The old adage that banks are only keen to lend money to people who do not need it seems to apply in spades to Oxford Instruments. The maker of high-tech tools, which was the first commercial spin-out from Oxford university, is going from strength to strength. Earlier this month, the company reported a 35 per cent rise in pre-tax profits for the year ending March 31.
As a result, says Kevin Boyd, group finance director, Oxford Instruments had no difficulty when it embarked on renegotiating its banking facility about 18 months ago, even in the teeth of the recession.
“I have to say I found it very easy and I had a number of banks who were keen to do business with me,” Mr Boyd says. “We have cash in the balance sheet; we don’t need the money but we use the banking facility because we are looking potentially to do acquisitions.”
The company, which developed the superconducting magnet that led to the invention of MRI scanners, last year purchased Omicron, a Frankfurt-based microscope producer; Omniprobe, a US-based company specialising in devices that can remove tiny pieces of a silicon wafer for quality control testing in the semiconductor industry; and Platinum Medical Imaging, a US provider of parts and services for MRI and CT medical imaging instruments.
However, Mr Boyd adds: “One thing I have noticed is that [bank facilities] seem to be more expensive than they used to be – non-utilisation fees have certainly gone up. They are about 40 per cent now whereas they used to be about 20-25 per cent. Since the credit crunch, the banks seem to have increased the fees.”
Oxford Instruments has become one of the UK’s most closely watched mid-cap companies. It listed in 1983 and was admitted to the FTSE 250 in September last year. All this helps give it a commanding position when looking for finance.
“It seems that large, well-capitalised companies are still able to deal with the banks,” says Mr Boyd. “But I know colleagues in smaller businesses for whom the banks seem to be closed at the moment.”