Oxford Instruments plc

Press Release

Tubney Woods, Abingdon, Oxon OX13 5QX, UK
Tel: +44 (0) 1865 393200
Email:info.plc@oxinst.com
www.oxford-instruments.com

Release Date: 7am Tuesday 10th November 2015
Oxford Instruments plc
Announcement of Half Year Results for 2015/2016
Oxford Instruments plc, a leading provider of high technology tools and systems for industry and research,
today announces its Half Year Results for the six months to 30 September 2015.
Highlights:










Order book up 21% since start of the year (excluding acquisitions and joint ventures)
Adjusted operating profit* up 7.0% to £20.0 million (2014: £18.7 million) and operating margins up
from 10.7% to 12.1%
Reported revenue down 5.8% to £164.8 million (2014: £175.0 million)
Adjusted EPS* up 1.9% to 21.3 pence (2014: 20.9 pence)
Nanotechnology Tools and Service sectors performed well. Difficult trading environment for
Industrial Products sector
Cost reduction programme delivering planned savings
MIR Acquisition and Scienta-Omicron joint venture performing as expected
Good cash performance with inflow before acquisitions and dividends of £1.4m (2014: £9.2m
outflow)
Proposed half year dividend of 3.7 pence (2014: 3.7 pence)*Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items
can be found in Note 2.

Jonathan Flint, Chief Executive of Oxford Instruments plc, said:“During the first half of the year the Group performed in line with expectations at the time of the September
trading update with improving margins and a strengthened underlying order book. Our NanoTechnology
Tools and Service businesses continue to perform well, although the markets served by our Industrial
Products businesses remain difficult in the face of macroeconomic uncertainty.
The order book and first half results of our NanoTechnology Tools and Service businesses support ourconfidence that performance for the Group for the full year will be in line with expectations.
Nanotechnology is positioned to continue to yield long term structural growth in demand for high technology
tools. We remain focused on our strategy to be the world’s leading nanotechnology tools provider.”Enquiries:
Oxford Instruments plc
Jonathan Flint, Chief Executive
Kevin Boyd, Group Finance Director

Tel: 01865 393200

MHP Communications
Rachel Hirst/ Jamie Ricketts

Tel: 020 3128 8100

Number of pages: 30

Half Year Statement
Overview
Overall, the Group delivered a first half performance in line with our AGM statement in September. As
expected, whilst revenues were down compared to the previous period, profits were ahead of the same
period last year, reflecting the management actions taken to reduce our cost base at the end of the last
financial year. Our NanoTechnology Tools and Service sectors have performed well with increased profitsand margins. Our Industrial Products sector continues to face a number of headwinds due to themacroeconomic backdrop, which, as previously reported, remains challenging for the Group.
The Order Book (orders for future delivery) at September was £135.7 million, an organic increase of 15%
compared to September 2014 and up 21% on the beginning of the year. The order book was up in all threesectors of the business.
Adjusted operating profit for the half year ended 30 September was £20.0 million (2014: £18.7 million).
This figure includes a contribution from acquisitions of £2.1 million and a currency headwind of £0.4 million.
This result reflects strong growth in NanoTechnology Tools and Service offset by a decline in Industrial
Products. Operating margins in total increased from 10.7% to 12.1%. In NanoTechnology Tools they grewby 4.0 percentage points to 11.1% and in Industrial Products they fell by 6.5 percentage points to 3.7%.
Margins in Service grew by 3.7 percentage points to 26.0%.
Revenues in the half year were £164.8 million (2014: £175.0 million). The net revenue effect of acquisitions
and disposals (including the acquisition of MIR and the disposal of Omicron into a joint venture with
Scienta) lowered revenues by £3.1 million compared with the same period last year. We saw constantcurrency organic revenue reduction, principally in our Industrial Products business where weaker demand isaffecting trading. As previously reported, the main factors are a slowdown in China and in the metals
market worldwide which have impacted our Industrial Analysis business, and weaker demand from ourcustomers who manufacture MRI machines, which reduced revenues in our superconducting wire businessby £4.5 million.
Constant currency organic revenues were approximately flat in Asia and down in Europe and North
America. Within Asia we saw growth in Japan and South Korea offset by a decline of 15% in China. In
North America NanoTechnology Tools sales were flat and we saw an 18% reduction in Industrial Products.
In Asia, there was a 9% increase in NanoTechnology Tools, offset by a 12% decline in Industrial Products.
In Europe we saw a 7% decline in NanoTechnology Tools and a 20% decline in Industrial Products. In
January this year we announced that a number of export licences to Russia had been refused and others,
previously granted, had been rescinded. The position here is unchanged.
We are in advanced discussions to dispose of our non-core Austin Scientific business, part of our Industrial
Products sector. The Austin business made a loss of £0.3 million (2014: profit £0.2 million) in the current
year to date. It has been treated as discontinued in both the current and prior year.
The cost reduction programme announced in January has delivered as anticipated. The Group’s operating
expenses have been reduced by £3.1 million in the half year.
Cash performance in the period improved with an inflow of £1.4 million before acquisitions and dividends
compared with an outflow of £9.2 million in the same period last year.
We continue to invest in our customer focussed R&D programme and have launched a number of new
products. Some of these are outlined in the Operations section. The consolidation of our R&D sites has
provided increased efficiency in the delivery of our programmes and a reduction in associated costs.
For the half year the Directors are proposing that the dividend is maintained at 3.7 pence per share.

Oxford Instruments plc
2Outlook
Nanotechnology is positioned to continue to yield long term structural growth in demand for high technology
tools. We remain focused on our strategy to be the world’s leading nanotechnology tools provider.
During the first half of the year the Group performed in line with expectations at the time of the September
trading update with improving margins and a strengthened underlying order book. Our NanoTechnology
Tools and Service businesses continue to perform well, although the markets served by our Industrial
Products businesses remain difficult in the face of macroeconomic uncertainty.
The order book and first half results of our NanoTechnology Tools and Service businesses support ourconfidence that performance for the Group for the full year will be in line with expectations.

Oxford Instruments plc
3Operations Review
Our Group reports in three sectors: Nanotechnology Tools, Industrial Products and Service.
Nanotechnology Tools

Revenue
Operating Profit
Operating Margin

2015

2014

£m
85.4
9.5
11.1%

£m
92.8
6.6
7.1%

GrowthUnderlying
Growth*(8.0%)(0.5%)*excludes foreign exchange and M&A

The Nanotechnology Tools sector produces our highest technology products which are sold primarily toresearch customers (c.85% of its revenues come from research and academia). Our customers in this
sector provide a unique insight into emerging trends in public and privately funded research, thus informing
our approach to innovation and product application. In the research field, our tools are used to advance thefrontiers of science and we count many Nobel laureates amongst our customers.
Reported revenues in this sector were down as a result of the Omicron business leaving the Group to form
part of the Scienta-Omicron joint venture. On a constant currency organic basis sales were flat with adecline in the NanoSolutions division (Plasma Technology and NanoScience) being compensated by
growth in the NanoCharacterisation businesses (NanoAnalysis, Andor Technology and Asylum Research),which performed particularly well in Japan.
The mix effect of growth in the more profitable
NanoCharacterisation division combined with the benefits of last year’s restructuring programme increased
operating margins from 7.1% to 11.1%.
Our NanoAnalysis business develops and produces world class analytical solutions and services forelectron and ion beam microscopes. These products are used by customers in academia and industry
across a range of sectors including semiconductors, materials science, natural resources, forensics, andenergy generation and storage. During the last six months we launched our latest detector that allows thechemical characterisation of the nano-scale structures that make up the current generation of semiconductor and other high-end electronic components. Researchers are now able to learn more about
components and can analyse contaminants, helping to save time and money during product development.
We have also launched a new camera, the NordlysMax3 that will help researchers characterise materials
twice as fast as the previous generation system. Significant enhancements have been made to ourAZtecFeature particle analysis software, including the introduction of a product to provide forensic analysis
of gunshot residues. We have experienced solid performance across all regions with notable growth inEurope, Middle East, Africa, India, China and Taiwan, and an encouraging recovery in Japan compared tolast year. Business in Russia remains at a significantly reduced level.
Andor Technology is a global leader in the design and manufacture of high performance scientific imaging
cameras, spectroscopy solutions and microscopy systems for research and industrial markets. Following aslow start to the year, we have seen a considerable improvement in the second quarter, with growth evident
in all segments. We have launched a number of new products including the iKon XL for X-ray andchallenging astronomy applications, such as the search for new planets outside our solar system. The iKon
XL can cool down to -100°C without the need for liquid nitrogen, which makes the camera particularly well
suited to remote astronomy locations where regular liquid nitrogen deliveries can be difficult and expensive.
We continue to gain market share in the mid-range imaging camera market where our position is further
boosted by the recent release of the Zyla 4.2 PLUS. This is an exceptional platform for life scientists
working in areas such as Neuroscience, researching Alzheimer’s, Parkinson’s and other neurologicaldiseases. The increased sensitivity offers researchers the ability to image time and light sensitive processes
more quickly and with better accuracy.

Oxford Instruments plc
4Asylum Research is the technology leader in Atomic Force Microscopy for both materials and bioscience
applications. We saw an increase in orders in the past six months, with strong growth in Asia, particularly
China. We continue to see an increase in orders for the MFP-3D Infinity and the Cypher ES. The Cypher
ES Polymer Edition is the most recent addition to the Cypher AFM product line which allows researchers tounderstand better how materials behave with the aim of maximising their performance. An example of the
instrument’s use is in the development of vehicle tyres that have more grip and can cover longer distances.
In the past six months we have also seen an increase in sales of the MFP-3D Origin, our most affordable
Atomic Force Microscope launched in line with our aim to broaden our product range.
Plasma Technology provides processes and platforms to customers in research laboratories andspecialised semi-conductor fabrication facilities who are developing new materials, nano-devices andproducts. For example graphene and other 2D materials are developed using our products by the researchcommunity. Researchers are trying to create materials with novel properties for use in microelectronics,
sensors and photovoltaics. We have seen an improvement in our performance in Japan but a slowdown in
China. We continue to be challenged by the sanctions on exports to Russia, as previously reported. A
reorganisation within the business was undertaken in the first half to establish a better alignment with theneeds of the market. During the second half of the year we will launch the highly anticipated PlasmaPro200.
This will replace two existing product lines, the PlasmaLab 100 and PlasmaPro100, offering customers amore flexible system in a more compact platform. A key application for this product line is in the productionof Indium Phosphide based lasers for optical telecommunications to support the continuing growth inelectronic data traffic.
NanoScience designs, manufactures and supports market-leading research tools that enable quantum
technologies, new materials and device development in the Physical Sciences. In the first half there has
been weak demand across most geographies. The market for our industry leading Triton refrigeration
system remains robust. During the first half we have restructured our service provision to introduce a
regional service model. This has allowed us to enhance our customer experience and offer faster response
times. Government announcements and customer feedback indicate a trend for a continued high level ofinvestment in Quantum Information Processing and we are working with a number of high profile
companies to look at further opportunities to develop this market.
The Omicron Scienta joint venture in the specialised Surface Science field has integrated well. A new
management team is in place, and is now focussing on the realisation of synergies. The Group has a 47%
share in the joint venture.

Industrial Products

Revenue
Operating Profit
Operating Margin

2015

2014

£m
46.0
1.7
3.7%

£m
52.2
5.3
10.2%

GrowthUnderlying
Growth*(11.9%)(7.9%)*excludes foreign exchange and the decline in Superconducting Wire volumes

Our Industrial Products sector sells more mature, though still technically advanced, products primarily toindustrial customers (59% of its revenues come from industrial customers). The tools and systems
produced by this sector enable us to benefit from the economies of scale offered by trading in the larger
industrial markets, thereby maximising the returns from our R&D programmes. In the industrial field, ourtools are used to improve production efficiency, ensure high standards of quality control and demonstratecompliance with environmental legislation.
This sector saw a decline in sales due to the difficulties in the metals and construction markets served byIndustrial Analysis, particularly in China, and the decline in demand for superconducting wire from our OEM

Oxford Instruments plc
5

MRI customers. Despite savings from last year’s restructuring programme, the decline in volume and someadverse pricing pressure impacted margins which fell from 10.2% to 3.7%.
Industrial Analysis designs and sells a range of spectrometers for industrial markets. Our customers
continue to be impacted by declining scrap metal and oil prices. Over the past six months we have rebuilt
the sales and distribution network. We have also developed a new product to address the specific needs ofour customers in China. The Foundry-Master Smart is smaller and more mobile than existing systems andis used to analyse the majority of metals and their alloys. The X-MET8000, launched last year, supports theregulatory compliance screening of consumer goods. It has successfully taken market share fromcompetitors and in the past 12 months has generated an increase of 85% in orders compared to theprevious year. The Maxxi 6, a tool for coating thickness measurement and materials analysis, wasdeveloped as a result of our acquisition of Roentgenanalytik and continues to experience strong demand.
We have also successfully completed the transfer of production for this product to our Uedem site inGermany. We released the mPulse+ laser spectrometry product in the first half. This is the fastest
aluminium sorter on the market. We relocated the production of the mPulse range, originally acquired aspart of the RMG acquisition, to our Tubney site earlier this year.
In September 2015, our Superconducting Wire business signed contracts worth $6 million to supply leadingedge technology niobium tin conductor for the High Luminosity upgrade to the Large Hadron Collider (LHC)
project at CERN. Deliveries of this contract will be phased over the next 24 months. This project is intended
to increase the high energy physics discovery potential of the particle accelerator at CERN by increasing
the rate of particle collisions. These orders represent initial procurements prior to the LHC upgrade over the
next few years. As previously announced our Superconducting Wire business has been indirectly impacted
by new Asian entrants in the MRI scanner business. As a result, the established MRI system manufacturers
have exerted significant price pressure on their supply base, impacting our revenues. Negotiations withthese customers are currently ongoing.
We are now experiencing increased market interest in our recent product releases from our California
based X-Ray Technology business, with our integrated X-ray sources providing added value for ourcustomers. These contain the X-ray tube and the power supply in a single unit that is compact enough tointegrate into our customers’ systems. China has been a difficult market for this business, with a slowdown
in OEM demand. We have also been challenged by the strong US dollar, making it difficult for the US based
business to compete in Europe and Asia.
Our Austin Scientific business is now beginning to rebuild sales, particularly in Asia, as we move forwardfrom the previously reported bankruptcy of our customer GTAT. Our recently released product, a ruggedized
air cooled helium compressor, has been well received for radio astronomy applications and will help
continue to rebuild the business’s pipeline. Following a strategic review, we are in advanced discussions todispose of Austin Scientific.

Service Sector

Revenue
Operating Profit
Operating Margin

2015

2014

£m
33.9
8.8
26.0%

£m
30.5
6.8
22.3%

GrowthUnderlying
Growth*11.2%(1.0%)*excludes foreign exchange, M&A and completed contracts

The Service sector comprises the Group’s maintenance service contracts, spare part sales for Oxford
Instruments’ equipment and the servicing of third party MRI and CT machines, under the OIHealthcare
brand. The complexity and uniqueness of our products mean our customers increasingly purchasemultiyear service contracts.

Oxford Instruments plc
6Service within NanoTechnology Tools has performed well in the first half of the year, with an increase insales and profits. In Industrial Analysis service has been impacted by the economic slowdown in China,
which has reduced demand for spare parts. A remedial plan has been put in place to address thischallenge. OI Healthcare reported a decrease in revenue due largely to the completion of the Siemens
contract, which has been previously reported. Our Healthcare business was also affected in the half year by
the MERS outbreak in South Korea. As a result of this outbreak, fewer people went to hospital, reducing thedemand for spare parts and servicing. The acquisition of Medical Imaging Resources (MIR) that wecompleted in May has performed ahead of our expectations. The better than expected performance from
MIR helped grow margins from 22.3% to 26.0%.
Balance Sheet: At the half year end, net debt was £139.5 million (2014: £137.5 million). Cash outflow inthe half year was £20.6 million (2014: £13.2 million) of which £16.8 million was for acquisitions (2014: £2.1
million), £3.1 million a loan to the Scienta-Omicron joint venture and £2.1 million on dividends (2014: £1.9
million).
The Group has total committed facilities of £193.9 million. This comprises £124.4 million in the form of arevolving credit facility with a club of banks, a £25.0 million seven year fixed interest loan with the European
Investment Bank which was drawn down in August 2014, and a £44.5 million seven year fixed interest loan
from Pricoa Capital which was drawn down in March 2014. The revolving credit facility expires in February
2020.
The Group has two principal covenants on its borrowings, Net Debt/EBITDA and Interest Cover which aretested each half year. Currently the covenant for Net Debt/EBITDA is 3.5. We have a number of earn-outs
payable in the second half of the current and the first half of the next financial year. To provide greater
comfort on headroom, we have in the period negotiated with the club of banks that provide our Revolving
Credit Facility to extend this covenant level by six months to September 2016. After that date, we have nofurther earn-outs and thus it will return to 3.0. Interest cover must remain above 4.0. At 30 September
2015 Net Debt/EBITDA was 2.4 and interest cover was 10.0.
As calculated under IAS19 (revised), the defined benefit pension deficit has reduced by £13.0 million to£40.5 million since 31 March 2015. In that period, assets have reduced by 6.8% to £222.4 million andliabilities have reduced by 10.0% to £262.9 million primarily as a result of the increase in the interest rateused to discount the liabilities.
Discontinued Operations: It is highly probable that the Group’s Austin Scientific business unit will bedisposed of within twelve months of the balance sheet date. As a result it has been classified as a
discontinued operation and its results excluded from the current and prior year.
Taxation and Earnings Per Share: The Group benefits from tax incentives relating to income earned fromtechnology assets and tax efficient financing. These partially mitigate the impact of generally higher tax
rates in the Group’s overseas territories of operation. The combination of these factors gives a half year
adjusted tax rate of 24% (2014: 23%). For the full year it is anticipated that the adjusted tax rate will be at asimilar level. Adjusted basic earnings per share (EPS) is 21.3 pence (2014: 20.9 pence). Reported EPS
was 4.9 pence (2014: 2.9 pence).
Dividend: In 2011, the Group moved to a progressive dividend policy, whereby we seek to raise dividends
as annual adjusted earnings per share increase. However, this is discretionary, depending on the Directors’
perceived need for cash to expand the business both organically and through acquisition. For the half year
just ended, the Directors are proposing an interim dividend of 3.7 pence per share (2014: 3.7 pence),payable on 8 April 2016 to shareholders who are on the register on 11 March 2016.

Oxford Instruments plc
7

Going concern: The Group’s business activities, together with the factors likely to affect its future
development, performance and position, are set out above. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are described above.
The diverse nature of the Group provides a solid foundation for a sustainable business. The Directors havereviewed the Group’s forecasts and considered a number of potential scenarios relating to changes in
trading performance. The Directors believe that the Group will be able to operate within its existing debt
facilities. This review also considered hedging arrangements in place. As a consequence, the Directors
believe that the Group is well placed to manage its business risks successfully.
This Half Year Report has been prepared on a going concern basis, based on the Directors’ opinion, after
making reasonable enquiries, that the Group has adequate resources to continue in operational existence
for the foreseeable future.
Principal Risks: The principal risks in the business are considered in the Principal Risks and Uncertainties
section of this Half Year Report.
Board Changes: In line with our Board succession plan, our Chairman, Nigel Keen, has decided after 17
years’ service that he will step down from the Board with a view to having a transition at the September
2016 AGM. A search for his successor has commenced.
We announced this morning that Dr Ian Barkshire, Chief Operating Officer of the Group, is joining the Board
with effect from today, 10 November 2015. Ian has been with Oxford Instruments since 1997 and held anumber of senior technical and managerial roles before being appointed Chief Operating Officer earlier thisyear.
On 27 October 2015 the Group announced that Kevin Boyd, who has been Group Finance Director since2006 will be leaving to take up the role of Group Finance Director at Spirax-Sarco Engineering plc. Kevin
will leave the Group in April 2016 and we wish him well in his new role. The search for his successor isunderway.
People: The success of our business relies on the diversity of skills and expertise and the high calibre of
our people worldwide. We would like to thank them for their high standards of professionalism, theircommitment and valuable contribution to the business.
Forward-looking statements: This document contains certain forward looking statements. The forwardlooking statements reflect the knowledge and information available to the Company during the preparation
and up to the publication of this document. By their very nature, these statements depend uponcircumstances and relate to events that may occur in the future thereby involving a degree of uncertainty.
Therefore, nothing in this document should be construed as a profit forecast by the Company.

Jonathan Flint
Chief Executive
10 November 2015

Oxford Instruments plc
8Condensed Consolidated Statement of Income
Half year ended 30 September 2015 – unaudited
Adjusted

Half Year to 30 Sept 2015
AdjustingTotal
items*

Adjusted

Half Year to 30 Sept 2014
AdjustingTotal
items*

Notes

£m

£m

£m

£m

£m

£m

3

164.8
(89.5)
75.3(11.8)(28.3)(15.6)—————(13.3)

164.8(89.5)
75.3(11.8)(28.3)(28.9)

175.0(97.3)
77.7(14.2)(31.4)(14.8)

—
(0.2)
(0.2)
—
—
(11.8)

175.0(97.5)
77.5(14.2)(31.4)(26.6)

—
—
0.4
20.0

(0.2)
3.2
—
(10.3)

(0.2)
3.2
0.4
9.7

—
—
1.4
18.7

—
1.4
—
(10.6)

—
1.4
1.4
8.1

Other financial income
Financial income

0.2
0.2

0.8
0.8

1.0
1.0

0.1
0.1

—
—

0.1
0.1

Interest charge on pension
scheme net liabilities
Other financial expenditure
Financial expenditure

(0.8)

—

(0.8)

(1.0)

—

(1.0)

(3.1)
(3.9)

(0.7)
(0.7)

(3.8)
(4.6)

(2.6)
(3.6)

(2.1)
(2.1)

(4.7)
(5.7)

3

16.3

(10.2)

6.1

15.2(12.7)

2.5

7

(3.9)

0.8

(3.1)

(3.4)

2.5

(0.9)

12.4

(9.4)

3.0

11.8

(10.2)

1.6

(0.3)

—

(0.3)

0.1

—

0.1

12.1

(9.4)

2.7

11.9

(10.2)

1.7

pence

pence

pence

pence

21.3
21.3

4.9
4.9

20.9
20.8

2.9
2.9

Revenue
Cost of sales
Gross profit
Research and development
Selling and marketing
Administration and shared services
Share of profit/(loss) of associate,
net of tax
Other operating income
Foreign exchange gain
Operating profit

Profit before income tax fromcontinuing operations
Income tax (expense)/credit
Profit for the period fromcontinuing operations(Loss)/profit from discontinued
operations after tax
Profit for the period attributable
to equity holders of the parent

4

Earnings per share
Basic earnings per share
Diluted earnings per share

8
8

Dividends per share
Dividends paid
Dividends proposed

9
9

3.70
3.70

3.36
3.70

* Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items can be found in note 2 of this Half Year Report.

Oxford Instruments plc
9Condensed Consolidated Statement of Income
Half year ended 30 September 2015 – unaudited
Adjusted

Year to 31 March 2015
AdjustingTotal
items*
£m
£m

Notes

£m

3

380.1
(210.3)169.8(30.5)(64.9)(34.3)
—
2.7
42.8
0.1
0.1

—
(0.2)
(0.2)
—
—
(39.2)——(39.4)——

380.1(210.5)169.6(30.5)(64.9)(73.5)
—
2.7
3.4
0.1
0.1

Interest charge on pension scheme net liabilities
Other financial expenditure
Financial expenditure

(1.9)
(5.3)
(7.2)

—
(5.9)
(5.9)

(1.9)
(11.2)(13.1)

Profit/(loss) before income tax

35.7(45.3)

(9.6)

(8.1)

11.5

3.4

27.6
(0.1)

(33.8)
—

(6.2)
(0.1)

27.5

(33.8)(6.3)

Revenue
Cost of sales
Gross profit
Research and development
Selling and marketing
Administration and shared services
Share of profit/(loss) of associate, net of tax
Foreign exchange gain
Operating profit
Other financial income
Financial income

Income tax (expense)/credit
Profit/(loss) for the period from continuing
operations
Loss from discontinued operations after tax
Profit/(loss) for the period attributable to equity
holders of the parent

4

7

Earnings per share
Basic earnings per share
Diluted earnings per share

8
8

Dividends per share
Dividends paid
Dividends proposed

9
9

48.2
48.0

(11.1)(11.1)

12.4
13.0*Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items can be found in note 2 of this Half Year Report.

Oxford Instruments plc
10Condensed Consolidated Statement of Comprehensive Income
Half year ended 30 September 2015 - unaudited
Half year to
30 Sept
2015£m

Half year to
30 Sept
2014£mYear to31 March2015£mProfit/(loss) for the period

2.7

1.7

(6.3)

Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss
Foreign exchange differences recycled from other comprehensive
income on disposal of subsidiary
Foreign exchange translation differences
Gain on effective portion of changes in fair value of cash flow hedges,
net of amounts recycled
Tax on items that may be reclassified to profit or loss

1.8
(2.1)

—
0.5

—
7.3

0.1
—

—
—

0.1
—

Items that will not be reclassified subsequently to profit or loss
Remeasurement gain/(loss) in respect of post retirement benefits
Tax on items that will not be reclassified to profit or loss
Total other comprehensive income/(expense)

10.5
(2.2)
8.1

(10.1)
2.1(7.5)(10.8)
2.3(1.1)

Total comprehensive income/(expense) for the period
attributable to equity shareholders of the parent

10.8

(5.8)

(7.4)

Oxford Instruments plc
11Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2015 – unaudited
Otherreserves£m

Foreignexchangetranslation
reserve£m

Retainedearnings
£m

Total
£m

61.5

0.2

2.9

58.0

125.5

—

—

—

—

2.7

2.7

– Foreign exchange differences recycled from othercomprehensive income on disposal of subsidiary

—

—

—

1.8

—

1.8

– Foreign exchange translation differences

—

—

—

(2.1)

—

(2.1)

– Gain on effective portion of changes in fair value of cash
flow hedges, net of amounts recycled

—

—

0.1

—

—

0.1

– Remeasurement gain in respect of post-retirement benefits

—

—

—

—

10.5

10.5

– Tax on items recognised directly in other comprehensive
income

—

—

—

—

(2.2)

(2.2)

Total comprehensive income/(expense) attributable to equity
shareholders of the parent

—

—

0.1

(0.3)

11.0

10.8

– Credit in respect of employee service costs settled byaward of share options

—

—

—

—

0.2

0.2

– Dividends paid

—

—

—

—

(7.4)

(7.4)

Balance at 1 April 2015

Sharecapital£mSharepremium
account£m

2.9

Total comprehensive income:
Profit for the period
Other comprehensive income:Transactions with owners recorded directly in equity:

Total transactions with owners recorded directly in equity:

—

—

—

—

(7.2)

(7.2)

Balance at 30 September 2015

2.9

61.5

0.3

2.6

61.8

129.1

Share
capital£mSharepremium
account£m

Foreignexchange
Other translation
reserves
reserve£m£m

Retainedearnings
£m

Total
£m

2.9

61.3

0.1

(4.4)

80.3

140.2

—

—

—

—

1.7

1.7

– Foreign exchange translation differences

—

—

—

0.5

—

0.5

– Remeasurement loss in respect of post-retirement
benefits

—

—

—

—

(10.1)(10.1)– Tax on items recognised directly in othercomprehensive income

—

—

—

—

2.1

2.1

Total comprehensive income/(expense) attributable to equity
shareholders of the parent

—

—

—

0.5

(6.3)

(5.8)

– Debit in respect of employee service costs settled byaward of share options

—

—

—

—

(0.2)

(0.2)

– Tax charge in respect of share options

—

—

—

—

(0.2)

(0.2)

– Proceeds from shares issued

—

0.1

—

—

—

0.1

– Dividends paid

—

—

—

—

(7.1)

(7.1)

Balance at 1 April 2014
Total comprehensive income:
Profit for the period
Other comprehensive income:Transactions with owners recorded directly in equity:

Total transactions with owners recorded directly in equity:

—

0.1

—

—

(7.5)

(7.4)

Balance at 30 September 2014

2.9

61.4

0.1

(3.9)

66.5

127.0

Oxford Instruments plc
12Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2015 – unaudited continued
Foreignexchange
Other translation
reserves
reserve
£m
£m

Share
capital£mSharepremium
account
£m

2.9

61.3

0.1

—

—

– Foreign exchange translation differences—– Gain on effective portion of changes in fair value of cash
flow hedges, net of amounts recycled

Retainedearnings
£m

Total
£m

(4.4)

80.3

140.2

—

—

(6.3)

(6.3)

—

—

7.3

—

7.3

—

—

0.1

—

—

0.1

– Remeasurement loss in respect of post-retirement benefits

—

—

—

—

(10.8)(10.8)– Tax on items recognised directly in othercomprehensive income

—

—

—

—

2.3

2.3

Total comprehensive (expense)/income attributable to equity
shareholders of the parent

—

—

0.1

7.3

(14.8)(7.4)– Debit in respect of employee service costs settled byaward of share options

—

—

—

—

(0.2)

(0.2)

– Tax charge in respect of share options

—

—

—

—

(0.2)

(0.2)

– Proceeds from shares issued

—

0.2

—

—

—

0.2

– Dividends paid

—

—

—

—

(7.1)

(7.1)

Balance at 1 April 2014
Total comprehensive income:Loss for the year
Other comprehensive income:Transactions with owners recorded directly in equity:

Total transactions with owners recorded directly in equity:

—

0.2

—

—

(7.5)

(7.3)

Balance at 31 March 2015

2.9

61.5

0.2

2.9

58.0

125.5

Oxford Instruments plc
13

Condensed Consolidated Statement of Financial Position
As at 30 September 2015 - unaudited
As at
30 Sept
2015
£m

As at
30 Sept
2014
£m

As at
31 March
2015
£m

35.2
225.8
14.4
3.1
17.8
296.3

34.5
240.7

33.1
231.3

—
—

—
—

12.8
288.0

20.1
284.5

68.8
71.5
4.1
2.3
1.2
15.3
163.2

77.2
79.6
1.2
3.9

70.8
87.3
3.3
3.4

—

—

18.9
180.8

25.1
189.9

459.5

468.8

474.4

2.9
61.5
0.3
2.6
61.8
129.1

2.9
61.4
0.1
(3.9)
66.5
127.0

2.9
61.5
0.2
2.9
58.0
125.5

154.8
1.2
40.5
7.1
203.6

156.4
8.0
54.7
9.4
228.5

144.0
0.8
53.5
6.2
204.5

102.6
5.2
5.3
2.0
0.4
11.3
126.8

95.5
2.3
5.2
1.1

121.6
2.6

—

—

9.2
113.3

16.1
144.4

Total liabilities

330.4

341.8

348.9

Total liabilities and equity

459.5

468.8

474.4

AssetsNon-current assets
Property, plant and equipment
Intangible assets
Investment in associateLong-term receivables
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Current income tax receivable
Derivative financial instruments
Assets of discontinued operations held for sale
Cash and cash equivalents

6

Total assets
EquityCapital and reserves attributable to the Company’s
equity shareholders
Share capital
Share premium
Other reserves
Translation reserve
Retained earnings

Liabilities
Non-current liabilities
Bank loans
Other payables
Retirement benefit obligations
Deferred tax liabilities

Current liabilities
Trade and other payables
Current income tax payables
Accrued dividend
Derivative financial instruments
Liabilities of discontinued operations held for sale
Provisions

6

—

4.1

Oxford Instruments plc
14

Condensed Consolidated Statement of Cash Flows half year ended 30 September 2015 - unaudited

Profit/(loss) for the period from continuing operations
Adjustments for:
Income tax expense/(credit)
Net financial expense
Reversal of acquisition related fair value adjustments
Acquisition related costs
Restructuring costs
Contingent consideration deemed no longer payable
Contingent consideration – further amount deemed payable
Impairment loss of assets held for sale
Amortisation of acquired intangibles
Depreciation of property, plant and equipment
Amortisation and impairment of capitalised development costs
Adjusted earnings before interest, tax, depreciation and amortisation
Loss on disposal of plant, property and equipment
Cost of equity settled employee share schemes
Acquisition related costs paid
Restructuring costs paid
Cash payments to the pension scheme more than the charge to operating
profitOperating cash flows before movements in working capital
Increase in inventories
Decrease/(Increase) in receivables(Decrease)/increase in payables and provisions
Increase in customer deposits
Cash generated by operations
Interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
Acquisition of property, plant and equipment
Acquisition of intangible assets
Capitalised development expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Increase in long-term receivables
Increase in borrowings
Repayment of borrowings
Dividends paid
Net cash generated from/(used in) financing activities
Net decrease in cash and cash equivalents from continuing operations(Decrease)/increase in cash from discontinued operations
Cash and cash equivalents at beginning of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the period

Half year to
30 Sept
2015
£m
3.0

Half year to
30 Sept
2014
£m
1.6

Year to31 March
2015
£m
(6.2)

3.1
3.6
—
0.8
0.8
(3.2)
0.7
2.8
8.4
3.1
1.6

0.9
5.6
0.2
0.9
—
(1.4)
—
—
10.9
2.5
1.7

(3.4)
13.0
0.2
2.2
9.9
(1.4)
6.8
—
21.7
5.5
4.7

24.7
0.1
0.2
(1.2)
(3.5)

22.9
0.1
(0.2)
(1.3)
—

53.0
0.2
(0.2)
(1.9)
(1.2)

(3.3)
17.0
(6.7)
7.6
(9.4)
3.2
11.7
(2.8)
(1.4)
7.5

(2.9)
18.6
(9.6)
(2.7)
(6.8)
4.0
3.5
(2.4)
(4.4)
(3.3)

(5.9)
44.0
(3.3)
(5.3)
1.6
1.9
38.9
(5.0)
(9.1)
24.8

(15.6)
(2.1)
(0.2)
(3.3)
(21.2)

(0.8)
(3.3)
—
(4.5)
(8.6)

(0.8)
(4.4)
(1.0)
(8.0)
(14.2)

—
(3.1)
10.8
(2.1)
5.6
(8.1)
(0.4)
25.1
(1.3)
15.3

0.1
—
15.0
(15.5)(1.9)(2.3)(14.2)
0.1
32.6
0.4
18.9

0.2
—
—
(12.9)(7.1)(19.8)
(9.2)
(0.1)
32.6
1.8
25.1

Half year to
30 Sept
2014£m(14.1)
0.4(13.7)(15.0)
15.5(13.2)(124.3)(137.5)

Year to31 March
2015
£m
(9.3)
1.8
(7.5)
—
12.9
5.4
(124.3)(118.9)Reconciliation of changes in cash and cash equivalents to movement in net (debt)/cash

Decrease in cash and cash equivalents
Effect of foreign exchange rate changes on cash and cash equivalents
Cash inflow from increase in debt
Cash outflow from decrease in debt
Movement in net debt in the period
Net debt at start of the period
Net debt at the end of the period

Half year to
30 Sept
2015
£m
(8.5)
(1.3)
(9.8)
(10.8)—(20.6)(118.9)(139.5)Oxford Instruments plc
15

Notes on the Half Year Financial Statements
Half year ended 30 September 2015 – unaudited
1

BASIS OF PREPARATION OF ACCOUNTS

Reporting entity
Oxford Instruments plc (the Company) is a company incorporated in England and Wales. The condensed
consolidated half year financial statements consolidate the results of the Company and its subsidiaries (together
referred to as the Group). They have been prepared and approved by the Directors in accordance with International
Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting as adopted by the EU. They do not include allof the information required for full annual financial statements, and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 March 2015.
The financial information contained herein is unaudited and does not constitute statutory accounts as defined by
Section 435 of the Companies Act 2006. The comparative figures for the financial year ended 31 March 2015 are notthe company’s statutory accounts for that financial year. Those accounts have been reported on by the company’s
auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include areference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and(iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Significant accounting policies
As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set offinancial statements has been prepared applying the accounting policies and presentation that were applied in the
preparation of the Company’s published consolidated financial statements for the year ended 31 March 2015, except
as explained below.
Adoption of new and revised standards
The following standards and interpretations are applicable to the Group and have been adopted as they aremandatory for the year ended 31 March 2016.
Amendments to IAS 19 Defined benefit plans - Employee contributions: The amendments introduce a relief that will
reduce the complexity and burden of accounting for certain contributions from employees or third parties. The Grouphas considered the impact of this amendment in future periods on profit, earnings per share and net assets. The
adoption of this standard has had no significant impact.
At present, there are no other new standards, amendments to standards or interpretations mandatory for the first time
for the year ending 31 March 2016.
Estimates
The preparation of half year financial statements requires management to make judgements, estimates andassumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates.
In preparing these Half Year Financial Statements, the significant judgements made by management in applying thegroup’s accounting policies and key sources of estimation uncertainty were the same as those that applied to theConsolidated Financial Statements as at and for the year ended 31 March 2015.
Going concern
The condensed consolidated half year financial statements have been prepared on a going concern basis, based on
the Directors’ opinion, after making reasonable enquiries, that the Group has adequate resources to continue inoperational existence for the foreseeable future.

Oxford Instruments plc
16Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
1

BASIS OF PREPARATION OF ACCOUNTS continued

Exchange rates
The principal exchange rates used to translate the Group’s overseas results were as follows:
Period end rates

Half year to
30 Sept
2015
1.51
1.36
181

Half year to
30 Sept
2014
1.62
1.28
178

Year to31 March
2015
1.48
1.38
178

Average translation rates
Half year to 30 September 2015
April
May
June
July
AugustSeptember

US Dollar

Euro

Yen

1.50
1.52
1.55
1.57
1.55
1.53

1.37
1.37
1.40
1.41
1.39
1.36

180
186
192
194
190
184

Average translation rates 2015
April
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary
FebruaryMarch

US Dollar
1.68
1.68
1.69
1.69
1.67
1.64
1.61
1.58
1.56
1.53
1.52
1.51

Euro
1.21
1.22
1.24
1.25
1.26
1.27
1.28
1.27
1.27
1.31
1.35
1.38

Yen
172
172
172
173
173
175
179
183
186
182
181
181

US DollarEuro
Yen

Oxford Instruments plc
17Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
2

NON-GAAP MEASURESThe Directors present the following non-GAAP measure as they believe it gives a better indication of the underlying
performance of the business.
RECONCILIATION BETWEEN PROFIT BEFORE INCOME TAX AND ADJUSTED PROFIT

Profit/(loss) before income tax from continuing operations
Reversal of acquisition related fair value adjustments toinventory
Acquisition related costs
Restructuring costs
Amortisation and impairment of acquired intangibles
Impairment loss on assets held for saleContingent consideration – further amount deemed payable
Contingent consideration deemed no longer payable
Unwind of discount in respect of deferred consideration
Mark to market (gain)/loss in respect of derivative financial
instruments
Adjusted profit before income tax from continuing operations
Share of taxation
Adjusted profit from continuing operations

Half year to
30 Sept
2015
£m
6.1

Half year to
30 Sept
2014
£m
2.5

Year to31 March
2015
£m
(9.6)

—

0.2
0.9

0.2
2.2
9.9
21.7

0.8
0.8
8.4
2.8
0.7
(3.2)
0.7
(0.8)
16.3
(3.9)
12.4

—

10.9
—
—

—

(1.4)
0.5

6.8
(1.4)
1.1

1.6
15.2
(3.4)
11.8

4.8
35.7
(8.1)
27.6

The reversal of acquisition related fair value adjustments to inventory are excluded from adjusted profit to provide ameasure that includes results from acquired businesses on a consistent basis over time to assist comparison of
performance.
Acquisition related costs comprise professional fees incurred in relation to mergers and acquisitions activity and any
consideration which, under IFRS 3 (revised), falls to be treated as a post-acquisition employment expense.
In common with a number of other companies adjusted profit excludes the non-cash amortisation and impairment ofacquired intangible assets and the unwind of discounts in respect of contingent consideration relating to businesscombinations. At the end of the current period, management reassessed the fair value of contingent consideration andas a result £3.2m was released to other operating income in respect of the acquisition of Asylum Research Inc.
Restructuring costs comprise the one off costs in respect of the cost reduction programme begun in the prior year andthe refocusing of the Plasma business.
The Group has classified its Austin Scientific business as held for sale. At 30 September 2015 an impairment charge
was taken to reduce the carrying value of the net assets of the Austin Scientific Business to the fair value less costs tosell.
In calculating the share of tax attributable to adjusted profit before tax in 2011 a one-off recognition of deferred tax
assets relating to the Group’s UK businesses of £11.3m was excluded. At that time the Group announced its intention
to exclude the reversal of this deferred tax from the calculation of the share of tax attributable to adjusted profit before
tax in the years in which it reverses. In the current period deferred tax of £0.4m (2014: £0.8m) has reversed andconsequently been excluded from the tax attributable to adjusted profit before tax.

Oxford Instruments plc
18

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
2

NON-GAAP MEASURES continued

Under IAS 39, all derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition,
they are also measured at fair value. In respect of instruments used to hedge foreign exchange risk and interest raterisk the Group does not take advantage of the hedge accounting rules provided for in IAS 39 since that standard
requires certain stringent criteria to be met in order to hedge account, which, in the particular circumstances of theGroup, are considered by the Board not to bring any significant economic benefit. Accordingly, the Group accounts forthese derivative financial instruments at fair value through profit or loss. To the extent that instruments are hedges of
future transactions, adjusted profit for the year is stated before changes in the valuation of these instruments so thatthe underlying performance of the Group can be more clearly seen.
3

SEGMENT INFORMATIONThe Group has nine operating segments. These operating segments have been combined into three aggregatedoperating segments to the extent that they have similar economic characteristics, with relevance to products andservices, type and class of customer, methods of sale and distribution and the regulatory environment in which they
operate. Each of these three aggregated operating segments is a reportable segment.
The Group’s internal management structure and financial reporting systems differentiate the three aggregatedoperating segments on the basis of the economic characteristics discussed below:
 the Nanotechnology Tools segment contains a group of businesses supplying similar products, characterisedby a high degree of customisation and high unit prices. These are the Group’s highest technology products
serving research customers in both the public and private sectors;
 the Industrial Products segment contains a group of businesses supplying high technology products andcomponents manufactured in medium volume for industrial customers; and the Service segment contains the Group’s service business as well as service revenues from other parts of theGroup.
Reportable segment results include items directly attributable to a segment as well as those which can be allocated ona reasonable basis. Inter-segment pricing is determined on an arm’s length basis. The operating results of each are
regularly reviewed by the Chief Operating Decision Maker, which is deemed to be the Board of Directors. Discrete
financial information is available for each segment and used by the Board of Directors for decisions on resource
allocation and to assess performance. No asset information is presented below as this information is not presented inreporting to the Group’s Board of Directors.
Half year to 30 September 2015

External revenue
Inter-segment revenue
Total segment revenue
Segment operating profit fromcontinuing operations

Nanotechnology
Tools
£m
85.4
—
85.4

Industrial
Products
£m
45.5
0.5
46.0

9.5

1.7

Nanotechnology
Tools
£m
92.7
0.1
92.8

Industrial
Products
£m
51.8
0.4
52.2

6.6

5.3

Service
£m
33.9
—
33.9

Total
£m
164.8

8.8

20.0

Service
£m
30.5
—
30.5

Total
£m
175.0

6.8

18.7

Half year to 30 September 2014

External revenue
Inter-segment revenue
Total segment revenue
Segment operating profit fromcontinuing operations

Oxford Instruments plc
19Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
3

SEGMENT INFORMATION continued

Year to 31 March 2015

External revenue
Inter-segment revenue
Total segment revenue
Segment operating profit fromcontinuing operations

Nanotechnology
Tools
£m
210.9
0.3
211.2

Industrial
Products
£m
103.0
1.1
104.1

Service
£m
66.2
—
66.2

Total
£m
380.1

20.7

6.4

15.7

42.8

Half year to
30 Sept
2015£m

Half year to
30 Sept
2014£mYear to31 March
2015
£m

20.0

18.7

42.8

—
(0.8)
(0.8)
(8.4)
(2.8)

(0.2)
(0.9)
—
(10.9)
—

(0.2)
(2.2)
(9.9)
(21.7)
—

(0.7)
3.2
1.0
(4.6)
6.1

—
1.4
0.1
(5.7)
2.5

(6.8)
1.4
0.1
(13.1)(9.6)

Half year to
30 Sept
2015£m

Half year to
30 Sept
2014£mYear to31 March
2015
£m

11.8
(0.4)
0.4

14.2
(0.4)
1.7

30.5
(0.8)
2.2

(1.6)
3.3

(1.7)
4.5

(4.7)
8.0

13.5

18.3

35.2

Reconciliation of reportable segment profit from continuing operations

Operating profit for reportable segments from continuing
operations
Reversal of acquisition related fair value adjustments toinventory
Acquisition related costs
Restructuring costs
Amortisation of acquired intangibles
Impairment loss on assets held for saleContingent consideration – further amount deemedpayableContingent consideration deemed no longer payable
Financial income
Financial expenditure
Profit before income tax from continuing operations

4

RESEARCH AND DEVELOPMENT

Total research and development spend by the Group is as follows:

Research and development expense charged to theconsolidated statement of income
Less: depreciation of R&D related fixed assets
Add: amounts capitalised as fixed assets
Less: amortisation and impairment of R&D costs
previously capitalised as intangibles
Add: amounts capitalised as intangible assets
Total cash spent on research and development during
the period

Oxford Instruments plc
20Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
5

ACQUISITIONS

Medical Imaging Resources, Inc.
On 1 May 2015 the Group acquired 100% of the issued share capital of Medical Imaging Resources, Inc. (MIR) for a
net cash consideration of £8.7m. MIR specialises in the build, lease and service of mobile medical imaging labs.
The book and fair values of the assets and liabilities acquired are given in the table below. Fair value adjustments
have been made to better align the accounting policies of the acquired business with the Group accounting policies
and to reflect the fair value of assets and liabilities acquired. The business has been acquired for the purpose of
integrating into the Oxford Instruments Healthcare business where it is believed that a number of synergies can beobtained.

Book value£mProvisional
Adjustments£mProvisional
Fair value£mIntangible fixed assets
Tangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Deferred tax
Net debt

—
4.8
0.4
0.9
(1.7)
—
(2.6)

5.7
(0.2)
0.2
—
—
(2.2)
—

5.7
4.6
0.6
0.9
(1.7)
(2.2)
(2.6)

Net assets acquired
Goodwill

1.8

3.5

5.3
7.5

Total consideration
Net debt acquired
Contingent consideration at acquisition

12.8
2.6
(6.7)

Net cash outflow relating to the acquisition

8.7

The goodwill arising is not tax deductible and is considered to represent the value of the acquired workforce andsynergistic benefits expected to arise from the acquisition. Further contingent consideration of up to £6.7m is payable
based on the performance of the Oxford Instruments Healthcare business in the year to 31 March 2016.
The book value of receivables in the tables above represents the gross contractual amounts receivable.
The acquisition above contributed revenue of £5.6m and a reported operating profit of £1.6m to the Group’s result forthe period. Had the acquisition taken place on 1 April 2015 the equivalent Group numbers would have been revenueof £165.9m and a reported operating profit of £10.0m.

Oxford Instruments plc
21

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
6

DISPOSALS AND DISCONTINUED OPERATIONS

Disposals
On 27 May 2015 the Group entered into a strategic alliance with GD Intressenter AB of Sweden (GDI) to create theworld’s largest company in the highly specialised Ultra High Vacuum Surface Science field. The alliance comprises
Oxford Instruments’ Omicron Nanotechnology GmbH (“Omicron”) and associated subsidiaries and GDI’s Scienta
Scientific AB (“Scienta”) and associated subsidiaries.
In consideration for new shares in Scienta, Oxford Instruments transferred all of its shares in the capital of Omicron to
Scienta. Oxford Instruments holds a 47% interest in the share capital of Scienta and GDI holds 53%. The investment
has been accounted for as an associate taking into account the following factors:-

The Group holds substantial, but minority, voting rights (47%). All other rights are controlled by a single
shareholder;
The Group has a minority number of non-executive board seats (two of five), with the remaining seats held byrepresentatives of GDI;
Whilst the Group has certain veto rights in respect of key decisions, it cannot unilaterally direct the activities of
the Scienta Group.

The book value of the net assets disposed of was £14.6m. The value of the shareholding acquired in Scienta wasconsidered to be equal to the book value of net assets disposed of, therefore there was no gain or loss arising on thetransaction.
Discontinued operations
At 30 September 2015 the Group’s Austin Scientific business was classified as held-for-sale and as a discontinued
operation, given it was a major class of business and highly probable that the sale will take place within 12 months ofthe balance sheet date.

Results of discontinued operations
Revenue
Expenses(Loss)/profit from operating activities before tax
Tax(Loss)/profit from operating activities after tax
Basic (loss)/profit per share (pence)
Diluted (loss)/profit per share (pence)

Cash flows from discontinued operations
Net cash used in operating activities
Net cash from investing activities
Net cash from financing activities
Net cash flows

Half year to
30 Sept
2015
£m
1.7
(2.1)
(0.4)
0.1
(0.3)
(0.5)
(0.5)

Half year to
30 Sept
2014
£m
3.5
(3.3)
0.2
(0.1)
0.1
0.2
0.2

Year to31 March
2015
£m
5.5
(5.6)
(0.1)

Half year to
30 Sept
2015
£m
(0.4)

Half year to
30 Sept
2014
£m
0.1

Year to31 March
2015
£m
(0.1)

—
—

—
—

—
—

(0.4)

0.1

(0.1)

—

(0.1)
(0.2)
(0.2)

Oxford Instruments plc
22Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
6

DISPOSALS AND DISCONTINUED OPERATIONS continued

The disposal group consists of the following assets and liabilities, held in accordance with IFRS 5 at the lower ofcarrying value and fair value less costs to sell:

Half year to
30 Sept
2015£m

Assets of disposal group held for sale
Intangible assets
Property, plant and equipment
Inventory
Trade and other receivables

—
—

0.5
0.7
1.2

Half year to
30 Sept
2015
£m
(0.4)
(0.4)

Liabilities of disposal group held for sale
Trade and other payables

An impairment loss of £2.8m has been recognised on the remeasurement of the disposal group to the lower of its
carrying amount and fair value less costs to sell.

7

TAXATION

The total effective tax rate on profits for the half year is 35% (2014: 36%). The weighted average tax rate in respect ofadjusted profit before tax (see note 2) for the half year is 24% (2014: 23%).

8

EARNINGS PER SHAREa) Basic
The calculation of basic earnings per share is based on the profit or loss for the period after taxation and a weighted
average number of ordinary shares outstanding during the period, excluding shares held by the Employee ShareOwnership Trust, as follows:

Weighted average number of shares outstanding
Less: weighted average number of shares held byEmployee Share Ownership Trust
Weighted average number of shares used in
calculation of earnings per share

Half year to
30 Sept
2015
Sharesmillion
57.3

Half year to
30 Sept
2014
Sharesmillion
57.1

Year to31 March
2015
Sharesmillion
57.3

(0.2)

(0.2)

(0.2)

57.1

56.9

57.1

Oxford Instruments plc
23

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
8

EARNINGS PER SHARE continuedb) Diluted
The following table shows the effect of share options on the calculation of both adjusted and unadjusted diluted basic
earnings per share.

Number of ordinary shares per basic earnings per
share calculations
Effect of shares under option
Number of ordinary shares per diluted earnings per
share calculations

9

Half year to
30 Sept
2015
SharesmillionHalf year to
30 Sept
2014
SharesmillionYear to31 March
2015
Sharesmillion

57.1
0.2

56.9
0.4

57.1
0.2

57.3

57.3

57.3

Half year to
30 Sept
2015
pence
3.70

Half year to
30 Sept
2014
pence
3.36

Year to31 March
2015
pence
3.36
9.04
12.40

DIVIDENDS PER SHARE

The following dividends per share were paid by the Group:

Previous period interim dividend
Previous period final dividend

—

—

3.70

3.36

The following dividends per share were proposed by the Group in respect of each accounting period presented:

Interim dividend
Final dividend

Half year to
30 Sept
2015
pence
3.70

Half year to
30 Sept
2014
pence
3.70

—

—

3.70

3.70

Year to31 March
2015
pence
3.70
9.30
13.00

The final dividend for the year to 31 March 2015 was approved by shareholders at the Annual General Meeting heldon 8 September 2015. Accordingly is it no longer at the discretion of the company and has been included as a liability
as at 30 September 2015. It was paid on 19 October 2015.
The interim dividend for the year to 31 March 2016 of 3.70 pence was approved by the Board on 10 November 2015,
the same as the previous year and has not been included as a liability as at 30 September 2015. The interim dividend
will be paid on 8 April 2016 to shareholders on the register at the close of business on 11 March 2016.

Oxford Instruments plc
24Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
10

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of financial assets and liabilities together with the carrying amounts shown in the Consolidated
Statement of Financial Position are as follows:
Carrying
amount30 Sept
2015
£m

Fair
value
30 Sept
2015£m

Carrying
amount30 Sept
2014
£m

Fair
value
30 Sept
2014£m

Carrying
amount31 March
2015
£m

Fair
value
31 March
2015
£m

58.4
5.7
15.3

58.4
5.7
15.3

66.6
5.7
18.9

66.6
5.7
18.9

75.8
5.0
25.1

75.8
5.0
25.1

2
2

0.2
2.1
2.3

0.2
2.1
2.3

—
3.9
3.9

—
3.9
3.9

0.1
3.3
3.4

0.1
3.3
3.4

2

(2.0)

(2.0)

(1.1)

(1.1)

(4.1)

(4.1)

2
3

—
(19.1)(21.1)—(19.1)(21.1)—(13.4)(14.5)—(13.4)(14.5)—(17.5)(21.6)—(17.5)(21.6)(69.5)(154.8)(69.5)(154.8)(69.8)(156.4)(69.8)(156.4)(86.9)(144.0)(86.9)(144.0)Fair
value
hierarchy

Assets carried at amortised cost
Trade receivables
Other receivables
Cash and cash equivalents
Assets carried at fair value
Derivative financial instruments:– Copper hedging contracts (designated as an
IAS 39 hedge)– Foreign currency contracts

Liabilities carried at fair value
Derivative financial instruments:– Foreign currency contracts– Copper hedging contracts (designated as an
IAS 39 hedge)
Contingent consideration
Liabilities carried at amortised cost
Trade and other payables
Borrowings

The following summarises the major methods and assumptions used in estimating the fair values of financial
instruments reflected in the above table.
Derivative financial instruments
Derivative financial instruments are marked to market using market prices.
Fixed and floating rate borrowings
The fair value of fixed and floating rate borrowings is estimated by discounting the future contracted principal andinterest cash flows using the market rate of interest at the reporting date.
Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the carrying amount is deemed to reflect the fairvalue. All other receivables/payables are discounted to determine their fair value. Advances received are excluded
from other payables above as these are not considered to be financial liabilities.
Contingent consideration
The fair value of contingent consideration is estimated based on the forecast future performance of the acquired
business over a timeframe determined as part of the acquisition agreement, discounted as appropriate. Key
assumptions include growth rates, expected selling volumes and prices and direct costs during the period.

Oxford Instruments plc
25

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2015 – unaudited
10

FAIR VALUE OF FINANCIAL INSTRUMENTS continued

Fair value hierarchy
The table above gives details of the valuation method used in arriving at the fair value of financial instruments. The
different levels have been identified as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); andLevel 3: inputs for the asset or liability that are not based on observable market data.
There have been no transfers between levels during the year.
Contingent consideration relates to amounts payable in respect of acquisitions. It is reassessed at the end of eachyear to its fair value.

Balance brought forward
Fair value of contingent consideration on acquisitions in the year
Unwind of discount in respect of contingent consideration
Contingent consideration paid
Increase in contingent consideration
Contingent consideration released to the consolidated statement of income
Effect of movement in foreign exchange
Balance carried forward

30 Sep
2015
£m
17.5
6.7
0.7
(2.6)
0.7
(3.2)
(0.7)
19.1

30 Sep 31 March
2015
2014
£m
£m
10.7
10.7
—
—
1.1
0.5
(0.8)
(0.8)
—
6.8
(1.4)
(1.4)
1.1
0.3
17.5
9.3

Oxford Instruments plc
26

Principal Risks and Uncertainties
The Group has in place a risk management structure and internal controls which are designed to identify, manage andmitigate risk.
In common with all businesses, Oxford Instruments faces a number of risks and uncertainties which could have amaterial impact on the Group's long term performance.
On pages 14 and 15 of its 2015 Annual Report and Accounts (a copy of which is available at www.oxfordinstruments.com), the Company set out what the Directors regarded as being the principal risks and uncertainties
facing the Group's long term performance and these are reproduced in the table below. Many of these risks are
inherent to Oxford Instruments as a global business and they remain valid as regards their potential impact during theremainder of the second half of the year.
The impact of the economic and end market environments in which the Group's businesses operate are considered in
the Half Year Statement of this Half Year Report, together with an indication if management is aware of any likely
change in this situation.
Specific Risk
Technical Risk

Economic
Environment

Acquisitions

Foreign exchange
volatility

Political Risk

Context

Risk

The Group provides hightechnology equipment
and systems to its
customers.

Failure of theadvanced
technologies
applied by
the Group to
producecommercial
products,
capable ofbeing
manufactured
and sold
profitably.

Possible
ImpactLower
profitability andfinancial returns.
Negative impact
on the Group’s
reputation.

Associated strategic
priorities‘Realising the Brand’‘Liberating Cash’

Government spend on
R&D has been
constrained.

Demand for
the Group’s
products may
be lower than
anticipated.

Lower
profitability andfinancial returns.

‘Realising the Brand’Part of the growth of
Oxford Instruments isplanned to come fromacquisitions which
provide the Group withcomplementary
technologies.

Appropriateacquisition
targets may
fail to provide
the planned
value.

Lower
profitability andfinancial returns.
Management
focus taken
away from thecore business inorder to manage
integration
issues.

‘Realising the Brand’A significant proportion of
the Group’s profit is madein foreign currencies.
Most costs are in Sterling.

The Group’s
profit levels
are exposedtofluctuations in
exchange
rates.

Lower
profitability andfinancial returns‘Delivering
Shareholder Value’

Changes inpolitical
relations may
affect the
granting oflicences.

An inability tosell certain
products tocertain countries

The Group operates in
global markets and canbe required to secure
export licences fromgovernment.

‘Delivering
Shareholder Value’‘Inventing the Future’‘Adding Personal
Value’

Mitigation
The Group has moved awayfrom large scale, single
customer development
programmes towards morecommercially orientatedproducts.
The New ProductIntroduction programme thatany new R&D projects must
pass through provides aframework within which thecommercial viability of
projects are scrutinised andassessed.
The Group has a broad
spread of customers,
applications andgeographical markets.

Extensive financial andtechnical due diligence isundertaken by the Groupduring any acquisition
programmes.

‘Liberating Cash’

Each transaction has acomprehensive postacquisition integration plan
which is monitored at thehighest level.
The Group seeks to mitigate
the exposure to transactionalrisk by the use of natural
hedges wherever possible.

‘Delivering
Shareholder Value’

The remaining transactional
foreign exchange risk in any
year is mitigated through theuse of forward and nonpremium based option
exchange contracts.
Maintain a diversified
geographical customer base.

‘Liberating Cash’

Ensure low commitment toinventory before attaining
export licences

Oxford Instruments plc
27

Customer
Concentration

Outsourcing

Pensions

PeopleThe Group’s
Superconducting Wirebusiness in reliant on asmall number of MRI
manufacturers as
customers .

Thesecustomers
can exert
significant
customer
power interms of priceand volume

Lost sales,
decreased
margins

The Group’s strategicplan includes theoutsourcing of asignificantly higher
proportion of the costs of
its products to benefit
from economies of scaleand natural currency
hedges.

Failures inthe supply
chain
impactingsales.

Disruption tocustomers.
Negative impact
on the Group’s
reputation.

The Group’s calculated
pension deficit issensitive to changes in
the actuarial
assumptions.

Movements
in theactuarialassumptions
may have anappreciable
effect on thereported
pensiondeficit.

Additional cash
required by theGroup to fundthe deficit.
Reduction in net
assets.

‘Delivering
Shareholder Value’Theemployeeleaves theGroup.

Lower
profitability andfinancial returns.

‘Adding Personal
Value’

A number of the Group’s
employees are businesscritical.

‘Delivering
Shareholder Value’Attempt to broaden customer
base to include all OEMS

‘Liberating Cash’

Explore alternative
applications forsuperconducting wire

‘Liberating Cash’

Relationships withoutsourcing businesses aremonitored closely and any
potential issues are acted
upon swiftly to avoid
disruption.

‘Realising the Brand’

Where practical dual sources
are used for key components
and services.

‘Liberating Cash’

The Group has closed its
defined benefit pension
schemes in the UK and US
to future accrual.
The Group has a funding
plan in place to reduce thepension deficit over the short
to medium term.

‘Inventing the Future’

The Group undertakes aregular employee survey andimplements and reviews
resulting action plans.
A comprehensive succession
planning process is in place,
together with a talent network
which identifies andmanages contacts withpeople who could provide
external succession for
critical current and futureroles.

Routes to market

In some instances theGroup’s products arecomponents of higher
level systems and thus
the Group does notcontrol its route tomarket.

The systems
integrator
switches
supplier
denying theGroup’s routeto market.

Lower
profitability andfinancial returns.

‘Inventing the Future’‘Realising the Brand’

A management development
programme provides
exposure to key skills
needed for growth. Regularindividual performance
reviews take place.
Use of the stage gate
process and ‘Voice of the
Customer’ to make sure that
the Group’s products are thebest in the market.
Co-marketing with system
integrators to promote themerits of the Group’s
products to end customers.
Seeking to increase thenumber of integrators
supplied by the Group .

Oxford Instruments plc
28Responsibility Statement of the Directors in respect of the Half Year Financial Statements
We confirm that to the best of our knowledge:•

the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU;•

the interim management report includes a fair review of the information required by:(a)DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events thathave occurred during the first six months of the financial year and their impact on the condensed set offinancial statements; and a description of the principal risks and uncertainties for the remaining six
months of the year; and(b)

DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that havetaken place in the first six months of the current financial year and that have materially affected thefinancial position or performance of the entity during that period; and any changes in the related party
transactions described in the last annual report that could do so.

Jonathan Flint, Chief Executive
10 November 2015

Kevin Boyd, Group Finance Director

Oxford Instruments plc
29

Independent review report to Oxford Instruments plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 30 September 2015 which comprises the Condensed Consolidated
Statement of Income, the Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated
Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity, Condensed Consolidated
Statement of Cash Flows and the related explanatory notes.
We have read the other information contained in the half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company inmeeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct
Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters weare required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company for our review work, for this report, or for theconclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The
condensed set of financial statements included in this half-yearly financial report has been prepared in accordancewith IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the halfyearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410
Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing(UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 September 2015 is not prepared, in allmaterial respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Greg Watts
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill, Snow Hill Queensway
Birmingham, B4 6GH
10 November 2015

Oxford Instruments plc
30