Oxford Instruments plc

semi-conductors

mutual successinnovative & progressive

skill

passionnew ideas

heritage

OES

50+ years

world classexperiencenanotechnology XRF integrity
inspiring confidence flexible
respect
long term relationships
careenvironment
listenmoderncontemporary

trust

colleagues shareholders

openscienceadvanced technology
globalcool
class

innovation

improving our world

peopleshaping the future
the business of scienceengaging sustainableenergypace

inclusive

opennesswholehearted

metalstrustedmicroanalysis

partners

designs that last

security

engage withinformation technology

superconductivity

life
industry
research

cryogenic systems

etch and depositionhigh technology NMR

servicetools and solutions

Reports and Financial Statements 2010

working together
our customers

Financial Hightlights

Oxford Instruments aims to pursue responsible
development and deeper understanding of
the world through Science & Technology
As one of the first commercial spin-out companies from
Oxford University, this vision has been at the heart ofour business for over 50 years. We use innovation toturn smart science into world-class products that support
research and industry to address the great challenges ofthe 21st Century.

Group Results
2010

2009

£m

£m

Orders

250.0

204.2

Revenue

211.5

206.5

Trading profit

14.7

13.1

Year ended 31 March

Adjusted profit before tax (note 1)

11.9

11.1

Net borrowings(10.4)(28.3)

Equity

52.2

61.9

2010

2009

pence perpence per

share

share

Total basic earnings

27.2(13.9)

Adjusted earnings

17.8

14.8

Proposed dividends

8.4

8.4

Net assets

105.3

125.4

Employees at year end *

1,389

1,449

* Includes temporary employees.

Oxford Instruments plc

2010 Financial Highlights
Group Orders£250.0m+22%

Revenue£211.5m+2%

Adjusted Profit Before Tax£11.9m+7%

Adjusted EPS

17.8p

+20%

Trading Profit. Return on Sales (%)

7.0%

+70

basis points

Contents
Business Overview

2010
2010
2009
2009
2010
2010
2009
2009
2010

£250.0m
Financial Hightlights

2009
2010
2010
2009
2009
2010
2010
2009
2009
2010
2010
2010
2009
2009
2009
2010
2010
2009
2009
2010

204.2m£211.5m£211.5m£206.5m£211.5m£206.5m£211.5m£206.5m£206.5m£211.5m£11.9m
£11.9m£206.5m£11.1m
£11.9m£11.1m
£11.9m£11.1m£11.1m
£11.9m

2010
2009
2010
2009
2010
2009
2010
2009
2009
2010
2010
2009
2010
2009
2009
2010
2010
2009
2009
2010

17.8p
£11.1m17.8p
14.8 p14.8 p 17.8p
17.8p
14.8 p14.8 p17.8p
7.0%
14.8 p 7.0%
6.3%
6.3%7.0%
7.0%
6.3%
6.3%
7.0%

2009

6.3%

Corporate Governance£250.0m
204.2m204.2m£250.0m£250.0m
204.2m204.2m£250.0m

Financial Statements

Financial Summary

1

Directors and Advisers

14-15

Accounting Policies

37-40

Revenue by Sector

2-3Report of the Directors

16-17

41-45

4

Corporate and Social
Responsibility

Reports and Financial
Statements

18-21

Notes to the Financial
Statements

46-72

Corporate Governance

22-27

Directors’ Remuneration
Report

73-78

28-34

Parent Company Financial
Statements

Directors’ Responsibilities

35

Report of the Independent
Auditors

36

Chairman’s Statement
Chief Executive’s Statement
Financial Review

Oxford Instruments plc

6-9
10-13

Historical Financial Summary

79

Other information
Shareholder Information

80

Worldwide Directory

81

1

2

Business Overview

Oxford Instruments
Today Oxford Instruments supplies
tools that detect heavy metal
pollution more effectively than has
ever been done before. Our handheld, X-ray Fluorescence analysers arein high demand all over the world for
RoHS and WEEE compliance testing andquality control, and our benchtop analysers
are used extensively to analyse petroleum forlow sulphur content.
The world needs to protect its limited energy resources. Oxford
Instruments is supplying tools used in the manufacture of High Brightness
light emitting diodes, which offer the possibility of lighting so efficient that
if adopted widely would make significant cuts in worldwide CO2 emissions.
There is also an urgent need to develop new forms of energy, which do notcontribute to global warming. Today Oxford Instruments is providing plasma etchand deposition equipment to the developers of photovoltaic devices who are seeking
to produce cost effective solutions for turning sunlight into electricity. Oxford Instruments
is also working with international agencies on the ITER programme which seeks to find new
ways of generating carbon free energy.
Our innovative range of liquid helium free cryogenic systems are used in fundamental physics
research into cutting edge applications, such as quantum information processing, which is widely
predicted to be the basis of a new generation of ultra fast computers required for applications suchas financial security, climate modeling and drug development.
This year Oxford Instruments was named as one of the UK’s top 500 Business Superbrands. Our
brand shapes how we work. We meet our customers’ needs through advanced technology andservice, and we do so with passion, with care and with pace. That is what enables us to help shape
the future.

Revenue by Market Sector
Nanotechnology Tools

Industrial Products

ServiceThis sector comprises our highest
technology assets and serves
customers who are working at thefrontiers of technology.
Nanoanalysis: tools for precise
chemical and structural analysis using
an electron microscope.
NanoScience: equipment forexperimental research in the areas ofvery low temperature and very highmagnetic fields.
Plasma Technology: nanofabrication
tools for the manipulation ofmaterials at the smallest level.

This sector offers more mature
products to industrial users, which
require efficient productionengineering and low cost sourcing
and manufacturing.
Industrial Analysis: equipment
for industrial quality control andenvironmental monitoring andcompliance testing.
Superconducting Wire: Leading
provider of superconducting wire for
MRI scanners and research.
Magnetic Resonance: Tools forthe analysis of industrial and foodproducts, particularly oils and fats.

This sector consists of our MRI
service businesses, Austin Scientificand the service elements of the
Nanotechnology Tools and Industrial
Products sectors.
MRI Service: provides service andsupport to the MRI industry, offering
magnet service in North America andJapan.
Austin Scientific: manufactures,
services and refurbishes highquality vacuum pumps, helium
compressors and cold heads for thesemiconductor, medical and researchsectors.

External Sector Revenue

External Sector Revenue

External Sector Revenue

Proportion ofGroup revenue

Proportion ofGroup revenue

Proportion ofGroup revenue£101.5 m
48.0%£71.0m
33.6%£39.0m
18.4%

Oxford Instruments plc

Business Overview

Business Locations

Diverse End Markets

Diverse Geographies
2009/2010

Research & AcademiaLife Sciences
17%

Life Sciences
EnvironmentResearch &Acedemia
44%

Environment
17%

Metal/Construction
2008/2009

Semicon/IT

Energy3%

Metal/
Constuction
12%
EnergySemicon/IT
6%

Oxford Instruments plc

3

4

Chairman’s Statement

Highlights• Broad spread of customers andgeographical markets has insulated
us from the worst effects of therecession• We are reporting both revenue andprofits growth• Efficiency improvements andnew products will deliver further
growthKey Information
Earnings per Share

17.8p

+20%

Dividend per ordinary share

8.4p

Our strategy is to generate shareholder
value by being a leading provider oftools and systems used by customers
who need to analyse and manipulatematter at the smallest scale. This covers
both research and industrial markets
and we operate in all regions around theworld. This broad spread of customers
and geographical markets has served toinsulate us from the worst effects of therecession.
Despite the economic downturn, theGroup performed well during the year.
Revenue rose to £211.5 million (2009:£206.5 million) and adjusted profit
before tax increased to £11.9 million(2009: £11.1 million). Adjusted earnings
per share grew 20% to 17.8 pence
supported by the strong underlying
result and a lower tax charge of 27%(2009: 35%). Net debt reduced in theyear by £17.9 million to £10.4 million.
In 2006 we announced a five year
objective to double the size of thebusiness and improve our margins
significantly. We are now reportingon the fourth year of the plan. Recent
recessionary pressures have inevitably
impacted the timing, but we continue
to make progress against this objective.

The Group is recommending a final
dividend of 6 pence, bringing the total
for the year to 8.4 pence (2009: 8.4
pence).
It has been a challenging year forour people.
They have faced theuncertainties of the economic downturnand internal austerity measures andthey have delivered against demanding
targets. I thank each of them for their
hard work and dedication.
The restructuring in 2008/09 and thenew product technologies introduced in
the past year served to ensure that we
continued to perform to shareholder
expectations. Now that global markets
are recovering, we are confident these
efficiency improvements and new
products will deliver further growthagainst our objectives in the current
year and form a strong foundationfrom which we can deliver long termshareholder value.
Nigel Keen Chairman
15 June 2010

In the year just ended we had notpredicted year on year growth; we
expected efficiency improvements to bebalanced by pricing pressure and market
share gains to be balanced by declines
in market size. Whilst industrial sales
improved gradually through the year
as we had predicted, research markets
displayed faster than expected growth.
As a result we are reporting bothrevenue and profits growth.

4

Oxford Instruments plc

Expertise
Chairman’s Statement

5

We believe people
make the difference

We use innovation to turnsmart science into worldclass products

We listen and engage
We approach what we do with
passion, with care and with pace

We are innovativeand progressive

Oxford Instruments plc

We build long term relationships
based on trust and respect56

Chief Executive’s Statement

Highlights• Continued growth in our researchmarkets, particularly in Asia, anda strengthening of sales to theindustrial markets we serve• Increased demand in all regions inthe second half of the year
• The Group’s innovative products
benefit the environment
Key Information
Order in-take£250m
Order Book

£102 mSales per Head+17%

We pursue responsible development
and deeper understanding of theworld through science and technology.
Innovation has always been at the heartof our culture and new products closely
linked to customer needs, have been
pivotal to our growth this year.
Oxford Instruments uses innovation
to turn smart science into worldclass commercial products, meeting
our customers’ needs for advanced
technological and service solutions.
This strategy has enabled us to deliver
improved profits and revenues this year.
Notable features of our success havebeen continued growth in our researchmarkets, particularly in Asia, and astrengthening of sales to the industrial
markets we serve.
This growth has been realised throughproduct introductions delivered by amore focused R&D programme which
has allowed us to reduce our R&D spend
without compromising our development
objectives.
During the second half of the year
we saw a recovery in those industrial
markets which had been hit hardest
by recession and we have maintained
our market share. We continue tomake progress against our margin
improvement objectives. Trading Profit
margins improved to 7.0% throughefficiency improvements and economies
of scale, which have counteracted
the pricing pressures we have seen incertain areas.
Our order book grew to £102 million.
Order in-take in the year was £250
million, a record for Oxford Instruments.
This position was helped by the large
contracts awarded to us in August and
September 2009 by ITER, a multinational
collaborative programme to prove theviability of a new form of carbon freeenergy production. Excluding ITER,
order in-take increased by £5.4 million
over the prior year.

6

During the year, we saw growthin the USA, and strong growth in
Asia, offsetting some softness in theEuropean markets.
However, we
experienced increased demand in all
regions in the second half of the year.
Our global reach continues to be oneof our greatest strengths, with less than
5% of our turnover going to end-users
in the UK.
Emerging markets continue to offer
excellent opportunities for the Group.
We are maintaining our focus ondeveloping our sales in China, India,
Russia and Latin America. Investment
by industry and governments in Asia
in high technology research has meanta significant increase in demand forour tools and systems. We had an
excellent year in China with orders up
by 30% and sales from our factory inShanghai up 210%. Indian markets
also grew significantly, albeit from asmaller base. We experienced difficult
trading conditions in Russia as aresult of government cuts to researchfunding, but our business in the region
is now beginning to show prospects ofgrowth.
In response to the global downturnin industrial markets in the autumn
of 2008 we initiated a restructuring
programme which was completed in
May 2009. This resulted in a reductionin headcount and the closure of two
operating sites. This was achieved
without significant loss of the skill baseor reduction in turnover. As a result wesaw an increase in Group sales per headof 17%. All businesses in the Group are
now contributing profitably.
In the light of market conditions
and difficulties in making accuratevaluations through the recession, we did
not make any acquisitions in the year.
However, going forward the corporate
environment is stabilising and we willassess appropriate acquisition targets
to further our growth agenda.

Oxford Instruments plc

Chief Executive’s Statement

PeopleOur staff responded well to the issues
presented by the global recession. Last
year we introduced a Group wide pay
freeze in addition to enacting a numberof other austerity measures. This year
in line with many other UK companies
we have announced proposals toclose our UK and US Defined Benefit
Pension schemes to future accrual. Our
employees have faced this challenging
environment with understanding andcommitment.
They have deliveredagainst demanding targets and they
have my respect and my thanks.
Sustainability
The Group is committed to using
resources (including managing its travel
requirements) efficiently in order tominimise the effect of its operational
processes on the environment and inparticular we have set the objectiveof reducing our global energy usage,

relative to turnover, by 5% year on
year. In 2009/10 we reduced our global
electricity consumption by 6% whencompared with the previous year.
Many of the Group’s innovative
products benefit the environment. For
example our new cryogen free products
which are used to create very cold
environments have replaced the useof liquid helium which is a dwindling,
non-renewable resource. Our products
used to fabricate high brightness
light emitting diodes (HBLEDs) andphotovoltaic cells help reduce energy
consumption. The biggest contribution
to the environment may come with theprogress towards fusion power where
the Group is supplying superconducting
wire which is a key component for the
ITER project, which aims to provide aclean source of energy.

7

OutlookThis year we have seen the full benefitof our new product introductions of
the last four years and the efficiency
savings and cost reductions achieved in2009. Our research markets are robust
globally and show good growth which
we expect to continue, particularly
in Asia. Our industrial markets areshowing clear signs of improvements
and have now returned to close to theirpre-recession levels.
These factors give us confidence thatthe current year will deliver further
growth and form a strong foundationfrom which we can deliver long termshareholder value.
Jonathan Flint
Chief Executive
15 June 2010

Top left: Quantum processing. Image courtesy of D-Wave Inc.
Top middle: Triton200, dilution refrigerator with integrated highfield superconducting magnet (Winner of The Queen’s Award
for Enterprise:Innovation 2010).
Top right: Benchtop NMR.

Bottom left: Rock core analysis with Benchtop NMR.
Bottom middle: Photovoltaics: next generation solar panels.
Bottom right: Nanofabrication tools.

Oxford Instruments plc

7

8

Operational Review

Highlights• Nanotechnology Tools Sector
Revenue£101.8 million
Trading Profit £8.2 million• Industrial Products Sector
Revenue£72.1 million
Trading Profit £1.0 million• Service Sector
Revenue£39.0 million
Trading Profit £5.5 million

Nanotechnology Tools
The Nanotechnology Tools sector
comprises our NanoAnalysis, NanoScienceand Plasma Technology businesses.
These businesses produce our highest
technology products and serve researchcustomers in both the public and private
sectors. Revenues were £101.8 million
up 8% on last year and Trading Profit
was £8.2 million (2009: £8.6 million),principally as a result of our continued
progress in the plasma technology area
despite facing pricing pressures.
Our NanoAnalysis business produces
analysis tools which give precise
chemical and structural data to usersof electron microscopes. Our X-Max
energy dispersive spectrometer, which
incorporates novel large area silicon
drift technology, continues to lead themarket. With X-Max our customers canobtain data, on samples with greater
sensitivity than any other product on
the market. X-Max is used for example,
in the semiconductor and electronics
industries to detect defects caused bynano-scale particles. Markets for thisbusiness, which were weak in the firsthalf of the year as customers delayedinvestment in capital equipment,
strengthened markedly in the second
half supported by increased research inthe semi-conductor and nanotechnology
sectors. Electron microscope unit sales
are expected to rise over the next few
years with the introduction of a newclass of electron microscopes, which
are able to sit on the bench top. These
are smaller and more cost effective
than floor mounted instruments and
we are well positioned with the major
manufacturers to ensure that ourequipment also captures a significant
share of this new market.
Our NanoScience business produces
equipment for experimental research in
the areas of very low temperature andvery high magnetic fields. This businesshas shown good growth and improved
efficiency this year. This has beenachieved as a result of the restructuring
programme in the prior year, supported

8

by a sequence of successful new
product introductions. In particular,
the Triton200 product has generated
sales above our expectations and has astrong order book. Triton enables ourcustomers to reach the extremely low
temperatures necessary for research inthe physical sciences with far greater
ease than ever before. As a result of
the success of this product, NanoScience
was a winner of a 2010 Queen’s Award
for Enterprise. This business has unique
technical skills, useful to a number of
new and emerging industries. Our new
consultancy business within NanoScienceoffers access to our knowledge basein the creation of very high magnetic
fields and very low temperatures andgenerates higher margins through theeffective use of our world renowned
expertise in these areas.
Our Plasma Technology business provides
nanotechnology fabrication tools which
are used to manipulate materials at thesmallest level. These tools are used inresearch and advanced manufacturing
applications. The business performed
well in the year supported by strong
research funding worldwide. The highbrightness light emitting diode (HBLED)
market continues to grow rapidly,
driven by the need for backlighting flat
screen television and computer displays.
We manufacture equipment which isused in the fabrication of HBLEDs. As
a result of this market opportunity wehave increased our investment in sales
and distribution for these products. The
attractive nature of the HBLED market
has resulted in pricing pressure fromcompetitors anxious to maintain market
share in this growing area. We have also
seen increased sales of our ion beam
products which are used to build up
substrates at the molecular level. This
increase has been driven by increasing
applications for new sensors.
In 2008 our acquisition of Technology
and Devices International Inc. brought
to the Group a unique technology for
Hydride Vapour Phase Epitaxy (HVPE)
which offers an opportunity to produce

Oxford Instruments plc

Operational Review

HBLEDs using a new and more efficient
process. We plan for prototypes to bewith our customers later in the year.
This new process will allow us to provide
our customers with a new tool whichis complementary to those we alreadyproduce and sell.
Industrial Products
The Industrial Products sector contains
our Industrial Analysis, Superconducting
Wire,
and
Magnetic
Resonancebusinesses. Revenue dropped to £72.1
million (2009: £75.5 million), reflecting
a full year of difficult trading conditions
for Industrial Analysis. Trading Profit inthis sector rose to £1.0 million (2009:£1.3 million loss) as a result of theefficiency measures implemented in theprevious year.
Our Industrial Analysis business produces
analytical equipment for industrial
quality control and environmental
monitoring. We continue to commit
to the growing opportunity in handheld instrumentation. We add value
for customers by taking lab-based
technologies and bringing theminto the workplace, as shown by ourinvestment in portable Optical Emission
Spectroscopy and Hand-Held X-ray
fluorescence analysers. For example ourFoundry Master Pro Optical Emission
Spectroscopy instrument allows ourcustomers to analyse steel components
in situ. The Industrial Analysis businesshad a much improved second half,with the result benefitting from therestructuring programme.
We arenow seeing sustained, though gradual,
improvement in demand from ourindustrial customers.

Our Superconducting Wire businessis the world leader in the provision ofwire for the MRI scanner market. It
also provides very high specification
superconducting wire to customers in
the research field. Following a slow
start to the year, demand for MRI wire
strengthened significantly during thesecond half. In August 2009 we signed
a contract with the European arm of
the ITER procurement programme,
to provide €40.7 million worth ofsuperconducting wire over 3 years. In
September 2009 we signed a contract toprovide a further US$7.7 million worthof superconducting wire to the US
arm of ITER procurement. Significant
investment has been made to increase
capacity to cope with the additional
throughput. This has been fully funded
by a pre-payment from the customer.
Our Magnetic Resonance businessproduces bench top equipment which
can be used to analyse industrial andfood products, particularly oils and fats.
This business has shown good growth,
illustrated by a new contract to supply
a large number of analysers to a Turkish
agricultural cooperative to measure theoil content in sunflower seeds. We arealso the leading provider of magnetic
resonance analytical tools for the
petrochemical industry which provides
data used to improve the efficiency ofoil extraction.

9

The MRI Service businesses provide
service and support to the MRI industry,offering magnet service, parts andaccessories predominantly in North
America and in Japan. The number of
MRI systems which we service in North
America increased during the year; wewere also successful in expanding ourhelium-fill services to customers, which
is a new growth area. In Japan we weresuccessful in increasing the number ofservice contracts and made significant
progress in expanding our technicalsupport in a number of other Asian
countries.
Our
AustinScientificbusinessmanufactures, services and refurbishes
high quality cryogenic vacuum pumps,
helium compressors and cold heads forcustomers in the semiconductor, medical
and research sectors. A recovery inthe marketplace in the second halfof the year and internal efficiency
improvements resulted in improved
profitability.
Service revenues in Nanotechnology
Tools fell slightly as a percentage of sales
due to the decision taken to concentrateon the sale of new products rather than
the refurbishment and sale of preowned Plasma Technology machines.
In Industrial Products, service revenues
increased relative to total sales as more
service contracts were sold as market
confidence began to return.

ServiceThis sector consists of our MRI Service
businesses in North America and Asia,
our Austin Scientific business, and theservice elements of Nanotechnology
Tools and Industrial Products. Turnoverwas £39.0 million (2009: £37.9 million)
and Trading Profit was £5.5 million(2009: £5.8 million).

Top left: Positive Material Identification with XRF and OES.
Top middle: Optical Emission Spectrometer.
Top right: Minerals analysis using XRF.

Oxford Instruments plc

9

10

Financial Review

Highlights• Adjusted earnings per share of
17.8 pence (+20%)• Reduction in net debt of £17.9m• Restructuring programme has
resulted in annualised savings of£11.0 million• Underlying tax rate of 27%
Key Information
Revenue£211.5m +2.4%
Trading profit£14.7m +12.2%
Reduction in net debt

£17.9m

Trading Performance
Revenues for the year grew by 2.4% to£211.5 million (2009: £206.5 million).
Growth was aided by favourable
foreign exchange rates (£7.7 million)
but impacted by adverse pricing, which
we estimate to be £2.0 million, and aslight reduction in underlying volumes(£0.7 million).
Despite pricing pressure as a result of
the economic downturn and an adverse
sales mix due to the outperformanceof our lower margin NanoSciencebusiness, gross margins only fell from
43.9% to 42.8% aided by efficiency
improvements.
Trading profit increased by £1.6 million
to £14.7 million (2009: £13.1 million),giving a 7.0% margin (2009: 6.3%). Of
the growth in the year, net operating
efficiencies contributed £4.2 million andfavourable exchange rates a further£2.7 million. These gains were offset by£2.0 million adverse pricing, £3.0 million
adverse mix and £0.3 million resulting
from the downturn in volume.
As explained below, at the start of afinancial year, the Group seeks to have
80% of its 12 month forecast foreignexchangetransactional
exposure
hedged to give a high degree ofcertainty to the foreign exchange rates
it will achieve. Due to the weakness insterling during the year, the hedged
rate was less favourable than spot rates.
As a result trading profit was impacted
by a loss on the settlement of currency
hedges of £6.7 million in the year
(2009: £8.3 million). Had the Group nothedged its foreign exchange exposure,trading profit margins would have been
10.1%.
Reported operating expenses fell by£1.7 million to £75.9 million (2009:£77.6 million). Of this reduction, £1.6
million was the decrease in the loss on
the currency hedges described above(see note 3). The translation of overseas
expenses at a weaker sterling exchange
rate increased reported operating

10

expenses by £3.2 million. On a constantcurrency basis, operating expenses fell by£3.3 million due to efficiencies resulting
from the previous year’s restructuring
programmes offset by increased salarycosts, increased headcount and R&D
costs in those parts of the business thathave seen marked revenue growth.
Reorganistion costs and impairment
As reported in last year’s Report andAccounts the Group initiated an
extensive restructuring programme inthe year ended March 2009 which cost a
total £9.1 million (£5.7 million in cash),of which £0.4 million fell into the year
ended March 2010 (see note 5).
The restructuring programme has
resulted in annualised savings of £11.0
million which, due to some savings being
realised in the prior year has generated£9.0 million incremental savings year
on year. Some of these cost savings are
due to reduction in capacity, which will
inevitably return as the global economy
strengthens. However a proportion ofthese costs were structural and will not
be reinstated.
Amortisation of acquired intangibles
Amortisation of acquired intangibles
was broadly in line with the prior yearat £4.1 million (2009: £4.3 million). No
acquisitions were made in the year.
Financial income and expenditureWithinfinancialincomeandexpenditure, total net interest payable
was in line with the prior year at £1.3
million. The interest charge on pension
scheme liabilities exceeded the expected
return on pension scheme assets by £1.5
million, an increase of £0.8 million overthe prior year.
Currency hedging
The Group uses derivative products
to hedge its exposure to fluctuations
in foreign exchange rates. It is Group
policy to have in place at the beginningof a financial year hedging instruments
to cover 80% of its forecast transactional
exposure for that period.

Oxford Instruments plc

Financial Review

In common with a number of othercompanies, the Group has decided thatthe additional costs of meeting theextensive documentation requirementsof IAS39 to apply hedge accounting to
the foreign exchange hedges cannot bejustified. Accordingly the Group does
not use hedge accounting for thesederivatives. Net movements on marking
to market such derivatives at thebalance sheet date are disclosed in theincome statement as Financial Income
or Expenditure and excluded from ourcalculation of adjusted profit before tax(note 2).
Commodity hedging
The Group also uses derivative products
to hedge its exposure to fluctuations in
the price of copper, a major component
for the Superconducting Wire business.
Given the small number of contracts
involved we apply hedge accounting
for these transactions and consequently
the results of marking to market
are excluded from the Statement of
Income.
Taxation
The underlying tax rate on the profit
before tax before reorganisation costs
and impairments, amortisation of
acquired intangibles and marking tomarket of hedging derivatives, was 27%(2009: 35%). The rate has reduced due toall parts of the Group being profitable
for tax purposes and therefore being
able to offset all expenses against
income.
The Group has tax losses of £43.1 million
in the UK available to set off against
future taxable profits from certain
business streams. No deferred tax asset
has been recognised in respect of theselosses. A deferred tax asset of £12.9
million (2009: £11.3 million) has beenrecognised against certain temporary
differences and US tax losses. Of this,£9.8 million (2009: £4.0 million) relates
to the deficit in the pension schemes.
A deferred tax liability of £6.7m (2009:£7.6 million) has been recognised. Of
this, £5.6 million (2009: £7.1 million)
relates to the intangible assets arisingfrom past acquisitions. This liability
will unwind as the intangible assets areamortised.
Earnings
After a tax charge of £4.8 million (2009:
credit £2.6 million) the reported net
profit for the financial year was £13.3
million (2009: loss £6.7 million). Witha weighted average number of sharesof 48.9 million (2009: 48.8 million),
the basic earnings per share were 27.2
pence (2009: loss per share 13.9 pence).

Total cash spent on research and development during the year
Less: amount capitalised
Add: amortisation of amounts previously capitalised
Research and development charged to the income statement

11

Adjusted profit before tax (note 1), which
we believe gives a better indicationof the underlying performance of thebusiness, grew by £0.8 million to £11.9
million which translates into an adjusted
earnings per share of 17.8 pence (2009:14.8 pence), an increase of 20%.
Dividends
The Group proposes a final dividendof 6.0 pence per share (2009: 6.0
pence), payable on 29 October 2010 toshareholders who are on the registeras at 1 October 2010. This gives a total
dividend for the year of 8.4 pence pershare (2009: 8.4 pence). Dividend coverfor the underlying business before
reorganisation costs and impairments,
amortisation of acquired intangibles
and marking to market of hedging
derivatives was 2.1 times (2009: 1.8
times).
Investment in research and development(R&D)
The total cash spent on researchand development in the year was£13.1 million (2009: £16.3 million). A
reconciliation between the cash spentand the amounts charged to the Income
Statement is given below:

2010£ million
13.1
(4.0)
4.0
13.1

2009
£ million
16.3
(6.4)
3.4
13.3

The net book value of capitalised R&D at the end of the financial year was £17.5 million (2009: £17.7 million).

Top left: X-Max large area silicon drift detector.
Top middle: Conservation of artefacts: Terracotta Warriors.
Top right: Nordlys camera for electron backscatter diffraction on electron microscopes.

Oxford Instruments plc

11

12

Financial Review

Balance sheet
Non-current assets fell from £89.7
million to £85.0 million primarily due tothe amortisation of acquired intangible
assets.
Net working capital (excluding derivative
financial instruments) reduced by £10.7
million in the year to £25.5 million. Of
this £10.2 million relates to the ITER
deposit described below.
Inventory turns increased by 0.2 to 3.1
while debtor days increased from 58
days to 59 days.
Net assets of the Group fell from £61.9
million to £52.2 million principally due
to the £14.9 million (net of deferredtax) increase in the defined benefit
pension deficit.
Pensions
The Group has defined benefit pension
schemes in the UK and the USA. Bothhave been closed to new entrants since2001. The total deficit, before tax,
under IAS19 on these pension schemes
increased in the year by £20.7 million
to £35.1 million with a corresponding
deferred tax asset of £9.8 million.
Assets of the schemes at 31 March2010 were £157.6 million (2009: £125.0
million). The increase in the deficit
is primarily due to a decrease in the
discount rate applied to liabilities, which
is based on corporate bond yields.
The latest triennial actuarial valuation of

the UK scheme was carried out as at 31
March 2009 and resulted in an actuarial
deficit of £39.5 million. A long-term plan
for recovering the deficit over 13 years
was agreed between the Company and
the Pension Trustee, which involves apayment of £3.1 million for the year to
March 2010, £5.3 million for the year to
March 2011 and £4.2 million for the year
to March 2012. For the subsequent 10
years the 2012 payment of £4.2 million
will be inflated by 2.85% per annum.
Should the Group increase the dividend
per share paid to shareholders, thepayment to the pension fund will besimilarly increased.
In April 2010 the Group informed its
employees that it proposes to close
both its UK and US schemes to future
accrual and has entered a consultation
period which will end in August 2010.
In making the proposal the Group isseeking to mitigate the risk of pension
fund liabilities rising. The alternative
pension arrangements offered to theemployees are cash neutral to theGroup.
Cash
Earnings
beforeinterest,
tax,
depreciation and amortisation (EBITDA)
increased by £2.2 million to £22.5
million. Working capital in the year
reduced by £16.4 million comparedwith a reduction of £1.4 million in theprior year. This was aided by a contract
prepayment of £10.2 million from Fusion
for Energy, the European contracting
body for the ITER programme. In the

Revenue growth
As reported
At constant currencies
Return on sales
Trading profit as a percentage of revenue
R&D
R&D cash spend as a percentage of revenue

12year £3.6 million was spent on inventory
and capital equipment for the ITER
programme. ITER shipments will begin
in the first half of 2010/11.
Net cash flow from operating activitieswas £31.1 million, an increase of £16.7
million on the prior year.
Net debt at the year-end was £10.4
million (2009: net debt of £28.3 million).
The Group has a committed £50 million
revolving credit facility that expiresin July 2012 and overdraft and otherfacilities of £13.8 million.
Employees
The average number of people
employed during the year decreasedby 190 to 1,341 over the prior year as aresult of the restructuring programme.
Average sales per employee increased
by 17% to £158k.
Share price
The closing mid-market price of theordinary shares at the end of thefinancial year was £2.69, compared with
£1.10 at the beginning of the year. The
highest and lowest prices recorded in
the financial year were £2.75 and £1.10
respectively.
Key Performance Indicators
The
following
key
performanceindicators show how we have progressedagainst our priorities:

2010

2009

+2.4%
-1.3%

+17.0%
-2.1%

7.0%

6.3%

6.2%

7.9%

Oxford Instruments plc

Financial Review

Risks to be managed
There are a number of risks anduncertainties which may have a material
effect on the Oxford Instruments
Group.
Oxford Instruments provides hightechnology equipment and systems.
There is necessarily some technical risk
associated with developing advanced
technologies. This risk has reduced
in recent years as the business has
moved away from large scale single
customer development programmes
towards more commercially orientatedproducts.
Our business plan requires theintroduction of new products to gain
market share to support our growth.
There is the risk that future productintroductions may not yield the sales
forecast, especially in industries where
investment has been cut back in thelight of current economic conditions.
Global financial market conditions
continue to impact demand but weremain well positioned, enjoying abroad spread of customers, applications
and geographical markets.
Part of the growth of Oxford Instruments’plans is to come from acquisitions which
provide the Group with complementary
technologies. There is the risk thatappropriate acquisition targets will not

be available in the necessary timescaleor that, once acquired, targets fail toprovide the planned value. This risk is
mitigated through extensive financial
and technical due diligence during theacquisition programme.
A significant proportion of Oxford
Instruments’ profit is made in foreign
currencies and we will therefore
continue to have exposure to exchange
rate fluctuations going forward. We
aim to mitigate this risk by natural
hedges where possible and the use of
forward contracts.
The Group’s strategic plan includes theoutsourcing of a significantly higher
proportion of the costs of its products
to benefit from economies of scaleand natural currency hedges. While
this policy mitigates some risks it also
increase the risk of failures in the supply
chain impacting sales.
We rely on the purchase of a number ofcommodity materials and, when prices
rise, we cannot always pass on thiscost directly to customers. We enter
into hedging contracts for the mostsignificant of these, copper.
Our calculated pension deficit is sensitive
to changes in the actuarial assumptions
that may have an appreciable effect on
the reported pension deficit.

13

Going concern
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position
are set out in the Chief Executive’sStatement. The financial position of theGroup, its cash flows, liquidity position
and borrowing facilities are describedin this Financial Review.
The relatively diverse nature of theGroup together with its current financial
strength provides a solid foundation.
The Directors have reviewed theGroup’s forecasts and believe that theGroup will be able to operate within its
existing debt facility which expires in
July 2012. This review also consideredfinancial risk management objectives
includinghedgingarrangements,
capital management and exposures tocredit and liquidity risks.
The 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 tocontinue in operational existence forthe foreseeable future.
Kevin Boyd
Group Finance Director
15 June 2010

Top left: High performance superconducting wire.
Top middle: Austin Scientific Electronics.
Top right: Superconducting wire for MRI magnets and MRI magnet service and support.

Oxford Instruments plc

13

14

Directors and Advisers

Nigel Keen

Non-Executive Chairman
joined the Board in 1999. He
has an engineering degreefrom Cambridge University,
is a Fellow of the Instituteof Chartered Accountants
and has been involved in theformation and developmentofhightechnology
businesses for more than
thirty years. He is Chairmanof Laird PLC, Bioquell Plc
and Deltex Medical Groupplc and a Non-Executive
Director of ISIS Innovation
Ltd. (Oxford Instruments andOxford University maintaina close relationship andthe Group’s Directors arestrongly represented on the
Board of ISIS Innovation,
the University’s intellectual
property company).

Jonathan Flint

Chief Executive
joined the Group as Chief
Executive in April 2005. Heholds a BSc in Physics from
Imperial College and an MBAfrom Southampton University.
He is a Fellow of the Instituteof Physics and Institution ofEngineering and Technology.
He sits on the Council ofthe Institute of Physics andis a member of advisory
panels to the UK Scienceand Technology Funding
Council. Prior to Oxford
Instruments, he held seniorcommercial
management
positions within Vislink plc,
BAE Systems, GEC Marconi
and Matra Space Systems.

Directors

The Directors at the date of the Report were:N J Keen, Non-Executive Chairman
D J Flint, Chief Executive
K J Boyd, Group Finance Director
C J A Holroyd, Executive Director
J M Brady, Deputy Chairman and Non-Executive Director
M A Hughes, Senior Independent Non-Executive Director
J F Lennox, Independent Non-Executive Director
B J Taylor, Independent Non-Executive Director

Board Committees

Audit: JF Lennox, Chairman; JM Brady; MA Hughes;
BJ Taylor
Remuneration: NJ Keen, Chairman; MA Hughes;
JF Lennox; BJ Taylor
Nomination: NJ Keen, Chairman; JM Brady; MA Hughes;
JF Lennox; BJ Taylor
Administration: Any two Directors

Kevin Boyd

Group Finance Director
joined Oxford Instruments inAugust 2006 as Group FinanceDirector. He holds a BEng inElectronic and Information
Engineering from Queen’s
University Belfast and is a
Chartered Engineer (FIET) and
Chartered Accountant (FCA),
having qualified with Arthur
Andersen. Prior to joining
Oxford Instruments he wasGroup Finance Director of
Radstone Technology plc,
Finance Director of Siroyan
Ltd and held senior financepositions in the TI Group(now Smiths Group plc). He
is a Non-Executive Directorof Guidance Ltd.

Charles Holroyd

Group Business
Development Director
was appointed to the Board
in November 2005, having
joined Oxford Instruments in
1999, and is responsible forGroup Business Development.
He has a BSc in Electricaland Electronics Engineeringfrom Bristol University andan MBA from INSEAD. He isa Chartered Engineer and a
Fellow of the Institution ofEngineering and Technology.
Previously he held senior
management
positions
within United Industries
plc, B Elliott plc, Spirent plc(previously Bowthorpe plc)
and Chloride Group plc.

Honorary President

Sir Martin Wood OBE FRS Hon FREng DL

Company Secretary
Susan Johnson-Brett

Advisers

Auditors: KPMG Audit Plc
Principal Bankers: HSBC Bank plc;
The Royal Bank of Scotland plc; Fortis Bank S.A./N.V.
Stockbrokers: JPMorgan Cazenove Limited
UK Solicitors: Laytons
US Counsel: Holland & Knight

JF Lennox was appointed Chairman of the Audit Committee
on 2 June 2009. JM Brady ceased to be a member of theRemuneration Committee on 7 June 2010. During theyear, PWL Morgan was a Director of the Company until his
retirement from the Board at the Annual General Meeting
held on 15 September 2009.

14

Oxford Instruments plc

Directors and Advisers

Professor
Sir Michael Brady

Deputy Chairman and NonExecutive Director
joined the Board in 1995
and is BP Professor ofInformation Engineering at
Oxford University. He is also a
Fellow of the Royal Society, aFellow of the Royal Academyof Engineering, and a Fellowof the Academy of Medical
Sciences. He is a founding
Director of Guidance Ltd,
Mirada Medical Ltd andMatakina Ltd (a New Zealandbased company), a Directorof Dexela Ltd and of ISIS
Innovation Ltd and a NonExecutive Director of Acuitas
Ltd.

Oxford Instruments plc

Professor
Michael Hughes

Senior Independent NonExecutive Director
joined the Board in November
2004. He is Chairman of EA
Technology Ltd and a NonExecutive Director of South
Staffordshire Water Ltd.
Previously he held senior
management positions in
GEC plc and was CEO of
Midlands Electricity plc until
2002.

Jock Lennox

Independent Non-Executive
Director
joined the Board on 1 April
2009. He is Non-Executive
Director of Enquest plc,
Hill & Smith Holdings plc, amember of the Council ofthe Institute of Chartered
Accountants of Scotland(chairing the Qualification
Board) and is Chairman of
the Tall Ships Youth Trust.
He is also a member of theAdvisory Board of Alchemy,
the private equity firm. He
was a Senior Audit Partner
at Ernst & Young until April
2009.

15

Bernard Taylor

Independent Non-Executive
Director
joined the Board in 2002 andis Vice-Chairman of Evercore
Partners. He is a member of
The Council of the Universityof Oxford and is Chairmanof the University’s Audit
Committee. He is Chairmanof ISIS Innovation Ltd anda Royal Commissioner on
the 1851 Commission. He is
also a Fellow of the Royal
Society of Chemistry and an
Honorary Fellow of St. John’sCollege, Oxford.

15

16

Report of the Directors
The Directors present their Report and the Financial
Statements of Oxford Instruments plc for the year ended 31
March 2010.
Principal activity and business reviews
The Company is the ultimate holding company of a groupof subsidiary undertakings (‘the Group’) engaged in the
research, development, manufacture and sale of hightechnology instruments. The Company is required to set out
in this report a fair view of the business of the Group during
the financial year ended 31 March 2010, the position of theGroup at the end of the financial year and a description of
the principal risks and uncertainties facing the Group. The
information which fulfils these requirements includes abusiness and financial review on pages 4 to 13 and corporate
and social responsibilities on pages 18 to 20, which areincorporated in this report by reference. The business, thestrategy, the research and development activities and likely
future prospects are reviewed in the Chairman’s Statementon page 4, the Chief Executive’s Statement on pages 6 to 9,
and the Financial Review on pages 10 to 13.
Results and dividends
The results for the year are shown in the Consolidated
Statement of Income on page 41. The Directors recommend a
final dividend of 6.0p per ordinary share, which together with
the interim dividend of 2.4p per ordinary share makes a totalof 8.4p per ordinary share for the year (2009: 8.4p). Subject
to shareholder approval, the final dividend will be paid on 28
October 2010 to shareholders registered at close of businesson 1 October 2010.
Risks and Uncertainties
The Board exercises proper and appropriate corporate
governance for the Group. It ensures that there are effective
systems of internal controls in place to effectively manage
shareholders’ interests and the Group’s assets, including
the assessment and the management of the risks that thebusinesses are exposed to, and to monitor and manage thecompliance with all the legal requirements that affect theGroup’s worldwide business activities.
The Executive Directors report to the Board on changes in thebusiness and in the external environment which may affectthe risks which the Group faces. The Executive Directors also
provide the Board with monthly financial information. Key
performance indicators are reviewed quarterly.
There are a number of risks and uncertainties which may havea material effect on the Oxford Instruments Group. These aredescribed in the Financial Review on page 13.
Directors
Biographies of all the Directors at the date of this report,
including the Non-Executive Directors, appear on pages
14 to 15.

Directors’ interests
The beneficial interests of the Directors in the Company’s
share capital, all in fully paid up shares at 31 March 2010,
are shown below. Details of share options for the Executive
Directors are shown in the Directors’ Remuneration Reporton pages 28 to 34.

Kevin Boyd
Mike Brady
Jonathan Flint
Charles Holroyd
Mike Hughes
Nigel Keen
Jock Lennox
Bernard Taylor

2010
Shares10,5442,500
30,754
48,224
12,216
126,580
3,500
190

2009
Shares
6,087
2,500
838
36,964
12,216
126,580
0190

No Director was beneficially interested in the shares ofany subsidiary company at any time during the year. In theyear to 31 March 2010 no Director had a material interest
in any contract of significance with the Company or any of
its subsidiaries other than the contract between Imperialise
Limited and the Company for the services of Nigel Keen, as
described in the Directors’ Remuneration Report on page 33.
There have been no changes since the year end.
Insurance cover and Directors’ indemnities
For some years the Group has purchased insurance to coverits Directors and Officers against their costs in defending
themselves in legal proceedings taken against them inthat capacity and in respect of damages resulting from theunsuccessful defence of any proceedings.
Neither the insurance nor the indemnity provided coverfor situations where the Director has acted fraudulently or
dishonestly.
To the extent permitted by UK law, the Group indemnifies its
Directors and Officers.
Share capital
The Company only has one class of share capital which
comprises ordinary shares of 5p each. All shares forming
part of the ordinary share capital have the same rights andcarry one vote each. There are no unusual restrictions on thetransfer of a share. The full rights and obligations attaching
to the Company’s ordinary shares, as well as the powers of the
Directors, are set out in the Company’s Articles of Association,a copy of which is available on the Company’s website. These
can also be obtained from Companies House or by writing to
the Company Secretary.

Peter Morgan was a Director until he retired from the Board
on 15 September 2009. Jock Lennox joined the Board on
1 April 2009. All other Directors served throughout the year.

Oxford Instruments plc

Report of the Directors Continued
During the year to 31 March 2010 the issued share capital
was increased by 0.32% with the issue of 157,977 ordinary
shares (2009: 32,115) following the exercise of options under
the Company’s share option schemes. At 31 March 2010, theissued share capital of the Company was 49,567,328 ordinary
shares of 5p each. 493,594 ordinary shares (representing 1%of the total issued share capital of the Company) are held by
the Company in a separately administered trust. No shareswere acquired by the Company during the year. Details of theshare capital and options outstanding as at 31 March 2010
are set out in note 8 of the Financial Statements. There havebeen no further changes in the issued share capital of theCompany since the year end.
At this year’s Annual General Meeting, the Directors propose
to renew the authority granted to them at last year’s AGM
to: (a) allot ordinary shares up to an aggregate nominal
value of £826,122 (one-third of the Company’s issued share

Schroder Investments
Threadneedle Asset Management
BlackRock Inc
Sir MF and Lady KA WoodGAM International Management Ltd
BAE Pension Fund Investment Management (UK)
Aberdeen Asset Management PLC
Aviva Investors
Legal & General Investment Management Ltd (UK)
Hermes Equity Ownership Services Ltd

capital) (Resolution 7(a)) and, including those shares allotted
under Resolution 7(a), up to an aggregate nominal valueof £1,652,244 (two-thirds of the Company’s issued sharecapital) where full pre-emption rights are applied (Resolution
7(b)); (b) allot up to 2,478,366 ordinary shares (5% of theCompany’s issued share capital) without first offering themto existing shareholders (Resolution 8); and (c) to buy back up
to 4,956,732 of the Company’s issued ordinary shares (10% of
the Company’s issued share capital) (Resolution 9). Details ofthese resolutions are set out in the notice of the meeting.
Substantial shareholdings
The following are beneficial interests of 3% or more of which
the Directors have been notified in accordance with Chapter
5 of the Disclosure and Transparency Rules, of the Company’s
issued ordinary share capital, the only class of voting capital,
at 7 June 2010:

Direct/Indirect

Shares
000

% of
Total

Indirect
Indirect
Indirect
DirectDirectDirectIndirect
Direct/Indirect
Direct5,398,183
5,136,191
4,587,870*
3,715,930
3,270,034
2,303,177
2,281,071
2,145,249
1,809,751

10.9
10.4
9.3
7.5
6.6
4.6
4.6
4.3
3.7

Proxy voting rights

2,857,706

5.8* of which 1,638,613 shares are the subject of financial Instruments with similar economic effect to Qualifying Financial
Instruments

Payment of Suppliers
The Group does not follow a standard payment practice but
agrees terms and conditions for its business transactions witheach of its suppliers. Payment is then made in accordance withthese terms. Trade creditors of the Company and the Group’s
UK subsidiaries at 31 March 2010 were equivalent to 27 days’(2009: 23) and 62 days’ (2009: 58) purchases respectively, basedon the amounts invoiced by suppliers during the year and theamounts owed to trade creditors at the end of the year.
Charitable Donations
During the year, the Group made charitable donations of£16,920.
Fixed Assets
Whilst the market value of some fixed assets may differ frombook value, the Directors believe that the differences are notmaterial.
Disclosure of Information to Auditors
Pursuant to Section 418(2) Companies Act 2006 the Directors
who held office at the date of approval of this Directors’

Oxford Instruments plc

Report confirm that, so far as they are each aware, there is no
relevant audit information of which the Company’s Auditors
are unaware; and each Director has taken all the steps thathe might reasonably have been expected to have taken
as a Director to make himself aware of any relevant audit
information and to establish that the Company’s Auditors areaware of that information.
Annual General Meeting
The Notice of the Annual General Meeting to be held on 14
September 2010 is set out in a letter to shareholders together
with explanatory notes relating to the resolutions.
A resolution to re-appoint KPMG Audit Plc as Auditor will be
proposed at the Annual General Meeting.
By Order of the Board
Susan Johnson-Brett, Company Secretary
15 June 2010

17

18

Corporate and Social Responsibility
The Group is committed to enhancing shareholder value inan ethical and socially responsible manner by considering
the interests of its wide community of stakeholders including
investors, employees, customers, suppliers and local
communities.
The Group’s products and services provide solutions which
help address the global issues of environmental control,
energy conservation, healthcare and security through thedevelopment of high technology, innovative instruments
and systems. Many of Oxford Instruments’ systems are used
to protect the environment, including the screening anddetection of hazardous substances in soils, electronic goods
and petroleum. The Group participates in a global project toresearch into alternative clean, sustainable energy sources,
and its superconducting wire is a key enabling factor insuch programmes. The Group is continuously looking for
new applications for its existing technologies to produce
instruments and systems that will support the growing needto protect the world and the people who live in it.
Ethical Operations
There are formal codes of behaviour in place for the Group’s
employees, which promote a commitment to maintaining thehighest standard of ethics and integrity in the conduct of theGroup’s business.
A code of ethics and a business malpractice policy includes
guidelines covering personal conduct, and advice on
recognising and dealing with conflict of interests, businessgifts, and bribery and corruption. These codes are given to
all new employees. The business malpractice policy provides
employees with the opportunity to report unethical or illegal
corporate conduct. The independent position of the Group’s
Senior Independent Director provides an alternative channelof communications for those employees who require it. The
formal code of ethics is updated regularly and is available on
the corporate website or from the Company on request.
A fair and open culture is fostered throughout the business inwhich everyone’s views and contributions are encouraged andrespected. New employees are introduced to the Company’s
culture and style through an induction process which actively
supports the corporate strategy. Business managers areprovided with practical guidance explaining the Group’s
policies and standards of conduct to ensure that these are
maintained.
Oxford Instruments does not make contributions to politicalparties or organisations.
The Board believes that operating ethically is an importantpart of efficient and profitable business management, andrecognises its success depends on the involvement andcommitment of everyone in the organisation.
Sustainability
The Group is committed to pursuing the highest standards ofenvironmental performance. Responsibility for sustainabilitylies with the Board and all the employees. Charles Holroyd,an Executive Director, is responsible for co-ordinating theGroup’s sustainability objectives, reviewing performanceagainst these objectives and for relationships with external
agencies.

The Board also reviews the sustainability performance of Groupsites. Every site has an Energy Champion who is responsiblefor implementing plans to reduce the carbon footprint of his/her site. Each site reports its monthly energy consumption andreduction activities. In the financial year 2009/10 the Group’s
global electricity consumption as a percentage of sales fell by
6.4% against a 5% target reduction. The objective for thefinancial year 2010/11 is to reduce energy consumption as apercentage of revenues by a further 5%.
In line with the Group’s environmental objectives, a moresustainable approach to the procurement of energy supplies
has been adopted. This strategy will be followed by global
operations, where possible, to ensure that electricity ispurchased from sustainable sources.
European directives continue to be enacted that havebeneficial effects on the environment. The current suchdirectives with which the Group complies include the Waste
Electrical and Electronic Equipment (WEEE) Directive, theRestriction on use of Hazardous Substances (RoHS) Directive,
the Registration, Evaluation, Authorisation of use ofChemicals (REACh) Directive and the Energy use of Products(EuP) Directive.
The Group has achieved the Carbon Trust Standard in theUK, whereby an assessor validates the carbon reduction
calculations and recommends improvements in the way
the carbon footprint is monitored. This was awarded inrecognition of the work undertaken by the Group to reduce
its carbon footprint.
The Carbon Reduction Commitment Energy Efficiency Scheme(CRC) is a UK Government initiative to reduce the amountof CO2 released to the atmosphere by organisations that
consumed more than 6GWh of energy during 2008. Oxford
Instruments falls into the category and will be a full participant
in Phase 1 of the CRC which runs from 2010 to 2013.
Regulatory requirements related to sustainability and climatechange present significant opportunities for the Group. It
looks not only to improve the environmental performance of
its own operations, but also in the manufacture of equipmentthat supports customers who have to comply with current
regulations. For example, the X-MET range of hand-held
analysers and the X-Strata range of benchtop analysers areused to check compliance to the RoHS and WEEE directives.
They also help to assess contaminated land for the presenceof heavy metals.
All major sites have a responsibility to recycle waste materials.
These materials include cardboard, paper, wood and metals.
Employees are encouraged to recycle paper, packaging, bottles
and cans. The amount of recycled material is recorded.
All corporate literature is now printed on environmentallyfriendly paper using Forest Stewardship Council (FSC)
accredited printers. This, together with the vegetable oils
used to coat the paper, means that these documents are biodegradable and recyclable.

Oxford Instruments plc

Corporate and Social Responsibility Continued
Health and Safety
Oxford Instruments is committed to providing high standardsof safety in the working conditions for its employees and tothe continual improvement of its health and safety (H&S)
performance.
Responsibility for Health and Safety (H&S) lies with theBoard. Charles Holroyd, an Executive Director, is responsible
for formulating the Group’s H&S strategy and objectives,
reviewing performance against these objectives and for
ensuring that key H&S issues are effectively identified andmanaged.
The Board reviews the H&S performance of the Group’s
operations. All Group businesses report progress on H&S issues
either monthly for large sites, or quarterly for smaller sites, tothe Group Health, Safety and Environment Manager who is
responsible for keeping Charles Holroyd, and consequently
the Board, informed of serious issues. The Group Health,
Safety and Environment Manager is responsible for auditing
each site annually.
The number of reportable accidents increased slightly during
2009/10 from the very low level of the previous year. The
underlying trend over three years continues to improve.
Key H&S risks within the business are subjected to a more
focused review by the Board. Current risks receiving closer
attention are those involved with driving for work, newproduction processes and the management of radiation issues
in those businesses providing X-ray products.
Two of the Group’s major sites are certified to the OHSAS18001
Health and Safety Management System standard. H&S
training and awareness is currently focused on those sites
seeing high revenue growth and an increase in new personnel.
This ensures that growth is achieved while maintaining H&S
standards in the business processes and working conditions.
Employees are kept informed of current H&S issues throughinformation provided by local H&S committees or Forums,
whose members include staff from all areas of the business.
These Forums meet on a regular basis.
In addition, information is published on the Group intranet,
notice boards and in monthly cascades and quarterly business
reports. Employees are actively encouraged to suggest
improvements that can be made in working conditions andpractices.
Employees
The Board recognises that the Group’s employees are criticalto the overall delivery of its business strategy. All employees
are kept informed of progress against the Group’s strategicplan through regular video presentations on the intranet andface-to-face meetings with the Chief Executive, monthly teammeetings, the Company intranet and newsletters.
Relations with employees are based on respect. The Group iscommitted to a working environment where there is mutual
trust and where everyone is accountable for their own actions
and share responsibility for the performance and reputationof the Group.

Oxford Instruments plc

It is the Group’s policy to provide competitive remunerationreferenced against external market data. Business andindividual performance determine actual remunerationand salaries are reviewed on an annual basis. Financial
participation in the Group is encouraged through the Share
Incentive Plan in the UK, Executive Share Options granted to
management, and through bonus schemes based on financial
performance. Due to economic conditions and inline with anumber of competitors, the Group operated a pay freeze inthe 2009/10 financial year.
In October 2009, the first company-wide Employee Survey
was conducted to benchmark staff engagement and morale,issues of concerns, opinions of leadership and alignment
to values. It was carried out by an external supplier, which
undertook the survey across the Group in five languages. The
response rate of 75% was well above average for a surveyof this type. The results and subsequent dialogue with staff
have made a strong contribution to our positive employee
relations environment. A plan is now in place to follow up
and respond to the issues that were raised as a result of thissurvey. It is planned to resurvey in April 2011.
The Group’s aim is to ensure there are equal opportunities forall employees with no discrimination on account of race, age,gender, sexual orientation, disability, and political or religious
beliefs. Ability and contribution are the determining factors
in the selection, training, career development and promotionof all employees. The Group is committed to continuing
professional development, managing individual and teamperformance and developing and valuing core skills. Having
the right skills-mix ensures that the business grows throughproducing innovative products that meet or exceed customer
requirements.
This year a business development training programme
was launched, providing a balance between industry bestpractice and practical experience, and is sponsored by senior
management. It consists of a series of modules which focus onleadership and managerial skills, and involves high potential
employees from around the world.
Each year, the Chairman hosts The Chairman’s Awards forInnovation which reward and recognise technical and process
innovation. Employees are encouraged to enter projects and/or activities that show innovation in its broadest sense and at
the same time have brought value to the business. Winners
receive a trophy and a cash prize, awarded at a gala dinner.
This year a new award for customer service was added, buildingon the brand development project which was introduced
2009. Once again, a record number of entries were received
from all business groups and all locations world-wide.
The Oxford Instruments Brand
An extensive programme was initiated in 2009/10 to energise
the Oxford Instruments brand. This is influencing the way
the Group is represented in its markets and what it stands for.
It has led to a redefinition and communication of Company
values, which are currently being validated through feedback
from employees and the results of a customer survey
conducted in June 2010.

19

20

Corporate and Social Responsibility Continued
Oxford Instruments’ values are:
Trusted: we build long term relationships based on trust andrespect
Inclusive: we listen and engage with customers, colleagues,
shareholders and partners for mutual success
Innovative & Progressive: we use skill, experience and openness
to new ideas to address the needs of the 21st Century
Wholehearted: we approach what we do with passion, withcare and with pace.
These values, reinforced by the redefined brand identity
will influence employee engagement activities, product andsoftware design, distributor and partner relationships andpublic relations. A broad programme of activities and processes
has been put in place to ensure the Oxford Instruments brandis adopted and championed across the businesses. The goal isto ensure a consistent, positive experience when dealing with
Oxford Instruments.
Customers
The Group believes that integrity in dealing with customers
is a prerequisite for a successful and sustained business
relationship. This principle governs all aspects of the business.
The Group values its customers and the trust that they placein the Group, and will safeguard the information provided bycustomers in accordance with relevant laws and contractual
commitments.

The Strategic Sourcing Team regularly inspects and audits
suppliers, and closely manages outsourcing to low cost
countries. ‘Road maps’ and regular strategic reviews are inplace for strategically important suppliers. In accordance with
ISO9001 and ISO 14001, only quality approved organisations
are used.
Communities
The well-being of the communities in which the Group operates
is important to its long term development and success. The
Group offers worthwhile and valuable employment in a safe
and well cared for working environment, and encourages ahealthy work/life balance.
The Group is an active supporter of local, national andinternational science communities both on a corporate level,a business group level and an individual level. It also sponsors
a number of international and national awards and events
including the prestigious Sir Martin Wood Prize through theMillennium Science Forum in Japan.
Business groups and employees are supported in any activities
that promote good relations with the local communities
by contributing to, and supporting, local charities andcommunity activities. The focus is on supporting science inbusiness, and encouraging innovation and the promotion ofscience in schools and universities. Employees are encouraged
to contribute to local charities using the Give-As-You-Earnscheme. Local social clubs run annual fundraising activities fora chosen charity and the Group supports these efforts with anadditional donation.

The Group’s ‘Voice of the Customer’ work ensures that theinterests of all customers are at the core of the business.
Oxford Instruments’ customers expect to receive and do
receive high quality, reliable goods and services. Innovativeand commercially successful products are developed to meetcurrent and future requirements. These products are offered
at competitive prices, and are backed by a global network ofskilled support teams.

Summary
Oxford Instruments pursues responsible development anddeeper understanding of the world through science andtechnology, meeting customer needs through advanced
technology and service. The Oxford Instruments’ values
embrace a wholehearted commitment to shareholders,
employees, customers, partners and communities.

Business Partners
All companies in the Group work hard to establish trust, respectand mutually beneficial relations with its business partners,
including suppliers, banks and collaborative associates.

Jonathan Flint Chief Executive
15 June 2010

There is a Group supplier management process in place which
promotes a common supply chain strategy split by commodity,
driving the business towards fewer high level suppliers. This
process has resulted in substantial savings and cost avoidanceacross the Group, as well as enabling reductions in working
capital

Oxford Instruments plc

INNOVATE
Corporate and Social Responsibility Continued

We use innovation to turn smart science into
world class products• Preservation of our environment• Research into new sources of energy• Conservation of the world’s natural resources• Secure data transfer and storage

Oxford Instruments plc

21

22

Corporate GovernanceIntroduction
The Board is committed to ensuring that high standards ofcorporate governance are maintained by the Group.
The Board endorses the main and supporting principles andthe provisions set out in the Combined Code on Corporate
Governance which is appended to the Listing Rules of the
Financial Services Authority (“the Code”), except as detailed
below.
The Board’s policies and procedures are documented in the
Board Reference File that sets out the roles and delegatedauthorities applying to the Directors, the Board and theBoard Committees. The Board Reference File is reviewed
annually by the Board as part of the annual governancereview undertaken by the Chairman.
Compliance
The Board considers that, throughout the period under review,
the Group has complied with the provisions recommended
in Section 1 of the Code, other than in respect of Provision
B.2.1 with the appointment of Nigel Keen as Chairman of theRemuneration Committee as described below.
Board of Directors and management structure
Board of Directors
The Board comprises the Chairman, four Non-Executive
Directors and three Executive Directors. The Directors’
biographies and details of length of service are shown on
pages 14 to 15. All the Directors have written letters of
appointment that have been approved by the Board.
The division of responsibilities between the role of Chairman
and the Chief Executive has been set out in writing andagreed by the Board.
Management Team
General Committee
The Board delegates management of the business to the Chief
Executive. To assist in this, the Chief Executive has created a
General Committee that consists of the Executive Directors,
the Group Operations Director, the Group Technical Director
and the Group Human Resources Director.
The General Committee meets at least twice a month either
physically or by video or telephone conference and focuses onGroup wide performance and risk management.
Executive Committee
The General Committee is supported by an Executive
Committee that consists of the members of the General
Committee with the addition of the Managing Directors ofeach of the principal businesses which comprise the Group.
Operation of the Board
The Board is responsible to shareholders for delivering
sustainable incremental shareholder value throughentrepreneurial leadership within a framework of controls for
managing risk. The Board sets the Group’s strategy, maintains
the policy and decision making framework in which thisstrategy is implemented, verifies that the necessary financial
and human resources are in place to meet strategic aims,
monitors performance against key financial and non-financial
indicators, oversees the system of risk management and setsvalues and standards in governance matters.
The details of the way the Board operates, including aschedule of matters reserved to the Board for decision, are
set out in the Board Reference File.

The Board retains control over strategy, investments andcapital expenditure, and limits the decisions which can betaken by management in the areas of strategic and financial
management and reporting, capital structure, corporate
actions, mergers and acquisitions, major contracts andother commitments, litigation and regulatory proceedings,
remuneration and share incentive plans.
Where the Board delegates authority to management it is ona structured basis, which requires that proper management
oversight exists at the appropriate level.
The Board meets on a regular basis, at least ten times a year,
and otherwise as required. Of the ten regular meetings,
typically eight are held at Group locations, and the remaining
two are held by telephone conference.
Board meetings involve reviews of financial and businessperformance against the plan approved by the Board. Risk
management review, both at Group level and also for eachof the business units, is embedded in the reporting system.
On a rotating basis, the Board receives presentations fromthe business units and key functional areas enabling it to
explore specific issues in more detail. Any matter requiring
a decision by the Board will be supported by a pre-circulated
paper analysing all relevant aspects of the proposal andrecommending a course of action.
Board papers are distributed in advance of the relevant
meeting in sufficient time to allow the Directors to prepare
for meetings. Minutes of Committee meetings are circulated
to the relevant Directors. In the very few instances when a
Director has not been able to attend Board or Committee
meetings, his comments on the papers to be considered at
the meeting are communicated in advance to the relevant
Chairman.
The Non-Executive Directors meet without the Executive
Directors at least annually, with the Chairman leading thesemeetings. The Non-Executive Directors also meet annually
without the Chairman in attendance. The Deputy Chairman
chairs these meetings.
The Company Secretary and the Company Secretary’s Office
are responsible for implementing Board procedures and foradvising the Board on corporate governance matters.
Board balance and independence
The Code requires the Board should be of sufficient size thatthe balance of skills and experience is appropriate for therequirements of the business and that there is a balance of
Executive and Non-Executive Directors such that no individual
or small group of individuals can dominate the Board’s
decision making.
The composition of the Board and the combination of diverse
backgrounds and expertise of the Non- Executive Directors
meet these principles.
Nigel Keen, Chairman, has a degree in engineering from
Cambridge University, is a Fellow of the Institute of Chartered
Accountants and has been involved in the formation anddevelopment of high technology businesses for more than
thirty years. He fulfilled the independence criteria at thetime of his appointment as set out in the Combined Code, is
Chairman of the Nomination and Remuneration Committees
as the Board considers that for a SmallCap company the
Chairman’s prime roles are: to procure an excellent strategy
for the business; to recruit and retain the best available
management team to execute this strategy; to put in place

Oxford Instruments plc

Corporate Governance Continued
a Board of independent directors whose experience can add
value to the work of the management; and to ensure thatthe business maintains the highest standard of corporate
governance. Taking into consideration the size of the Company,
the Board believes that in order to fulfil these obligations it
is appropriate and necessary for the Chairman of the Board
to also be Chairman of the Nomination Committee and theRemuneration Committee. Nigel Keen also serves as Chairmanof Oxford Instruments Pension Trustee Limited, which is theTrustee of the UK defined benefit pension scheme. The Boardof the Company and the Board of the Trustee to the Pension
Scheme have each independently considered whether it
is appropriate to have the Chairman of the Company as
Chairman to the Board of the Trustee of the Pension Scheme,
notwithstanding the potential conflicts of interest inherent in
the same person holding both these positions, and they eachhave unanimously confirmed that they believe that it is in theinterest of all parties for this to continue.
Mike Brady, Deputy Chairman, has been a member of theBoard since June 1995. He is BP Professor of Information
Engineering at Oxford University and is one of the UK’s
leading engineers. He brings a depth of technical expertise to
Board discussions. His independence of mind gained from acareer as a senior academic supervisor of research programmes
in a major technical discipline at Oxford University, his
technical expertise as the only Non-Executive Director from ascientific profession and the value of that expertise to Board
discussions, the breadth of his professional and businessinterests unrelated to the Group, his continual constructive
probing of the technical aspect of proposals being consideredby the Board and the composition of the Board generally
leads the Board to conclude that it is appropriate that heshould continue in office. Although the Board continues tovalue Mike’s input to the Board it has reviewed his status as
an independent director and in the light of guidance by the
Combined Code has determined that he should no longer
be considered independent. Following this determination
during 2010 Mike has stepped down as a member of theRemuneration Committee. Despite these changes, the Board
continues to consider that Mike remains independent in theway he works as a Non-Executive Director.
Mike Hughes, Senior Independent Non-Executive Director,
has been a member of the Board since November 2004.
He is currently the Chairman of EA Technology Ltd and a
Non-Executive director of South Staffordshire Water Ltd.
Previously he held senior management positions within GEC
before becoming CEO of Midlands Electricity plc and thenExecutive Vice President of GPU Inc International Operations
Group.
Jock Lennox was appointed to the Board as an Independent
Non-Executive Director on 1 April 2009. Until April 2009he was a Senior Audit Partner at Ernst & Young where hegained extensive experience advising clients in a variety ofindustries on financial reporting, financing, transactions
and international expansion. Jock became Chairman of
the Audit Committee on 2 June 2009 and is a member ofthe Remuneration and Nomination Board Committees. The
Board believes that Jock’s skills, experience and knowledge
enhance and maintain an effective Board and provide a wellqualified Chairman of the Audit Committee.
Bernard Taylor was appointed to the Board as an independent
Non-Executive Director in 2002. He has worked at various City
institutions, including Robert Fleming & Co. Ltd where he
was Deputy Chairman and Chief Executive and at J.P. Morgan
plc where he was Vice-Chairman (Investment Banking). He is
Vice Chairman of Evercore Partners and Chief Executive of its

Oxford Instruments plc

European business. He is also a fellow of the Royal Society ofChemistry, Chairman of ISIS Innovation Ltd and a member of
The Council of the University of Oxford.
Further information on each of the Non-Executive Directors is
to be found in the Directors’ Biographies on pages 14 to 15.
In the opinion of the Board Mike Hughes, Jock Lennox
and Bernard Taylor are currently independent under theguidelines set out in the Combined Code. This opinion isbased on current participation and performance on both theBoard and Board Committees including consideration of thelength of service at Oxford Instruments plc.
Term of appointment of Non-Executive Directors
Each Non-Executive Director is appointed for an initial termof three years. The requirement to submit Directors forreappointment at regular intervals is met by applying theCompany’s Articles of Association.
These require that at each Annual General Meeting: (1) not lessthan one-third of the Directors who are subject to retirementby rotation must retire; (2) any Director has to retire who was
not appointed at either of the two previous Annual General
Meetings and who has served as a Director for more than two
years since appointment or last reappointment; and (3) any
Non-Executive Director who has been in office for more thannine years should offer themselves for re-election each year.
In addition, Directors who have been appointed since
the previous Annual General Meeting have to resubmit
themselves for election at the first Annual General Meeting
following their appointment.
Board development and evaluation
Board development
On appointment, Directors undertake an induction process
which is designed to develop knowledge and understandingof the Group’s businesses through visits to various Group
operating sites, discussion of relevant technology, as well as
product demonstrations, briefings from management andfamiliarisation with investor perceptions of the Group.
The operating business units’ senior management teams
present to the Board on a regular basis.
Non-Executive Directors are encouraged to meet individual
members of the senior management team and have done soduring the year under review.
Throughout the year, Non-Executive Directors attend Oxford
Instruments’ events, exhibitions and award presentations.
The Company Secretary and her office act as advisers to
the Board on matters concerning governance and ensurecompliance with Board procedures. All Directors have accessto this advice and a procedure also exists for Directors to takeindependent professional advice at the Group’s expense. No
such advice was sought during the year. The appointment andremoval of the Company Secretary are matters for the Board
as a whole.
Board evaluation
In the year ended 31 March 2010 the Board completed its
annual effectiveness evaluation exercise, including a specificreview of the effectiveness of its principal committees andmembers. This was an internal exercise under the controlof the Chairman using a detailed questionnaire completedby all Directors in relation to the key areas of Board
accountability and the arrangements in place to enable

23

24

Corporate Governance Continued
effective focus on these areas. Topics covered included
Group strategy, performance, delegation and accountability,
success, development and reward, Board and Committee
composition, Board induction and training, internal control
and risk management. In addition, whereas in previous years
each Director took part in a 360 evaluation process involving
completion of an assessment questionnaire, for the past two
years assessment was carried out by each director preparing
a written statement concerning governance of the Company
and discussing the statement with the Chairman at theindividual one-to-one interviews which the Chairman holdswith each director. The Chief Executive is also involved in
the process by giving his input on the way the Board helps
him in his role. The output from these evaluations allows
the Chairman to review objectively the overall balance of theBoard.

Number of meetings held
Nigel Keen
Jonathan Flint
Kevin BoydCharles Holroyd
Mike Brady
Mike Hughes
Jock Lennox
Bernard Taylor
Peter Morgan 2

Attendance at meetings
No one other than the Committee Chairman and members
is entitled to be present at a meeting of the Nomination,
Audit or Remuneration Committee, but others may attend
by invitation of the Committee. No Director votes on matterswhere he has a conflict of interest. Further details of theindividual Committees’ activities are described below.
The following table sets out the frequency of, and attendance
at, Board and principal Board Committee meetings for theyear to 31 March 2010:

Main
Board
10
10
10
10
10
10
9
10
10
4

Audit
Committee¹
6
6
6
6
6
6
5
6
6
3

Remuneration
Committee
4
4
4
2
4
4
2

Nomination
Committee
1
1
1
1
1
1
1

Note:
¹ The Chairman of the Board and the Executive Directors attend the Audit Committee by invitation
2
Peter Morgan retired from the Board on 15 September 2009
Board Committees
The Board has formed the following Committees: Nomination,
Remuneration, Audit and Administration.
Membership of Board Committees, which is set out on page14, is determined by the Board and is reviewed regularly.
The written terms of reference of the Board Committees arereviewed annually by each Committee and the Board and areavailable on the Company’s website and from the Company
on request. They will be on display at the Annual General
Meeting.
Nomination Committee
The Nomination Committee comprises all the Non-Executive
Directors, under the chairmanship of the Chairman of theBoard. The Nomination Committee is responsible for assisting
the Board in the formal selection and appointment of Directors
and considers succession planning for the Board. It also
considers potential candidates and recommends appointmentsof new Directors to the Board. The appointments are basedon merit and against objective criteria including the time
available and the commitment that will be required of thepotential Director.
There is a formal, rigorous and transparent procedure forthe appointment of new Non-Executive Directors to theBoard, the prime responsibility for which is delegated to theNomination Committee. Each appointment process begins
with an evaluation of the balance of skills, knowledge andexperience existing on the Board that is effected througha series of one-on-one meetings between the Committee
Chairman and Directors. The Nomination Committee takes
external advice when considered appropriate.

A description of the role and capabilities required is preparedusing the information gathered. Candidates meet with the
Chairman and the Deputy Chairman and a final selection ofpotential appointees meets several Directors individually.
Following these meetings, the Nomination Committee
considers each Director’s feedback and makes a final
recommendation to the Board concerning any appointment.
On joining the Board, new Non-Executive Directors are given
an induction programme including site visits and meetings
with senior management. This induction is supported bybriefing papers prepared by the Company Secretary. Major
shareholders are provided with an opportunity to meet any
new Non-Executive Directors.
The Nomination Committee recommends to the Board
whether a Non-Executive Director’s appointment should be
renewed for a further three years at the end of each threeyear term, taking into account the performance of theindividual.
The Nomination Committee also annually reviews theperformance of the Chief Executive and succession planningwithin the business.
Remuneration Committee
The Remuneration Committee comprises all the Independent
Non-Executive Directors and the Chairman of the Board.
The Chairman of the Board, Nigel Keen, who fulfilled the
independence criteria at the time of his appointment as set
out in the Code, is Chairman of the Remuneration Committee
because as set out on page 22 to 23 above, the Board considers

Oxford Instruments plc

Corporate Governance Continued
that in a SmallCap company it is essential that the Chairman
be involved in setting remuneration policy. The members of
the Committee are appointed by the Board.
The Remuneration Committee is responsible for recommending
to the Board the remuneration packages for Executive
Directors and the bonus and share option strategy for theGroup’s executive management. Independent professional
advice is sought when considered necessary. Under its termsof reference the Chairman of the Board may be Chairman of
the Committee. The Board as a whole is responsible for fixing
the remuneration of the Non-Executive Directors, including
the Chairman.
The Chief Executive is invited to attend Remuneration
Committee meetings as deemed appropriate, for example
when consideration is being given to the performance ofother Executive Directors and on significant Group widechanges in salary structure and terms and conditions affecting
other employees at senior executive level. Further details of
the Remuneration Committee are included in the Directors’
Remuneration Report set out on pages 28 to 34.
Audit Committee
The Audit Committee comprises all the Non-Executive
Directors and is chaired by Jock Lennox. The Chairman of
the Board and members of senior management such as theChief Executive and Group Finance Director are invited toattend all or part of any meetings or to present such reports
as are required for the Committee to discharge its duties.
The external auditors are invited to attend meetings of theCommittee on a regular basis, including at the half year, atthe planning stage before the audit and after the audit at thereporting stage. At least once a year the Committee meetswith the external auditors without the Executives present.
The primary objective of the Audit Committee is to assist theBoard of Directors in fulfilling its responsibilities relating toexternal financial reporting and associated announcements,
oversight of the external audit process including considerationof the independence of the Group’s external auditors, theresourcing and plans of the Internal Audit function andthe adequacy and effectiveness of the financial control
environment.
The Audit Committee’s terms of reference include all matters
indicated by the Combined Code. The terms of reference areconsidered annually by the Audit Committee and are thenreferred to the Board for approval. The Audit Committee
structure requires the inclusion of one member with relevant
recent financial experience, currently the Committee
Chairman, and expects all Audit Committee members to befinancially literate.
The Audit Committee Chairman reports the outcome of
meetings to the Board and the Board receives minutes of
all Audit Committee meetings. The Audit Committee has
unrestricted access to Group documents and information, as
well as to employees of the Group and the external auditor.
The Committee reviews all public statements containing
financial information, including the half year and annual
financial statements and interim management statements,
together with the related Stock Exchange announcements,
having received information on the accounting principles,policies and practices adopted in the Group’s accounts,changes proposed to those principles, policies and practices,significant accounting issues and contingent liabilities
affecting the Group, potential tax contingencies and theGroup’s compliance with statutory tax obligations.

Oxford Instruments plc

The Audit Committee is responsible for the development,
implementation and monitoring of the Group’s policy on
external audit. The Audit Committee reserves oversight
responsibility for monitoring the independence and objectivityof the external auditors.
A review takes place annually of the performance of theexternal auditors following the completion of the annual
audit.
To assess the effectiveness of the external auditors, the Audit
Committee reviews:• The external auditors’ fulfilment of the agreed audit planand variations from the plan

• The robustness and perceptiveness of the auditors in theirhandling of key accounting and audit judgements• The external auditors’ comments in respect of financial
controls

To fulfil its responsibility regarding the independence of theexternal auditors, the Audit Committee reviews the changes
in key external audit staff in the external auditor’s plan for thecurrent year, the arrangements for day-to-day managementof the audit relationship, a report from the external auditors
describing their arrangements to identify, report and manage
any conflicts of interest and the overall extent of non-audit
services provided by the external auditors. In addition the
Chairman of the Audit Committee reviews the provisionof non-audit services by the external auditors where theproposed fee exceeds £20,000 with formal Audit Committee
approval where fees are £50,000 or above. Competitor quotes
are obtained where the proposed fee is in excess of £50,000.
Details of the audit fees, together with fees for non-audit
services for the year, are set out in note 3 (page 48) to the
Financial Statements.
The Audit Committee is required to assist the Group Board
to fulfil its responsibilities relating to the adequacy andeffectiveness of the financial control environment. This
includes consideration of the adequacy of both the resourcing
and the plans of the Internal Audit function.
To fulfil these duties the Committee reviews:• The Group’s risk framework and risk policies• Any internal control findings reported by the external
auditor• The Internal Audit function’s terms of reference,

reporting lines and access to the Audit Committee and all
members of the Board, and its plans and achievement of
the planned activity• Internal Audit reports on key audit areas and significant
control environment deficiencies• Reports on the systems of financial controls and financial
risk management

The Group’s Business Malpractice Policy comprises an internal
process that has been communicated directly to all employees
by which employees can raise a concern, including concerns
relating to fraud, damage to the environment, criminal
activity or danger to health and safety, in the knowledge
that it will be taken seriously, treated as confidential and thatno action will be taken against them. The Policy is reviewed
annually by the Committee.

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26

Corporate Governance Continued
Administration Committee
The Administration Committee consists of a minimum of two
Directors and deals with items of a routine and administrative
nature. The Board receives copies of the minutes of the
Administration Committee.
Investor relations
The Group places considerable importance on regularcommunications with its shareholders with whom it has
an ongoing programme of dialogue. All shareholders areencouraged to participate in the Annual General Meeting at
which the Chairman and Chief Executive present an overview
of the Group’s business and review the results and makecomments on strategy and current business activity.
The Non-Executive Directors meet informally withshareholders both before and after the Annual General
Meeting and respond to shareholder queries and requests.
The Chairman and the Senior Independent Director makethemselves available to meet any shareholders, as required.
All Group announcements are posted on the Group website,www.oxford-instruments.com, as soon as they are released.
The Investor Relations section of the website provides
financial and other information on the Group.
Annual General Meeting (AGM)
The Annual General Meeting is an opportunity for the Board
to meet shareholders. At its AGM, the Group complies with theprovisions of the Combined Code relating to the disclosure ofproxy votes, the separation of resolutions and the attendanceof Committee Chairmen. The Group arranges for the Annual
Reports and Financial Statements and related papers to beposted on its website and, where shareholders have elected
to receive papers copies, posted to shareholders so as to allow
at least 20 working days for consideration prior to the AGM.
The next AGM will be held on 14 September 2010.
Risk management
Within the Group there is an ongoing embedded process for
identifying, evaluating and managing the significant risks
faced by the Group. Day-to-day management of this process
has been delegated by the Board to the Executive Directors.
A standard process is in place throughout the Group that
requires the senior management of each business to identify
significant business risks and to classify them both as toprobability and potential impact.
Once identified, mitigating action, where possible, isformulated and responsibility within the management
team assigned. On a regular basis each business reviews andupdates its risk summary which is then reported to the Chief
Executive. If a material risk changes or arises, the Managing
Director of the business reports this in writing to the Chief
Executive at which time there is a discussion on the adequacyof the mitigating actions taken. Details of all major risks
identified and the mitigating actions in place are reported toand reviewed by the Board. The Financial review (page 13)
gives an overview of the major risks and uncertainties facedby the Group.
In addition, the Board considers risks to the Group’s strategic
objectives which are not addressed within the Group’sbusinesses and develops appropriate actions to manage andmitigate these risks.

Internal control
The Board is ultimately responsible for the Group’s system ofinternal control and for reviewing its effectiveness. However,such a system is designed to manage rather than eliminate
the risk of failure to achieve business objectives and canprovide only reasonable and not absolute assurance againstmaterial mis-statement or loss. Day-to-day responsibility for
maintaining adequate systems of internal control is delegatedto the Executive Directors.
During the year the Directors have reviewed the effectivenessof the Group’s system of internal controls.
These internal control procedures have been in place forthe year under review and up to the date of approval of thereport. They are regularly reviewed by the Board and accord
with the Turnbull guidance. These controls include financial,
operational, compliance and risk management.
The key components designed to provide effective internal
control within the Group are as follows:• there is a formal schedule of matters reserved to theBoard for decision; other than these matters, theBoard delegates to the Chief Executive and reviews thedelegation of authorities throughout the management
structure;• the Group’s management structure comprises the General
Committee whose members have Group wide financial
responsibilities and to whom day-to-day responsibility
for the management of the Group is delegated. The
responsibility is based on the identification of separatebusinesses for each of the Group’s activities, the headsof these businesses together with the Chief Executive,
the Group Finance Director and certain other membersof the senior management team form the Group’s
Executive Committee. There are clearly defined linesof management responsibilities at all levels up to andincluding the Group Board and the Group’s accounting
and reporting functions reflect this organisation;• financial executives within Group businesses reportto their own operational head but there is also a wellestablished and acknowledged functional reporting
relationship through to the Group Finance Director;• the Board reviews strategic issues and options formallyonce a year during the annual strategic planning process
and during the year as appropriate. In addition the
Executive Directors maintain a three year planning modelof the Group and its individual businesses;• annual budgets are prepared for each of the Group’sbusinesses which include monthly figures for turnover,profit, capital expenditure, cash flow and borrowings.
The budgets are reviewed through the Groupmanagement structure and result in a Group financial
budget which is considered and approved by the Board;• the businesses prepare monthly management accounts

which compare the actual operating result with both thebudget and the prior year. The businesses also prepare
rolling reforecasts for orders, turnover, operating profit
and cash. Both are reviewed by the Board monthly;• the Board approves all acquisition and divestment

proposals and there are established procedures forthe planning, approval and monitoring of capital
expenditure;

Oxford Instruments plc

Corporate Governance Continued• for all major investments the performance of at least• the Board receives regular updates on treasury, tax,

• each Group site, except for representative sales offices,• authorisation limits are set at appropriate levels

the first twelve months against the original proposal isreviewed by the Board;is required to submit a self assessment internal control
questionnaire on a regular basis;• internal audit is carried out through a system ofregular reviews of the internal controls at each site byaccountants from other parts of the Group and in Japanand China, due to language differences, by local external
auditors. These reviews are coordinated by a manager in
Head Office;• work performed is based on a standardised Group format
but involves random testing, together with a review of
the internal control questionnaire;• where required, action plans are drawn up by thebusinesses in conjunction with the Group FinanceDirector to remedy any significant control weaknesses
that are identified from completion of the internal
control questionnaire or as a result of the internal
audit. The results of audit reviews are reported to local
management, the Group Finance Director and the Audit
Committee and checks on the progress of the action
items arising are made;Oxford Instruments plc

property, pensions, insurance, litigation, human resources
and health and safety matters;
throughout the Group; compliance with these limits ismonitored by the Group Finance Director and internal
audit;• all requests to quote for substantial fixed price contracts

are reviewed by the Chief Executive and/or the Group
Finance Director to assess both technical and financial
risk and to fix an appropriate balance between risk
and reward. However, no procedure can guarantee theavoidance of losses on fixed price contracts of a technicalnature; and• with respect to the UK pension scheme the Grouphas its own trustee representatives, involves its own
independent actuary with whom actuarial assumptions
are reviewed, agrees the investment policy with theTrustee, ensures there is an independent actuarial
valuation every three years, reviews members benefits
and contributions regularly and audits the annualchanges in pensionable salaries.

Susan Johnson-Brett, Company Secretary
15 June 2010

27

28

Directors’ Remuneration Report
Remuneration Committee
Details of the composition of the Remuneration Committee
are set out on page 14. The Committee defines andcommunicates to the Executive Directors the Company’s policyon the remuneration, benefits and terms of employment foreach Executive Director. As part of this process, it provides
a formal framework for the development of remuneration
policy for Executive Directors and for fixing the remuneration
packages of individual Directors. The Board, as a whole, is
responsible for determining the remuneration of the NonExecutive Directors, including the Chairman. No Director isinvolved in deciding his own remuneration.
The Committee reviews and approves new long term incentive
schemes and changes to existing schemes, together withawards under these schemes, and general increases in salaries
and bonus arrangements for staff. The remuneration policy
and practice for employees are taken into account whensetting remuneration for Executive Directors.
Over the past year the Committee continued to use Hewitt
New Bridge Street to provide independent external advice
on the Executive Directors’ remuneration. Hewitt New
Bridge Street has no other connection to the company. The
Committee also sought input as required from the Chief
Executive and from Laytons, the Company’s lawyer.
The Chairman maintains contact with principal shareholders
regarding remuneration policy as appropriate.
Non-Executive Directors
The Non-Executive Directors do not have service contracts
but their appointments are subject to review every three
years and the rotation provisions of the Company’s Articles
of Association.
The Company’s policy is to appoint Non-Executive Directors
to the Board with a breadth of international skills andexperience that is relevant to Oxford Instruments’ global
business. Appointments are made by the Board upon
the recommendations and advice from the Nomination
Committee.
Remuneration policy
The Remuneration Committee has established a policy forthe remuneration of Executive Directors and the Board has
established a policy for the remuneration of the Chairman
and the Non-Executive Directors.
The Company has an incentive-driven Executive Director
remuneration policy that promotes the delivery of theGroup strategy, seeks to align the interests of Directors andshareholders and reflects the performance of each Director. The
Remuneration Committee considers carefully the motivational
effects of the incentive structure in order to ensure that itis effective and does not have any unintentionally negative
impact on matters such as governance, environmental andJonathan Flint
Kevin BoydCharles Holroyd
Total

Salary
£000
290
200
181

social issues and attitude to risk. A significant proportion of
total potential rewards are provided through performancebased schemes. Overall the remuneration package aims tobe appropriate to attract, motivate and retain high calibre
executives.
Each of the Executive Directors has a service contract which, inline with remuneration policy, has a notice period of one year.
The Remuneration Committee’s policy on early termination
is to provide compensation which reflects the Company’scontractual obligations (which do not include entitlement tobonus after the date of notification of termination), whilst
recognising the principle of mitigation of losses. Jonathan
Flint’s, Kevin Boyd’s and Charles Holroyd’s service contracts
are dated 21 February 2005, 9 May 2006 and 22 November
2005 respectively.
Executive Directors’ remuneration
Executive Directors receive base salary, annual performance
awards, pension contributions and other benefits and longterm performance awards. Benefits comprise provision of acar or car allowance, life and health insurance, participation
in a bonus scheme and contributions towards a pension. Basesalaries, benefits and performance awards of the Executive
Directors are reviewed annually by the Remuneration
Committee.
Compensation is determined with reference to an
appropriate comparator group of companies, which isreviewed annually. Consideration is given to the Director’s
experience, performance and responsibilities and how overall
compensation aligns with the interests of shareholders. In
the 2009/10 financial year Oxford Instruments operated a pay
freeze across the business. There was no increase in salary for
Executive Directors during this period. Despite the difficult
global economic environment, the Group has performed
strongly during the year and consequently the Remuneration
Committee has reviewed the salaries and bonus payments
for the Group’s employees. As a result of this review, a
discretionary payment of 3% of salary has been made in
respect of the year just ended to all Group employees otherthan the Executive Directors.
For the salary year starting on 1 July 2010, staff salaries havebeen reviewed dependent on individual performance withsuch annualised payments across the Group averaging 2.5%
and ranging from nil to 10% for exceptional performance. In
light of the good performance that the Executive Directors
have put in over the last two years, which has led to a
substantial improvement in the Group’s results and shareprice, the salaries for the three Executive Directors will be
increased by 15% in the case of Jonathan Flint and KevinBoyd and 5% for Charles Holroyd.
Emoluments of the current Executive Directors showing
the breakdown between basic and performance related
remuneration are shown below:

Benefits
£000
14
14
11

Performance
relatedremuneration
£000
290
150
115

Total
remuneration
2010
£000
594
364
307
1265

Total
remuneration
2009
£000
400
259
232
891

Oxford Instruments plc

Directors’ Remuneration Report Continued
Steve Parker resigned as a Director on 13 November 2008.
During the year to 31 March 2010, he received a total of£66,993* which comprised £37,811* paid in accordance withhis service contract and a prorated bonus payment of £29,182*
for the period of the 2008/9 financial year during which he
was employed. Steve Parker was retained on a consultancy
basis during the year to allow the business to continue tobenefit from his expertise in US markets. For this he received
payments totalling £35,377*.
*Using average exchange rate applying for each quarter(£1:$1.59)
UK employees are able to elect to cease making personal
contributions into the relevant pension schemes. Their salaries
are reduced by the amount of their pension contributions andthe Company pays the same amount directly to the pension
schemes. Accordingly, the annual salaries of Jonathan Flint,
Kevin Boyd and Charles Holroyd were reduced to £261,000,£180,000 and £161,360 respectively. For reasons of clarity, thesalaries shown in the table above for these Directors are theamount they would have been paid had they not given up
these salary entitlements to receive pension benefits instead.
These ‘notional’ base salaries are used to calculate salarylinked remuneration such as bonus and some benefits.
Annual Performance Incentive Bonus
Bonuses are earned primarily on the achievement of financial
targets, with further elements payable on meeting specificobjectives. Bonuses are finalised and paid after the completionof the statutory annual audit.
The Executive Directors’ bonus scheme for the year ended
31 March 2010 set performance targets which would pay
bonuses for on-target performance at the rate of 50% of basesalary for Jonathan Flint, 35% of base salary for Kevin Boydand Charles Holroyd. The bonus potential has a maximumof 100% of salary for Jonathan Flint and 75% of salary forthe other Executive Directors. Bonuses are earned on fullyear performance. The level of award for the year ended 31
March 2010 took account of the continuing improvement infinancial performance against the background of a worldwide
economic recession and the generally poor performance ofcompetitors. This performance was reflected in achievement
against specific financial targets in relation to orders, profit
and cash generation and measurable progress in meeting
defined strategic objectives for the Group.
For the financial year to 31 March 2011 the structure andmaximum bonus potential of Executive Directors’ annual
bonuses will be similar to that for the year to 31 March 2010.

Oxford Instruments plc

Pension Plans
Oxford Instruments Pension Scheme
For UK based Executive Directors and employees employedprior to April 2001, a contributory pension, depending on
length of service, of up to two thirds of pensionable salaryis provided on retirement through the Oxford Instruments
defined benefit pension scheme. This is a contracted-out
contributory pension scheme which provides benefits basedon earnings at or near retirement and is funded througha separate trust. Early retirement is possible on a reduced
pension from age 55 with the consent of the Company.
Pensions in payment are guaranteed to increase by a level ofinflation up to a maximum of 3% per year on pension earned
before 1 April 1997 and a maximum of 5% per year thereafter,
subject to any applicable statutory requirements. In the caseof death before retirement from active service a spouse’s
pension of one half of the member’s prospective pension ispayable plus a capital sum of three times the member’s basic
salary and a refund of the member’s contributions.
Defined Contribution Pension Arrangements (UK)
Following the closure of the Company’s defined benefit
pension scheme to new members in April 2001, employees
and Executive Directors appointed now are offeredmembership of the Oxford Instruments Stakeholder Plan, adefined contribution scheme, or the Executive Director canelect that contributions be made into a defined contribution
plan of his or her choice in accordance with contractuallyagreed contribution rates. Under this arrangement only basesalary is pensionable. Such contributions are treated as a nonsalary benefit as they are paid directly to the pension plan
and are not included in the calculation of bonus entitlements
and share awards.
Executive Director Pension Arrangements
Under the terms of their service contracts Jonathan Flint and
Kevin Boyd can ask the Company to contribute to a pension
plan of their own choice. The Company contributes a maximumof 14% of base salary if matched by a contribution of 10%
by the director. Cash bonuses are excluded from contribution
calculations. During the year the Company contributed£40,600 (2009:£40,040) into a personal defined contribution
pension plan in respect of Jonathan Flint and £28,000 (2009:£27,720) into the UK Oxford Instruments Stakeholder Pension
Plan in respect of Kevin Boyd.
Charles Holroyd is the only current Executive Director who
is a member of the UK defined benefit pension scheme.
His pensionable pay is capped at £123,600. The Company
contributes to the scheme at a rate of 12.7% of pensionablesalary and Charles Holroyd has chosen to contribute at a rate
16.3% for a 1/50th accrual rate and to enable him to takeall benefits at the age of 65. The following table shows thecompulsory member’s contributions, the increase in accrued
entitlement during the year in excess of inflation and theaccrued entitlement at the end of the reporting period,
together with the transfer value of the accrued pensions:

29

30

Directors’ Remuneration Report Continued

Charles Holroyd

Charles Holroyd

Age as at
31 March
2010
Years
54

Accruedyears ofservice
Years
10

Member’s
contributions
during the
year
£000
20

Additional
annual pension
earned during
the year£000 pa
4

Transfer value of additional
pension earned during the year inexcess of inflation£000
33

The Company is currently in consultation with its pension
scheme members to close its UK defined benefit pension
scheme to future accrual and if this is agreed the pension
arrangements for Charles Holroyd will change to bring themin line with those for the other Executive Directors.
Share Incentive Schemes
The Company has a number of share option schemes forincentivising Executive Directors and employees of theGroup:• the Executive Share Option Scheme (ESO);• the Senior Executive Long Term Incentive Scheme (SELTIS);• Individual Options (Individual);• All employee Share Incentive Plan (SIP); and• All employee Save-As-You-Earn Scheme (SAYE)The ESO scheme is the principal vehicle used to incentivise
the Executive Directors and senior management. The SELTIS
and Individual schemes are used at the discretion of theRemuneration Committee. Until 1 April 2008, the SAYE
scheme was open to all UK permanent staff employed for atleast six months on the date of invitation to join the scheme.
The SAYE scheme has been replaced by a Share Incentive
Plan (SIP) which since 1 April 2008 has been open to all UK
permanent staff employed for at least six months.
Performance conditions
The Remuneration Committee considers that the combinationof TSR and EPS performance conditions across the ESO andSELTIS option schemes will encourage shareholder value
creation and improved financial performance. In selecting
appropriate targets the Committee takes into account both
the recent performance of the Company and its projections for
future growth and these arrangements are set out below.
Dilution Limits
The ESO, SELTIS and SAYE share option schemes provide that
overall dilution under all employee share option schemes
should not exceed 10% over a 10 year period in relation to
the Company’s issued share capital. Any awards which arerequired to be satisfied by market purchased shares are
excluded from such calculations. Awards made under the
SELTIS schemes prior to 2009 and shares required by the SIP
are satisfied by market purchased shares. The Committeemonitors the position prior to the making of any award underthese share option schemes to ensure that the Company
remains within this limit. As at the date of this Report,
the Company’s headroom position remains within theseguidelines.

Additional annual
pension earned
during the year inexcess of inflation£000 pa
3

Transfer value of
accrued pension
2010
2009
£000
£000
336
257

Accruedannual pension
entitlement atyear end£000 pa
26

Change in transfer
value over year lessmember contributions£000
59

ESO schemes (1995 and 2001)
These shareholder and Inland Revenue approved schemes
grant options over new shares to be issued at the time of
exercise and also over existing shares. Options granted to anindividual in excess of £30,000 are classified as unapproved
options.
All awards of ESO share options are made under the 2001
ESO scheme. The aggregate market value of shares overwhich options under the 2001 ESO scheme may be granted
to an individual participant in any financial year may notnormally exceed twice base salary. However, in exceptional
circumstances the limit is three times base salary, provided
that to the extent an individual is granted options in excess ofthe standard limit, there will be a corresponding reduction in
the number of shares under options granted in the following
two years. For the purpose of calculating these limits, theCompany’s share price will be averaged over the three months
before the options are granted.
Options are granted at the middle market price on the lastdealing day prior to grant and are exercisable after three
years but not more than ten years from the date of grant.
1995 ESO performance condition
Over a period of three consecutive years the growth inearnings per share (EPS) of the Company expressed as apercentage is to exceed the growth in the Retail Price Index(RPI) expressed as a percentage plus a further 2% per year
over the same period.
2001 ESO performance conditions
For grants prior to December 2008, the performance conditions
are based equally on the Company’s total shareholder return(TSR) performance and on its EPS performance (adjusted
to exclude non-recurring items, amortisation of acquired
intangible assets and the effects of financial instruments).
Since December 2008, options were granted with aperformance condition based solely on EPS performance.
This change was made in conjunction with a change to theperformance conditions relating to the Company’s SELTIS
Scheme (see below).
For options granted in December 2009, 50% will vest where
the Company’s EPS grows by at least 5% per annum rising ona straightline basis to full vesting for EPS growth of 10% perannum or better. Options granted at the same time to other
employees will fully vest where the growth in EPS is at least
5% per annum. For options granted in December 2008, 50%
will vest where the Company’s EPS grows by at least RPI + 5%
per annum rising on a straightline basis to full vesting for EPS
growth of RPI + 10% per annum or better. Options granted

Oxford Instruments plc

Directors’ Remuneration Report Continued
at the same time to other employees will fully vest where thegrowth in EPS is at least RPI + 5% per annum.
The performance conditions for options under the 2001 ESO
scheme are measured over a single three year period. No
extension of the performance period is permitted although
once performances conditions have been met participants
have the remainder of the ten year period of the option inwhich to exercise the option.
50% of the options granted in July 2003 and July 2004
are exercisable as for each grant the EPS performance test
failed, 49% of options granted in July and December 2005
have vested with the failure of the TSR performance test
and partial vesting of the EPS performance test and 50% of
options granted in July and September 2006 have vested withthe failure of the TSR performance test.
Share appreciation rights
At the Annual General Meeting in 2005, shareholders gave
their approval to the granting of Share Appreciation Rights(SAR) and to the satisfaction of outstanding options withshare appreciation rights under unapproved options of thescheme. Under SAR, in effect, an option is settled by onlyissuing shares to the value of the gain and these shares areissued at no consideration. This means that the number ofshares to which an option holder may become entitleddepends on the Company’s share price at the time of exercise.
In December 2008 and 2009, the Company granted options
over 1,043,763 shares under the SAR arrangements.
SELTISThe SELTIS scheme is similar to the ESO schemes, with the
exception that options are exercisable at no cost to the option
holder.
The value of shares over which options may be granted under
the SELTIS scheme to any one participant in a financial year
may not exceed 50% of annual remuneration (excluding
benefits in kind). For the purpose of calculating this limit,
the market value is the closing middle market price of theCompany’s shares on the day before the date of grant.
SELTIS options granted since the establishment of the 2001
ESO scheme
Prior to December 2008, the performance conditions are thesame as those applying to awards under the 2001 ESO scheme
in the same financial year as detailed above and under thetable below. In December 2008 and December 2009, SELTIS
options were granted with a single TSR performance condition
which compares the Company’s TSR performance with that ofa comparator group made up of the FTSE Small Cap index(excluding companies within the Food & Drug Retailers,
General Retailers, Banks, Nonlife Insurance, Life Insurance,
Real Estate, General Financial, Equity Investment Instruments
and Nonequity Investment Instruments Sectors). 50% of theoptions granted in 2008 and 33.3% of the options granted in2009 will vest where the Company’s TSR performance at least
equals the TSR performance of the median company in thecomparator group rising on a straightline basis to full vesting
where the Company’s TSR performance is equal to or greaterthan that of the upper quartile company on the same basis.

Oxford Instruments plc

Retention conditions
Options granted under the ESO scheme prior to September
2007 may be exercised according to the following schedule:
one third of the original grant being exercisable from thethird anniversary of grant; a further third on the fourthanniversary; and the final third on the fifth anniversary of the
grant. SELTIS options granted under the scheme prior to July
2007 are subject to a retention condition, to the effect thaton exercise the option holder must retain ownership of sharesequivalent to half of the market value of the shares (aftertax) until the sixth anniversary of the date of grant. Changes
approved by the shareholders at the Annual General Meetingin 2007 mean that ESO and SELTIS options no longer haveretention conditions.
Shareholding guidelines
Following the removal of the retention conditions on ESO andSELTIS options in 2007, the Executive Directors have agreed
to build up a shareholding equivalent in value to 100% of
basic salary by retaining or purchasing shares equivalent tothe value of 50% of gains (after deductions) from options
granted in and after 2007 under the ESO or SELTIS schemes.
Individual options
Individual options are granted at the discretion of theRemuneration Committee. There are currently no individual
options which are outstanding.
Share Incentive Plan (SIP)The SIP was launched on 1 April 2008 and is administered inaccordance with Inland Revenue guidelines. In accordancewith the Plan rules, employees are able to purchase shares up
to the value of £1,500 (or, where lower, 10% of taxable pay)
per annum out of pre-tax pay. Shares (“Partnership Shares”)
are purchased by the Plan’s trustee on the employee’s
behalf and are held in trust. The Company also purchases
one additional share for every five Partnership Shares thatthe employee purchases to be held for the benefit of theemployee (the “Matching Shares”). The risk of forfeitureattached to the Matching Shares will normally be removed
on the third anniversary of purchase subject to continued
employment and the retention of the Partnership Shares.
Both Partnership and Matching Shares can be taken out of
the trust tax free to the recipient provided they have been
held for at least five years. All shares acquired by the SIP arepurchased in the market by the trustee.
SAYE options
The SAYE scheme is administered in accordance with Inland
Revenue guidelines. There are no performance conditions
attached to exercise.
As at the 31 March 2010 the outstanding options for Jonathan
Flint, Kevin Boyd and Charles Holroyd under the 1995 and2001 ESO, the SELTIS and SAYE schemes were as follows:

31

32

Directors’ Remuneration Report Continued

Name

SchemeMarch
2010

Jonathan
Flint

ESO
ESO
ESO
ESO
ESO
SELTISSELTISSELTISSELTISSELTIS
ESO
ESO
ESO
ESO
SELTISSELTISSELTISSELTIS
SAYE
SAYE
ESO
ESO
ESO
ESO
ESO
ESO
ESO
SELTISSELTISSELTISSELTISSELTIS
ESO
ESO
ESO
ESO
ESO
ESO
SELTISSELTISSELTIS

140,000
220,000
100,000
50,00098,00070,000110,000
50,0000095,000150,000
40,00033,33347,50075,00012,50000085,000150,000
40,00012,50019,60025,00025,00042,50075,00012,500
0
0
0
0
0
0
0
0
12,500
6,250
9,800

Kevin
Boyd

CharlesHolroyd

Steve
Parker***Movements during the year
Granted**Exercised*Lapsed

March
2009

Exercise
Price

Share priceon dateof grant

Date forearliest
exercise

Date for
LatestExercise

140,0000
220,000
100,000
100,000
98,0000
110,000
50,00050,00024,5000
150,000
40,00066,667075,00012,50012,5001,032
699
0150,000
40,00025,00019,60025,00025,000075,00012,50012,5009,800
20,00012,50019,60030,00035,00030,00012,50012,5009,800£2.035
£1.35
£2.32
£2.10
£2.19
Nil
Nil
Nil
Nil
Nil
£2.035£1.35£2.32£2.0375
Nil
Nil
Nil
Nil
£1.83
£2.14
£2.035
£1.35
£2.32
£2.10
£2.19
£2.18
£1.875
Nil
Nil
Nil
Nil
Nil
£2.32
£2.10
£2.19
£2.18
£1.875
£1.48
Nil
Nil
Nil

£2.03
£1.33
£2.30
£2.10
£2.18
£2.03
£1.33
£2.71
£2.10
£2.18
£2.03
£1.33
£2.30
£2.06
£2.03
£1.33
£2.71
£2.06
£2.53
£2.44
£2.03
£1.33
£2.30
£2.10
£2.18
£2.19
£1.88
£2.03
£1.33
£2.71
£2.10
£2.42
£2.30
£2.10
£2.18
£2.19
£1.88
£1.48
£2.71
£2.10
£2.18

17/12/12
16/12/11
28/09/10
15/07/09
15/07/08
17/12/12
16/12/11
26/07/10
15/07/09
15/07/08
17/12/12
16/12/11
28/09/10
04/09/09
17/12/12
16/12/11
26/07/10
04/09/09
01/02/10
01/02/09
17/12/12
16/12/11
28/09/10
15/07/09
15/07/08
15/07/07
15/07/06
17/12/12
16/12/11
26/07/10
15/07/09
15/12/08
28/09/10
15/07/09
15/07/08
15/07/07
15/07/06
13/12/05
26/07/10
15/07/09
15/12/08

16/12/19
15/12/18
27/09/17
14/07/16
14/07/15
16/12/16
15/12/15
25/07/14
14/07/13
14/07/12
16/12/19
15/12/18
27/09/17
03/09/16
16/12/16
15/12/15
25/07/14
03/09/13
31/07/10
31/07/09
16/12/19
15/12/18
27/09/17
14/07/16
14/07/15
14/07/14
14/07/13
16/12/16
15/12/15
25/04/14
14/07/13
14/12/12
13/11/09
13/11/09
13/11/09
13/11/09
13/11/09
13/11/09
25/07/14
14/07/13
14/12/12

50,00070,00025,00024,50025,00095,00033,33447,500

6,250
1,032

6,250
699

85,00012,50042,500

6,250
9,800

6,250
20,00012,50019,60030,00035,00030,000* Lapsed as performance conditions were not met.
** Jonathan Flint, Kevin Boyd and Charles Holroyd exercised
SELTIS and ESO Options on 25 September 2009. The market
price on the day of exercise was £1.88. Charles Holroyd
exercised SAYE Options on 8 February 2010. The market priceon the day of exercise was £2.55. The gain yielded on theexercise of options during the year for Jonathan Flint, KevinBoyd and Charles Holroyd was £93,100, £11,755 and £30,930
respectively.
*** Steve Parker resigned as a director of the Company on 13
November 2008. All ESO options have now lapsed. The date
for latest exercise of his SELTIS options remains unchanged.
The ESO and SELTIS performance conditions for awards
between 2001 and before December 2008 were based 50% on
EPS growth and 50% on TSR growth as follows, with 12.25%of the total vesting at threshold and 50% of the total vestingat stretch performance for each element:

6,250

2001: 15% p.a. – 30% p.a.
2002: 12.5% p.a. – 25% p.a.
2003: 10% p.a. – 20% p.a.
2004 to before December 2008: 7.5% p.a. – 15% p.a.
TSR is measured by comparing its average net return over
the three month period preceding the beginning of eachperformance period with its average net return (calculated
in the same manner) over the same period at the end of eachperformance period.
During the year, Jonathan Flint exercised SELTIS options over
49,500 shares, Kevin Boyd exercised SELTIS option over 6,250
shares and Charles Holroyd exercised SELTIS and SAYE options
over 17,082 shares. They each sold sufficient shares to meetthe costs of PAYE and NIC. As at 31 March 2010, Jonathan
Flint, Kevin Boyd and Charles Holroyd have cumulatively
148,500, 33,333 and 82,100 options respectively under various
schemes capable of exercise.

Oxford Instruments plc

Directors’ Remuneration Report Continued

The market price of the shares at 31 March 2010 was 269p.
(2009: 110p) and the range during the year was 110p-275p(2009: 107p-251p).
Outside appointments
The Board allows Executive Directors to accept appropriate
outside commercial non-executive appointments provided
the aggregate commitment is compatible with their duties
as Executive Directors. The Executive Director concerned may
retain fees paid for these services, which will be subject toapproval by the Board.
Jonathan Flint holds positions as a member of the Council ofthe Institute of Physics and a member of the advisory boardof the ISIS neutron spellation instrument during the year.
During the year he received fees of £136 from ISIS.
Kevin Boyd is a non-Executive Director of Guidance Ltd. He
joined their Board in July 2009. During the year he received
fees of £13,050.
Independent Non-Executive Directors
ChairmanUnder an arrangement between the Company andImperialise Limited, Nigel Keen is retained to act as Chairmanof the Company and Chairman of the Trustee to the Oxford
Instruments Pension Scheme and he must account toImperialise Limited for his services. This arrangement canbe terminated by either party at any time by the giving of 6months’ notice. Imperialise Limited is paid a sum equivalent
to the employer’s national insurance contributions on thesefees as it is responsible for the cost of national insurance
on payments to Nigel Keen, whereas national insurance
contributions in respect of the other Non-Executive Directors
are made directly to the UK Inland Revenue. The fees for
Nigel Keen’s services to the Company were reviewed witheffect from 25 February 2008. His current term of appointmentcommenced on 25 February 2008 and is for three years.
Non-Executive Directors
Non-Executive Directors are appointed for an initial periodof three years with subsequent reviews. They do not havea contract of employment and their appointment can beterminated without notice. Non-Executive Directors receive
fixed fees agreed by the full Board after reference to similarroles in an appropriate comparator group of companies andreimbursement of expenses incurred in attending Board andother meetings. It is the Board’s policy for the Non-Executive
Directors to be paid a level of fee that reflects the timecommitment and responsibilities of the role and is sufficient
to attract individuals with appropriate knowledge andexperience.

Remuneration of the Chairman and Non-Executive Directors:

Nigel Keen, Chairman1
Mike Brady
Mike Hughes
Jock Lennox
Peter Morgan2
Bernard Taylor
Total

2010
£000
113
35
35
34
15
30
262

2009
£000
113
32
32
0
32
27
236

Nigel Keen’s fees above include a payment of £12,800 to Imperialise Limited in respect of employers’ national insurance
contributions. In addition, he received fees of £20,000 for his services as Chairman to the Trustee of the Oxford Instruments
Pension Scheme together with a payment of £2,560 to Imperialise Limited in respect of employers’ national insurance
contributions.
2Peter Morgan resigned as a Non-Executive Director on 15/09/2009
1

The Chairman and Non-Executive Directors receive no other benefits.

Oxford Instruments plc

33

34

Directors’ Remuneration Report Continued

Oxford Instruments

FTSE Techmark

FTSE E&EE

FTSE Small Cap

180

160

140

120

100

80

60
40

Source: Thomson Financial Datastream
April 1 2005

Performance graph
The graph above shows for the five years ended 31 March2010 the Total Shareholder Return (TSR) on a holding of theCompany’s ordinary shares compared with a hypotheticalholding of shares made up of shares of the same kind andnumber as those by reference to which the FTSE Small Cap,FTSE Techmark and FTSE Electronic and Electrical Equipment
indices are calculated. These indices have been chosen as they
are considered to be the most appropriate comparator groups
for the Company. TSR has been calculated by reference to therelevant share price for each constituent company assuming
dividends are reinvested.

March 31 2010

In accordance with the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008, the four
tables setting out the Executive and Non-Executive Directors’
remuneration, pensions and share options contained within
the report have been audited; all other information including
the statements of policy have not been audited.
This report was adopted by the Remuneration Committee at a
meeting on 7 June 2010 and has been approved subsequently
by the Board for submission to shareholders at the Annual
General Meeting to be held on 14 September 2010.
Nigel Keen Chairman of the Remuneration Committee
15 June 2010

Oxford Instruments plc

Directors’ Responsibilities in relation to the Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report
and the Group and Parent Company financial statements inaccordance with applicable law and regulations.
Company law requires the directors to prepare Group andParent Company financial statements for each financial
year. Under that law they are required to prepare the Groupfinancial statements in accordance with IFRSs as adopted by
the EU and applicable law and have elected to prepare the
Parent Company financial statements in accordance with
UK Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice).
Under company law the Directors must not approve thefinancial statements unless they are satisfied that they givea true and fair view of the state of affairs of the Group andParent Company and of their profit or loss for that period. In
preparing each of the Group and Parent Company financial
statements, the Directors are required to:• select suitable accounting policies and then apply themconsistently;• make judgments and estimates that are reasonable andprudent;• for the Group financial statements, state whether they

have been prepared in accordance with IFRSs as adopted
by the EU;

Under applicable law and regulations, the Directors arealso responsible for preparing a Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statementthat complies with that law and those regulations.
The Directors are responsible for the maintenance andintegrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of theAnnual Financial Report
We confirm that to the best of our knowledge:• the financial statements, prepared in accordance withthe applicable set of accounting standards, give a trueand fair view of the assets, liabilities, financial positionand profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and• the Directors’ Report includes a fair review of thedevelopment and performance of the business and theposition of the issuer and the undertakings includedin the consolidation taken as a whole, together with adescription of the principal risks and uncertainties thatthey face.

• for the Parent Company financial statements, state

whether applicable UK Accounting Standards havebeen followed, subject to any material departures
disclosed and explained in the parent company financial
statements; and• prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the Groupand the Parent Company will continue in business.

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Parent Company
and enable them to ensure that its financial statementscomply with the Companies Act 2006. They have general
responsibility for taking such steps as are reasonably open tothem to safeguard the assets of the Group and to prevent anddetect fraud and other irregularities.

Oxford Instruments plc

Jonathan Flint		
Director			
15 June 2010

Kevin Boyd
Director

35

36

Report of the Independent Auditors to the members of Oxford Instruments plc
We have audited the financial statements of Oxford
Instruments plc for the year ended 31 March 2010 set out
on pages 37 to 45. The financial reporting framework thathas been applied in the preparation of the Group Financial
Statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the EU. The
financial reporting framework that has been applied in the
preparation of the Parent Company financial statements is
applicable law and UK Accounting Standards (UK Generally
Accepted Accounting Practice).

Opinion on other matters prescribed by the Companies Act
2006
In our opinion:• the part of the Directors’ Remuneration Report to beaudited has been properly prepared in accordance with
the Companies Act 2006; andThis report is made solely to the Company’s members, asa body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken sothat we might state to the Company’s members those matters
we are required to state to them in an auditors’ report andfor no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone otherthan the Company and the Company’s members, as a body,for our audit work, for this report, or for the opinions wehave formed.

Statement set out on pages 22 to 27 with respect tointernal control and risk management systems in relation
to financial reporting processes and about share capital
structures is consistent with the financial statements

Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 35, the Directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit the financial statements in accordance withapplicable law and International Standards on Auditing(UK and Ireland). Those standards require us to comply with
the Auditing Practices Board’s (APB’s) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB’s web-site at www.frc.org.uk/apb/
scope/UKP.
Opinion on financial statements
In our opinion:• the financial statements give a true and fair view of thestate of the Group’s and of the Parent Company’s affairs
as at 31 March 2010 and of the Group’s and the Parent
Company’s profit for the year then ended;• the information given in the Report of the Directors forthe financial year for which the financial statements areprepared is consistent with the financial statements; and• the information given in the Corporate GovernanceMatters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report toyou if, in our opinion:• adequate accounting records have not been kept by the

Parent Company, or returns adequate for our audit havenot been received from branches not visited by us; or• the Parent Company financial statements and the part of

the Directors’ Remuneration Report to be audited are notin agreement with the accounting records and returns; or• certain disclosures of directors’ remuneration specified bylaw are not made; or• we have not received all the information andexplanations we require for our audit.

Under the Listing Rules we are required to review:• the directors’ statement, set out on page 35, in relation
to going concern; and• the part of the Corporate Governance Statement on page
22 relating to the Company’s compliance with the nine
provisions of the June 2008 Combined Code specified forour review.

• the Group financial statements have been properly

prepared in accordance with IFRSs as adopted by the EU;• the Parent Company financial statements have been
properly prepared in accordance with UK Generally
Accepted Accounting Practice;• the financial statements have been prepared inaccordance with the requirements of the Companies Act
2006; and, as regards the Group financial statements,
Article 4 of the IAS Regulation.

S Haydn-Jones (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
15 June 2010

Oxford Instruments plc

Accounting Policies
The Group financial statements have been prepared andapproved by the Directors in accordance with International
Financial Reporting Standards as adopted by the EU(“Adopted IFRSs”). The Company has elected to prepare its
Parent Company financial statements in accordance with UK
GAAP; these are presented on pages 73 to 78.
The accounting policies set out below have, unless otherwise
stated been applied consistently to all periods presented inthese Group financial statements.
The financial statements are prepared on a going concern
basis based on the assessment made by the Directors as
described in the Financial Review on page 13.
(a) New accounting standards
During the year, the Group has applied IAS 1 ‘Presentationof Financial Statements (revised 2007)’ which has introduced
a number of terminology changes (including titles for the
primary statements) and has resulted in a number of changes
in presentation and disclosures. The adoption of IAS 1 meansthat all owner changes in equity are now presented within
the Consolidated Statement of Changes in Equity and all nonowner changes in equity are presented in the Consolidated
Statement of Comprehensive Income. This presentation has
been applied in these consolidated financial statements.
Comparative information has been presented to conform withthis revised standard. Since the changes are presentational
only there is no impact on profit, earnings per share or net
assets.
As of 1 April 2009, the Group has adopted IFRS 8 ‘Operating
Segments’ and now discloses segment information based on
the internal reports regularly reviewed by the Group’s Boardof Directors in order to assess each segment’s performance andto allocate resources to them. The Group has three reportablesegments (Nanotechnology Tools, Industrial Products andService) as described in note 2, which are the Group’s strategic
business units. Comparative segment information has been
re-presented in conformity with the transitional requirementsof IFRS 8. Since the change in accounting policy only impacts
the presentation and disclosure aspects, there is no impact on
profit, earnings per share or net assets.
The Group has applied amendments to IFRS 7 ‘Financial
instruments’. These amendments expand the disclosuresrequired in respect of fair value measurements and liquidity
risk.
The adoption during the year of IFRS 2 ‘Amendment regarding
share-based payments – vesting conditions and cancellations’has had no material impact on the reported results or financial
position of the Group.
In respect of borrowing costs relating to qualifying assets forwhich commencement date for capitalisation is on or after 1
January 2009, the Group capitalises borrowing costs directly
attributable to the acquisition, construction or production ofa qualifying asset as part of the cost of that asset. Previously
the Group immediately recognised all borrowing costs as an
expense. This change in accounting policy was due to theadoption of IAS 23 ‘Borrowing Costs (2007)’. In accordancewith the transitional provisions of such standard, comparative
figures have not been restated. The change in accounting
policy had no material impact on profit, earnings per shareor net assets.

Oxford Instruments plc

37(b) Basis of preparation
The financial statements are presented in pounds sterling andare prepared on the historical cost basis except as described
below under the heading ‘Financial Instruments’.
The preparation of financial statements in conformity with
IFRSs requires management to make judgements, estimatesand assumptions that affect the application of policies
and reported amounts of assets and liabilities, income andexpenses. The estimates and associated assumptions are
based on historical experience and various other factors thatare believed to be reasonable under the circumstances, theresults of which form the basis of making the judgements
about carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on
an ongoing basis. The key judgements made in respect of theappropriateness of the Group accounting policies relate to:• Fair value measurements on business combinations

The measurement of fair values on a businesscombination requires the recognition and measurementof the identifiable assets, liabilities and contingent
liabilities. The key judgements involved are theidentification and valuation of intangible assets which
require the estimation of future cash flows and theselection of a suitable discount rate. (See Note 14)• Impairment of intangible assets (including goodwill) andtangible assets
Goodwill is held at cost and tested annually for
impairment, and amortised intangibles and tangible
assets are tested for impairment where there areindications of impairment. These impairment tests require
the Group to make an estimate of the expected cash
flows and to select suitable discount rates. These require
an estimation of the value-in-use of these assets. (SeeNote 14)• Measurement of defined benefit scheme liabilities

The Group recognises and measures costs relating todefined benefit pension schemes in accordance with IAS
19 ‘Employee Benefits’. In applying IAS 19 the costs areassessed in accordance with the advice of independent
qualified actuaries. This requires the exercise ofjudgement in relation to the estimation of futurechanges in salaries and inflation, as well as mortality
rates, expected returns on plan assets and the selection ofsuitable discount rates. Further detail is provided in note22.

• Provisions

Provisions are recognised in the period when it becomesprobable that there will be a future outflow of funds
resulting from past expectations or events which can bereasonably estimated. The timing of recognition requires
the application of judgement to existing facts andcircumstances which can be subject to change. Amounts
provided represent the Group’s best estimate of exposure
based on currently available information.

38

Accounting Policies Continued• Deferred tax assets

A deferred tax asset is recognised in the period if it isprobable that future taxable profits will be available
against which the asset can be utilised. This requires theexercise of judgement in relation to the estimation of
future taxable profit.
Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revisionaffects only that period or in the period of the revisionand future periods if the revision affects both current
and future periods. The key areas where estimates havebeen used and assumptions applied are in the calculationof provisions, the valuation of acquired intangible assets,
the impairment testing of goodwill and the estimation ofdefined benefit pension plan liabilities.

(c) Basis of consolidation
The Group accounts include the accounts of Oxford Instruments
plc and its subsidiary companies adjusted to eliminate intragroup balances and any unrealised gains and losses or income
and expenses arising from intra-group transactions. The
results of subsidiary companies are included from the monththat control is obtained to the month of their disposal, wherecontrol is lost.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation,
are translated into sterling at exchange rates ruling at theend of the reporting period. Income statements and cash
flows of foreign operations are translated into sterling at
average quarterly exchange rates which approximate foreignexchange rates at the date of the transaction. Foreignexchange differences arising on retranslation are recognised
directly in a separate translation reserve.
(d) Foreign currency
An individual entity’s transactions in foreign currencies aretranslated at the foreign exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominatedin foreign currencies at the reporting date are translated at theforeign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in profit orloss. Non-monetary assets and liabilities that are measured interms of historical cost in a foreign currency are translatedusing the exchange rate at the date of the transaction.
(e) Financial instruments
Financial assets and liabilities are recognised in the Group’s
Consolidated Statement of Financial Position when theGroup becomes a party to the contractual provisions of the
instrument.

Derivatives comprising interest rate swaps, foreign exchange
contracts and options and metal futures contracts are classified
as ‘fair value through profit and loss’ under IAS 39, unlessdesignated as hedges. Subsequent to initial recognition,
derivatives are measured at fair value, and gains or losses on
the settlement of such derivatives are recognised in operating
expenses. Where such derivatives relate to the following
year’s exposure, any gains or losses resulting from the change
in fair value are taken to the Mark to market gains/losses line
within financial income or expense.
(iii) Cash flow hedges
Changes in the fair value of the derivative hedging instruments
designated as cash flow hedges are recognised in equity to
the extent that the hedge is effective. To the extent that thehedge is ineffective, changes in fair value are recognisedin the Consolidated Statement of Income. If the hedging
instrument no longer meets the criteria for hedge accounting,expires or is sold, terminated or exercised, then hedge
accounting is discontinued prospectively. The cumulative gainor loss previously recognised in equity remains there until theforecast transaction occurs. When the hedge item is a nonfinancial asset, the amount recognised in equity is transferredto the carrying amount of the asset when it is recognised.
In other cases the amount recognised in equity is transferredto the Consolidated Statement of Income in the same periodthat the hedged item affects profit or loss.
(iv) The fair value of forward exchange contracts is theirquoted market price at the Consolidated Statement of
Financial Position date, being the present value of the quoted
forward price. The gain or loss on remeasurement to fair valueof forward exchange contracts is recognised immediately in
the Consolidated Statement of Income.
(v) Interest bearing borrowings are recognised initially atfair value less attributable transaction costs. Subsequent toinitial recognition, interest bearing borrowings are stated
at amortised cost with any difference between cost andredemption value being recognised in profit or loss over theperiod of the borrowing on an effective interest basis.
(f) Property, plant and equipment
Property, plant and equipment is stated at historical costless provisions for impairment (see accounting policy l) anddepreciation which, with the exception of freehold land which
is not depreciated, is provided on a straight-line basis overeach asset’s estimated economic life. Depreciation is provided
based on its historical costs less its estimated residual value.
The principle estimated economic lives used for this purposeare:(i) The Group’s investments in equity securities are classified
as available for sale financial assets. Subsequent to initialrecognition, they are measured at fair value and changes
therein, other than impairment losses and foreign exchange
gains and losses on available for sale monetary items,
are recognised directly in equity. When an investment
is derecognised, the cumulative gain or loss in equity istransferred to profit and loss.

Freehold buildings, long leasehold
land and buildings
Leasehold improvements (less than 50
years duration)
Furniture and fittings
Machinery and other equipment
Computer equipment and software
Vehicles50 years(ii) Derivative financial instruments of the Group are used
to hedge its exposure to interest rate, foreign currency andcommodity pricing risks arising from operational, financing
and investment activities. The Group does not hold or issue
derivative financial instruments for trading purposes. All
derivatives are initially recognised at fair value; attributabletransaction costs are recognised in profit or loss as incurred.

(g) Intangible assets(i) Goodwill
All business combinations are accounted for by applying thepurchase method. Goodwill represents amounts arising on
acquisition of subsidiaries. In respect of business acquisitions
that have occurred since 31 March 2004, goodwill represents

Period of lease
10 years
5 to 10 years
4 years
4 years

Oxford Instruments plc

Accounting Policies Continued
the difference between the cost of the acquisition and the
net fair value of the identifiable intangible assets, othernet assets, liabilities and contingent liabilities acquired. In
respect of acquisitions prior to this date, goodwill is included
on the basis of its deemed cost, which represents the amountrecorded under previous GAAP.
Goodwill arising on acquisitions is stated at cost and allocatedto cash-generating units that are anticipated to benefit fromthe combination. It is not amortised but is tested annually for
impairment (see accounting policy l).
(ii) Development costs
Research and development costs are charged to theConsolidated Statement of Income in the year in which
they are incurred unless development expenditure meets
certain strict criteria for capitalisation. These criteria include
demonstration of the technical feasibility of completing a
new intangible asset that will be available for sale and thatthe asset will generate probable future economic benefits.
Where expenditure meets the criteria, development costs
are capitalised and amortised through the Consolidated
Statement of Income over their useful economic lives.
(iii) Acquired intangible assets
An intangible asset acquired with a subsidiary undertaking
is recognised as an intangible asset if it is separable from theacquired business or arises from contractual or legal rights,
is expected to generate future economic benefits and its
fair value can be reliably measured. The asset is amortised
through the Consolidated Statement of Income over it useful
economic life.
(iv) Amortisation
Amortisation of intangible assets is charged to theConsolidated Statement of Income on a straight-line basis
over their estimated useful economic lives as follows:
Capitalised development costs
Technology related acquired
intangibles
Customer related acquired
intangibles

3 to 5 years
5 to 10 years
6 months to 8 years(h) Trade and other receivables
Trade and other receivables are initially recognised at fairvalue and subsequently stated at their cost less appropriate
allowances for amounts which are expected to be nonrecoverable.
(i) Inventories
Inventories are stated at the lower of cost and net realisablevalue. Cost includes materials, direct labour, an attributableproportion of production overheads based on normal
operating capacity and all other expenditure incurred inacquiring the inventories and bringing them to their existing
location and condition. Net realisable value is the estimatedselling price in the ordinary course of business, less theestimated costs of completion and selling expenses.
Provision is made for obsolete, slow moving and defective
stock where appropriate in the light of recent usage, expected
future requirements, new product introduction plans andlikely realisable values.

Oxford Instruments plc(j) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and calldeposits and are carried at amortised cost. Bank overdrafts
that are repayable on demand and form an integral part of
the Group’s cash management are included as a componentof cash and cash equivalents for the purpose of the statementof cash flows.
(k) Held for sale assets
Immediately before classification as held for sale, themeasurement of the assets is brought up-to-date in accordancewith applicable IFRSs. Then, on initial classification as held for
sale, non-current assets are recognised at the lower of theircarrying amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale areincluded in the Consolidated Statement of Income, even when
the asset has previously been revalued. The same applies togains and losses on subsequent remeasurement.
(l) Impairment of non-current assets
All non-current assets are tested for impairment whenever
events or circumstances indicate that their carrying value may
be impaired. Additionally, goodwill is subject to an annual
impairment review.
An impairment loss is recognised in the Consolidated
Statement of Income in reorganisation costs and impairment
to the extent that an asset’s carrying value exceeds its
recoverable amount, which represents the higher of theasset’s net realisable value and it value in use. An asset’svalue in use represents the present value of the future cash
flows expected to be derived from the asset or from the
cash generating unit to which it relates. The present value
is calculated using a discount rate that reflects the current
market assessment of the time value of money and the risks
specific to the asset concerned.
Impairment losses recognised in previous periods for an asset
other than goodwill are reversed if there has been a change inestimates used to determine the asset’s recoverable amount,but only to the extent that the carrying amount of the asset
does not exceed its carrying amount had the impairment loss
not been recognised in previous periods. Impairment losses
in respect of goodwill are not reversed.
(m) Employee benefits
The Group operates a number of defined benefit and defined
contribution plans which require contributions to be made to
independent trustee administered funds.
(i) Defined contribution plans
Obligations for contributions to defined contribution pension
plans are recognised as an expense in the Consolidated
Statement of Income as incurred.
(ii) Defined benefit plans
The Group’s net obligation in respect of defined benefit
pension plans is calculated separately for each plan by
estimating the amount of future benefit that current andpast employees have earned in return for their service inthe current and prior periods; that benefit is discounted todetermine its present value, and the fair value of any plan
assets is deducted. The calculation is performed by a qualified
actuary using the projected unit credit method.

39

40

Accounting Policies Continued
All actuarial gains and losses in calculating the Group’s net
obligation are recognised in the Consolidated Statement ofComprehensive Income in the year.
The charge to the Consolidated Statement of Income reflects
the current service cost. The expected return on scheme assets
and the interest cost on scheme liabilities are included within
financial income or financial expenditure in the Consolidated
Statement of Income respectively.
(iii) Share-based payment transactions
The fair value of equity settled share option programmes
is measured at grant date and charged to the Consolidated
Statement of Income on a straight line basis over the period
during which the employees become unconditionally entitledto the options. The amount recognised as an expense isadjusted to reflect the actual number of share options that vest
except where forfeiture is only due to market performance
conditions not being met.
(n) Provisions
A provision is recognised in the Consolidated Statementof Financial Position when the Group has a present legal
or constructive obligation as a result of a past event and it
is probable that an outflow of economic benefits will be
required to settle the obligation. A provision for warranty
is recognised when the underlying products are sold. A
provision for restructuring is recognised when the Group has
approved a detailed and formal restructuring plan and therestructuring has either commenced or has been announced
publicly. A provision for onerous contracts is recognised
when the expected benefits to be derived by the Group froma contract are lower than the unavoidable cost of meeting its
obligations under the contract.
(o) Trade and other payables
Trade and other payables are initially recognised at their fairvalue and subsequently stated at amortised cost.

Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used fortaxation purposes. A deferred tax asset is recognised only tothe extent that it is probable that future taxable profits will
be available against which the asset can be utilised.
Additional income taxes that arise from the distribution ofdividends are recognised at the same time as the liability to
pay the related dividend.
(r) Lease payments
Payments made under operating leases are recognised in
profit or loss on a straight-line basis over the term of thelease.
(s) Segment reporting
An operating segment is a distinguishable component of theGroup that engages in business activities from which it may
earn revenues and incur expenses, including any revenues andexpenses that relate to transactions with any of the Group’s
other components. An operating segment’s operating results
are reviewed regularly by the Group’s Board of Directors
to make decisions about resources to be allocated to thesegment and to assess its performance, for which discrete
financial information is available.
Segment results that are reported to the Board include items
directly attributable to a segment as well as those that can beallocated on a reasonable basis.
(t) Adopted IFRS not yet applied
At the date of authorisation of these financial statements,
the following standards and interpretations, which have notbeen applied in these financial statements, were in issue but
not yet effective:• Amendments to IFRS1 and IAS 27: Cost of an investment
in a subsidiary, jointly controlled entity or associate(p) Revenue
Revenue is recognised in the Consolidated Statement of
Income when the significant risks and rewards of ownershiphave transferred to the buyer. Revenue excludes value
added tax and similar sales based taxes, represents sales toexternal customers of products and services and is stated
before commissions payable to agents. Revenue is recognised
on shipment, except for installation and service contracts.
Revenue from installation is separately recognised oncompletion of the installation. Revenue from contracts formaintenance and support is recognised on a pro-rata basis
over the contract period.

• Revised IAS 17: Leases• Revised IAS 28: Investments in associates• IFRIC 17: Distribution of non-cash assets to owners
The Directors anticipate that the adoption of these Standards
and Interpretations in the future periods are unlikely to havea material impact on the financial statements of the Group.

(q) Income tax
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax is recognised in profit or loss
except to the extent that it relates to items recognised directlyin equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted
at the reporting date, and any adjustment to tax payable inrespect of previous years.

Oxford Instruments plc

Consolidated Statement of Income year ended 31 March 2010

Revenue
Cost of sales
Gross profit
Trading expenses excluding cost of sales
Trading profit
Reorganisation costs and impairment
Amortisation of acquired intangibles
Operating profit
Bank interest receivable
Expected return on pension scheme assets
Mark to market gain in respect of derivative financial instruments
Financial income
Interest payable on bank loans and overdrafts
Interest charge on pension scheme liabilities
Mark to market loss in respect of derivative financial instruments
Financial expenditure

Notes
2

3

5

22
1

22
1

Profit/(loss) before income tax
Income tax (expense)/credit
Profit/(loss) for the year attributable to equity shareholders of the parent

9

41

2010
£m
211.5
(120.9)90.6(75.9)
14.7

2009
£m
206.5
(115.8)90.7(77.6)
13.1

(0.4)
(4.1)
10.2

(6.8)
(4.3)
2.0

7.9

0.2
9.6

10.7
18.6

9.8

(1.3)
(9.4)

(1.5)
(10.3)(10.7)(9.3)(21.1)

18.1

(9.3)

(4.8)
13.3

2.6
(6.7)

pence

pence

Earnings per share
Basic earnings/(loss) per share
Diluted earnings/(loss) per share

10
10

27.2
27.1

(13.9)(13.9)

Dividends per share
Dividends paid
Dividends proposed

11
11

8.4
8.4

8.4
8.4

Adjusted profit before tax is calculated as follows:
Profit/(loss) before income tax
Reorganisation costs and impairment
Amortisation of acquired intangibles
Mark to market (gain)/loss in respect of derivative financial
instruments
Adjusted profit before tax

Adjusted earnings per share
Basic earnings per share
Diluted earnings per share

Oxford Instruments plc

1

1, 10
1, 10

£m

£m

18.1
0.4
4.1

(9.3)
6.8
4.3

(10.7)
11.9

9.3
11.1

pence

pence

17.8
17.8

14.8
14.8

42

Consolidated Statement of Comprehensive Income year ended 31 March 2010
2010
£m
13.3

2009
£m
(6.7)

22

(3.8)
(22.8)

5.6
6.4

9

0.8
6.1

(0.6)
(1.6)

Total other comprehensive (expense)/income(19.7)

9.8

Total comprehensive (expense)/income for the year attributable toequity shareholders of the parent

(6.4)

3.1

Note
Profit/(loss) for the year
Other comprehensive (expense)/income
Foreign exchange translation differences
Actuarial (loss)/gain in respect of post retirement benefits
Net gain/(loss) on effective portion of changes in fair value of cash
flow hedges, net of amounts recycled
Tax on items recognised directly in equity

Oxford Instruments plc

Consolidated Statement of Changes in Equity year ended 31 March 2010

Balance at 1 April 2009
Total comprehensive income/(expense)
attributable to equity shareholders of
the parent

43

Other
reserves£m(0.3)

Foreignexchangetranslation
reserve£m
7.9

Retainedearnings
£m
30.5

Total
£m
61.9

-

0.5

(3.8)

(3.1)

(6.4)

Share
capital
£m
2.5

Share
premium
account£m
21.3-

Transactions recorded directly in equity:- Credit in respect of employee service
costs settled by award of share options- Proceeds from shares issued- Dividends paid
Total contributions by and distributions
to equity shareholders
Balance at 31 March 2010

-

0.3
-

-

-

0.5
(4.1)

0.5
0.3
(4.1)

2.5

0.3
21.6

0.2

4.1

(3.6)
23.8

(3.3)
52.2

Balance at 1 April 2008

2.5

21.2

0.1

2.3

36.4

62.5

-

-

(0.4)

5.6

(2.1)

3.1

-

0.1
-

-

-

0.3
(4.1)

0.3
0.1
(4.1)

2.5

0.1
21.3

(0.3)

7.9

(3.8)
30.5

(3.7)
61.9

Total comprehensive (expense)/income
attributable to equity shareholders of
the parent
Transactions recorded directly in equity:- Credit in respect of employee service
costs settled by award of share options- Proceeds from shares issued- Dividends paid
Total contributions by and distributions
to equity shareholders
Balance at 31 March 2009

Other reserves comprise the capital redemption reserve which represents the nominal value of shares repurchased and thencancelled during the year ended 31 March 1999, and the hedging reserve in respect of the effective portion of changes in valueof commodity contracts.
The foreign exchange translation reserve comprises all foreign exchange differences arising since 1 April 2004 from thetranslation of the Group’s net investments in foreign subsidiaries into Sterling.
The Group holds 493,594 (2009: 569,394) of its own shares in an employee benefit trust. The cost of these shares is included
within retained earnings.

Oxford Instruments plc

44Consolidated Statement of Financial Position as at 31 March 2010
2010
£m

2009
£m

13
14
15

22.8
49.3
12.9
85.0

23.5
54.9
11.3
89.7

16
17

39.3
60.2
0.9
0.8
11.2
112.4

39.9
57.6
0.6
0.2
13.3
111.6

197.4

201.3

2.5
21.6
0.2
4.1
23.8
52.2

2.5
21.3
(0.3)
7.9
30.5
61.9

21
23
22
15

19.6
0.9
35.1
6.7
62.3

31.8
1.0
14.4
7.6
54.8

21
19
23

0.1
1.9
69.1
2.6
4.3
4.9
82.9

0.1
9.7
53.3
1.8
12.4
7.3
84.6

Total liabilities

145.2

139.4

Total liabilities and equity

197.4

201.3

Notes
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

19

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
Bank loans
Bank overdrafts
Trade and other payables
Current income tax payables
Derivative financial instruments
Provisions

19
24

The financial statements were approved by the Board of Directors on 15 June 2010 and signed on its behalf by:
Jonathan Flint		
Director				

Kevin Boyd
Director

Oxford Instruments plc

Consolidated Statement of Cash Flows year ended 31 March 2010

45

2010
£m
13.3

2009
£m
(6.7)

4.8
(7.9)
0.4
4.1
3.8
4.0
22.5
0.5
(3.2)

(2.6)
11.3
6.8
4.3
3.8
3.4
20.3
0.3
(2.5)

(3.4)
16.4
(0.4)
(3.7)
11.2
9.3
32.8
(1.1)
(0.6)
31.1

(1.9)
16.2
(0.2)
3.6
(3.6)
1.6
17.6
(1.5)
(1.7)
14.4

0.2
0.7
(2.4)
(3.6)
(4.0)
(9.1)

0.2
3.1
0.3
0.2
(4.4)
(3.6)
(6.4)
(10.6)Cash flows from financing activities
Proceeds from issue of share capital
Repayment of borrowings
Dividends paid
Net cash from financing activities

0.3(12.2)(4.1)(16.0)

0.1
(2.6)
(4.1)
(6.6)

Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year

6.0
3.6
(0.3)
9.3

(2.8)
7.2
(0.8)
3.6

6.0
(0.3)
5.7
12.2
17.9
(28.3)(10.4)

(2.8)
(0.8)
(3.6)
2.6
(9.5)
(10.5)(17.8)(28.3)

Profit/(loss) for the year
Adjustments for:
Income tax expense/(credit)
Net financial (income)/expense
Reorganisation costs and impairment
Amortisation of acquired intangibles
Depreciation of property, plant and equipment
Amortisation of capitalised development costs
Earnings before interest, tax, depreciation and amortisation
Cost of equity settled employee share schemes
Restructuring costs paid
Cash payments to the pension scheme more than the charge to the Consolidated
Statement of Income
Operating cash flows before movements in working capital
Increase in inventories(Increase)/decrease in receivables
Increase/(decrease) in payables and provisions
Increase in customer deposits
Cash generated from operations
Interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of available for sale equity securities
Proceeds from disposal of product line
Interest received
Acquisition of subsidiaries, net of cash acquired
Acquisition of property, plant and equipment
Capitalised development expenditure
Net cash used in investing activities

Recognition of changes in cash and cash equivalents to movement in net debt
Increase/(decrease) in cash and cash equivalents
Effect of foreign exchange rate changes on cash and cash equivalents
Cash outflow from decrease in debt
Effect of foreign exchange rate changes on borrowings
Movement in net borrowings in the year
Net borrowing at start of the year
Net borrowing at the end of the year

Oxford Instruments plc

46

Notes to the Financial Statements
1

Reconciliation between profit and adjusted profit

Profit/(loss) before income tax
Reorganisation costs and impairment
Amortisation of acquired intangibles
Mark to market (gain)/loss in respect of derivative financial instruments
Adjusted profit before income tax
Share of taxation
Adjusted profit

2010
£m
18.1
0.4
4.1
(10.7)
11.9
(3.2)
8.7

2009
£m
(9.3)
6.8
4.3
9.3
11.1
(3.9)
7.2

Adjusted earnings per share
Basic
Diluted

pence
17.8
17.8

pence
14.8
14.8

Adjusted figures are stated before other operating income, amortisation of acquired intangibles, reorganisation costs andimpairment and unrealised changes in the fair value of financial instruments.
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 rate risk 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 the Group, are considered by the Board
not to bring any significant economic benefit. Accordingly, the Group accounts for these derivative financial instruments atfair value through profit or loss. Adjusted profit for the year is stated before changes in the valuation of these instruments sothat the underlying performance of the Group can more clearly be seen.
See note 10 for details of the number of shares used in the calculation of earnings per share.

2

Segment information

Information is presented in the consolidated financial statements in respect of the Group’s three business segments being
the primary basis of the Group’s segmental reporting, namely Nanotechnology Tools, Industrial Products and Service. Thesesegments reflect the internal reporting provided to the Chief Operating Decision Maker (considered to be the Group’s Boardof Directors) on a regular basis and are the level at which performance is monitored and resources allocated.
These segments comprise groups of similar products and services, a summary of which is provided below:- The Nanotechnology Tools segment contains a group of businesses supplying similar products, characterised by a high degreeof customisation and high unit prices. These are the Group’s highest technology products serving research customers in boththe public and private sectors.
- The Industrial Products segment contains a group of businesses supplying high technology products and components
manufactured in medium volume for industrial customers.
- The Service segment contains the Group’s service businesses as well as service revenues from the service activities from otherparts of the Group.
Segment results include items directly attributable to a segment as well as those which can be allocated on a reasonable basis.
Inter-segment pricing is determined on an arm’s length basis.
No asset information is presented below as this information is not allocated to reportable segments in reporting to the Group’s
Board of Directors.

Oxford Instruments plc

Notes to the Financial Statements Continueda)Analysis by BusinessYear to 31 March 2010

External revenue
Inter-segment revenue
Total segment revenue

Nanotechnology
Tools
£m
101.5
0.3
101.8

Industrial
Products
£m
71.0
1.1
72.1

Service
£m
39.0
39.0

Total
£m
211.5

Segment trading profit

8.2

1.0

5.5

14.7

Nanotechnology
Tools
£m
93.8
0.4
94.2

Industrial
Products
£m
75.1
0.4
75.5

Service
£m
37.6
0.3
37.9

Total
£m
206.5

8.6

(1.3)

5.8

13.1

2010
£m
14.7
(0.4)
(4.1)
18.6
(10.7)
18.1

2009
£m
13.1
(6.8)
(4.3)
9.8
(21.1)(9.3)

Year to 31 March 2009

External revenue
Inter-segment revenue
Total segment revenue
Segment trading profit/(loss)
Reconciliation of reportable segment profit

Profit for reportable segments
Reorganisation costs and impairment
Amortisation of acquired intangibles
Financial income
Financial expenditure
Profit/(loss) before income tax

Depreciation, amortisation and impairment and capital expenditure arise in the following segments:

Nanotechnology Tools
Industrial Products
Service
Unallocated Group
items
Total

2010
Depreciation
£m
2.0
1.2
0.1

2010
Amortisation
£m
1.5
2.5
-

2010
Capitalexpenditure
£m
1.3
2.0
0.1

2009
Depreciation
£m
1.7
1.4
0.1

2009
Amortisation &impaiment (1)
£m
1.1
2.3
-

2009
Capitalexpenditure
£m
2.5
0.8
0.1

0.5
3.8

4.1
8.1

0.2
3.6

0.6
3.8

7.5
10.9

0.2
3.6

Amortisation of Research and Development costs is included in arriving at segment trading profit. Amortisation of acquired
intangibles is included below segment trading profit and so has been included within unallocated Group items.
(1) Amortisation and impairment in 2009 includes impairment of property, plant and equipment (£0.4m), research and development (£1.0m) and inventory (£1.8m), as
disclosed in restructuring costs in the year to 31 March 2009.

Oxford Instruments plc

47

48

Notes to the Financial Statements Continuedb)

Geographical Analysis

The Group’s reportable segments are located across several geographical locations, and make sales to customers in countries
across the world.
The analysis below shows revenue and non-current assets (excluding deferred tax) for individual countries or regions that
represent more than 5% of revenue.
Revenue from external customers

USA
Rest of Europe
Rest of Asia
UK
Japan
China
Germany
Rest of World
Total

2010
£m
54.4
34.2
25.2
24.5
23.2
22.4
17.2
10.4
211.5

2009
£m
51.6
37.8
23.5
24.5
20.0
17.2
17.5
14.4
206.5

2010
£m
30.4
19.8
13.1
8.6
0.1
0.1
72.1

2009
£m
30.2
23.9
14.2
9.8
0.1
0.2
78.4

2010
£m
36.1
20.0
13.1
6.7
75.9

2009
£m
36.4
19.6
13.3
8.3
77.6

Non current Assets (excluding deferred tax)

UK
Germany
USA
Rest of Europe
Japan
China
Total

3

Trading expenses excluding cost of sales

Selling and marketing costs
Administration and shared services
Research and development (note 4)
Foreign exchange loss

The foreign exchange loss represents the loss arising on foreign exchange hedging instruments which matured during theyear.
Auditor’s remuneration
Audit of these financial statements
Amounts received by auditors and their associates in respect of:
Audit of financial statements of subsidiaries pursuant to legislation
Other services relating to tax
Other services
Total fees paid to auditor and its associates

£’000
107

£’000
104

188
7
6
308

196
16
27
343

Oxford Instruments plc

Notes to the Financial Statements Continued
4

RESEARCH AND DEVELOPMENT

The total research and development spend by the Group is as follows:
2010
Nanotechnology
Tools£m
Total cash spent on research anddevelopment during the year
Less: amount capitalised
Add: amortisation of amounts
previously capitalised
Research and development
charged to Consolidated
Statement of Income

Industrial
Products
£m

8.2
(3.2)

2009

Total
£m

Nanotechnology
Tools
£m

Industrial
Products
£m

Total
£m

4.9
(0.8)

13.1
(4.0)

8.4
(3.7)

7.9
(2.7)

16.3
(6.4)

1.5

2.5

4.0

1.1

2.3

3.4

6.5

6.6

13.1

5.8

7.5

13.3

5	reorganisation costs and impairment

Profit on disposal of Oxford Diffraction Ltd
Loss on disposal of MBE product line
Restructuring costs
Impairment of carrying value of ARKeX Ltd

2010
£m
(0.4)
(0.4)
(0.4)

2009
£m
3.4
(1.0)
(8.7)
(6.3)
(0.5)
(6.8)

During the year, the Group concluded the restructuring programme started in the previous year. This resulted in additional
redundancy and related costs at sites in Japan, France, Finland and the UK of £0.4m.
Restructuring costs in the year to 31 March 2009 comprise rationalisation of activities at sites in Oxfordshire and High Wycombe
UK, Chicago US, Espoo Finland, Uedem and Ismaning Germany, and Hobro Denmark. Costs comprise redundancy and related
charges of £5.5m, inventory impairments of £1.8m, capitalised research and development impairments of £1.0m and fixed asset
impairments of £0.4m.
The Group disposed of its 22% holding in Oxford Diffraction Ltd on 4 April 2008 resulting in a profit of £3.4m. The final partof the consideration of £0.7m was received on 15 December 2009.
On 22 September 2008 the Group disposed of the Molecular Beam Epitaxy (MBE) product line to Riber SA for a cash considerationof £0.3m with a resulting loss on disposal of £1.0m.
In the year to 31 March 2009 the Group recognised an impairment charge of £0.5m against the cost of its investment in andloans to ARKeX Ltd.

6	personnel COSTS

Wages and salaries
Social security costs
Charge in respect of defined benefit pension schemes
Contributions to defined contribution pension plans
Charge in respect of employee share options

2010
£m
51.6
5.1
1.9
2.0
0.5
61.1

Directors’ emoluments are disclosed in the Directors’ Remuneration Report on pages 28 to 34 of this Annual Report.

Oxford Instruments plc

2009
£m
55.7
5.4
2.9
1.8
0.3
66.1

49

50

Notes to the Financial Statements Continued
7

Employees

The average number of people employed by the Group (including Directors and temporary employees) during the year was
as follows:

Production
Sales and marketing
Research and development
Administration and shared services
Total average number of employees

8

2010
Number
584
366
184
207
1,341

2009
Number
676
377
252
226
1,531

SHARE OPTION SCHEMESThe Group operates four share option schemes.
All employee Save As You Earn Scheme
Options awarded under the Save As You Earn scheme have a vesting period of either 3 or 5 years. The exercise prices are
determined according to the mid-market closing share price on the day before the date of grant. Options must be exercised
within 6 months of vesting. There are no performance conditions associated with this scheme. The final grant under thisscheme was made in December 2006 and at the current time the Directors do not intend to grant any further options under
this scheme.
Executive Share Option Scheme (ESO)
Options awarded under the Executive Share Option scheme are made annually to certain senior executives. The exercise prices
are determined according to the mid-market closing share price on the day before the date of grant. Options have a life of
10 years and a vesting period of 3 years.
Senior Executive Long Term Incentive Scheme (SELTIS)
Options awarded under the Senior Executive Long Term Incentive scheme are made annually to certain senior executives. The
exercise prices are nil. Options have a life of 10 years and a vesting period of 3 years.
Both the Executive Share Option scheme and Senior Executive Long Term Incentive Scheme are subject to performance
conditions which can be found in the Directors’ Remuneration Report on pages 28 to 34.
All employee Share Incentive Plan (SIP)All UK employees are eligible to participate in the Group’s HM Revenue and Customs approved SIP. Participating employees
make a cash contribution to the plan each month. The Group contributes a further amount equal to 20% of the employee’s
contribution. Independent trustees then purchase shares in the market on behalf of the employees. The matching shares veston the completion by the participating employee of a further three years service and can be withdrawn from the plan tax-free
after 5 years service.
Administrative expenses include a charge of £0.5m (2009: £0.3m) in respect of the cost of providing share options. The cost is
calculated by estimating the fair value of the option at grant date and spreading that amount over the vesting period.
Fair values are determined using an internal calculation based on Monte-Carlo stochastic and modified Black-Scholes models.
Expected volatility has been based on historical volatility over a period of time of the same length as the expected option lifeand ending on the grant date. Half of the ESO options issued before 2009 and all SELTIS options use Total Shareholder Return(TSR) as a performance condition. As TSR is a market based performance condition, the accounting treatment differs from thatfor shares subject to internal performance conditions. This means that the TSR performance conditions have been incorporated
into the calculation of the fair value as a discount in calculating the fair value.

Oxford Instruments plc

Notes to the Financial Statements Continued
For options granted in 2009 and 2010, the fair value per option granted and the assumptions used in the calculation are as
follows:

Fair value at measurement date
Share price
Exercise price
Expected volatility
Expected option life (expressed as weighted
average life used in the modelling)
Expected dividend yield
Risk free interest rate
Performance condition discount in respect of
TSR condition

Senior Executive Long Term
Incentive Scheme
2010
2009
£0.784£0.481£2.030£1.330
£nil
£nil
44.2%
36.6%

Executive Share Option Scheme
2010£0.494£2.030£2.03535.3%

2009£0.238£1.330£1.35034.4%

3 years
4.1%
1.7%

3 years
6.3%
2.3%

6 years
4.1%
3.0%

6 years
6.3%
3.0%

56.3%

56.3%

n/a

n/a

The options existing at the year end were as follows:

Options subsisting at the year end on unissued
ordinary shares
Executive Share Option Schemes
July 2000
December 2002
July 2003
July 2004
July 2005
December 2005
July 2006
September 2006
September 2007
December 2007
December 2008
December 2009
Save As You Earn
December 2003
December 2004
December 2005
December 2005
December 2006
December 2006
Total options subsisting on unissued ordinary
sharesPercentage of issued share capital
Options subsisting at the year end on existing
ordinary shares held in trust
Senior Executive Long Term Incentive Scheme
July 2005
December 2005
July 2006
September 2006
July 2007
December 2008
December 2009
Executive Share Option Scheme
December 1999
Save As You Earn
December 2003
Total options subsisting on existing ordinary
shares held in trust

Oxford Instruments plc

2010
Numberof shares

Exercise
price

Period when
exercisable

2009
Numberof shares

125
87,00084,750182,742
159,350
33,333
397,500
2,000
844,000
667,500

£1.83
£1.48
£1.875£2.18£2.19£2.425£2.10£2.038£2.32£1.925£1.35£2.03501/04/10 – 21/12/10
01/04/09 – 13/12/12
01/04/10 – 15/07/13
01/04/10 – 15/07/14
01/04/10 – 15/07/15
01/04/09 – 15/12/15
01/04/10 – 15/07/16
01/04/10 – 04/09/16
28/09/10 – 28/09/17
18/12/10 – 18/12/17
16/12/11 – 16/12/18
17/12/12 – 17/12/19

2,625
30,000141,250
146,500
234,4371,470
382,450
66,667459,500
2,000
878,000-

10,80959,601
11,661
104,450

£1.64
£1.65
£2.14
£2.02
£1.83
£1.73

01/04/09 – 31/07/09
01/04/10 – 31/07/10
01/04/09 – 31/07/09
01/02/11 – 31/07/11
01/04/10 – 31/07/10
01/02/12 – 31/07/12

39,512
86,11240,79275,21776,780131,7392,644,821
5.3%

2,795,051
5.7%

9,800
6,250
87,500260,000
160,000

Nil
Nil
Nil
Nil
Nil
Nil
Nil

01/04/09 – 15/07/12
01/04/10 – 25/07/12
25/07/09 – 25/07/13
25/09/09 – 25/07/13
25/07/10 – 25/07/14
16/12/11 – 18/12/15
17/12/12 – 18/12/16

24,50019,60075,00012,50087,500260,000--£1.94501/04/09 – 23/12/09

5,500

-

£1.64

01/04/09 – 31/07/09

34,469523,550

519,069

51

52

Notes to the Financial Statements Continued
The number and weighted average exercise prices of those options are as follows:9

Weighted
average

Numberof

Weighted
average

Numberofexercise priceoptions

exercise priceoptions

Outstanding at the beginning of the period
Granted during the year
Forfeited during the year
Exercised during the year
Lapsed during the year

2010
£1.58
£1.64
£1.79
£1.27
£1.87

2010
3,314,120
827,500(141,266)(233,777)(598,206)

2009
£1.87
£1.04
£1.91
£1.76
£1.93

2009
2,741,909
1,138,000(81,315)(50,382)(434,092)

Outstanding at the year end£1.55

3,168,371£1.58

3,314,120

Exercisable at the year end£1.99

749,871£1.90

720,655

Income tax expense

Recognised in the Consolidated Statement of Income
2010
£m

2009
£m

2.8
(0.8)
2.0

1.0
(0.3)
0.7

2.0
0.8
2.8

(4.4)
0.8
0.3
(3.3)

4.8

(2.6)

Profit/(loss) before income tax

18.1

(9.3)

Income tax using the UK corporation tax rate of 28%
Effect of:Tax rates in foreign jurisdictions
Non-tax deductible expenses
Profit on disposal of held for sale assets
Tax incentives not recognised in the Consolidated Statement of Income
Temporary differences not recognised for deferred tax
Effect of current tax losses not utilised
Effect of previous tax losses now utilised
Write off of deferred tax previously recognised
Under provided in prior years
Total tax expense/(income)

5.1

(2.6)

0.3
(0.3)
0.1
(0.4)
4.8

(0.6)
0.3
(0.8)
0.2
0.7
(0.6)
0.8
(2.6)

(0.9)
(5.5)
0.3
(6.1)

1.8
(0.2)
1.6

Current tax expense
Current year
Adjustment in respect of prior years

Deferred tax expense
Origination and reversal of temporary differences
Write off of deferred tax previously recognised
Adjustment in respect of prior years

Total tax expense/(income)Reconciliation of effective tax rate

Taxation recognised directly in equity
Current tax – relating to employee benefits
Deferred tax - relating to employee benefits
Deferred tax – relating to cash flow hedges

Oxford Instruments plc

Notes to the Financial Statements Continued
10 EARNINGS PER SHARE
The calculation of basic earnings per share is based on a weighted average number of ordinary shares outstanding during theyear, excluding shares held by the Employee Share Ownership Trust, as follows:

Weighted average number of shares outstanding
Less shares held by Employee Share Ownership Trust
Weighted average number of shares used in calculation of earnings per share

2010
Sharesmillion
49.4
(0.5)

2009
Sharesmillion
49.4
(0.6)

48.9

48.8

The following table shows the effect of share options on the calculation of diluted earnings per share:

Weighted average number of ordinary shares per basic earnings per sharecalculations
Effect of shares under option
Weighted average number of ordinary shares per diluted earnings per sharecalculations

2010
Sharesmillion2009
Sharesmillion

48.9
0.3

48.8
0.2

49.2

49.0

2010
pence
2.4
6.0
8.4

2009
pence
2.4
6.0
8.4

11 DIVIDENDS PER SHARE
The following dividends per share were paid by the Group:

Previous year interim dividend
Previous year final dividend

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

Interim dividend
Final dividend

2010
pence
2.4
6.0
8.4

2009
pence
2.4
6.0
8.4

The interim dividend was not provided for at the year end and was paid on 8 April 2010.
The final proposed dividend of 6.0 pence per share (2009: 6.0 pence) will not be provided for until authorised by shareholders
at the forthcoming Annual General Meeting.

12 Acquisitions
The following acquisitions occurred in the prior year.
Technologies and Devices International Inc
On 9 April 2008 the Group acquired 100% of the voting rights in Technologies and Devices International Inc based in Silver
Spring, Maryland, USA for a net cash consideration of £1.2m. In addition, deferred consideration of £0.5m was paid on 1
October 2008. Further contingent consideration of up to £3.5m ($5.0m) is payable based on post acquisition revenue growth.
The Group’s best estimate of this contingent consideration at the current time is £0.7m. The company is a manufacturer anddeveloper of Hydride Vapour Phase Epitaxy templates.
In the period following acquisition to 31 March 2009, the company contributed revenue of £1.0m and a loss before tax of£1.5m (including amortisation of acquired intangibles of £0.8m) to the Group. As the acquisition occurred close to the startof the prior year it is estimated that these amounts approximate to those which would be reported had the acquisition takenplace on the first day of the year.

Oxford Instruments plc

53

54

Notes to the Financial Statements Continued
The following table gives an analysis of the assets acquired and the goodwill arising:

Intangible assets
Receivables
Payables and provisions
Deferred tax assets
Deferred tax liabilities
Total net assets acquired
Goodwill
Total purchase cost *Less contingent consideration
Net cash outflow in respect of the purchaseBook value
£m
0.2
0.1
(0.3)
-

Fair value
adjustments
£m
3.4
0.1
(1.2)
2.3

Fair value
to the Group
£m
3.6
0.1
(0.3)
0.1
(1.2)
2.3
2.3
(0.6)
1.7

* Includes costs associated with the acquisition of £0.1m.
The book value of the assets acquired was based on the management accounts at the date of acquisition. The fair value
adjustment relates to the recognition of technology related intangible assets and associated deferred tax.
Oxford Instruments Nordiska AB
On 28 May 2008 the Group acquired 100% of the voting rights in Oxford Instruments Nordiska AB from Link Nordiska AB basedin Lidingo, Sweden for a net cash consideration of £0.6m. Further contingent consideration of up to £0.6m is payable basedon post acquisition revenue growth. The Group’s best estimate of this contingent consideration at the current time is £0.3m.
The company is a distributor of Oxford Instruments NanoAnalysis equipment in Scandinavia.
In the period following acquisition to 31 March 2009, the company contributed revenue of £1.5m and no profit or loss before
tax to the Group. Amortisation of acquired intangibles of £0.1m was charged in arriving at this figure. Had the acquisition
taken place on the first day of the financial year, additional revenue of £0.3m would have been earned by the Group. The result
before tax would have been unchanged.
The following table gives an analysis of the assets acquired and the goodwill arising:

Intangible assets
Receivables
Net cash
Payables and provisions
Deferred tax liabilities
Total net assets acquired
Goodwill
Total purchase costLess contingent consideration
Net cash outflow in respect of the purchaseLess cash acquired
Net cash outflow on acquisition

Book value
£m
0.3
0.4
(0.5)
0.2

Fair value
adjustments
£m
0.9
(0.3)
0.6

Fair value
to the Group
£m
0.9
0.3
0.4
(0.5)
(0.3)
0.8
0.2
1.0
(0.4)
0.6
(0.4)
0.2

The book value of the assets was based on the financial accounting records at the date of acquisition. The fair value adjustments
relate to the recognition of customer related intangible assets and associated deferred tax. The goodwill comprises the value
attributable to the employee workforce as well as expected revenue and cost synergies that are expected to arise following
the integration of the business into the Group.

Oxford Instruments plc

Notes to the Financial Statements Continued
13	property, plant anD equipment
Land andbuildings£mPlant andequipment£mFixtures andfittings
£m

Total
£m

15.0
0.1
-

34.0
3.4
-

7.9
0.1
(0.7)

56.9
3.6
(0.7)

1.2
16.3

5.1
42.5

0.2
7.5

6.5
66.3

16.3
(0.3)

42.5
3.1
(5.7)

7.5
0.5
(1.0)

66.3
3.6
(7.0)

(0.2)
15.8

(1.1)
38.8

(0.1)
6.9

(1.4)
61.5

3.1
0.3
-

25.3
3.2
0.4
-

6.1
0.3
(0.5)

34.5
3.8
0.4
(0.5)

0.6
4.0

3.8
32.7

0.2
6.1

4.6
42.8

4.0
0.4
(0.3)

32.7
2.9
(5.7)

6.1
0.5
(0.9)

42.8
3.8
(6.9)

(0.1)
4.0

(0.9)
29.0

5.7

(1.0)
38.7

Carrying amounts
At 1 April 2008

11.9

8.7

1.8

22.4

At 31 March 2009 and 1 April 2009

12.3

9.8

1.4

23.5

At 31 March 2010

11.8

9.8

1.2

22.8

Cost
Balance at 1 April 2008
Acquisitions
Disposals
Effect of movements in foreign exchange
rates
Balance at 31 March 2009
Balance at 1 April 2009
Acquisitions
Disposals
Effect of movements in foreign exchange
rates
Balance at 31 March 2010
Depreciation and impairment losses
Balance at 1 April 2008
Depreciation charge for the year
Impairment charge
Disposals
Effect of movements in foreign exchange
rates
Balance at 31 March 2009
Balance at 1 April 2009
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
rates
Balance at 31 March 2010

Oxford Instruments plc

55

56

Notes to the Financial Statements Continued
14	intangible assets

Goodwill£m
Cost
Balance at 1 April 2008
Acquisitions - internally developed
Acquisitions – business combinations
Disposals
Effect of movements in foreign exchange
rates
Balance at 31 March 2009

Customer
relatedacquiredintangibles£mTechnology
relatedacquiredintangibles£m

Development
costs
£m

Total
£m

11.5
2.1
(0.6)

3.1
0.9
-

21.0
3.6
-

20.2
6.4
(1.4)

55.8
6.4
6.6
(2.0)

2.2
15.2

4.0

5.0
29.6

1.9
27.1

9.1
75.9

15.2
-

4.0
0.5

29.6
(0.5)

27.1
4.0
(1.1)
-

75.9
4.0
(1.1)
-

(0.5)
14.7

4.5

(1.1)
28.0

(0.4)
29.6

(2.0)
76.8

1.1
-

2.4
0.1
-

2.5
4.2
-

5.8
3.4
1.0
(1.3)

11.8
7.7
1.0
(1.3)

0.2
1.3

2.5

1.1
7.8

0.5
9.4

1.8
21.0

1.3
-

2.5
0.3
1.1

7.8
3.8
(1.1)

9.4
4.0
(1.1)
-

21.0
8.1
(1.1)
-

1.3

(0.1)
3.8

(0.2)
10.3

(0.2)
12.1

(0.5)
27.5

Carrying amounts
At 1 April 2008

10.4

0.7

18.5

14.4

44.0

At 31 March 2009 and 1 April 2009

13.9

1.5

21.8

17.7

54.9

At 31 March 2010

13.4

0.7

17.7

17.5

49.3

Balance at 1 April 2009
Acquisitions - internally developed
Disposals
Reclassification
Effect of movements in foreign exchange
rates
Balance at 31 March 2010
Amortisation and impairment losses
Balance at 1 April 2008
Amortisation charge for the year
Impairment charge
Disposals
Effect of movements in foreign exchange
rates
Balance at 31 March 2009
Balance at 1 April 2009
Amortisation charge for the year
Disposals
Reclassification
Effect of movements in foreign exchange
rates
Balance at 31 March 2010

Oxford Instruments plc

Notes to the Financial Statements Continued
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected
to benefit from that business combination. The carrying amount of goodwill was allocated to individual CGU’s as follows:

Nanotechnology Tools
NanoScience
NanoAnalysis
Plasma Technology
Industrial Products
Industrial Analysis
Magnetic Resonance
Service
Austin Scientific

2010
£m

2009
£m

2.4
3.4
0.1

2.5
3.5
0.1

3.5
2.3

3.6
2.3

1.7
13.4

1.9
13.9

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be
impaired.
The impairment test operates by determining the recoverable amounts of relevant cash generating units, which are calculated
as the higher of the fair value less costs to sell or their value in use. The recoverable amount of the Group’s goodwill is basedon value in use calculations. For the purpose of impairment testing, Board-approved three year cash flow forecasts, preparedby the management of each CGU are used as a basis for the value in-use calculations together with 5% growth for each CGU
for the subsequent twenty years.
Key assumptions
The key assumptions are those regarding discount rates, growth rates, expected selling prices and direct costs during theperiod.
The growth rates are based on industry growth factors. Changes in selling prices and direct costs are based on past practices
and expectations of future changes in the market.
The post tax weighted average costs of capital used in impairment testing range between 11.5% and 13.0% (2009: 6.0%).
Management have estimated these discount rates by reference to past experience and an industry average weighted cost ofcapital as adjusted for appropriate risk factors reflecting current economic circumstances and the risk profiles of each CGU.
Sensitivity analysis
The Group’s estimate of impairments are most sensitive to increases in the discount rate and forecast cash flows. Sensitivity
analysis has been carried out by reference to both of these assumptions. This demonstrated that an impairment would only berequired if there was an increase in the discount rates of 220 basis points or a 16% reduction in forecast cash flows on the CGU
with the lowest level of headroom. Sensitivity testing on the other CGUs shows an even greater level of headroom.
Based on the above, it is not considered possible that any reasonable change to the key assumptions would generate a
different impairment test outcome to the one included in these Financial Statements.

Oxford Instruments plc

57

58

Notes to the Financial Statements Continued
15	deferred TAX
Movements in deferred tax assets and liabilities were as follows:

Balance 31 March 2008
Recognised in income
Recognised in equity
Acquisitions
Foreign exchange
Balance 31 March 2009
Recognised in income
Recognised in equity
Foreign exchange
Balance 31 March 2010

Property,plant andequipment
3.2
0.1
0.2
3.5
(1.3)
2.2

Inventory

Employeebenefits

Intangible
assetsTax losses

Other

Total

1.4
(0.3)
0.1
1.2
0.1
(0.1)
1.2

6.9
0.5
(1.8)
(1.0)
4.6
0.7
5.5
(0.1)
10.7

(9.3)
(1.8)
(1.5)
0.3
(12.3)
1.3
0.3(10.7)

0.1
1.9
0.1
2.1
(0.6)
1.5

1.2
2.9
0.2
0.3
4.6
(3.0)
(0.3)
1.3

3.5
3.3
(1.6)
(1.5)
3.7
(2.8)
5.2
0.1
6.2

2010
£m
6.2
6.2

Net
2009
£m
3.7
3.7

Certain deferred tax assets and liabilities have been offset as follows:

Gross assets/(liabilities)
OffsetNet assets/(liabilities)

2010
£m
17.2
(4.3)
12.9

Assets
2009
£m
16.0
(4.7)
11.3

2010
£m
(11.0)
4.3(6.7)

Liabilities
2009£m(12.3)
4.7(7.6)

Deferred tax assets have not been recognised in respect of the following items:

Deductible temporary differences
Tax losses

2010
£m
2.2
12.7
14.9

2009
£m
2.7
11.6
14.3

The losses do not expire under current tax legislation. The deductible temporary differences do not expire under current tax
legislation. Deferred tax assets have not been recognised in respect of these items as it is not probable that future taxable
profits will be available in the subsidiaries concerned against which the Group can utilise the benefits there from.
No deferred tax liability has been recognised in respect of £48.7m (2009: £52.7m) of undistributed earnings of overseas
subsidiaries as the Group is able to control the timing of remittances so that any tax is not expected to arise in the foreseeable
future.

16 INVENTORIES

Raw materials and consumables
Work in progress
Finished goods

2010
£m
10.2
14.1
15.0
39.3

2009
£m
11.9
13.4
14.6
39.9

The amount of inventory recognised as an expense comprises cost of sales. In the prior year the amount of inventory recognised
as an expense also included £1.8m that was included within reorganisation costs.

Oxford Instruments plc

Notes to the Financial Statements Continued
17	trade and other receivables

Trade receivables
Less provision for impairment of receivables
Net trade receivables
Prepayments
Other receivables

2010
£m
53.1
(0.7)
52.4
2.1
5.7
60.2

2009
£m
50.6
(0.5)
50.1
2.2
5.3
57.6

Trade receivables are non-interest bearing. Standard credit terms provided to customers differ according to business andcountry, and are typically between 30 and 60 days.
The maximum exposure to credit risk for trade receivables by geographic region was:UK
Continental Europe
North America
Japan
Rest of World

2010
£m
16.3
10.4
14.6
10.5
1.3
53.1

2009
£m
17.6
11.3
13.1
8.3
0.3
50.6

2010
£m
33.8
8.7
6.1
4.5
53.1

2009
£m
33.1
7.9
3.5
6.1
50.6

The ageing of trade receivables at the reporting date was:Current (not overdue)
Less than 31 days overdue
More than 30 days but less than 91 days overdue
More than 90 days overdue

In both periods presented all of the provision against trade receivables relates to balances more than 90 days overdue.
The movement in the allowance for impairment of trade receivables during the year was as follows:

Balance at start of year
Increase/(decrease) in allowance
Balance at end of year

Oxford Instruments plc

2010
£m
0.5
0.2
0.7

2009
£m
0.6
(0.1)
0.5

59

60

Notes to the Financial Statements Continued
18 Financial Risk Management
The Group’s multinational operations and debt financing expose it to a variety of financial risks. In the course of its business,
the Group is exposed to foreign currency risk, interest rate risk, liquidity risk, commodity risk and credit risk. Financial risk
management is an integral part of the way the Group is managed. Financial risk management policies are set by the Boardof Directors. These policies are implemented by a central treasury function that has formal procedures to manage foreignexchange risk, interest rate risk, and liquidity risk, including, where appropriate, the use of derivative financial instruments.
Commodity risk is managed locally by the operating businesses. The Group has clearly defined authority and approval limits.
In accordance with its treasury policy, the Group does not hold or use derivative financial instruments for trading or speculative
purposes. Such instruments are only used to manage the risks arising from operating or financial assets or liabilities or highly
probable future transactions.
The Group uses derivative financial instruments to hedge its exposure to fluctuations in foreign exchange rates, interest rates
and commodity prices.
The Group has adopted hedge accounting for a limited number of related commodity contracts as outlined below. However,in common with a number of other companies, the Group has decided that the additional costs of meeting the extensive
documentation requirements of IAS 39 to apply hedge accounting to derivative financial instruments used for hedging exposure
to foreign currency and interest rate volatility cannot be justified. Accordingly the Group does not use hedge accounting forsuch derivatives.
Foreign Currency Risk
Foreign currency risk arises both where sale or purchase transactions are undertaken in currencies other than the respectivefunctional currencies of Group companies (transactional exposures) and where the results of overseas companies areconsolidated into the Group’s reporting currency of sterling (translational exposures). The Group has operations around theworld which record their results in a variety of different local functional currencies. In countries where the Group does not haveoperations, it invariably has some customers or suppliers that transact in a foreign currency. The Group is therefore exposed tothe changes in foreign currency exchange rates between a number of different currencies but the Group’s primary exposuresrelate to the US dollar, the Euro and the Japanese Yen. To reduce uncertainty the Group maintains a rolling hedge equivalent
to 80% of the exposure expected to arise over the following 12 months. The hedge comprises a mixture of fixed forward
contracts and option based products. The remaining 20% is sold on the spot market as it arises. The fair value of outstanding
currency contracts recognised as a liability as at 31 March 2010 amount to £3.4m (2009: £11.4m) and those recognised as an
asset amount to £0.7m (2009: £0.2m).
Changes in the fair value of derivative financial instruments are recognised in the Consolidated Statement of Income
immediately. However, in order to facilitate a more meaningful comparison of the Group’s performance year on year suchchanges are treated as an adjusting item in the calculation of adjusted earnings (see note 1).
The Group’s translational exposures to foreign currency risks can relate both to the Consolidated Statement of Income and net
assets of overseas subsidiaries. The Group’s policy is not to hedge the translational exposure that arises on consolidation of theConsolidated Statements of Income of overseas subsidiaries.
Interest Rate Risk
Interest rate risk comprises both the interest rate price risk that results from borrowing at fixed rates of interest and also theinterest cash flow risk that results from borrowing at variable rates. At this time, the majority of the Group’s borrowings
attract floating rates of interest and therefore the Group’s principal interest rate risk is a cash flow risk. In May 2008 the Group
entered into an interest rate swap in order to manage its exposure to interest rate movements. Under the terms of the swap,
the Group pays fixed interest of 4.1% on the notional amount of £14.8m and receives three months Sterling LIBOR.
The fair value of swaps entered into as at 31 March 2010 is estimated as a liability of £0.9m (2009: £0.9m). These amounts are
based on market estimates of equivalent instruments at the Consolidated Statement of Financial Position date. These interest
rate swaps are not designated as cash flow hedges and they are accounted for at fair value through profit or loss. No charge
was made to the Consolidated Statement of Income in the period (2009: £0.9m).

Oxford Instruments plc

Notes to the Financial Statements Continued
Liquidity Risk
Liquidity risk represents the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation. The Group manages this risk by maintaining adequate committed lines of funding from high quality lenders. The
facilities committed to the Group as at 31 March 2010 are set out in note 21.
Credit Risk
Credit risk arises because a counterparty may fail to perform its obligations. The Group is exposed to credit risk on financial
assets such as cash balances, derivative financial instruments, trade and other receivables. The Group’s credit risk is primarily
attributable to its trade receivables. The amounts recognised in the Consolidated Statement of Financial Position are net of
appropriate allowances for doubtful receivables, estimated by the Group’s management based on prior experience and theirassessment of the current economic environment. Trade receivables are subject to credit limits, and control and approval
procedures in the operating companies.
Due to its large geographic base and number of customers, the Group is not exposed to material concentrations of credit
risk on its trade receivables. Credit risk associated with cash balances and derivative financial instruments is managed bytransacting with financial institutions with high quality credit ratings. Accordingly the Group’s associated credit risk is limited.
The Group has no significant concentration of credit risk. The Group’s maximum exposure to credit risk is represented by the
carrying amount of each financial asset, including derivative financial instruments, in the Group Consolidated Statement of
Financial Position.
Exposure to credit risk
The carrying amount of financial assets represent the maximum credit exposure. The maximum exposure to credit risk at 31
March 2010 was £70.0m (2009: £68.9m).

Trade receivables
Other receivables
Cash and cash equivalents
Forward exchange contracts

2010
£m
52.4
5.7
11.2
0.7
70.0

2009
£m
50.1
5.3
13.3
0.2
68.9

The maximum exposure to credit risk for trade receivables is discussed in note 17.
Other receivables include £2.6m (2009: £2.4m) in respect of VAT and similar taxes which are not past due.
Commodity risk
The Group is exposed to changes in commodity prices, particularly in respect of copper used as a major component in theGroup’s US operations. It manages this exposure using derivative commodity hedging instruments.
At 31 March 2010, the Group had outstanding commodity hedge contracts with a fair value of £0.1m (2009: £0.7m liability)that were designated and effective as cash flow hedges of committed and highly probable forecast transactions. Fair value
movements of these contracts have been deferred in equity until the hedged transaction takes place. These contracts all
mature within one year of the Consolidated Statement of Financial Position date.
A £0.5m gain net of tax (2009: £0.7m loss) has been deferred in equity as at 31 March 2010 in respect of these contracts. A
gain of £0.2m (2009: £0.8m loss) has been recycled to current assets (inventory) in respect of contracts designated as cash flow
hedges that have matured during the year to 31 March 2010.
At 31 March 2010 the Group had provided a margin call to the provider of the hedge contracts amounting to £nil (2009:£0.6m).

Oxford Instruments plc

61

62

Notes to the Financial Statements Continued
Capital Management
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options
are recognised as a deduction from equity, net of any tax effects. The Board’s policy is to maintain a strong capital base so as
to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors
monitors both the demographic spread of shareholders and the level of dividends to ordinary shareholders.
The Board encourages employees to hold shares in the Company. As well as various share option plans (full details of which are
given in note 8), from April 2008 all UK employees have been offered the opportunity to take part in a Share Incentive Plan
(SIP). Under this plan, employees are able to invest up to £1,500 each tax year in shares in the Company. The Company awards
one additional free share (a matching share) for every five shares bought by each employee. It is envisaged that no further
options will be offered under the Save as You Earn (SAYE) option scheme.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings andthe advantages and security afforded by a sound capital position. The Group maintains the right to purchase its own sharesin the market; the timing of these purchases would depend on market prices. Buy and sell decisions are made on a specifictransaction basis by the Board. There were no changes to the Group’s approach to capital management during the year.
Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements. To assist the Board incapital management earnings per share is regularly reported to them.

19	financial instruments
Fair values of financial assets and liabilities
The fair values of financial assets and liabilities together with the carrying amounts shown in the Consolidated Statement of
Financial Position are as follows:
Fair
value
hierarchy

Carrying
amount
2010
£m

Fair
value
2010
£m

Carrying
amount
2009
£m

Fair
Value
2009
£m

52.4
5.7
11.2

52.4
5.7
11.2

50.1
5.3
13.3

50.1
5.3
13.3

1

0.7

0.7

0.2

0.2

1

0.1
0.8

0.1
0.8

0.2

0.2

1
1

(3.4)
(0.9)

(3.4)
(0.9)

(11.4)(0.9)(11.4)
(0.9)

1

(4.3)

(4.3)

(0.1)
(12.4)(0.1)(12.4)

19.7(70.0)(1.9)

18.8(70.0)(1.9)(31.9)(54.3)(9.7)(29.1)(54.3)(9.7)

Assets carried at amortised cost
Trade receivables
Other receivables
Cash and cash equivalents
Assets carried at fair value
Derivative financial instruments:
AssetsForeign currency contracts
Copper hedging contracts(net of cash guarantee)
Liabilities carried at fair value
Liabilities
Foreign currency contracts
Interest rate swaps
Copper hedging contracts(net of cash guarantee)

Liabilities carried at amortised cost
Secured bank borrowing (note 21)
Trade and other payables
Bank overdraft

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments
reflected in the above table.

Oxford Instruments plc

Notes to the Financial Statements Continued
Derivative financial instruments
Derivative financial instruments are marked to market using listed market prices.
Fixed and floating rate borrowings
The fair value of fixed and floating rate borrowings is estimated by discounting the future contracted principal and interest
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 fair value. Allother receivables/payables are discounted to determine the fair value.
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 (ie.
as prices) or indirectly (ie. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data
Maturity of financial liabilities
31 March 2010

Bank overdrafts
Secured bank borrowing
Trade and other payables
Foreign exchange contracts
Interest rate swaps

Carrying
amount
£m
1.9
19.7
70.0
3.4
0.9
95.9

Contractual
cash flows
£m
1.9
20.6
70.0
4.0
1.0
97.5

Due
withinone year
£m
1.9
0.4
69.1
3.5
0.5
75.4

Due
1 – 5 years
£m
19.7
0.9
0.5
0.5
21.6

Due
more than
5 years£m
0.5
0.5

Carrying
amount
£m
9.7
31.9
54.3
11.5
0.9
108.3

Contractual
cash flows
£m
9.7
34.4
54.3
8.3
1.1
107.8

Due
withinone year
£m
9.7
0.7
53.3
6.5
0.4
70.6

Due
1 – 5 years
£m
33.1
1.0
1.8
0.7
36.6

Due
more than
5 years£m
0.6
0.6

31 March 2009

Bank overdrafts
Secured bank borrowing
Trade and other payables
Foreign exchange contracts
Interest rate swaps

At the reporting date the interest rate profile of the Group’s interest – bearing financial instruments was:Carrying
amount2010£m

Carrying
amount2009£m

Variable rate instruments
Financial assets
Financial liabilities

11.2(20.9)

13.3(40.7)

Fixed rate instruments
Financial liabilities

(0.7)

(0.9)

Oxford Instruments plc

63

64

Notes to the Financial Statements Continued
Bank overdraft
The bank overdrafts are repayable on demand. Bank overdrafts carry interest rates of either 2.75% or 2.21% in the UK andEurope, and 3.62% in Japan.
Sensitivity analysis
The Group has estimated the impact of the change to the fair value of its financial instruments and the translation of currency
profits and assets on the Consolidated Statement of Income and on equity for the following:• one percentage point increase in interest rates• ten percentage point weakening in the value of sterling against all currencies• ten percentage point strengthening in the value of sterling against all currencies• five percentage point increase in the cost of copper• five percentage point decrease in the cost of copper
The outputs from the sensitivity analysis are estimates of the impact of market risk assuming that the specified changes occur
net of any hedging in place at the year end. Actual results in the future may differ materially from these estimates due tocommercial actions taken to mitigate any potential losses from such rate movements, to the interaction of more than one
sensitivity occurring and to further developments in global financial markets. As such this table should not be considered as aprojection of likely future gains and losses.

At 31 March 2010
Impact on Consolidated
Statement of Income
Impact on equity
At 31 March 2009
Impact on Consolidated
Statement of Income
Impact on equity

1% increase
in interest
rates
£m

10%
weakeningin sterling¹£m10%
strengthening
in sterling¹£m

5% increasein copper
prices£m

5% decreasein copper
prices
£m

0.2

3.7

(3.7)

-

-

0.2

3.7

(3.7)

0.1

(0.1)

0.2

5.7

(5.7)

-

-

0.2

5.7

(5.7)

0.1

(0.1)

¹ Of the effect on the Consolidated Statement of Income, £3.1m (2009: £5.5m) would have been recognised on the ‘Mark toMarket’ line (see Note 1).

Oxford Instruments plc

Notes to the Financial Statements Continued

20

CALLED UP SHARE CAPITAL

Issued and fully paid ordinary shares:

At the beginning of the year

2010

2009

Number of shares

Number of shares

49,409,351

49,377,236

Issued for cash
At the end of the year

Authorised
Ordinary shares of 5p each
Allotted, called up and fully paid
Ordinary shares of 5p each

157,977

32,11549,567,328

49,409,351

2010
Number ofshares

2010

2009

£m

2009
Number ofshares

58,000,000

2.9

58,000,000

2.9

49,567,328

2.5

49,409,351

2.5

New issues of ordinary shares of 5p each during the year
Exercise of Savings Related Share Options
Exercise of Executive Share Options£m

Numberof shares

Aggregate
nominal value

Consideration
per share

110,642
47,335£5,532£2,367£1.65-£2.02£1.88-£2.32

The holders of the ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share atmeetings of the Company.

21	borrowings
Borrowings with a book and fair value of £19.0m (2009: £31.0m) are supported by a £50m (2009: £50.0m) revolving credit
facility made available to Oxford Instruments plc. It is repayable in July 2012 and carries a floating interest rate of LIBOR plus
0.65% on the first £14m and LIBOR plus 0.85% on the remainder. It is secured on certain of the Group’s freehold properties witha carrying value of £10.4m (2009: £10.7m) and certain intellectual property of the Group. All necessary conditions precedentand covenants were met at 31 March 2010. The next repricing of the LIBOR element of the loan after the year end is on 30 April
2010. Thereafter the repricing of the LIBOR element occurs after 1, 3 or 6 months at the Group’s option. The undrawn amountof the facilities at 31 March 2010 was £31.0m (2009: £19.0m).
Borrowings with a book and fair value of £0.7m (2009: £0.9m) relate to a mortgage made available to Oxford Instruments
Analytical GmbH (formerly Worldwide Analytical Systems AG) in respect of a property in Uedem, Germany of which £0.1m is
repayable within one year. The borrowing is denominated in Euro and carries a fixed rate of 4.6% until 2011. It is repayable ininstalments of £0.1m per year until 2011 and in instalments of £50k per year until 2021.

Oxford Instruments plc

65

66

Notes to the Financial Statements Continued
22	retirement benefit obligations
The Group operates defined benefit plans in the UK and US; both offer pensions in retirement and death in service benefit tomembers. Pension benefits are related to members’ final salary at retirement and their length of service. Both schemes havebeen closed to new members since 2001.
The Group has opted to recognise all actuarial gains and losses immediately via the Consolidated Statement of Comprehensive
Income.
The amounts recognised in the Consolidated Statement of Financial Position are:Present value of funded obligations
Fair value of plan assets
Recognised liability for defined
obligations

UK
2010
£m
183.7
(151.7)

USA
2010
£m
9.0
(5.9)

Total
2010
£m
192.7
(157.6)

UK
2009
£m
131.1
(119.8)

USA
2009
£m
8.3
(5.2)

Total
2009
£m
139.4
(125.0)

32.0

3.1

35.1

11.3

3.1

14.4

benefitReconciliation of the opening and closing balances of the present value of the defined benefit obligation

Benefit obligation at the beginning of theyear
Interest on obligation
Current service cost
Contributions paid by plan participants
Benefits paid
Actuarial loss/(gain) on obligation
Exchange rate adjustment
Benefit obligation at the end of the year

UK
2010
£m

USA
2010
£m

Total
2010
£m

UK
2009
£m

USA
2009
£m

Total
2009
£m

131.1
8.9
1.5
0.1
(4.1)
46.2
183.7

8.3
0.5
0.4
(0.3)
0.5
(0.4)
9.0

139.4
9.4
1.9
0.1
(4.4)
46.7
(0.4)
192.7

154.0
9.8
2.4
0.1
(3.5)
(31.7)
131.1

7.0
0.5
0.5
(0.3)
(1.9)
2.5
8.3

161.0
10.3
2.9
0.1
(3.8)
(33.6)
2.5
139.4

Reconciliation of the opening and closing balances of the fair value of plan assets

Fair value of plan assets at the beginning of
the year
Expected return on plan assets
Contributions by employers
Contributions paid by plan participants
Benefits paid
Actuarial gain/(loss) on assets
Exchange rate adjustment
Fair value of plan assets at the end of the year

UK
2010
£m

USA
2010
£m

Total
2010
£m

UK
2009
£m

USA
2009
£m

Total
2009
£m

119.8
7.6
5.0
0.1
(4.1)
23.3
151.7

5.2
0.3
0.3
(0.3)
0.6
(0.2)
5.9

125.0
7.9
5.3
0.1
(4.4)
23.9
(0.2)
157.6

134.8
9.1
4.2
0.1
(3.5)
(24.9)
119.8

5.0
0.5
0.6
(0.3)
(2.3)
1.7
5.2

139.8
9.6
4.8
0.1
(3.8)
(27.2)
1.7
125.0

Oxford Instruments plc

Notes to the Financial Statements Continued
Expense recognised in the Consolidated Statement of Income
2010
£m
1.9
9.4
(7.9)
3.4
2.0
5.4

Current service cost
Interest on obligation
Expected return on plan assets
Total – defined benefit
Contributions to defined contribution schemes

2009
£m
2.9
10.3
(9.6)
3.6
1.8
5.4

The actual gain on plan assets was £31.8m (2009: £17.6m loss).
The Group expects to contribute approximately £6.3m to defined benefit plans in the next financial year.
The pension costs are recorded in the following lines of the Consolidated Statement of Income:

Cost of sales
Selling and marketing costs
Administration and shared services
Research and development
Financial income
Financial expenditure

2010
£m
1.8
0.8
0.7
0.6
(7.9)
9.4
5.4

2009
£m
1.5
0.9
1.2
1.1
(9.6)
10.3
5.4

2010
£m
(22.8)

2009
£m
6.4

Actuarial gains and losses shown in the Statement of Recognised Income and Expense:

Actuarial (loss)/gain

Cumulative actuarial losses reported in the Consolidated Statement of Comprehensive Income since 1 April 2004, the transition
date to IFRS, are £3.6m (2009: £19.2m cumulative actuarial gains).
History of experience gains and losses are as follows:

Present value of benefit obligations
Fair value of plan assets
Recognised liability for defined benefit
obligations
Difference between the expected and actual
return:Amount £m% of scheme assets
Experience (losses)/gains on scheme liabilities:
Amount £m% of the present value of the scheme liabilities

Oxford Instruments plc

2010
£m
192.7
(157.6)

2009
£m
139.4
(125.0)

2008
£m
161.0
(139.8)

2007
£m
165.9
(135.1)

2006
£m
180.8
(127.4)

35.1

14.4

21.2

30.8

53.4

23.9
15%

(27.2)
(22%)

(7.3)
(5%)

(2.0)
(1%)

15.2
12%

(46.7)
24%

33.6
(24%)

14.4
(9%)

24.1
(15%)

(25.5)
14%

67

68

Notes to the Financial Statements Continued
Defined benefit scheme - United Kingdom
A full actuarial valuation of the UK plan was carried out as at 31 March 2009 and has been updated to 31 March 2010 bya qualified independent actuary. The major assumptions used by the actuary for the purposes of IAS 19 were (in nominal
terms):

Discount rate
Rate of salary increase
Rate of increase to pensions in payment (pre 1997)
Rate of increase to pensions in payment (post 1997)
Rate of inflation

Mortality – pre and post-retirement – males andfemales

As at
31 March
2010
%
5.6
3.9
2.4
3.2
3.4
94% of SP1A tables (97%for females) – year of birth:
medium cohort (min annual
improvement of 1%)

As at
31 March
2009
%
6.9
3.4
2.6
2.9
2.9

PA92 – year of birth: medium
cohort

The assumptions used in determining the overall expected rate of return of the plan have been set with reference to yields
available on government bonds and appropriate risk margins.
The mortality assumptions imply the following expected future lifetime from age 65:
2010
22.9
25.2
21.5
23.8

Pre-retirement – males
Pre-retirement – females
Post-retirement – males
Post-retirement – females

2009
22.9
25.7
22.0
24.9

The assumptions have been chosen by the Directors from a range of possible actuarial assumptions, which due to the timescales
covered, may not be borne out in practice.
The assets in the plan and the expected rates of return were:

Equities
Corporate bonds
Gilts
Cash
Alternative

Long-term rateof return
expected at
31 March
2010
%
8.0
5.6
4.5
4.5
7.3

Value at
31 March
2010
£m
53.2
41.6
31.3
15.4
10.2
151.7

Long-term rateof return
expected at
31 March
2009
%
8.0
6.9
4.2
4.2
7.0

Value at
31 March
2009
£m
43.6
28.4
30.0
10.1
7.7
119.8

Oxford Instruments plc

Notes to the Financial Statements Continued
Defined benefit scheme - United States
A full actuarial valuation of the US plan was carried out as at 1 January 2005 which for reporting purposes has been updated
to 31 December 2009 by a qualified independent actuary. Results at 31 March 2010 have been taken to be the same as those at
31 December 2009. The major assumptions used by the actuary for the purposes of IAS 19 were (in nominal terms):

Discount rate
Rate of salary increase
Rate of increase to pensions inpayment
Rate of inflation
Mortality – pre and postretirement

As at
31 March
2010
%
5.75
3.00

As at
31 March
2009
%
6.25
3.00

0.00
3.00
2009 IRS prescribed mortality – optional
combined table for small plans, male andfemale0.00
3.00
2008 IRS prescribed mortality – optional
combined table for small plans, male andfemale

The assumptions used in determining the overall expected rate of return of the plan have been set with reference to yields
available on government bonds and appropriate risk margins.
The assets in the plan and the expected rates of return were:

Equities
Bonds
Property and otherLong term
rate of return
expected at
31 March
2010
%
9.2
6.1
8.4

Value at
31 March
2010
£m
3.0
2.6
0.3
5.9

Long term
rate of return
expected at
31 March
2009
%
9.2
6.1
8.3

Value at
31 March
2009
£m
2.5
2.1
0.6
5.2

Defined contribution schemes
Since 1 April 2001 all new joiners in the UK have been offered participation in the defined contribution Oxford Instruments
Stakeholder Plan. During the year ended 31 March 2010 the Company paid contributions to the scheme on a variable scale up
to a maximum of 5% for members who contributed at a rate of at least 3%. Employees make contributions at a rate of theirchoice. The Group also operates a 401k defined distribution plan in the USA.

23 TRADE AND OTHER PAYABLES

Trade payables
Social security and other taxes
Accrued expenses and deferred income
Other creditors (including deferred consideration)
Amounts due after more than one year – other creditors

2010
£m
43.7
1.4
21.9
3.0
70.0
(0.9)
69.1

2009
£m
28.8
1.0
18.1
6.4
54.3
(1.0)
53.3

Deferred consideration relates to amounts payable in respect of acquisitions made during prior years.
During the year, deferred consideration of £2.4m was paid in respect of the 2008 acquisition of Vericold Technologies GmbH.

Oxford Instruments plc

69

70

Notes to the Financial Statements Continued
24	provisions for other liabilities and charges

Balance at 1 April 2009
Provisions made during the year
Provisions used during the year
Provisions released during the year
Effect of movements in foreign exchange
rates
Balance at 31 March 2010

Warranties
£m
3.2
2.7
(2.3)
(0.3)

Restructuring
£m
3.0
(2.7)
(0.1)

Other
£m
1.1
0.6
(0.2)
-

Total
£m
7.3
3.3
(5.2)
(0.4)

3.3

(0.1)
0.1

1.5

(0.1)
4.9

Warranty provisions reflect the Group’s standard terms and conditions. In general these apply for a year and, as a result,the majority of the provision is expected to be utilised within a twelve-month period. Restructuring provisions relate to therationalisation of activities across the Group (see note 5). Other provisions relate to various obligations including obligations
in respect of onerous leases and obligations to employees in Japan on termination of their employment.

25	operating leases
LeasesNon-cancellable future minimum operating lease rentals are payable as follows:

Less than one year
Between one and five years

2010
£m
1.0
3.1
4.1

2009
£m
0.1
5.7
5.8

During the year ended 31 March 2010 £2.2m was recognised as an expense in the Consolidated Statement of Income in respectof operating leases (2009: £2.3m).
The leases relate to motor vehicles and various properties used mainly as sales offices.

26	capital commitments
During the year ended 31 March 2010, the Group entered into contracts to purchase property, plant and equipment which are
expected to be settled in the following financial year for less than £0.1m (2009: £0.1m).

27	contingencies
In an international group of companies a variety of legal claims arise from time to time. The Board, having taken legal advice,
are of the opinion that the ongoing actions and investigations will not have a material impact on the Group’s financial
position.

28 RELATED PARTIESThe Group has a related party relationship with its Directors and Executive officers.
Transactions with key management personnel are disclosed in the Director’s Remuneration Report on pages 28 to 34. There
were no other significant transactions with key management personnel in either the current or preceding year other than thefollowing.
During the year the Company paid £0.1m (2009: £0.1m) to Imperialise Limited, a company for whom Nigel Keen is a Director.
The payment was for his services as Chairman of the Group. The liability due to Imperialise Ltd at the year end was nil (2009:
nil).

Oxford Instruments plc

Notes to the Financial Statements Continued
29 PRINCIPAL GROUP ENTITIESOxford Instruments Analytical Holdings Ltd
Oxford Instruments Holdings Europe Ltd
Oxford Instruments Overseas Holdings Ltd
Oxford Instruments Overseas Holdings 2008 Ltd
Oxford Instruments Superconductivity Holdings Ltd
Oxford Instruments Overseas Marketing Ltd
Oxford Instruments Analytical Ltd
Oxford Instruments Molecular Biotools Ltd
Oxford Instruments Plasma Technology Ltd
Oxford Instruments Superconductivity Ltd
Oxford Instruments America Inc
Oxford Instruments OST Holdings LLC
Oxford Instruments OST Asset Co LLC
Oxford Instruments MRI Service LLC
Oxford Instruments Superconductivity Wire LLC
Oxford Instruments (Tennessee) Inc
Oxford Instruments Holdings Inc
Oxford Instruments Holdings 2008 Inc
Austin Scientific Company
Oxford Instruments X-Ray Technology Inc
Oxford Superconducting Technology
Oxford Instruments (Shanghai) Company Ltd
Oxford Instruments HKL Technologies A/S
Oxford Instruments Analytical Oy
Technologies and Devices Inc
Oxford Instruments SAS
Oxford Instruments GmbH
VeriCold Technologies GmbH
Oxford Instruments Analytical GmbH (formerly Worldwide
Analytical Systems AG)
Oxford Instruments KK
Oxford Instruments Pte Ltd

Equity owned by
the company
%
100
100
100
*100
100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100

Country ofincorporation
EnglandEnglandEnglandEnglandEnglandEnglandEnglandEnglandEnglandEngland
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
China
Denmark
Finland
USA
FranceGermany
Germany

Principal
activity
Holding
Holding
Holding
Holding
Holding
MarketingTrading
Trading
Trading
Trading
Distribution
Holding
Holding
Trading
Trading
Holding
Holding
Holding
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Distribution
Distribution
Manufacturing

*100
*100
*100

GermanyJapan
Singapore

Manufacturing
Distribution
Marketing

Equity owned by the Company represents issued ordinary share capital.
A full list of the Group companies as at 31 March 2010 is available for inspection at the Company’s registered office.
With the exception of holding companies, all the above companies are engaged in either advanced instrumentation or the
manufacture of components used in advanced instrumentation. Equity owned by subsidiary companies is indicated by anasterisk (*). All the above companies are included in the Group accounts.

30	subsequent events
The interim dividend of 2.4p per share (total cost £1.1m) was paid after the year end. In addition on 15 June 2010 the Director’s
proposed a final dividend of 6.0p per ordinary share (total cost £3.0m). The total amount of £4.1m has not been provided forand there are no income tax consequences.

Oxford Instruments plc

71

72

Notes to the Financial Statements Continued
31 EXCHANGE RATESThe principal exchange rates to sterling used were:Year end rates
2010
1.52
1.12
142

2009
1.43
1.08
142

US Dollar
1.55
1.64
1.62
1.56

Euro
1.13
1.14
1.11
1.12

Yen
150
153
145
142

US Dollar
1.98
1.89
1.60
1.44

Euro
1.27
1.26
1.20
1.09

Yen
206
203
157
136

US Dollar
Euro
Yen
Average translation rates 2010
Quarter 1 2010
Quarter 2 2010
Quarter 3 2010
Quarter 4 2010
Average translation rates 2009
Quarter 1 2009
Quarter 2 2009
Quarter 3 2009
Quarter 4 2009

Oxford Instruments plc

Parent Company Balance Sheet as at 31 March 2010

73

2010
£m

2009
£m

c
d

0.6
61.8
62.4

0.9
61.3
62.2

e

102.2

101.7

3.1
105.3

9.6
111.3

(0.6)
(18.8)(19.4)(3.2)(14.4)(17.6)Net current assets

85.9

93.7

Total assets less current liabilities

148.3

155.9

Notes
Fixed assets
Tangible assets
Investments in subsidiary undertakings

Current assets
Debtors (including £99.8m (2009: £97.5m) due after more than one
year)
Cash at bank and in hand

Creditors: amounts falling due within one year
Bank loans and overdrafts
Other creditorsfCreditors: amounts falling due after more than one year
Bank loansg(19.0)(31.0)

Provisions for liabilities and charges

h

(0.2)

(0.3)

129.1

124.6

2.5
21.6
7.7
97.3

2.5
21.3
7.7
93.1

129.1

124.6

Net assets

Share capital
Share premium account
Other reserves
Profit and loss account

i
i
i
i

Equity shareholders’ funds

The financial statements were approved by the Board of Directors on 15 June 2010 and signed on its behalf by:
Jonathan Flint			Director				Company number: 775598

Oxford Instruments plc

Kevin Boyd
Director

74

Notes to the Parent Company Financial Statementsa) Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in
relation to the Company’s financial statements, except as noted below.
Basis of preparation
The financial statements have been prepared in accordance with applicable UK GAAP accounting standards and under
the historical cost accounting rules. In accordance with S408 of the Companies Act 2006, the Company is exempt from therequirement to present its own profit and loss account.
In accordance with FRS 1: Cash flow statements, the company is exempt from preparing its own cash flow statement.
Going concern
The Financial Statements have been prepared on a going concern basis, based on the Directors’ opinion, after making reasonableenquiries, that the Company has adequate resources to continue in operational existence for the foreseeable future.
Taxation
The charge for taxation is based on the result for the year and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised, without discounting,in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which havearisen but not reversed by the Balance Sheet date, except as otherwise required by FRS 19: Deferred Tax.
LeasesOperating lease rentals are charged to the profit and loss account on a straight-line basis over the life of the lease.
Fixed assets and depreciation
Depreciation is provided to write off the valuation or the cost less estimated residual value of tangible fixed assets by equal
instalments over their estimated useful economic lives as follows:
Computer equipment 		
Motor vehicles 			

4 years
4 years

Financial instruments
The Company’s accounting policies for financial instruments under UK GAAP, namely FRS 25 – Financial instruments: presentation,
FRS 26 – Financial instruments: measurement and FRS 29 – Financial instruments: disclosures, are the same as the group’s
accounting policies under IFRS, namely IAS 32 – Financial instruments: presentation, IAS 39 – Financial instruments: recognition
and measurement and IFRS 7 – Financial instruments: disclosures. These policies are set out in accounting policy ‘(e) Financial
instruments’ in the group accounting policies. As consolidated financial information has been disclosed under IFRS 7 in note 19
to the consolidated financial statements, the parent company is exempt from the disclosure requirements of FRS 29.
Post retirement benefits
The Company participates in a group wide pension scheme providing benefits based on final pensionable pay. The assets ofthe scheme are held separately from those of the Company. The Company is unable to identify its share of the underlying
assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS 17: Retirement
benefits, accounts for the scheme as if it were a defined contribution scheme. As a result, the amount charged to the profit
and loss account represents the contributions payable to the scheme in respect of the accounting period. Refer to note j forthe additional disclosures required by FRS 17.
Foreign currencies
The Company enters into forward exchange contracts to mitigate the currency exposures that arise on sales and purchases
denominated in foreign currencies. Transactions in foreign currencies are converted into Sterling at the rate ruling on the dateof the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at theBalance Sheet date or at the appropriate forward contract rates. Exchange profits and losses arising from the above are dealt
with in the profit and loss account.
Own shares held by Employee Benefit Trust (EBT)Transactions of the Group-sponsored EBT are included in the Group financial statements. In particular, the trust’s purchase ofshares in the company are debited directly to equity.

Oxford Instruments plc

Notes to the Parent Company Financial Statements Continued
Share-based payments
The share option programme allows employees to acquire shares of the Company. The fair value of options granted after
7 November 2002 and those not yet vested as at 1 April 2005 is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted is measured using an option pricing model,
taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense
is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices notachieving the threshold for vesting.
When options are granted to employees of subsidiaries of the Company, the fair value of options granted is recognised as an
employee expense in the financial statements of the subsidiary undertaking together with the capital contribution received.
In the financial statements of the Company, the options granted are recognised as an investment in subsidiary undertakings
with a corresponding increase in equity.
Dividends on shares presented within shareholders’ funds
Dividends unpaid at the Balance Sheet date are only recognised as a liability at that date to the extent that they are appropriately
authorised and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed
in the notes to the financial statements.
Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within
its group, the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, theCompany treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will
be required to make a payment under the guarantee.
b) Profit for the year
The Company’s profit for the financial year was £7.8m (2009: £8.9m).
The auditor’s remuneration comprised £107,000 (2009: £104,000) for statutory audit.
The average number of people employed by the Company (including Directors) during the year was 42 (2009: 44). All of these
individuals were involved in administration.
The aggregate payroll costs (including Directors) of these people were as follows:
2010
£m
3.7
0.4
0.2
4.3

Wages and salaries
Social security costs
Other pension costs

2009
£m
3.0
0.3
0.2
3.5

The share based payment expense was £nil (2009: £nil).
Full details of the emoluments paid to Directors can be found in the Directors’ Remuneration Report on pages 28 to 34.
c)Tangible fixed assets
Motorvehicles£mComputerEquipment
£m

Total

Cost
Balance at 1 April 2009
Additions
Balance at 31 March 2010

0.2
0.2

3.3
0.1
3.4

3.5
0.1
3.6

Depreciation
Balance at 1 April 2009
Charge for year
Balance at 31 March 2010

0.1
0.1

2.5
0.4
2.9

2.6
0.4
3.0

Net book value
At 31 March 2009

0.1

0.8

0.9

At 31 March 2010

0.1

0.5

0.6

Oxford Instruments plc

£m

75

76

Notes to the Parent Company Financial Statements Continuedd)Investments
Investments
in subsidiary
undertakings
£m

Other
investments
£m

Total
£m

Cost or valuation
Balance at 1 April 2009
Additions
Balance at 31 March 2010

77.0
0.5
77.5

0.3
0.3

77.3
0.5
77.8

Amortisation
Balance at 1 April 2009
Balance at 31 March 2010

15.7
15.7

0.3
0.3

16.0
16.0

Net book value at 31 March 2009

61.3

-

61.3

Net book value at 31 March 2010

61.8

-

61.8

Other investments at 31 March 2010 comprise:
Investment

Principal activity

ARKeX Limited

Supply of gravity-gradiometry exploration and related services to theoil, gas and minerals industries

Percentage ofcompany owned
9.3%

The addition to subsidiary investments of £0.5m relates to the awarding of share options to employees of subsidiarycompanies. In the prior year, the addition to subsidiary investments of £9.7m related to the investment in Oxford Instruments
Holdings Europe Limited and to the awarding of share options to employees of subsidiary companies. Details of the subsidiaryinvestments are given in note 29.
e)Debtors

Amounts falling due within one year:
Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income

2010
£m

2009
£m

101.7
0.5
102.2

100.6
0.9
0.2
101.7

Amounts owed by subsidiary undertakings includes £99.8m (2009: £97.5m) due after more than one year.
f)Creditors: amounts falling due within one year

Trade creditors
Amounts owed to subsidiary undertakings
Tax, social security and sales related taxes
Other financial liabilities
Accruals and deferred income
Other creditors

2010
£m
0.3
12.5
0.9
3.6
1.1
0.4
18.8

2009
£m
0.3
12.4
0.7
0.7
0.3
14.4

g) Creditors: amounts falling due after one year
Details of the bank loans are included in note 21.

Oxford Instruments plc

Notes to the Parent Company Financial Statements Continuedh)Provisions for liabilities and charges
Vacant leaseprovision
£m
0.3
(0.1)
0.2

Balance at 1 April 2009
Utilised during the year
Balance at 31 March 2010
The transfer of economic benefits in relation to the vacant lease provisions is expected to be within one year.
The amounts of deferred tax assets are as follows:

2010
£m

Recognised
2009
£m

2010
£m

Unrecognised
2009
£m

-

-

0.8
0.1
0.9

0.8
0.1
0.9

Excess of depreciation over corresponding
capital allowances
Carried forward tax losses
Other timing differences

The Company recognises deferred tax assets only to the extent that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
i)

Reserves
SharecapitalBalance at 1 April 2009
Retained profit for the year
Proceeds from shares issued
Share options awarded to
employees of subsidiaries
Dividends paid
Balance at 31 March 2010

£m
2.5
-

Share
premium
account
£m
21.3
0.3

Capitalredemption
reserve
£m
0.1
-

Other
reserves£m
7.6-

Profit andlossaccount
£m
93.1
7.8
-

Total
£m
124.6
7.8
0.3

2.5

21.6

0.1

7.6

0.5
(4.1)
97.3

0.5
(4.1)
129.1

Details of issued, authorised and allotted share capital are included in Note 20.
Details of treasury shares held by the Company are included as a note to the Consolidated Statement of Changes in Equity.
Details of the Group’s share option schemes are included in Note 8.
Other reserves relates to premium on shares issued as part of acquisitions made in the year to 31 March 1987.
j)Pension commitments

Defined Benefit scheme
The Company and its employees contribute to the Oxford Instruments Pension Scheme, a defined benefit scheme. Contributions
are based on pension costs across the Group as a whole. The assets of the Scheme are held in a separate trustee administeredfund.
The Oxford Instruments Pension Scheme was closed to new members from 1 April 2001. Since this date new employees
have been invited to join the Oxford Instruments Stakeholder Plan, a defined contribution scheme. The company makes
contributions to this scheme.
The Directors do not believe it is possible to allocate the assets and liabilities of the scheme to individual group members on
a consistent and reasonable basis. Accordingly, under FRS 17 the Company is exempt from recognising its share of the net
pension deficit and accounts for the scheme as though it were a defined contribution scheme. Details of the scheme and mostrecent actuarial valuation can be found in note 22. The contributions paid by the Company to the Oxford Instruments Pension
Scheme were £0.1m (2009: £0.2m).

Oxford Instruments plc

77

78

Notes to the Parent Company Financial Statements Continued
Stakeholder Pension scheme
The Company makes contributions to a stakeholder pension scheme. The pension costs charge for the year represents
contributions payable by the Company to the scheme. These amounted to £0.1m (2009: £0.1m). There were no outstanding
contributions at the end of the financial year (£2009: nil).
k) Guarantees
The Company has given a guarantee to the pension scheme in respect of the liability of its UK subsidiaries to the pension
scheme.
l)Commitments

Operating leases which expire:Within one year
In the second to fifth years inclusive

2010
£m

2009
£m

0.1
0.1

0.1
0.1

There were no capital commitments as at 31 March 2010 (2009: £nil).
m) Subsequent events
See note 30 for details of dividends paid or declared after the Balance Sheet date.
n)

Related party transactions

The Company has a related party relationship with its Directors and Executive officers and with its wholly owned subsidiarycompanies.
Transactions with key management personnel are disclosed in the Director’s Remuneration Report on pages 28 to 34. There
were no other significant transactions with key management personnel in either the current or preceding year other than thefollowing.
During the year the Company paid £0.1m (2009: £0.1m) to Imperialise Limited, a company for whom Nigel Keen is a Director.
The payment was for his services as Chairman of the Group. The liability due to Imperialise Ltd at the year end was nil (2009:
nil).

Oxford Instruments plc

Historical Financial Summary

79

2006
£m

2007
£m

2008
£m

2009
£m

2010
£m

147.4

161.6

176.5

206.5

211.5

Trading profit
Reorganisation costs and impairment
Amortisation of acquired intangibles
Operating profit/(loss)
Net financing income/(costs)
Profit/(loss) before taxation
Income tax (expense)/income
Profit/(loss) after taxation but before
profit on discontinued operations
Profit from discontinued operations, netof taxProfit/(loss) for the year

4.4
(4.7)
(0.2)
(0.5)
(0.4)
(0.9)
(2.5)

8.3
(5.2)
(1.1)
2.0
(0.7)
1.3
(2.8)

10.6
0.7
(2.9)
8.4
(3.4)
5.0
(2.3)

13.1
(6.8)
(4.3)
2.0
(11.3)
(9.3)
2.6

14.7
(0.4)
(4.1)
10.2
7.9
18.1
(4.8)

(3.4)

(1.5)

2.7

(6.7)

13.3

(3.4)

(1.5)

2.7

(6.7)

13.3

Adjusted profit before tax*

4.0

7.5

9.5

11.1

11.9

23.4
15.6
1.0
18.1
27.1
45.4
5.0
(39.0)
96.6
12.7
(2.9)
9.8
(6.6)
(53.4)

21.5
18.1
0.6
10.3
25.6
45.6
7.0
(40.4)
88.3
2.8
(1.0)
1.8
(3.5)
(30.8)

22.4
44.0
0.6
1.5
34.9
54.1
(48.6)
108.9
7.2(25.0)(17.8)(7.4)(21.2)

23.5
54.9
2.5
39.9
57.6
(54.3)
124.1
3.6(31.9)(28.3)(19.5)(14.4)

22.8
49.3
4.5
39.3
60.2
(70.0)
106.1
9.3(19.7)(10.4)(8.4)(35.1)

46.4

55.8

62.5

61.9

52.2

(8.0)
(7.0)
(1.2)

5.2
(9.7)
(5.1)

(0.1)
(15.1)
19.4

14.4(10.6)
(6.6)

31.1
(9.1)
(16.0)(16.2)

(9.6)

4.2

(2.8)

6.0

pence

pence

pence

pence

pence

(7.2)
3.9
8.4
-

(3.2)
9.6
8.4
-

5.6
11.7
8.4
-

(13.9)
14.8
8.4
-

27.2
17.8
8.4
-

Consolidated Statement of Income
Revenue

Consolidated Statement of Financial Position
Property, plant and equipment
Intangible assets
Available for sale equity securities
Deferred and current tax
Inventories
Trade and other receivables
Held for sale assets
Trade and other payables
Net assets excluding net cash
Cash and cash equivalents
Bank borrowings
Net cash
Provisions and other items
Retirement benefit obligations
Net assets employed/capital and reserves
attributable to the company’s equity
holders
Cash flow
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Net increase/(decrease) in cash
equivalents

Per ordinary share
Earnings – continuing
Adjusted earnings *Dividends – excluding special dividend
Dividends – special
Employees
Average number of employees**

1,412

1,388

1,501

1,531

1,341

* Before other operating income, amortisation of acquired intangibles, reorganisation costs and impairment and mark to market
gains or losses in respect of certain derivatives. ** Employee numbers in 2005 and 2006 exclude temporary employees.

Oxford Instruments plc

80

Shareholder Information
Financial calendar
3 March 2010
5 March 2010
14 March 2010
31 March 2010
8 April 201015 June 201015 June 2010
Late July
14 September 201029 September 2010
1 October 2010
3 October 2010
28 October 2010
March 2011
March 2011
March 2011
31 March 2011

Ordinary shares quoted ex-dividendRecord date for interim dividend
DRIP date (Dividend Reinvestment Plan)
Financial year end
Payment of interim dividend
Announcement of preliminary results
Announcement of final dividend
Publication of Annual Report
Annual General Meeting
Ordinary shares quoted ex-dividendRecord date for final dividend
DRIP Date
Payment of final dividend
Ordinary shares quoted ex-dividend
DRIP date (Dividend Reinvestment Plan)
Record date for interim dividend
Financial year end

Administrative enquiries concerning shareholdings
Administrative enquiries concerning shareholdings in Oxford
Instruments plc, such as the loss of a share certificate, dividend
payments, or a change of address should be directed, in thefirst instance, to the Registrar, Capita Registrars.
Capita Registrars
Northern House, Woodsome Park, Fenay Bridge,
Huddersfield, West Yorkshire HD8 0GA
Tel: 0871 664 0331

Company registration
Registered office: Tubney Woods, Abingdon, Oxon OX13
5QX
Registered in England number: 775598
Website – www.oxford-instruments.com
Oxford Instruments has an extensive website which gives
details of all its products and services, contact information,
vacancies and latest news announcements. An interactive
investor relations section gives information on recent trading
reports, share price data and forthcoming events.
Shareholder Communications
Unless you have elected to continue to receive shareholder
communications by post, you will be notified by post or,
where you have given us an email address for electronic
notification, by email that shareholder communications areavailable for viewing on the Company’s website at www.
oxford-instruments.com/investors. The Company reserves theright to distribute any communication in hard copy if it deems
this necessary.
Capita Share Dealing Services
A quick and easy share dealing service to either sell or buy
shares in many leading UK companies is provided by Capita
Share Dealing Services. An on-line and telephone facility isavailable providing our shareholders with an easy to accessand simple to use service.

Correspondence should refer to Oxford Instruments plc
and state clearly the registered name and address of theshareholder. Please notify the Registrar promptly of any
change of address.

There’s no need to pre-register and there are no complicatedforms to fill in. The online and telephone dealing service
allows you to trade “real time” at a known price which will
be given to you at the time you give your instruction.

Dividend bank mandates
If you wish dividends to be paid directly into a bank orbuilding society account and notification to be sent to yourshareholder register address, please contact the Company’s
Registrar at the address given above for a dividend mandateform.

To deal on-line or by telephone all you need is your surname,
Investor Code (IVC*) reference number, full postcode andyour date of birth. Your Investor Code can be found on a
recent share certificate, statement or tax voucher. Please havethe appropriate documents to hand when you log on or call,as this information will be needed before you can buy or sellshares.

Consolidation of share certificatesIf your total registered ordinary shareholding is represented
by several share certificates, you may wish to have these
replaced by one consolidated certificate. There is no charge
for this service. You should send your share certificates to
the Company’s Registrar (address as above), together with aletter of instruction.
Shareholder enquiries
Shareholders who have questions relating to the Group’sbusiness or who wish to have additional copies of the Reportand Accounts should apply to:Company Secretary
Oxford Instruments plc
Tubney Woods, Abingdon, Oxon OX13 5QX
Tel: 01865 393200
Fax: 01865 393442
E-mail info.oiplc@oxinst.com
Website www.oxford-instruments.com

For further information on this service, or to buy and sellshares, please contact: www.capitadeal.com (online dealing)or 0871 664 0446 (telephone dealing – calls cost 10p per
minute plus network extras; lines are open 8.00am to 4.30pm,
Monday – Friday excluding public holidays)
Full terms, conditions and risks apply and are available on
request or by visiting www.capitadeal.com.
This is not a recommendation to buy or sell shares. Remember
the price of shares can go down as well as up, and you are
not guaranteed to get back the amount that you originallyinvested.
* Should you not be able to locate your IVC number, pleasecontact Capita Registrars on 0871 664 0300 (calls cost 10p per
minute plus network extras; lines are open 8.30am to 5.30pm,
Monday - Friday)

Analysis of shareholders as at 31 March 2010

Size of shareholding
Up to 5,000 shares
5,001 to 50,000 shares
50,001 to 200,000 sharesOver 200,000 shares
Total

Number ofholders% of total

Total holding% of total

2,518
183
53
37
2,791

90.22
6.56
1.90
1.32
100.001,647,756
2,731,769
5,351,505
39,836,548
49,567,578

3.32
5.51
10.80
80.37
100.00Oxford Instruments plc

Oxford Instruments Directory81

Oxford Instruments plc

Plasma Technology

Regional Sales and Service Offices

Head OfficeTubney Woods, Abingdon
Oxon OX13 5QX, UK
Tel +44 (0) 1865 393200
Fax +44 (0) 1865 393442
email info.oiplc@oxinst.com

Tools for nanotechnology fabrication
North End, Yatton, Bristol
BS49 4AP, UK
Tel +44 (0) 1934 837000
Fax +44 (0) 1934 837001
email plasma@oxinst.com

Industrial Analysis

12214 Plum Orchard Drive
Silver Spring
MD 20904, USA
Tel +1 301 572 7834
Fax +1 301 572 6435
email plasma@oxinst.com

China
Room 714, Tower 3
Henderson Centre,
No. 18 Jianguomennei Avenue,
Beijing 100005, China
Tel +86 (0)10 6518 8160/1/2
Fax +86 (0)10 6518 8155
email china.info@oxinst.com

Tools for QC, environmental
and compliance testing
Halifax Road , High Wycombe
Bucks HP12 3SE, UK
Tel +44 (0) 1494 442255
Fax +44 (0) 1494 524129
email industrial@oxinst.com
P.O. Box 85 (Nihtisillankuja 5)
FI-02631 Espoo, Finland
Tel: +358 9 329 411
Fax:+358 9 32941 300
email industrial@oxinst.com
360 El Pueblo Road
Scotts Valley, CA, 95066, USA
Tel +1 831 439 9729
Fax +1 831 439 6051
email industrial@oxinst.com
Wellesweg 3147589 Uedem, Germany
Tel +49 (0) 2825 9383-0
Fax +49 (0) 2825 9383-100
email industrial@oxinst.com

NanoAnalysis
Systems for materials analysis
at the nano-scale
Halifax Road, High Wycombe
Bucks HP12 3SE, UK
Tel +44 (0) 1494 442255
Fax +44 (0) 1494 524129
email nanoanalysis@oxinst.com
Lejonvägen 28
Box 1097
S-18122 Lidingö
SwedenTel +46 8 544 81550
Fax +46 8 544 81558
email nordiska@oxinst.com

NanoScience
Environments for nanotechnology
research
Tubney Woods, Abingdon,
Oxon OX13 5QX, UK
Tel +44 (0) 1865 393200
Fax +44 (0) 1865 393333
email nanoscience@oxinst.com
Bahnhofstrasse 21
85737 Ismaning
GermanyTel +49 89 9699 8560
Fax +49 89 9699 8569
email nanoscience@oxinst.com

Magnetic Resonance
Benchtop NMR for industrial
applications
Tubney Woods, Abingdon,
Oxon OX13 5QX, UK
Tel +44 (0) 1865 393200
Fax +44 (0) 1865 393333
email magres@oxinst.com
8403 Cross Park Drive, Suite 3F
Austin, Texas 78754, USA
Tel +1 512 339 0640
Fax +1 512 339 0620
email magres@oxinst.com

Oxford Superconducting
Technology
Superconducting wire and MRI
support services
600 Milik Street, P O Box 429,
Carteret,
New Jersey 07008-0429, USA
Tel +1 732 541 1300
Fax +1 732 541 7769
email sales@ost.oxinst.com

Austin Scientific
Cryogenic pumps and compressors
4114 Todd Lane, Austin,
Texas 78744, USA
Tel +1 512 441 6893
Fax + 1 512 443 6665
email cryo-sales@oxinst.com

Oxford Instruments plc

Room 14-F,
No. 1 Plaza,No. 800 Nanjing East Road
Shanghai 200001, P. R. China
Tel +86 (0)21 6132 9688
Fax +86 (0)21 6360 8535
email china.info@oxinst.com
No.129, Lane 150
Pingbei Road, Xinzhuang
Industrial Area,
Minhang District, Shanghai,
201109, China
Tel +86 (0)21 6490 8580/8280
Fax: +86 (0)21 6490 4042
email china.info@oxinst.com
Room2112 Bai Hui Plaza,
193 Zhong Shan Wu Road,
Guangzhou 510030, China
Tel +86 (0)20 8364 9990
Fax +86 (0)20 8364 9996
email china.info@oxinst.com
Czech Republic
Velvarska 13, CZ-160 00 Praha
Czech Republic
Tel +420 233 343 264
Fax +420 224 311 724
email office@oxinst.cz

Japan
Haseman Bldg., 2-11-6 Tomioka,
Koto-ku, Tokyo 135-0047, Japan
Tel +81 (0)3 5245 3251
Fax +81 (0)3 5245 4472
email info.jp@oxinst.com
Shin Osaka Plaza Bldg
3-3-1 Miyahara, Yodogawa-ku
Osaka 532-0033, Japan
Tel +81 (0)6 6350 0555
Fax +81 (0)6 6350 0880
Email info.jp@oxinst.com
RussiaDenisovskiy per. 26
105005 Moscow
Russian Federation
Tel +7 (095) 933 51 23
Fax +7 (095) 933 51 24
email info@oxford.de
Singapore
10 Ubi Crescent #04-81
Ubi Tech Park Lobby E
Singapore 408564
Tel +65 6337 6848
Fax +65 6337 6286
email oi.admin@oxford-instruments.com.sg
Taiwan1F, No. 23, Jing-Shang 19th Street,
Hsinchu Taiwan
Tel +886 3 5788696
Fax +886 3 5789993
email oi.admin@oxford-instruments.com.tw

USA/Canada/Latin America
300 Baker Avenue
Suite 150
FranceConcordBâtiment Ariane
MA 01742
Domaine Technologique de Saclay USA
4 rue René Razel
Tel +1 978 369 9933
91892 Saclay
Fax +1 978 369 8287
Franceemail info@ma.oxinst.com
Tel : +33 1 69 85 25 25
Fax +33 1 69 41 46 80
Email infofrance@oxinst.com
Germany
Otto-von-Guericke-Ring 10,65205 Wiesbaden, Germany
Tel +49 6122 937 0
Fax +49 6122 937 100
email ger_info@oxinst.com
India
Office no 17, Shreeji Arcade,
Almeida Road, Panchapakhadi,
Thane 400 602 India
Tel/Fax +91 22 25452424
email india.analytical@oxinst.com

semi-conductors

mutual successinnovative & progressive

skill

passionnew ideas

heritage

OES

50+ years

world classexperiencenanotechnology XRF integrity
inspiring confidence flexible
respect
long term relationships
careenvironment
listenmoderncontemporary

trust

colleagues shareholders

openscienceadvanced technology
globalcool
class

innovation

improving our world

peopleshaping the future
the business of scienceengaging sustainableenergypace

inclusive

opennesswholehearted

metalstrustedmicroanalysis

partners

designs that last

security

engage withinformation technology

life
industry
research

cryogenic systems

etch and depositionhigh technology NMR

servicetools and solutions

superconductivity

working together
our customers

Oxford Instruments plc
Tubney Woods, Abingdon
Oxon OX13 5QX, UK
Tel +44 (0) 1865 393200
Fax +44 (0) 1865 393442
email info.oiplc@oxinst.com
As part of Oxford Instruments’ environmental policy this brochure has been printed on FSC paper