Oxford Instruments, the high technology tools maker, is emerging from a radical restructuring with a booming order book and a sharp rise in operating profit.
The group, which sold its medical business in March 2005 and which closed its volume magnets operation in the last financial year, said orders rose by 28% to £85.3m in the first half and sales by almost a fifth, on a like-for-like basis to £72m.
Oxford Instruments said that movements in the price of currencies and copper, which its uses for its products, cost the company around £1.1m in the first half.
But it said today that the paper work needed to meet international accounting standards on contracts taken on to reduce its exposure to such sharp changes in prices is too onerous. It has therefore joined a number of other companies to change the way it treats such contracts.
"We have decided that the additional costs of meeting the extensive documentation requirements of IAS 39 to apply hedge accounting cannot be justified," the company said in a statement. Instead gains and losses on such derivatives will be disclosed in the company's income statement.
"The standard is really targeted towards financial institutions which have very exotic financial derivative instruments. Trading companies like ourselves doing forward currency contracts are very different beasts," finance director Kevin Boyd said.
Oxford Instruments is now concentrating on "nanotools", which are used by companies working at the atomic and molecular level, and biotools, which are used in emerging life science applications.
The biotools side has already pre-sold this year's production of its HyperSense Dynamic Nuclear polarisation product which is used in the development of new pharmaceutical products and is expanding production to cope with demand.
The group has shifted production of several of its products to Shanghai to take advantage of low-cost production, but said the scope for outsourcing production is limited because of the need to remain in close contact with research and development work being undertaken in the US and UK.
Overall Oxford Instruments made a trading profit of £2m compared with a loss £200,000 in the first half of last year. However the group had to fund a £2.2m contract against a 1997 contract to provide a hybrid magnet to a French customer. The company said the settlement represented "a line in the sand" under a series of troublesome legacy contracts.
The group is aiming to double turnover and increase margins by 10% of the next five years. "There's still a lot of hard work to do but this is a great time for the business," chief executive Jonathan Flint said.