Oxford Instruments Regulatory News (OXIG)

16 Feb 2006 07:01

Oxford Instruments PLC16 February 2006 Embargoed until 7am Thursday 16 February 2006 Restructuring of Oxford Instruments' UK Superconductivity businesses Oxford Instruments plc today announces the creation of Oxford InstrumentsNanoScience and its intention to discontinue general volume production ofundifferentiated low field magnets for OEM customers. In the UK, Oxford Instruments' Superconductivity Segment currently consists oftwo businesses: the market leading Physical Science business based at TubneyWoods in Oxfordshire, providing specialist magnet and cryogenic systems directlyto end user customers in the applied research field; and the Magnet Technologybusiness based at Eynsham in Oxfordshire, manufacturing NMR and ICR magnetsystems for original equipment manufacturers (OEMs) to incorporate in thesystems they supply to their end user customers. Whilst the Physical Science business continues to maintain a very strongposition in its market, the Magnet Technology business has been suffering from adecline in the demand from its OEM customers for undifferentiated low fieldmagnets. The markets for Oxford Instruments' technically demanding, high fieldNMR magnets and the newly emerging DNP-NMR magnet systems continue to providegrowth opportunities. In order to respond to these changed market circumstances, it is now proposed todiscontinue general volume production of undifferentiated low field magnets forOEM customers after completing all existing commitments. This creates anopportunity to merge the high technology, high field NMR magnet products, andtheir associated R&D and engineering, with the growing Physical Sciencebusiness. In addition, it will be possible to reshape the business, address theoverall cost base and give a secure platform from which to grow. At the end of March 2006, it is proposed to consolidate all the UK magnet andcryogenic expertise and resources at the Tubney Woods site, and to form a newbusiness - Oxford Instruments NanoScience. This business will: • include all the activity currently undertaken by the Physical Science business of Superconductivity; • continue the Superconductivity business' activity in higher margin, high performance specialist NMR magnets; these will be sold to end-users, including through the Magnets Direct programme. • continue to provide a full service support to customers worldwide As a result of these changes a number of redundancies will be proposed and theCompany is initiating consultation with all parties who may be affected. The loss-making activities, which are to be discontinued, are expected tocontribute sales of £11m in the current financial year. The establishment of thenew business as a consolidated operation and the closure of these loss-makingactivities will involve a one-off non-recurring charge of approximately £5m,represented by cash costs of £2m together with additional provisions of £3m.Alternative uses for the Eynsham site are being explored. Overall, these actions are expected to deliver at least a £3m year on yearimprovement in operating profit in 2006/07. The new product developmentexpenditure programme of up to £5m next year will be unaffected. Jonathan Flint, Chief Executive of Oxford Instruments, said: "Our strategy isfocused on delivering enhanced and sustainable shareholder value by developingour position as the leading provider of tools and systems for customers workingat the nanoscale. The formation of the Oxford Instruments NanoScience businessrepresents an important step in realising this strategy." Enquiries: Oxford Instruments plc Tel: 01865 881437 Fax: 01865 884045Jonathan Flint, Chief ExecutiveMartin Lamaison, Financial Director Hogarth Partnership Limited Tel: 020 7357 9477 Fax: 020 7357 8533Rachel HirstAndrew Jaques This information is provided by RNS The company news service from the London Stock Exchange