09 June 2020

Announcement of Preliminary Results for the year ended 31 March 2020

Oxford Instruments plc, a leading provider of high technology products and systems for industry and research, today announces its preliminary results for the year ended 31 March 2020.

Financial highlights:

• Good progress underpinned a strong financial performance until the impact of covid-19 in Q4
• Trading disruption due to the pandemic equated to approximately two weeks’ equivalent revenue following deferred product shipments and installations in the last quarter
• Reported orders up 0.3% to £336.0m (2019: £335.1m), a decrease of 1.3% at constant currency; book to bill ratio of 1.06
• Order book of £175.0m (31 March 2019: £153.2m), up 14.2% (12.1% at constant currency), assisted by finished goods not shipped or installed at the year end
• Reported revenue increased by 1.1% to £317.4m (a decline of 0.7% at constant currency)
• Adjusted operating profit from continuing operations up 5.9% at £50.5m (a decline of 1.0% at constant currency)
• Adjusted operating margin of 15.9% (2019: 15.2%), 15.1% at constant currency
• Net cash grew to £67.5m, aided by strong operating cash flow (124% cash conversion) and proceeds from business disposals. At the end of March, our revolving credit facility remained undrawn, leaving approximately £105m of undrawn committed facilities. This represents total headroom of approximately £200m
• Following the uncertainty created by covid-19, the Group suspended payment of the interim dividend of 4.1p per share. As a result of continued uncertainty, the Board will defer a decision on payment of dividends but will keep this under review as the year progresses while we assess the impact of covid-19 on our markets and trading performance

Operational highlights:

• Good progress with our Horizon strategy; tangible benefits from our customer-centric, market-driven approach and operational excellence programme
• Business responded to the challenges of covid-19, with the wellbeing of our employees paramount. Manufacturing sites remained operational with products supporting the fight against covid-19 and essential industries
• Cost-saving measures implemented to preserve the financial health of the business
• Underlying growth across all of our customer segments
• Materials & Characterisation saw good underlying demand for our products across the Semiconductor, Advanced Materials and Energy & Environment sectors, with covid-19 disruption particularly impacting shipments into the Semiconductor segment
• Research & Discovery had strong underlying revenue growth supported by global initiatives related to quantum technologies and increased research funding. Refined commercial practices and gains through operational excellence contributed to improved profit and margin
• In Service & Healthcare, the transformation of our customer services approach drove strong order and revenue growth with improved profitability
• Further portfolio focus with disposal of US Healthcare business and equity stake in Scienta Omicron
• Alison Wood to join Board as independent Non‑Executive Director in September 2020

Summary and outlook:

Ian Barkshire, Chief Executive of Oxford Instruments plc, said:

"We have made good progress in the year with the implementation of our Horizon strategy, which combined with our strong balance sheet continues to provide the foundation for long-term sustainable growth and margin improvement. We have positioned the Group to be a leading provider of high technology products and services to the world’s leading industrial customers and scientific research communities to image, analyse and manipulate materials down to the atomic and molecular level. This allows us to live up to our purpose of facilitating a greener economy, increased connectivity, improved health and leaps in scientific understanding.

"The coronavirus has continued to impact trading in the first two months of the year, with cumulative orders 3% below a weak comparator period, and with growth in Asia of 19% offsetting a reduction in Europe and North America of 23% and 7% respectively. A strong uplift in orders for our compound semiconductor process solutions has offset a reduction in orders for our higher-margin scientific cameras and optical microscopy products, which have been severely impacted by disruption across academic customers. Group revenue is 3% above last year, assisted by delivery of shipments that were held over from the year end due to covid-19.

"We have an active pipeline of sales opportunities, reinforced by our digital marketing and online sales presence; but activity levels within academic institutions remain low due to continued customer site closures.

"It will take some time to understand the impact and longevity of this disruption, and we will continue to take measures to adapt and protect our business throughout this period. Once we have attained an improved level of visibility, we will be in a position to provide guidance on the current year’s expected financial outcomes.

"Our strategy is to operate in attractive markets with long-term fundamental growth drivers and to focus on segments where we can maintain leadership positions. With the increasing demand for electric vehicles and digital communications infrastructure, and the need for improved energy‑efficient devices, medicines and diagnostic tools, we are confident that our end markets are resilient and should not be weakened in the long term by covid-19 headwinds."

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