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 12 November 2013
Oxford Instruments plc
Announcement of Half Year Results for 2013/2014
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 2013.
Highlights:
First half orders of £168.0 million (2012: £169.8 million)

First half revenue of £166.3 million (2012: £170.8 million)Marked improvement in trading conditions in the second quarterAdjusted gross margin of 45.0% (2012: 44.6%)

Adjusted profit before tax* of £20.6 million (2012: £22.5 million)



Reported EPS up 16.0% at 23.2 pence (2012: 20.0 pence)

Adjusted EPS down 13.3% at 28.6 pence (2012: 33.0 pence)Focused R&D and strong new product pipeline will underpin organic growthAcquisition of RMG Technology Limited

Discussions with Andor Technology plc

Interim dividend increased by 10.2% to 3.36p per share (2012: 3.05p)*Adjusted numbers are stated to give a better understanding of the underlying business. Details of adjusting items can be found in
Note 2.

Jonathan Flint, Chief Executive of Oxford Instruments plc, said:“The second quarter has shown a significant strengthening in both orders and revenues. This improvementin trading, supported by the strength of new product introductions and our actions to enhance operating
efficiencies, should enable us to deliver an improved performance in the second half. Looking forward, theapplication of both our existing and new techniques to the Nano-Bio field offers us the opportunity for further
sustained profitable growth”.
Enquiries:
Oxford Instruments plc
Jonathan Flint, Chief Executive
Kevin Boyd, Group Finance Director

Tel: 01865 393200

MHP Communications
Rachel Hirst
Rory King

Tel: 020 3128 8100

Number of pages: 27

Half Year Results Announcement for the six months ended 30 September 2013

Half Year Statement
Introduction
This statement addresses Oxford Instruments’ financial and operational performance for the half year to 30
September 2013. It also includes commentary on the planned strategic direction for the Oxford Instruments
Group, beyond the end of the current mid-term plan which is due to be completed at the end of this financial
year, in March 2014.
Half Year Overview
The Group saw a marked improvement in trading conditions as the first half of the year progressed. As
previously reported, the year started with slow trading during April and May, followed by a better
performance in June. This strengthening in demand has continued with a sustained recovery during thesecond quarter of our financial year. Second quarter revenue was above the same period in the prior year,
offsetting the fall seen in the first quarter. Orders reflected a similar pattern. The Group saw an increase inorders year-on-year during quarter two, offsetting the decline seen during the first quarter. The book to billratio improved with total orders for the first half year steady at £168.0 million (2012: £169.8 million).
Total revenue in the first half was £166.3 million (2012: £170.8 million). Excluding the effects of the ITER
wire and Austin Scientific GTAT contracts which were largely completed in the prior year, we saw underlying
growth. As a result of the reduced revenues, adjusted operating profit fell £1.6 million to £22.0 million giving
an adjusted operating margin of 13.2% (2012: 13.8%). Operating margins improved in the Industrial
Products and Service sectors but fell in Nanotechnology Tools due to reduced revenues into the High
Brightness LED market and the addition of lower margins from the Asylum Research acquisition. We
believe that the HBLED market will recover in the next 12 months and margins in Asylum Research will
improve as sales volumes grow.
At the time of our AGM Statement in September our order rate was ahead of the previous year in Asia andEurope but behind in North America. At the end of the half year, run rates are still ahead in Asia andEurope and much improved in North America.
We continue to invest in our customer focused R&D programme with sustained momentum in new productintroductions. Our strong brand and technological leadership underpinned our success in maintaining
pricing and continued to strengthen our competitive position. We acted quickly to address the softness inthe first quarter by focusing on operational cost control while protecting R&D programmes.
As announced today, we are in discussions with the Board of Andor Technology plc (Andor) in relation to anoffer to acquire Andor for 500 pence per share in cash (c. £166 million) funded from debt and current cash.
This is covered in more detail in the strategy section below.
We also announce today the acquisition of RMG Technology (RMG), completed on 8 November 2013.
RMG is a small UK business, formed in 2000, which brings a unique laser technology to our Industrial
Analysis business. This is covered in the Industrial Products review below. This acquisition will not have amaterial impact on performance in the current year.
For the half year just ended, the Directors are proposing an interim dividend of 3.36 pence per share (2012:3.05 pence), a 10.2% increase payable on 7 April 2014 to shareholders who are on the register on 7 March2014.

Oxford Instruments plc
2

Half Year Results Announcement for the six months ended 30 September 2013

Strategy
In June 2011, we defined a medium term strategic objective for the Group in which we sought to achieve arevenue compound annual growth rate of 14% per year and a net return on sales of 14% by the end of the2014 financial year. This is known as the 14 Cubed Plan.
The strong performance of the Group over the first two years of the plan, driven by our technologicaladvantage and exposure to growing markets and geographies, meant that we hit the 14% return on sales
target a year early in March 2013. The revenue growth rate in the first two years averaged 15.6%, in excessof the 14% required. In the first half of the current year, growth was a compound 13.7% over the same
period in 2011, our base year.
With this strong foundation in place, now is the time to look forward to the next stage of the Group’s
strategic evolution. We believe the current trend towards convergence of the sciences provides a unique
opportunity for Oxford Instruments to access a new set of customers who want to work at the atomic andmolecular level. Areas like genomics and DNA modelling hold enormous potential for researchers
worldwide. The mechanisms of protein folding and enzyme replication, for example, are amenable toresearch using tools at the nano scale. Initially, our technological focus will be on analysis, observing
biological mechanisms in their natural state. Whilst many of our existing analytical techniques can be usedin life sciences, there is a difference. Biological samples are often best studied in their natural, liquid
environments, rather than in vacuum environments, as is generally the case in the analysis of inorganic
samples. We call the analysis and manipulation of organic molecules the Nano-Bio arena.
We intend to build on our world renowned reputation in the physical sciences with a complementary
capability using related techniques to become a leading provider of tools in the Nano-Bio area. The
acquisition of Asylum Research in 2012 gave us the capability to produce atomic force microscopes that areused in both the physical and life sciences markets.
We are looking at acquisitions that share routes to market with Oxford Instruments and offer opportunities
for growth in the Nano-Bio market. As announced this morning, one avenue we are exploring is through thepotential acquisition of Andor, a UK based high-technology company specialising in the manufacture ofhigh-end scientific cameras, microscope systems and analytical software for the material and life science
industries. Andor’s technology would extend our capability into the optical domain, which is the primary
technology used for analysing biological samples at the nano scale.
Nanotechnology applied to both life sciences and elsewhere will continue to offer long term structural
growth. Our strategy will continue to focus on delivering organic growth derived from our existing
nanotechnology capabilities in materials science, augmented with a new range of techniques in the NanoBio field. We are committed to driving further margin improvement by building on our market leading
position and continuing to focus on efficiency and operational excellence. We will continue our investment
in research and product development with a particular emphasis on the rapidly growing emerging markets.
We will also continue to target acquisitions that further strengthen our position in our chosen markets.

Oxford Instruments plc
3

Half Year Results Announcement for the six months ended 30 September 2013

Half Year Operational Review
Nanotechnology Tools Sector

Revenue
Operating profit

2013
£m
77.1
7.4

2012
£m
80.9
10.3

The Nanotechnology Tools sector produces our highest technology products. It serves research andindustrial customers in both the public and private sectors and represents 46% of Group revenue. The
sector comprises three businesses: NanoAnalysis, which includes Omniprobe and Asylum Research,
Plasma Technology and Omicron NanoScience.
Overall revenue fell by 4% in the half. However, in line with the overall Group trend, performance in thesecond quarter was much improved with growth of 10% over the same period last year. Operating margins
reduced from 12.7% to 9.6% primarily as a result of the decline in the HBLED market noted above and theinclusion of the Asylum Research acquisition. This is performing exactly on plan and we should see
increasing margins from this business in future.
Our NanoAnalysis business produces leading-edge tools that enable materials characterisation and sample
manipulation at the nanometre scale. Its products include detectors used on electron microscopes and ionbeam systems in academic institutions and industrial applications including semiconductors, renewableenergy, mining, metallurgy and forensics. Sales of our new material characterisation system, comprising ourlatest generation nanoanalysis detector hardware and multi-tasking AZtec® software, have been strong. A
new software product was introduced for the characterisation and analysis of photovoltaic cells. AZtec
LayerProbe™ is used by customers in the energy market to determine the correct thickness of solar cells to
obtain maximum efficiency and reduce costs at the same time. Asylum Research, acquired in December
2012, gives us entry to the Nano-Bio market. It continues to contribute to the growth of the businessthrough access to new microscopy technologies that operate in ambient conditions independently fromelectron microscopes. Successful marketing of its atomic force microscopes in Asia has resulted in
improved orders from demanding markets such as Japan.
Our Plasma Technology business produces equipment for nanofabrication. This business has seen ageneral slowdown in its markets primarily due to softness in the HBLED sector. However, we maintain astrong technological position in this market and we are well placed to benefit when demand picks up,
underpinned by our pipeline of innovative new products. Increased interest in two dimensional materials
such as graphene, molybdenum disulphide and boron nitride is driving increased interest in our plasma
technology solutions and has led us to develop a centre of excellence to exploit worldwide investment inthis nascent area.
Our Omicron NanoScience business is the market and technology leader for analytical measurement
techniques in high vacuum, low temperature and high magnetic fields, supplying the fundamental andapplied research communities. Its technologies are used in a broad range of application-specific solutionsin advanced materials, advanced computing, sustainable energy, life science and security. This business ismade up of the former NanoScience and Omicron Nanotechnology businesses. We have experienced
difficult trading conditions in some markets with sequestration in the USA having had a significant effect.
Demand has shown some tentative recovery in the last two months. Sales of the next generation dilution
refrigerator for quantum processing applications, TritonULT, have grown 50% year on year in the first half.
Deliveries began of our largest ever nanofabrication system to Jülich University in Germany. This multitechnique system includes an Atomic Layer Deposition system from Plasma Technology, a cross businesscollaboration model we are developing within the Nanotechnology Tools sector.

Oxford Instruments plc
4Half Year Results Announcement for the six months ended 30 September 2013

Industrial Products Sector

Revenue
Operating profit

2013
£m
58.0
8.1

2012
£m
61.5
7.5

Our Industrial Products sector supplies analytical systems for quality control, environmental and compliancetesting and components for industry and research. It represents 35% of Group revenue. The businesses
which make up this sector are grouped into Industrial Analysis and Industrial Components. The Industrial
Analysis business comprises X-ray Fluorescence, Optical Emission Spectroscopy and Magnetic
Resonance. Industrial Components comprises Superconducting Wire, Austin Scientific and X-Ray
Technology.
Revenue in the first half was 6% down on the prior year. Excluding the two major contracts discussed
above, revenue grew by 5%. Operating profits grew by 8% and operating margins increased to 14.0%(2012: 12.2%) due to a better product mix and good cost control.
Our Industrial Analysis business supplies high quality instruments for materials identification, quality
assurance, elemental analysis, thickness gauging and quality control applications. Our customers span
global industries including metals, steel, recycling, agriculture, automotive, textiles, petrochemicals andconstruction. The decline in steel markets that we saw last year has reversed, particularly in China, andsales of our portable and hand-held analysers have been strong. We have launched the world’s firstportable optical emission spectrometer. PMI-MASTER Smart enables the analysis of metals in inaccessible
environments such as high platforms and towers in chemical and oil plants. A new magnetic resonanceanalyser Pulsar™ was introduced earlier this year for rapid, low cost analysis of the fatty acid compositionof food samples. In an exclusive collaboration with the UK Institute of Food Research, we have developed
improved methods of testing meat in the food chain and are able to differentiate between beef, lamb, pork
and horsemeat, providing new tools to tackle the problems of food fraud and contamination.
The acquisition of RMG Technology, which we have announced today, will strengthen our ability to offer
customers in the recycling industry an unprecedented choice of analytical techniques, tailored to their
specific requirements. RMG’s innovative Laser Induced Breakdown Spectrography (LIBS) will provide
differentiation in a growing sector and is complementary to our existing X-ray Fluorescence and OpticalEmission technologies, allowing us to expand and develop our share of the world recycling market in themedium term.
In Industrial Components, increasing demand for next generation, higher magnetic field MRI scanners
continues to drive growth in our Superconducting Wire business. We have installed new capital equipment
which will improve the efficiency of our wire production facility. Our Austin Scientific business has won anorder from a major semiconductor equipment manufacturer, mitigating the impact of challenging US market
conditions. Both our Superconducting Wire and Austin businesses have faced tough comparators with lastyear following the successful completion of major contracts, as previously reported. Our X-Ray Technology
business has performed well, particularly in sales to China.

Oxford Instruments plc
5Half Year Results Announcement for the six months ended 30 September 2013

Service Sector

Revenue
Operating profit

2013
£m
32.3
6.5

2012
£m
29.3
5.8

Our Service business comprises our service, support, training, refurbishment, consumables andaccessories elements of our business and represents 19% of Group revenue. It consists of therefurbishment, servicing and sale of CT and MRI medical scanners in North America and Asia, and theservice elements of the Nanotechnology Tools and Industrial Products sectors.
Revenue grew by 10% and profits by 12%. Operating profit margins remained strong at 20.1% (2012:
19.8%).
The aftermarket revenues associated with our two manufacturing sectors are split into three main revenue
streams: service contracts (customers purchase unlimited support for a fixed period); billable service(customers are billed for time and materials); and the sale of spare parts and consumables. Service orders
and sales were ahead of last year across all revenue streams, particularly for service contracts and spares.
We continue to invest in the development of our service capability internationally, especially in emerging
and fast growing markets.
The CT and MR Service business continues to win long term service contracts helped by new opportunities
in the US veterinary market.
Financial Review
Comparative figures have been restated as required by IAS 19 (revised). Details of this restatement can befound in note 1 to the accounts.
After a slow start in the first two months of the year, order intake picked up and ended the half year at£168.0 million (2012: £169.8 million) with the order book for future deliveries standing at £123.0 million.
Revenue in the half year fell by 2.6% to £166.3 million. Acquisitions contributed £7.3 million in the period.
Foreign currency exchange rate movements increased sales by £1.8 million resulting in a constant currency
organic decline in revenue of 8.0%.
Improved mix, favourable foreign exchange rates and acquisitions helped raise the adjusted gross margin
from 44.6% to 45.0%. In response to the downturn in revenue there was an increased focus on costs. As aresult, constant currency operating expenses, excluding acquisitions, fell by £5.2 million.
Adjusted operating profit reduced by £1.6 million to £22.0 million, giving an adjusted operating profit marginof 13.2% (2012: 13.8%). Net bank interest reduced by £0.1 million to a charge of £0.2 million. Net intereston the pension fund increased £0.4 million to £1.2 million due to the increased pension deficit at the end of
March 2013. As a result, adjusted profit before tax fell £1.9 million to £20.6 million.
The ability to utilise brought forward tax losses in the UK has kept the adjusted tax rate relatively low at 21%(2012: 18%) which leads to adjusted basic earnings per share (EPS) of 28.6 pence (2012: 33.0 pence).
Reported EPS was 23.2 pence (2012: 20.0 pence). The difference is due to the items detailed in note 2,
primarily mark to market movements of derivative financial instruments, acquisition costs, amortisation of
acquired intangible assets and the utilisation of a large deferred tax asset the recognition of which was
excluded from adjusted earnings in 2011.

Oxford Instruments plc
6

Half Year Results Announcement for the six months ended 30 September 2013

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the period were £26.1
million (2012: £28.0 million). As expected working capital expanded in the period but remains controlled at
11% of the previous 12 months’ sales. Capital expenditure reduced to £2.4 million from £4.2 million. The
prior year had been abnormally high due to investment in our superconducting wire facility.
At the half year end, net cash was £32.2 million (2012: £37.1 million). Cash outflow in the period was £7.0
million (2012: £2.0 million inflow). The Group has a committed £50 million revolving credit facility with aclub of banks, extendable to £70 million by mutual consent, which expires in December 2014. In March
2013, the Group agreed a £25 million 7 year fixed interest facility with the European Investment Bank. Thisfacility was drawn down in August 2013.
As calculated under IAS19, the defined benefit pension deficit has reduced by £5.3 million to £42.6 million
since 31 March 2013. Since then assets have fallen by 2.7% to £192.6 million while liabilities have reduced
by 4.4% to £235.2 million due mainly to the increase in corporate bond yields used to discount liabilities.
Dividends
In 2011 the Group moved to a progressive dividend policy, whereby we would seek to raise dividends asadjusted earnings per share increase, although not necessarily by the same proportion, depending on the
Directors’ perceived need for cash to expand the business both organically and through acquisition. For thehalf year just ended, the Directors are proposing an interim dividend of 3.36 pence per share (2012: 3.05
pence), payable on 7 April 2014 to shareholders who are on the register on 7 March 2014.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performanceand position, are set out above. The financial position of the Group, its cash flows, liquidity position andborrowing facilities are described in the above Financial Review section.
The diverse nature of the Group combined with its current financial strength provides a solid foundation fora sustainable business. The Directors have reviewed the Group’s forecasts and considered a number ofpotential scenarios relating to changes in trading performance. The Directors believe that the Group will beable to operate within its existing debt facility which expires in December 2014. This review also consideredhedging 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 thisHalf Year Report.
PeopleOur business relies on the expertise and commitment of our people. When the market slowed during thefirst quarter of the year we relied more than ever on the continued dedication of our staff, operating to thehighest standards of professionalism and skill. I would like to thank them for their valuable contribution
during the half year.

Oxford Instruments plc
7

Half Year Results Announcement for the six months ended 30 September 2013

Outlook
Following the weaker trading conditions seen in the first two months of the year, the remainder of the period
has shown a significant strengthening in both orders and revenues. This improvement in trading, supportedby the strength of new product introductions and our actions to enhance operating efficiencies, should
enable us to deliver an improved performance in the second half. Looking forward, the application of both
our existing and new techniques to the Nano-Bio field offers us the opportunity for further sustained
profitable growth.

Jonathan Flint
Chief Executive
12 November 2013

Oxford Instruments plc
8

Half Year Results Announcement for the six months ended 30 September 2013

Condensed Consolidated Statement of Income
Half year ended 30 September 2013 – unaudited
Half Year to 30 Sept 2013

Half Year to 30 Sept 2012
As restated*
Before Adjusting
Total
adjustingitems**£mitems**£m£m

Beforeadjustingitems**£m

Adjustingitems**
£m

Total
£m

166.3
(91.4)
74.9(12.0)(26.9)(14.2)
0.2
22.0

(5.9)
(5.9)

166.3
(91.4)
74.9(12.0)(26.9)(20.1)
0.2
16.1

170.8
(94.6)
76.2(12.1)(25.1)(16.5)
1.1
23.6

(0.2)
(0.2)
(6.0)
(6.2)

170.8
(94.8)
76.0(12.1)(25.1)(22.5)
1.1
17.4

Other financial income
Financial income

0.2
0.2

3.5
3.5

3.7
3.7

0.2
0.2

-

0.2
0.2

Interest charge on net defined benefit
pension liabilities
Other financial expenditure
Financial expenditure

(1.2)

-

(1.2)

(0.8)

-

(0.8)

(0.4)
(1.6)

(0.5)
(0.5)

(0.9)
(2.1)

(0.5)
(1.3)

-

(0.5)
(1.3)

Revenue
Cost of sales
Gross profit
Research and development
Selling and marketing
Administration and shared services
Foreign exchange gain
Operating profit

Notes
3

4

Profit before income tax

3

20.6

(2.9)

17.7

22.5

(6.2)

16.3

Income tax (expense)/credit
Profit for the period attributable toequity shareholders of the parent

6

(4.4)

(0.1)

(4.5)

(4.0)

(1.1)

(5.1)

16.2

(3.0)

13.2

18.5

(7.3)

11.2

pence

pence

pence

pence

28.6
28.3

23.2
23.1

33.0
32.5

20.0
19.7

Earnings per share
Basic earnings per share
Diluted earnings per share

7
7

Dividends per share
Dividends paid
Dividends proposed

8
8

3.05
3.36

2.77
3.05

* See Note 1 of this Half Year Report for details of restatement and re-presentation of comparative information.
** Adjusting 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Half Year Results Announcement for the six months ended 30 September 2013

Condensed Consolidated Statement of Income
Half year ended 30 September 2013 – unaudited

Before adjusting
items**£m
Revenue
Cost of sales
Gross profit
Research and development
Selling and marketing
Administration and shared services
Foreign exchange gain
Operating profit

Notes
3

Year to 31 March 2013
As restated*
AdjustingTotal
items**
£m
£m

350.8
(194.0)156.8(24.3)(51.1)(35.3)
3.2
49.3

(0.5)
(0.5)
(15.9)(16.4)

350.8(194.5)156.3(24.3)(51.1)(51.2)
3.2
32.9

Other financial income
Financial income

0.3
0.3

-

0.3
0.3

Interest charge on net defined benefit pension
liabilities
Other financial expenditure
Financial expenditure

(1.7)

-

(1.7)

(0.9)
(2.6)

(2.2)
(2.2)

(3.1)
(4.8)

Profit before income tax

47.0(18.6)

28.4

(9.7)
37.3

2.3
(16.3)(7.4)
21.0

Income tax (expense)/credit
Profit for the period attributable to equity
shareholders of the parent

4

6

Earnings per share
Basic earnings per share
Diluted earnings per share

7
7

Dividends per share
Dividends paid
Dividends proposed

8
8

pence

pence

66.5
65.7

37.4
37.0

10.0
11.2

* See note 1 of this Half Year Report for details of restatement of comparative information**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Half Year Results Announcement for the six months ended 30 September 2013

Condensed Consolidated Statement of Comprehensive Income – Half year ended 30 September 2013 unaudited
Half year to
30 Sept
2013
£m
13.2

Half year to
30 Sept
2012
As restated*£m
11.2

Year to31 March
2013
As restated*
£m
21.0

(5.5)

(2.6)

3.4

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 expense

3.6
(2.2)
(4.0)

(7.1)
1.5
(8.2)

(15.7)
3.5(8.8)

Total comprehensive income for the period
attributable to equity shareholders of the parent

9.2

3.0

12.2

Profit for the period
Other comprehensive (expense)/income:Items that may be reclassified subsequently to profit
or loss
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

* See note 1 of this Half Year Report for details of restatement of comparative information

Oxford Instruments plc
11Half Year Results Announcement for the six months ended 30 September 2013

Condensed Consolidated Statement of Changes in Equity half year ended 30 September 2013 – unaudited

Balance at 1 April 2013
Total comprehensive income/(expense)
attributable to equity shareholders of theparent- Profit for the period- Other comprehensive income
Transactions recorded directly in equity:- Credit in respect of employee service
costs settled by award of share options- Tax charge in respect of share options- Proceeds from shares issued- Dividends paid and accrued
Total contributions by and distributions toequity shareholders
Balance at 30 September 2013

Balance at 1 April 2012
Total comprehensive income/(expense)
attributable to equity shareholders of theparent- Profit for the period- Other comprehensive income
Transactions recorded directly in equity:- Credit in respect of employee service
costs settled by award of share options- Tax credit in respect of share options- Proceeds from shares issued- Dividends paid and accrued
Total contributions by and distributions toequity shareholders
Balance at 30 September 2012

Share
capital
£m
2.8

Share
premium
account
£m
60.6

Other
reserves£m
0.1

Foreignexchangetranslation
reserve£m
4.0

Retainedearnings
£m
70.2

Total
£m
137.7

0.1
0.1

(5.5)
(5.5)

13.2
1.4
14.6

13.2
(4.0)
9.2

-

0.8
(0.7)
(6.4)

0.8
(0.7)
0.1
(6.4)

-

-

-

-

-

-

-

0.1

-

-

-

2.8

0.1
60.7

0.2

(1.5)

(6.3)
78.5

(6.2)
140.7

Share
capital
£m
2.8

Share
Premium
Account
£m
60.2

Other
reserves£m
0.1

Foreignexchangetranslation
reserve£m
0.6

Retainedearnings
asrestated*
£m
63.4

Total
£m
127.1

11.2
(5.6)
5.6

11.2
(8.2)
3.0

-

-

-

-

-

-

-

(2.6)
(2.6)

-

-

-

0.1

-

-

-

-

0.6
1.3
(5.6)

0.6
1.3
0.1
(5.6)

2.8

0.1
60.3

0.1

(2.0)

(3.7)
65.3

(3.6)
126.5

* See note 1 of this Half Year Report for details of restatement of comparative information

Oxford Instruments plc
12Half Year Results Announcement for the six months ended 30 September 2013

Condensed Consolidated Statement of Changes in Equity half year ended 30 September 2013 – unaudited
continued

Balance at 1 April 2012
Total comprehensive income/(expense)
attributable to equity shareholders of theparent- Profit for the period- Other comprehensive income
Transactions recorded directly in equity:- Credit in respect of employee service
costs settled by award of share options- Tax credit in respect of share options- Proceeds from shares issued- Dividends paid
Total contributions by and distributions toequity shareholders
Balance at 31 March 2013

Other
reserves£m
0.1

Foreignexchangetranslation
reserve£m
0.6

Retainedearnings
asrestated*
£m
63.4

Total
£m
127.1

-

-

3.4
3.4

21.0
(12.2)
8.8

21.0
(8.8)
12.2

-

0.4

-

-

-

-

1.4
2.2
(5.6)

1.4
2.2
0.4
(5.6)

0.4
60.6

0.1

4.0

(2.0)
70.2

(1.6)
137.7

Share
capital
£m
2.8

Share
Premium
Account
£m
60.2

-

-

2.8

* See note 1 of this Half Year Report for details of restatement of comparative information

Oxford Instruments plc
13

Half Year Results Announcement for the six months ended 30 September 2013

Condensed Consolidated Statement of Financial Position as at 30 September 2013 - unaudited
As at
30 Sept
2013
£m

As at
30 Sept
2012
£m

As at
31 March
2013
£m

32.1
84.1
19.3
135.5

29.9
70.8
21.0
121.7

32.9
91.9
25.0
149.8

61.0
70.3
0.1
4.2
56.9
192.5

60.9
64.2
1.0
2.2
37.9
166.2

58.1
71.8
0.4
2.2
39.2
171.7

328.0

287.9

321.5

2.8
60.7
0.2
(1.5)
78.5
140.7

2.8
60.3
0.1
(2.0)
65.3
126.5

2.8
60.6
0.1
4.0
70.2
137.7

24.7
11.4
42.6
5.1
83.8

0.7
3.8
40.9
7.2
52.6

11.1
47.9
6.2
65.2

84.3
4.4
4.6
0.4
9.8
103.5

0.1
91.4
3.5
4.0
0.4
9.4
108.8

101.4
4.3
2.6
10.3
118.6

Total liabilities

187.3

161.4

183.8

Total liabilities and equity

328.0

287.9

321.5

AssetsNon-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Current income tax recoverable
Derivative financial instruments
Cash and cash equivalents

Total assets
EquityCapital and reserves attributable to theCompany’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
Bank loans
Trade and other payables
Current income tax payables
Accrued dividend
Derivative financial instruments
Provisions

Oxford Instruments plc
14

Half Year Results Announcement for the six months ended 30 September 2013

Condensed Consolidated Statement of Cash Flows half year ended 30 September 2013 - unaudited
Half year to
30 Sept
2013

Profit for the period
Adjustments for:
Income tax expense
Net financial (income)/expense
Reversal of acquisition related fair value adjustments
Acquisition related costs
Amortisation of acquired intangibles
Depreciation of property, plant and equipment
Amortisation and impairment of capitalised development costs
Adjusted earnings before interest, tax, depreciation andamortisation
Loss on disposal of plant, property and equipment
Cost of equity settled employee share schemes
Acquisition related costs paid
Cash payments to the pension scheme more than the charge
to operating profit
Operating cash flows before movements in working
capital(Increase)/decrease in inventories
Increase in receivables(Decrease)/increase in payables and provisions(Decrease)/increase in customer deposits
Cash generated by operations
Interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of product line and subsidiary
Interest received
Acquisition of subsidiaries, net of cash acquired
Acquisition of property, plant and equipment
Capitalised development expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Increase in borrowings
Dividends paid
Net cash from/(used in) financing activities
Net increase in cash and cash equivalents
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

£m
13.2

Half year to
30 Sept2012
as restated*£m
11.2

Year to31 March2013
as restated*
£m
21.0

4.5
(1.6)
0.8
5.1
2.3
1.8

5.1
1.1
0.2
0.6
5.4
2.3
2.1

7.4
4.5
0.5
2.1
13.8
4.6
3.9

26.1
0.2
0.8
(0.1)

28.0
0.6
-

57.8
0.2
1.4
(1.2)

(2.4)

(2.2)

(4.9)

24.6
(5.0)
(1.2)
(10.3)
(4.3)
3.8
(0.3)
(3.0)
0.5

26.4
(2.2)
(4.7)
(4.6)
0.4
15.3
(0.5)
(5.8)
9.0

53.3
4.7
(9.4)
2.8
(1.0)
50.4
(0.5)
(8.4)
41.5

(0.3)
(2.4)
(2.4)
(5.1)

1.0
0.2
(0.2)
(4.2)
(1.8)
(5.0)

1.0
(20.1)(8.6)(4.6)(32.3)

0.1
24.7
(1.7)
23.1
18.5
39.2
(0.8)
56.9

0.1
0.8
(1.6)
(0.7)
3.3
35.1
(0.5)
37.9

0.4
(5.6)
(5.2)
4.0
35.1
0.1
39.2

Half year to
30 Sept
2013
£m
18.5

Half year to
30 Sept
2012
£m
3.3

Year to31 March
2013
£m
4.0

(0.8)
17.7
(24.7)
(7.0)
39.2
32.2

(0.5)
2.8
(0.8)
2.0
35.1
37.1

Reconciliation of changes in cash and cash equivalents to movement in net cash

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

0.1
4.1
4.1
35.1
39.2

* See note 1 of this Half Year Report for details of restatement of comparative information

Oxford Instruments plc
15

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements
Half year ended 30 September 2013 – 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 2013.
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 2013 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 2013, 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 2014.
Amendments to IAS 1 Presentation of Items of Other Comprehensive Income: The amendments require that an entity
present separately the items of other comprehensive income that may be reclassified to profit or loss in the future fromthose that would never be reclassified to profit or loss. The adoption of this standard has had no significant impact.
Amendments to IAS 19 Employee Benefits: The amendments require immediate recognition of actuarial gains andlosses in other comprehensive income and eliminate the corridor method. The principal amendment that will affectmost entities with a defined benefit plan is the requirement to calculate net interest income or expense using thediscount rate used to measure the defined benefit obligation. The new standard requires retrospective application andwill impact the Group’s Income Statement and Statement of Comprehensive Income as a result of the changes inassessing the return on pension scheme assets. A prior year restatement has been made to reflect these changes,
which is explained in further detail below.
IFRS 13 Fair Value Measurement: This is a new standard to replace existing guidance on fair value measurement indifferent IFRSs with a single definition of fair value, a framework for measuring fair values and disclosures about fairvalue measurements. This standard applies to assets, liabilities and an entity’s own equity instruments that, underother IFRSs, are required or permitted to be measured at fair value or when disclosure of fair value is provided. Fairvalue is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date, i.e. an exit price. The adoption of this standard has
had no significant impact.
Amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities: The amendment requires
specific disclosure for financial assets and financial liabilities within the scope of the common disclosures. 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 2014.

Oxford Instruments plc
16

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements
Half year ended 30 September 2013 – unaudited
1

BASIS OF PREPARATION OF ACCOUNTS continued

Restatement
As a result of the amendments to IAS 19 Employee Benefits, the Group has changed its accounting policy with respect
to determining the income or expense related to its defined benefit pension scheme. The standard prescribes that aninterest expense or income is calculated on the net defined benefit liability by applying the discount rate to the net
defined benefit liability. This replaces the interest expense on the defined benefit obligation and the expected return onplan assets. In addition, the revised standard clarifies the treatment for scheme administration expenses. The revised
standard requires retrospective application, therefore the table below reflects the adjustments made to thecomparative amounts for the period to 30 September 2012 and the year to 31 March 2013.
These comprise the reversal of the interest expense on the defined benefit obligation (30 September 2012: £5.2m, 31
March 2013: £10.4m) and the interest income on pension scheme assets (30 September 2012: £4.8m, 31 March
2013: £9.5m) to be replaced by a net interest expense (30 September 2012: £0.8m, 31 March 2013: £1.7m) and anincrease in the scheme administration expenses charged to the consolidated income statement (30 September 2012:£0.2m, 31 March 2013: £0.4m). The associated income tax has been restated accordingly. Actuarial losses recognisedin the consolidated statement of comprehensive income (30 September 2012: £7.7m, 31 March 2013: £16.9m) havebeen restated into a re-measurement loss of (30 September 2012: £7.1m, 31 March 2013: £15.7m) with theassociated income tax also restated.
30 September 2012£m

31 March 2013£mConsolidated income statement
Increase in administrative and shared service expenses
Decrease in finance expense
Decrease in finance income
Decrease in income tax expense
Decrease in profit for the period

(0.2)
4.4
(4.8)
0.1
(0.5)

(0.4)
8.7
(9.5)
0.2
(1.0)

Decrease in basic and diluted earnings per share(0.9p)(1.8p)

Consolidated statement of comprehensive income
Other comprehensive income:Decrease in re-measurement of defined benefit plans
Decrease in income tax on other comprehensive income
Increase in other comprehensive income

0.6
(0.1)
0.5

1.2
(0.2)
1.0

The revised standard stipulates that actuarial gains and losses are recognised immediately in the periods in which
they occur. The Group already adopted this policy and therefore there are no changes to the consolidated balance
sheet and consolidated cash flow statement.
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 2013.

Oxford Instruments plc
17

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2013 – unaudited
1

BASIS OF PREPARATION OF ACCOUNTS continued

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

US Dollar
Euro
Yen
Average translation rates
Half year to 30 September 2013
Quarter 1
Quarter 2
Year to 31 March 2013
Quarter 1
Quarter 2
Quarter 3
Quarter 4

Half year to
30 Sept
2013
1.62
1.20
159

Half year to
30 Sept
2012
1.61
1.26
126

Year to31 March
2013
1.52
1.18
143

US Dollar

Euro

Yen

1.53
1.55

1.18
1.17

150
152

1.58
1.59
1.61
1.56

1.23
1.26
1.24
1.19

127
125
132
142

Oxford Instruments plc
18

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2013 – 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

Half year to
30 Sept
2013

Profit before income tax
Reversal of acquisition related fair value adjustments toinventory
Acquisition related costs
Amortisation and impairment of acquired intangibles
Unwind of discount in respect of deferred consideration
Mark to market (gain)/loss in respect of derivative
financial instruments
Adjusted profit before income tax
Share of taxation
Adjusted profit

£m
17.7

Half year to
30 Sept2012
as restated*£m
16.3

Year to31 March2013
as restated*
£m
28.4

0.8
5.1
0.5

0.2
0.6
5.4
-

0.5
2.1
13.8
0.2

(3.5)
20.6
(4.4)
16.2

22.5
(4.0)
18.5

2.0
47.0
(9.7)
37.3

* See note 1 of this Half Year Report for details of restatement of comparative information

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 deferred consideration relating to businesscombinations.
In calculating the share of tax attributable to adjusted profit before tax in the year ended 31 March 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 year ended 31 March 2013 deferred tax
of £3.3m was reversed. In the current period deferred tax of £1.2m (2012: £3.2m) has reversed and consequently
been excluded from the tax attributable to adjusted profit before tax.
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.

Oxford Instruments plc
19Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2013 – unaudited
3

SEGMENT INFORMATIONThe Group has six 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; andthe 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 2013

External revenue
Inter-segment revenue
Total segment revenue

Nanotechnology
Tools
£m
77.0
0.1
77.1

Industrial
Products
£m
57.0
1.0
58.0

7.4

8.1

Nanotechnology
Tools
as restated*
£m
80.7
0.2
80.9

Industrial
Products
as restated*
£m
60.9
0.6
61.5

Serviceas restated*
£m
29.2
0.1
29.3

Total
as restated*
£m
170.8

10.3

7.5

5.8

23.6

Segment operating profit

Service
£m
32.3
32.3

Total
£m
166.3

6.5

22.0

Half year to 30 September 2012

External revenue
Inter-segment revenue
Total segment revenue
Segment operating profit* See note 1 of this Half Year Report for details of restatement of comparative information

Oxford Instruments plc
20

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2013 – unauditedYear to 31 March 2013

External revenue
Inter-segment revenue
Total segment revenue

Nanotechnology
Tools
as restated*
£m
165.8
0.3
166.1

Industrial
Products
as restated*
£m
124.5
0.6
125.1

20.6

17.3

11.4

49.3

Half year to
30 Sept
2013
£m
22.0

Half year to
30 Sept2012
as restated*£m
23.6

Year to31 March2013
as restated*
£m
49.3

(0.8)
(5.1)
3.7
(2.1)
17.7

(0.2)
(0.6)
(5.4)
0.2
(1.3)
16.3

(0.5)
(2.1)
(13.8)
0.3
(4.8)
28.4

Half year to
30 Sept2013£m

Half year to
30 Sept2012£mYear to31 March
2013
£m

12.0
(0.3)
0.7

12.1
(0.1)
0.4

24.3
(0.7)
0.8

(1.8)
2.4

(2.1)
1.8

(3.9)
4.6

13.0

12.1

25.1

Segment operating profit

Serviceas restated*
£m
60.5
0.1
60.6

Total
as restated*
£m
350.8

Reconciliation of reportable segment profit

Operating profit for reportable segments
Reversal of acquisition related fair value adjustments toinventory
Acquisition related costs
Amortisation of acquired intangibles
Financial income
Financial expenditure
Profit before income tax* See note 1 of this Half Year Report for details of restatement of comparative information

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
21

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2013 – unaudited

5

ACQUISITIONS

Asylum Research Corporation
In the prior year, on 19 December 2012 the Group acquired the trade and certain assets of Asylum Research
Corporation for an initial cash consideration of £19.8m. Further contingent consideration of between £2.0m and£31.6m is payable based on post acquisition business performance. At 30 September 2013 £6.5m is provided in theaccounts in respect of this contingent consideration being the fair value of the contingent consideration payable.
Asylum Research is a leading manufacturer of atomic force and scanning probe microscopes and is headquartered in
Santa Barbara, USA with subsidiaries in the UK, Germany and Taiwan.
The book and fair value of the assets and liabilities acquired is given in the table below. Fair value adjustments havebeen made to better align the accounting policies of the acquired business with the Group accounting policies. The
business was acquired for the purpose of integrating into the Nanotechnology Tools segment where it is believed thatsynergies can be obtained particularly in respect of routes to market.

Intangible fixed assets
Tangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Deferred tax
Net assets acquired
Goodwill
Total consideration
Contingent consideration at acquisition
Net cash outflow relating to the acquisition

Book value
£m
0.4
2.4
1.7
(2.3)
2.2

Adjustments
£m
14.4
(0.1)
(0.3)
(0.2)
0.3
14.1

Fair value
£m
14.4
0.3
2.1
1.7
(2.5)
0.3
16.3
9.3
25.6
(5.8)
19.8

The goodwill arising is tax deductible in full and is considered to represent the value of the acquired workforce andsynergistic benefits expected to arise from the acquisition.

6

TAXATION

The total effective tax rate on profits for the half year is 25% (2012: 31%). The weighted average tax rate in respect ofadjusted profit before tax (see note 2) for the half year is 21% (2012: 18%).
The Group estimates that its full year weighted average tax rate in respect of adjusted profit before tax will be 21%.

Oxford Instruments plc
22

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2013 – unaudited
7

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
2013
Sharesmillion
56.9

Half year to
30 Sept
2012
Sharesmillion
56.2

Year to31 March
2013
Sharesmillion
56.4

(0.2)

(0.2)

(0.2)

56.7

56.0

56.2

b) 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

Half year to
30 Sept
2013
SharesmillionHalf year to
30 Sept
2012
SharesmillionYear to31 March
2013
Sharesmillion

56.7
0.5

56.0
1.0

56.2
0.6

57.2

57.0

56.8

Oxford Instruments plc
23

Half Year Results Announcement for the six months ended 30 September 2013

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2013 – unaudited
8

DIVIDENDS PER SHARE

The following dividends per share were paid by the Group:

Previous period interim dividend
Previous period final dividend

Half year to
30 Sept
2013
pence
3.05
3.05

Half year to
30 Sept
2012
pence
2.772
2.772

Year to31 March
2013
pence
2.772
7.228
10.000The 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
2013
Pence
3.36
3.36

Half year to
30 Sept
2012
pence
3.05
3.05

Year to31 March
2013
Pence
3.05
8.15
11.20

The final dividend for the year to 31 March 2013 was approved by shareholders at the Annual General Meeting heldon 10 September 2013. Accordingly is it no longer at the discretion of the company and has been included as a liability
as at 30 September 2013. It was paid on 24 October 2013.
The interim dividend for the year to 31 March 2013 of 3.36 pence was approved by the Board on 12 November 2013,
10 % higher than the previous year and has not been included as a liability as at 30 September 2013. The interim
dividend will be paid on 7 April 2014 to shareholders on the register at the close of business on 7 March 2014.

9

POST BALANCE SHEET EVENTSOn 8 November the Group acquired 100% of the share capital of RMG Technology Ltd for cash consideration of £6m
and deferred consideration of up to £4m payable in April 2015. RMG Technology Ltd is a UK business specialising in
Laser Induced Breakdown Spectrography. Some of the disclosure required by IFRS3 has been omitted since, due tothe timing of the acquisition, the initial accounting is incomplete at the date of this publication.

Oxford Instruments plc
24Half Year Results Announcement for the six months ended 30 September 2013

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 26 and 27 of its 2013 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.
Specific Risk
Technical risk

Context
The Group provides high technology
equipment and systems to its customers.

Risk
Failure of the advanced technologies
applied by the Group to produce
commercial products, capable of being
manufactured and sold profitably.

Outsourcing

The Group’s strategic plan includes theoutsourcing of a significantly higher
proportion of the costs of its products tobenefit from economies of scale andnatural currency hedges.

Failures in the supply chain impacting
sales.

Acquisitions

Part of the growth of Oxford Instruments isplanned to come from acquisitions which
provide the Group with complementary
technologies.

Appropriate acquisition targets may not be
available in the necessary timescale.
Alternatively, once acquired, targets may
fail to provide the planned value.

PeopleA number of the Group’s employees arebusiness critical.

The employee leaves the Group

Economic environment

The recent global recession and prevailing
economic downturn have resulted in cuts
to both government and private sector
spending.

Demand for the Group’s products may belower than anticipated.

Pensions

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

Movements in the actuarial assumptions
may have an appreciable effect on thereported pension deficit.

Foreign exchange volatility

A significant proportion of the Group’s
profit is made in foreign currencies.

The Group’s profit levels are exposed tofluctuations in exchange rates.

Routes to market

In some instances the Group’s products
are components of higher level systems
and thus the Group does not control its
route to market.

The system integrator switches supplier,denying the Group’s route to market.

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.

Oxford Instruments plc
25

Half Year Results Announcement for the six months ended 30 September 2013
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
12 November 2013

Kevin Boyd, Group Finance Director

Oxford Instruments plc
26

Half Year Results Announcement for the six months ended 30 September 2013

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-yearly financial
report for the six months ended 30 September 2013 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 2013 is not prepared, in allmaterial respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Simon Haydn-Jonesfor and on behalf of KPMG LLP
Chartered Accountants
One Snowhill, Snow Hill Queensway
Birmingham, B4 6GH
12 November 2013

Oxford Instruments plc
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