From the Human Screen

I remember looking at Oxford Instruments years ago and pondering briefly it’s maudlin performance. Fastforward a few years and, well, I missed some very significant developments.

Here’s two rows of figures plucked from its five year history in the 2011 annual report with this year’s results tacked on:

Management are taking the credit. A five-year plan that ended in 2011 and promised to double turnover while improving profit margins ended in success, despite the company suspending its acquisition program for three years during the credit crunch. Nearly 13% of the 14.4% compound annual average growth rate came from businesses it already owned.

New product launches went better than expected as the company targeted R&D at what customers wanted. Since last year Oxford Instruments has been following a new plan, although it doesn’t seem very different to the old one, promising mostly organic compound annual revenue growth of 14% a year and a net profit margin of 14%.

To paraphrase, probably cruelly, management has whipped the stuffy old boffins into shape and got them producing sexy nonotechnology customers actually want. The second sentence in last year’s annual report is:

[Oxford Instruments] designs and manufactures equipment that can fabricate, analyse and manipulate matter at the atomic level

Which I’m sure I last read in a sci-fi novel.

Unfortunately there’s nothing like a bit of nanotechnology to get investors’ interest, especially if profits are erupting. From the low in 2009 to the high earlier his year, it’s a ten-bagger.

The old me would file it in the ‘ones that got away category’, i.e. forget it. The new me, wants to get to know the company.

Although I'm mindful five-year plans often end in ignominy and recognise companies going through rapid change are difficult to analyse because the past, about which we have lots of data, is less relevant, perhaps its a hidden champion in the making.