Oxford Instruments keeps full-year dividend

Provider of high technology tools and systems for research and industry Oxford Instruments kept its full-year dividend steady despite a rise in underlying earnings per share.

The Oxfordshire-based outfit declared a full-year dividend of 13.0p, unchanged from the prior 12-month period.

"In a year of transition, the Group delivered a stable performance, supported by currency tailwinds. Whilst academic and R&D funding levels remain uncertain, we believe that progress with our strategic initiatives and favourable currency effects will deliver an outcome for the year in line with expectations", said Ian Barkshire, Chief Executive of Oxford Instruments plc.

Against what the company described as a "challenging amrket backdrop", adjusted operating profits increased by 3.2% to £42.5m, versus £41.2m in the year-ago period, although £3.7m of that was the result of positive FX tailwinds.

However, on a per share and continuing basis earnings were ahead by 5.5%.

Oxford decided to maintain the dividend payout after taking into account the impact of business disposals and currency effects, together with the firm's progressive strengthening of the balance sheet, according to chairman Alan Thomson.

At current exchange rates, revenues for the 12 months ending on 31 March were up by 9.0% to £348.5m, but down by 3.7% on a constant currency basis.

Profits before tax declined to -£25.5m, down from a profit of £9.7m in the year-ago period, due to non-cash impairment charges and other adjusting items a £45.8m totalling -£45.8m.

Central to those charges, following a poor financial performance at its US Healthcare and Asylum businesses, management decided that projections of future cash flows do not support the level of goodwill and intangibles held on the balance sheet.

The company incurred impairment charges totalling £37.8m and wrote-down the carrying value of its investment in the ScientaOmicron joint-venture by £8.0m.

Net debt on the other hand was lowered from £128.2m in the year-ago period to £109.3m, with the company attributing that to good cash conversion and proceeds from the sale of its Superconducting Wire business in November 2016.

By period-end the order book was 9.3% above the year-ago level, but up by just 0.5% on a constant currency basis.

"We has hoped for some improvement in order trends as seen from other operators, but given the level of (necessary) change in the business’ operations and culture, the benefits may take time to come through. We retain a HOLD recommendation, awaiting further details and analysis on order trends," ShoreCap's Ben McSkelly told clients.