial Statements.
Consolidated Statement of Income
year ended 31 March 2016
Notes Adjusted*£m Adjustingitems*£m Total£m
Revenue 3 319.7 - 319.7
Cost of sales (164.2) (1.0) (165.2)
Gross profit 155.5 (1.0) 154.5
Research and development 4 (23.6) - (23.6)
Selling and marketing (59.4) - (59.4)
Administration and shared services (31.8) (23.0) (54.8)
Share of loss of associate, net of tax 6 (0.2) (1.3) (1.5)
Other operating income - 4.9 4.9
Foreign exchange 0.7 - 0.7
Operating profit/(loss) 41.2 (20.4) 20.8
Other financial income - - -
Financial income - - -
Interest charge on pension scheme net liabilities (1.7) - (1.7)
Other financial expenditure (5.9) (3.5) (9.4)
Financial expenditure (7.6) (3.5) (11.1)
Profit/(loss) before income tax 33.6 (23.9) 9.7
Income tax (expense)/credit 8 (7.7) 5.0 (2.7)
Profit/(loss) for the year from continuing operations 25.9 (18.9) 7.0
Profit/(loss) from discontinued operations after tax 7 1.9 (1.9) -
Profit/(loss) for the year attributable to equity Shareholders of the parent 27.8 (20.8) 7.0
pence pence
Earnings per share
Basic earnings per share 2
From continuing operations 45.3 12.2
From discontinued operations 3.4 -
From profit for the year 48.7 12.2
Diluted earnings per share 2
From continuing operations 45.2 12.3
From discontinued operations 3.4 -
From profit for the year 48.6 12.3
Dividends per share
Dividends paid 9 13.0
Dividends proposed 9 13.0
* Adjusted numbers are stated to give a better understanding of the
underlying business performance. Details of adjusting items can be found in
Note 1 of this Preliminary Statement.
Consolidated Statement of Comprehensive Income
year ended 31 March 2017
Notes 2017£m 2016 £m
(Loss)/profit for the year (20.3) 7.0
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss
Gain/(loss) on effective portion of changes in fair value of cash flow hedges, net of amounts recycled 0.1 (0.1)
Foreign exchange translation differences 18.8 5.6
Net cumulative foreign exchange (gain)/loss on disposal of subsidiaries recycled to the Income Statement (5.7) 1.2
Items that will not be reclassified subsequently to profit or loss
Remeasurement gain in respect of post-retirement benefits 4.4 13.6
Tax on items that will not be reclassified to profit or loss 8 (0.9) (2.6)
Total other comprehensive income 16.7 17.7
Total comprehensive (expense)/income for the year attributable to equity Shareholders of the parent (3.6) 24.7
Consolidated Statement of Financial Position
as at 31 March 2017
2017£m 2016 £m
Assets
Non-current assets
Property, plant and equipment 32.5 35.2
Intangible assets 181.0 220.8
Investment in associate 3.9 13.1
Long-term receivables 3.6 3.4
Deferred tax assets 26.0 19.0
247.0 291.5
Current assets
Inventories 53.9 61.1
Trade and other receivables 81.1 77.5
Current income tax recoverable 4.2 2.7
Derivative financial instruments 0.6 1.5
Cash and cash equivalents 27.2 21.8
167.0 164.6
Total assets 414.0 456.1
Equity
Capital and reserves attributable to the Company's equity Shareholders
Share capital 2.9 2.9
Share premium 61.5 61.5
Other reserves 0.2 0.1
Translation reserve 22.8 9.7
Retained earnings 45.1 68.8
132.5 143.0
Liabilities
Non-current liabilities
Bank loans and overdrafts 129.6 147.0
Retirement benefit obligations 25.1 35.0
Deferred tax liabilities 5.6 5.7
160.3 187.7
Current liabilities
Bank loans and overdrafts 6.9 3.0
Trade and other payables 93.0 102.4
Current income tax payables 6.5 2.1
Derivative financial instruments 5.0 5.8
Provisions 9.8 12.1
121.2 125.4
Total liabilities 281.5 313.1
Total liabilities and equity 414.0 456.1
The Financial Statements were approved by the Board of Directors on 13 June
2017 and signed on its behalf by:
Ian Barkshire Gavin Hill
Director Director
Company Number: 775598
Consolidated Statement of Changes in Equity
year ended 31 March 2017
Sharecapital£m Sharepremiumaccount£m Otherreserves£m Foreignexchangetranslationreserve£m Retainedearnings£m Total£m
Balance at 1 April 2016 2.9 61.5 0.1 9.7 68.8 143.0
Total comprehensive income/(expense):
Loss for the year - - - - (20.3) (20.3)
Other comprehensive income:
- Foreign exchange translation differences - - - 18.8 - 18.8
- Net foreign exchange gain on disposal of subsidiaries recycled to the Income Statement - - - (5.7) - (5.7)
- Gain on effective portion of changes in fair value of cash flow hedges, net of amounts recycled - - 0.1 - - 0.1
- Remeasurement gain in respect of post-retirement benefits - - - - 4.4 4.4
- Tax on items recognised directly in other comprehensive income - - - - (0.9) (0.9)
Total comprehensive income/(expense) attributable to equity Shareholders of the parent - - 0.1 13.1 (16.8) (3.6)
Transactions with owners recorded directly in equity:
- Charge in respect of employee service costs settled by award of share options - - - - 0.5 0.5
- Dividends paid - - - - (7.4) (7.4)
Total transactions with owners recorded directly in equity - - - - (6.9) (6.9)
Balance at 31 March 2017 2.9 61.5 0.2 22.8 45.1 132.5
Other reserves comprise the capital redemption reserve, which represents the
nominal value of shares repurchased and then cancelled during the year ended
31 March 1999, and the hedging reserve in respect of the effective portion of
changes in value of commodity contracts.
The foreign exchange translation reserve comprises all foreign exchange
differences arising since 1 April 2004 from the translation of the Group's net
investments in foreign subsidiaries into Sterling.
The Group holds 183,145 (2016: 183,145) of its own shares in an employee
benefit trust. The cost of these shares is included within retained earnings.
There was no movement in the shares held by the trust during the year.
Consolidated Statement of Changes in Equity
year ended 31 March 2016
Sharecapital£m Sharepremiumaccount£m Otherreserves£m Foreignexchangetranslationreserve£m Retainedearnings£m Total£m
Balance at 1 April 2015 2.9 61.5 0.2 2.9 58.0 125.5
Total comprehensive income/(expense):
Profit for the year - - - - 7.0 7.0
Other comprehensive income:
- Foreign exchange translation differences - - - 5.6 - 5.6
- Net foreign exchange loss on disposal of subsidiaries recycled to the Income Statement - - - 1.2 - 1.2
- Loss on effective portion of changes in fair value of cash flow hedges, net of amounts recycled - - (0.1) - - (0.1)
- Remeasurement gain in respect of post-retirement benefits - - - - 13.6 13.6
- Tax on items recognised directly in other comprehensive income - - - - (2.6) (2.6)
Total comprehensive income/(expense) attributable to equity Shareholders of the parent - - (0.1) 6.8 18.0 24.7
Transactions with owners recorded directly in equity:
- Charge in respect of employee service costs settled by award of share options - - - - 0.4 0.4
- Dividends paid - - - - (7.6) (7.6)
Total transactions with owners recorded directly in equity - - - - (7.2) (7.2)
Balance at 31 March 2016 2.9 61.5 0.1 9.7 68.8 143.0
Consolidated Statement of Cash Flows year ended 31 March 2017
2016£m 2015£m
(Loss)/profit for the year from continuing operations (25.1) 7.0
Adjustments for:
Income tax expense (0.4) 2.7
Net financial expense 5.5 11.1
Acquisition related fair value adjustments to inventory - 0.2
Acquisition related fair value adjustments to property, plant and equipment - 0.8
Acquisition related costs 1.5 2.5
Restructuring costs 0.6 2.9
Restructuring costs - relating to associate 0.4 1.3
Impairment of capitalised development costs 0.7 -
Loss on disposal of subsidiary 0.4 0.9
Contingent consideration deemed no longer payable - (4.9)
Impairment of investment in associate 8.0 -
Amortisation and impairment of acquired intangibles 48.7 16.7
One off impairment of capitalised intangible software costs 2.2 -
Depreciation of property, plant and equipment 5.7 5.5
Amortisation of capitalised development costs 4.8 3.9
Adjusted earnings before interest, tax, depreciation and amortisation 53.0 50.6
Loss on disposal of property, plant and equipment 0.5 0.1
Cost of equity settled employee share schemes 0.5 0.4
Share of loss from associate 0.8 0.2
Acquisition related costs paid (1.2) (1.8)
Restructuring costs paid (1.3) (4.7)
Foreign currency loss on intra-group dividends (0.8) -
Cash payments to the pension scheme more than the charge to operating profit (6.9) (6.7)
Operating cash flows before movements in working capital 44.6 38.1
(Increase)/decrease in inventories (1.5) 1.1
Decrease in receivables 0.6 7.4
(Decrease)/increase in payables and provisions (4.5) 2.2
Increase/(decrease) in customer deposits 1.0 (2.3)
Purchase of rental assets held for subsequent sale (1.0) (3.0)
Cash generated from operations 39.2 43.5
Interest paid (5.0) (5.6)
Income taxes paid (2.1) (3.5)
Net cash from operating activities 32.1 34.4
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (9.8) (27.1)
Acquisition of property, plant and equipment (3.5) (2.2)
Acquisition of intangible assets (0.1) (0.2)
Net cash flow on disposal of subsidiary 12.2 0.6
Capitalised development expenditure (7.9) (8.2)
Net cash used in investing activities (9.1) (37.1)
Cash flows from financing activities
Increase in long-term receivables - (3.0)
(Decrease)/increase in borrowings (12.8) 4.6
Dividends paid (7.4) (7.6)
Net cash from financing activities (20.2) (6.0)
Net increase/(decrease) in cash and cash equivalents from continuing operations 2.8 (8.7)
Increase in cash from discontinued operations 1.4 4.9
Cash and cash equivalents at beginning of the year 20.4 25.1
Effect of exchange rate fluctuations on cash held 1.9 (0.9)
Cash and cash equivalents at end of the year 26.5 20.4
Reconciliation of changes in cash and cash equivalents to movement in net debt
Increase/(decrease) in cash and cash equivalents 4.2 (3.8)
Effect of foreign exchange rate changes on cash and cash equivalents 1.9 (0.9)
6.1 (4.7)
Cash outflow/(inflow) from decrease/increase in debt 12.8 (4.6)
Movement in net debt in the year 18.9 (9.3)
Net debt at start of the year (128.2) (118.9)
Net debt at the end of the year (109.3) (128.2)
Notes to the Financial Statements
year ended 31 March 2017
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 from
continuing operations
2017Operating (loss)/profit£m 2017(Loss)/profit before income tax£m 2016Operating profit£m 2016Profit before income tax£m
Statutory measure from continuing operations (20.0) (25.5) 20.8 9.7
Reversal of acquisition related fair value adjustments to inventory - - 0.2 0.2
Reversal of acquisition related fair value adjustments to property, plant and equipment - - 0.8 0.8
Acquisition related costs 1.5 1.5 2.5 2.5
Restructuring costs 0.6 0.6 2.9 2.9
Restructuring costs - relating to associate 0.4 0.4 1.3 1.3
Loss on disposal of subsidiary 0.4 0.4 0.9 0.9
Contingent consideration deemed no longer payable - - (4.9) (4.9)
Unwind of discount in respect of contingent consideration and acquisition related accruals - 0.2 - 0.8
Non-recurring and acquisition related items 2.9 3.1 3.7 4.5
Impairment of acquired intangibles 34.9 34.9 - -
Impairment of investment in associate 8.0 8.0 - -
Impairment of capitalised development costs 0.7 0.7 - -
Impairment of capitalised software costs 2.2 2.2 - -
Amortisation and impairment of acquired intangibles 13.8 13.8 16.7 16.7
Mark to market (gain)/loss in respect of derivative financial instruments - (1.2) - 2.7
Adjusted measure from continuing operations 42.5 36.0 41.2 33.6
Share of taxation - (8.7) - (7.7)
Adjusted profit for the year from continuing operations - 27.3 - 25.9
Acquisition related costs comprise professional fees incurred in relation to
mergers and acquisitions activity and any consideration which, under IFRS 3
(revised), falls to be treated as a post-acquisition employment expense.
Restructuring costs comprise one-off costs in respect of the cost reduction
programme which began in March 2015. Restructuring costs relating to the
Group's associate relate to exceptional costs incurred by the associate
arising from the merger of the Scienta and Omicron businesses.
During the year the Group settled various claims totalling £0.4m relating to
the disposal of its Omicron business in the prior year. In the prior year the
Group made a loss on disposal of £0.9m in respect of the disposal on Omicron.
In order to assist with comparability between peers, adjusted profit excludes
the non-cash amortisation and impairment of acquired intangible assets and
goodwill and the unwind of discounts in respect of contingent consideration
relating to business combinations.
During the year the Group recognised an impairment of £8.0m relating to its
equity accounted associate investment. See note 7 for further details
The one off impairment of capitalised development costs relates to a specific
internal systems project that has been stopped as the Group focuses and
directs resources so as to accelerate key projects.
The one off impairment of capitalised software costs has been carried out
following a reassessment of the future value expected to be derived from
internally developed software.
The Group reports ineffectiveness of its hedging as an adjusting item. In the
current year this includes losses on certain contracts relating to the hedging
of the Japanese Yen which were not required for ordinary trading and which
were re-allocated for use against the remittance of net income of the Group's
Japan operations. Additionally, 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 the prior year:-
· the reversal of acquisition related fair value adjustments to inventory
and property, plant and equipment were 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.
· £4.9m was released relating to contingent consideration on the
acquisition of Asylum Research Corporation following the end of the earnout
period.
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.
2017£m 2016£m
Basic (loss)/earnings from continuing operations (25.1) 7.0
Basic earnings from discontinued operations 4.8 -
Basic (loss)/earnings (20.3) 7.0
Adjusted earnings (Note 1) 28.0 27.8
Weighted average number of shares 57.1 57.1
pence pence
Basic (loss)/earnings per share from continuing operations (44.0) 12.2
Basic earnings per share from discontinued operations 8.4 -
Basic (loss)/earnings per share (35.6) 12.2
Adjusted earnings per share 49.0 48.6
The weighted average number of shares used in the calculation excludes shares
held by the Employee Share Ownership Trust, as follows:
2017Sharesmillion 2016Sharesmillion
Weighted average number of shares outstanding 57.3 57.3
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 57.1 57.1
The following table shows the effect of share options on the calculation of
diluted earnings per share:
2017Sharesmillion 2016Sharesmillion
Weighted average number of ordinary shares per basic earnings per share calculations 57.1 57.1
Effect of shares under option 0.1 0.1
Weighted average number of ordinary shares per diluted earnings per share calculations 57.2 57.2
Adjusted diluted earnings per share has been calculated in a manner consistent
with previous periods.
3 Segment information
The Group has seven operating segments. These operating segments have been
combined into three aggregated operating segments to the extent that they have
similar economic characteristics, with relevance to products and services,
type and class of customer, methods of sale and distribution and the
regulatory environment in which they operate. Each of these three aggregated
operating segments is a reportable segment.
The Group's internal management structure and financial reporting systems
differentiate the three aggregated operating segments on the basis of the
economic characteristics discussed below:
· the NanoTechnology Tools segment contains a group of businesses,
supplying similar products, characterised by a high degree of customisation
and high unit prices. These are the Group's highest technology products
serving research customers in both the public and private sectors;
· the Industrial Products segment contains a group of businesses
supplying high technology products and components manufactured in medium
volume for industrial customers; and
· the Service segment contains the Group's service, rental and
refurbished asset sales business as well as service revenues from other parts
of the Group.
Reportable segment results include items directly attributable to a segment as
well as those which can be allocated on a reasonable basis. Inter-segment
pricing is determined on an arm's length basis. The operating results of each
are regularly reviewed by the Chief Operating Decision Maker, which is deemed
to be the Board of Directors. Discrete financial information is available for
each segment and used by the Board of Directors for decisions on resource
allocation and to assess performance. No asset information is presented below
as this information is not presented in reporting to the Group's Board of
Directors.
a) Analysis by business
Results from continuing operationsYear to 31 March 2017 NanoTechnologyTools£m IndustrialProducts£m Service£m Total£m
External revenue 208.6 56.7 83.2 348.5
Inter-segment revenue 0.1 - -
Total segment revenue 208.7 56.7 83.2
Segment adjusted operating profit from continuing operations 25.6 1.7 15.2 42.5
Results from continuing operationsYear to 31 March 2016 NanoTechnologyTools£m IndustrialProducts£m Service£m Total£m
External revenue 187.3 54.0 78.4 319.7
Inter-segment revenue 0.1 - -
Total segment revenue 187.4 54.0 78.4
Segment adjusted operating profit from continuing operations 21.3 1.1 18.8 41.2
The adjusted loss after tax of £0.8m (2016: £0.2m) from the Group's associate
is reported within the NanoTechnology Tools segment.
Included in the Service sector is revenue from equipment sales of £5.6m (2016:
£13.8m) and from equipment leasing of £9.0m (2016: £8.1m) .
Reconciliation of reportable segment profit
Year to 31 March 2017 NanoTechnologyTools£m Industrial Products£m Service£m UnallocatedGroup items£m Total£m
Adjusted profit for reportable segments from continuing operations 25.6 1.7 15.2 - 42.5
Acquisition related costs (0.3) (1.2) - - (1.5)
Restructuring costs - (0.2) (0.4) - (0.6)
Restructuring costs - relating to associate (0.4) - - - (0.4)
Impairment of capitalised development costs (0.7) - - - (0.7)
Loss on disposal of subsidiary (0.4) - - - (0.4)
Impairment of investment in associate (8.0) - - - (8.0)
Impairment of capitalised software costs - - - (2.2) (2.2)
Amortisation of acquired intangibles (10.6) (1.3) (1.9) - (13.8)
Impairment of acquired intangibles (22.6) (1.1) (11.2) - (34.9)
Financial income - - - 1.4 1.4
Financial expenditure - - - (6.9) (6.9)
(Loss)/profit before income tax on continuing operations (17.4) (2.1) 1.7 (7.7) (25.5)
Year to 31 March 2016 NanoTechnologyTools£m Industrial Products£m Service£m UnallocatedGroup items£m Total£m
Adjusted profit for reportable segments from continuing operations 21.3 1.1 18.8 - 41.2
Reversal of acquisition related fair value adjustments to inventory - - (0.2) - (0.2)
Reversal of acquisition related fair value adjustments to property, plant and equipment - - (0.8) - (0.8)
Acquisition related costs (1.7) (0.1) (0.7) - (2.5)
Restructuring costs (2.5) (0.1) (0.3) - (2.9)
Restructuring costs - relating to associate (1.3) - - - (1.3)
Loss on disposal of subsidiary (0.9) - - - (0.9)
Contingent consideration deemed no longer payable 4.9 - - - 4.9
Amortisation of acquired intangibles (10.8) (4.0) (1.9) - (16.7)
Financial income - - - - -
Financial expenditure - - - (11.1) (11.1)
Profit/(loss) before income tax on continuing operations 9.0 (3.1) 14.9 (11.1) 9.7
4 Research and development (R&D)
The total R&D spend by the Group is as follows:
2017 2016
NanoTechnologyTools£m
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