Oxford Instruments plc
Half Year Report September 2014

Empowering scienceand industry

Half Year Results Announcement for the six months ended 30 September 2014

Half Year Statement
Overview
The strengthening markets and improving order trend reported earlier in the year continued throughout thehalf year. Orders were up 19.9% to £201.5 million (2013: £168.0 million), growing the order book by 17.3%
to £147.9 million in the half. On a constant currency organic basis, orders grew by 7.4%.
Revenues grew by 7.3% to £178.5 million (2013: £166.3 million) supported by a strong contribution from
Andor Technology which we acquired in January 2014. On a constant currency organic basis, revenues fell
by 5.9%. This reflects the successful completion of the ITER contract, where sales in the comparator periodamounted to £3.0 million, and tougher trading conditions in our Plasma Technology business, as outlined in
the Sector Overview below.
Adjusted Operating Profit was £18.9 million (2013: £22.0 million). Acquisitions in the period contributed £4.1
million which countered a £2.1 million currency headwind.
Andor Technology has performed ahead of expectations and we expect it to be a key pillar of our future
growth. The Andor brand has facilitated access for the entire group into the Life Sciences market. The
convergence of the sciences offers Oxford Instruments a unique opportunity to access new markets as thelife sciences increasingly use the analytical tools and methodologies of physics and engineering. For
example, our EDS spectrometers are now being used by biologists to investigate the effects of nanoparticles on human biology, the bio-fortification of crops and pesticide protection of arable plants. This is dueto the high performance and sensitivity of our X-MAX150 scanning electron microscope detectors that, forthe first time, enable this type of bio-analysis.
Our two smaller acquisitions in the Industrial Products sector, RMG and RoentgenAnalytik, completed thistime last year, have broadened our product offering to our industrial customers and their integration isproceeding to plan.
We experienced strong growth in North America where organic order growth was 28.7%. This growth wasseen in both the Nanotechnology Tools and Industrial Products sectors as customers’ budgets for hightechnology products have increased following two slow years. In Europe, we saw an improving position withorganic orders increasing by 12.7%. In Asia, organic orders fell 13.8%, reflecting weaker demand in Japandespite growth in China.
We continue to invest in our customer focused R&D programme with sustained momentum in new productintroductions. In the first half, our R&D spend increased by 41%. Our strong brand and technologicalleadership underpinned our success in maintaining pricing and we continued to strengthen our competitive
position. The percentage of revenue that is made up of products less than three years old is a key indicatorof the vitality of our new product development and currently stands at 46%.
For the half year, the Directors are proposing an interim dividend of 3.7 pence per share (2013: 3.36
pence), a 10.1% increase. This represents the seventh consecutive half year of double digit dividend
growth.

Oxford Instruments plc
2

Half Year Results Announcement for the six months ended 30 September 2014

Sector Overview
We operate in three sectors: Nanotechnology Tools, Industrial Products and Service.
NanoTechnology Tools

Revenue
Operating profit

2014

2013

GrowthCER*
Organic
Growth

£m
92.8
6.6

£m
77.1
7.4

20.4%

-13.7%*Constant Exchange Rate

This sector produces our highest technology products and comprises two divisions. NanoCharacterisation
is made up of our NanoAnalysis, Asylum Research and Andor Technology businesses. NanoSolutions
comprises our Omicron, NanoScience and PlasmaTechnology businesses. Revenue grew by 20.4%,
reflecting a strong contribution from Andor. However, profit was impacted by a currency headwind, asoftening in demand in Japan and Russia across the sector, and a weaker performance from Plasma
Technology. Performance in our Omicron business unit improved in the half year.
Our Plasma Technology business saw reduced order intake during the second half of the prior year. Thisflowed through to weaker revenues in the reported half. However, the business has now seen a marked
recovery in orders, supported by a broad based market improvement in both research and production
applications. Within production markets, there has been encouraging activity within the High Brightness
LED sector, and we have also launched a new etch tool aimed at next generation single wafer technology.
One order of note came from the UK National Graphene Institute at The University of Manchester, which
ordered systems for graphene research from both our Plasma Technology and NanoScience businesses.
We are increasingly involved in the development and commercial exploitation of components for the
emerging quantum information processing industry. For example, our Triton® dilution refrigerators arebeing used for scaling up quantum computers towards practical machines, and our NanoScience businesshas strengthened its relationship with D-Wave, the first company to exploit the enormous commercial
potential offered by Quantum Computing.
This year, the winners of the Nobel Prize for both chemistry and physics were Oxford Instruments
customers. The Nobel Prize for Chemistry was won for the work with Super Resolution Microscopy, using
Andor’s advanced scientific cameras. As a result, we can now, understand better what is happening inside
cells, including the potential to block HIV infection and to interfere with the mechanisms for type 2 diabetes.
The winners of the Prize for Physics used our AZtec Analysis software with our electron backscatter
diffraction hardware in analysing the illumination efficiency and defect density of a semiconductor device fornext generation LED development.
Asylum Research’s MFP-3D-Bio Atomic Force Microscope is being used to undertake research into
whether cells are malignant or benign offering the possibility not only to detect cancerous cells but also tograde them in terms of how aggressively they may spread.
Andor Technology has performed well. A new Managing Director was appointed in May 2014, an internal
promotion. The integration of the company into the Group continues to proceed to plan. Spectral Imaging
and Apogee, two acquisitions made by Andor immediately prior to joining Oxford Instruments, are also
integrating well into the Group.
Seven new products were launched during the period, with the high resolution Zyla HF creating significant
customer interest. This camera is the fastest X-ray detection camera in the market, allowing the user tovisualise samples in real time in a non-destructive manner.

Oxford Instruments plc
3

Half Year Results Announcement for the six months ended 30 September 2014

Industrial Products

Revenue
Operating profit

2014

2013

£m
54.5
5.5

£m
58.0
8.1

Growth CER Organic
Growth
-6.0%

-0.7%

This sector supplies analytical systems for quality control, environmental and compliance testing, andcomponents for industry and research. It comprises two divisions: Industrial Analysis and Industrial
Components.
Reported revenue fell by 6%. However on a constant currency organic basis and excluding revenues fromthe ITER contract which concluded in the prior year, underlying growth was 4.5%. The completion of the
ITER contract meant that profits were included in the comparator period but not in the reporting period andthis, as well as adverse foreign currency exchange rates, impacted profits.
In September, we launched the X-MET8000 hand-held X-ray Fluorescence analyser. This offers significant
opportunities to take market share from our competitors in the metals recycling and Positive Material
Identification markets. The product, which is used to identify the composition of the material being analysed,
has a unique and particularly robust design, making it ideal for industrial applications. Orders for thisproduct have exceeded expectations in the first few weeks since launch.
The PMI MasterSmart mobile metals analyser launched at the end of the last financial year has beensuccessful, opening up new markets in the power plant and wind industry and the offshore petrochemical
and refineries markets.
Our magnetic resonance MQC analyser continues to be the preferred quality control (QC) tool for the snack
food industry. Industrial Analysis has recently fulfilled a large order for replacement, updated analysers to amajor international snack food manufacturer for QC testing. The market for Magnetic Resonance’s rockcore application also continues to grow, increasing its reach into South Africa and Australia.
Our acquisitions, RMG and RoentgenAnalytik, continue to integrate well. We extended the addressable
market for RMG’s mPulse LIBS (laser induced breakdown spectroscopy) instrument to include Asia and the
US. LIBS offers customers in the recycling markets rapid metal sorting and is free from the regulatory
constraints usually associated with alternative x-ray based systems. RoentgenAnalytik has just launched its
new coating thickness analyser, Maxxi6. It can for the first time determine phosphorous in nickel coatings,
a key requirement for customers who employ sophisticated new metals plating methods in the electronics
industry.
Our superconducting wire, X-ray Technology and Austin businesses make up Industrial Components
division. This part of the business delivered a steady performance. The wire business has an improvedorder book due to continued healthy demand from customers producing MRI machines.
Austin has delivered a range of rugged compressors to the South African MeerKAT project, which is aimed
at installing sixty four high-tech, highly sensitive, radio telescopes. These compressors feature uniqueelectronics, sensors and controls which have been specifically designed for operation in harshenvironments. In October 2014, GT Advanced Technologies Inc (GTAT) who had in the past, been a major
customer for Austin, filed for bankruptcy court protection under Chapter 11 of the US bankruptcy code.
Anticipated sales to GTAT in the second half of this year were £0.9 million.

Oxford Instruments plc
4Half Year Results Announcement for the six months ended 30 September 2014

Service Sector

Revenue
Operating profit

2014

2013

£m
31.7
6.8

£m
32.3
6.5

Growth CER Organic
Growth
-1.9%

1.9%

Our Service sector comprises our service, support training, refurbishment, consumables and accessories
elements of our business and our MRI and CT third party service business in the US and Japan. Revenues
were slightly down reflecting the slower trading conditions reported above. However, margins improved dueto the growth of our third party service business which has been renamed Oxford Instruments Healthcare tobetter reflect its market focus. This business delivered an increase in revenue, due in part to a successful
entry into the US veterinary market.
In the US, the Affordable Care Act continues to be a major influence in the healthcare marketplace.
Payments to health care providers have been cut and incentives provided to consolidate healthcare
provision. This is causing health care providers to re-think how they purchase service solutions for their
imaging equipment. As a result, they are moving towards more responsive and flexible partners such as
Oxford Instruments Healthcare.
The general service teams are performing well across all revenue streams. China, in particular, has shown
good growth in service contracts and spares for the NanoAnalysis and Industrial Analysis businesses. A
dedicated service repair centre was opened in India to strengthen our capability in the region.
Balance SheetAt the half year end, net debt was £137.5 million (2013: net cash £32.2 million). Cash outflow in the period
was £13.2 million (2013: £7.0 million). The Group has total committed facilities of £169.5 million. This
comprises £100 million in the form of a revolving credit facility with a club of banks, a £25 million 7 year
fixed interest loan with the European Investment Bank which was drawn down in August 2013, and a £44.5
million 7 year fixed interest loan from Pricoa which was drawn down in March 2014. The revolving credit
facility is extendable to £150 million by mutual consent, and expires in December 2018.
As calculated under IAS19, the defined benefit pension deficit has increased by £8.4 million to £54.7 million
since 31 March 2014. Since then, assets have increased by 6.8% to £209.9 million while liabilities haveincreased by 8.9% to £264.6 million as a result of the decrease in interest rates since the half year end.
Taxation and Earnings Per ShareIn the UK, the Group benefits from the patent box tax regime and the ability to utilise brought forward tax
losses. These mitigate the impact of higher tax rates in the Group’s other major territories of operation. The
combination of these factors gives a half year adjusted tax rate of 23% (2013: 21%). For the full year it isanticipated that the adjusted tax rate will be at a similar level. This is the final year in which the Group
expects to benefit from brought forward tax losses.
Adjusted basic earnings per share (EPS) is 20.9 pence (2012: 28.6 pence). Reported EPS was 2.9 pence(2012: 23.2 pence). The significant reduction in reported EPS is mainly due to amortisation charges whichhave increased significantly following the acquisition of Andor Technology in January 2014.
Dividends
In 2011, the Group moved to a progressive dividend policy, whereby we seek to raise dividends as annual
adjusted earnings per share increase, although not necessarily by the same proportion, depending on the
Directors’ perceived need for cash to expand the business both organically and through acquisition. For thehalf year just ended, the Directors are proposing an interim dividend of 3.7 pence per share (2013: 3.36
pence), payable on 9 April 2015 to shareholders who are on the register on 6 March 2015.

Oxford Instruments plc
5Half Year Results Announcement for the six months ended 30 September 2014

Going concern
The Group’s business activities, together with the factors likely to affect its future development, performanceand position, are set out above. The financial position of the Group, its cash flows, liquidity position andborrowing facilities are described above.
The diverse nature of the Group provides a solid foundation for a sustainable business. The Directors havereviewed the Group’s forecasts and considered a number of potential scenarios relating to changes in
trading performance. The Directors believe that the Group will be able to operate within its existing debt
facilities. This review also considered hedging arrangements in place. As a consequence, the Directors
believe that the Group is well placed to manage its business risks successfully.
This Half Year Report has been prepared on a going concern basis, based on the Directors’ opinion, after
making reasonable enquiries, that the Group has adequate resources to continue in operational existence
for the foreseeable future.
Principal Risks
The principal risks in the business are considered above in the Principal Risks and Uncertainties section ofthis Half Year Report.
Board Changes
Professor Sir Michael Brady retired from the Board at our recent AGM. Mike’s technical and business skills
have been a fantastic asset to the Group over many years and his wise counsel was greatly valued. To
provide continuing specialist advice on high technology issues, Professor Sir Richard Friend joined theBoard on 1 September 2014. Richard is Cavendish Professor of Physics at Cambridge University.
PeopleThe success of our business relies on the diversity of skills and expertise and the high calibre of people
worldwide. We would like to thank them for their high standards of professionalism, their commitment andvaluable contribution to the business.
Current Trading and Outlook
We expect the improved economic conditions in the US and UK, and the momentum of new productintroductions to yield a significantly improved operating profit in the second half. Second half results arealso expected to be ahead of the comparable period last year. Our confidence is underpinned by thestrengthening order book built up during the first half. However for the full year, given relatively weak tradingin the first half, we anticipate performance around the lower end of market expectations.
Looking ahead, we will continue to focus on developing innovative new products and growing market sharein our core areas of physical science. Our strategy will extend our reach into adjacent new markets byapplying our tools and technologies to life science research and analysis, thus extending the reach andreputation of the Oxford Instruments brand worldwide.
Forward-looking statements
This document contains certain forward looking statements. The forward-looking statements reflect theknowledge and information available to the Company during the preparation and up to the publication of thisdocument. By their very nature, these statements depend upon circumstances and relate to events that
may occur in the future thereby involving a degree of uncertainty. Therefore, nothing in this document
should be construed as a profit forecast by the Company.
Jonathan Flint
Chief Executive
11 November 2014

Oxford Instruments plc
6

Half Year Results Announcement for the six months ended 30 September 2014

Condensed Consolidated Statement of Income
Half year ended 30 September 2014 – unaudited

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

Notes
3

4

Half Year to 30 Sept 2014
BeforeAdjustingTotal
adjustingitems*
items*
£m
£m
£m
178.5
178.5
(99.8)(0.2)(100.0)
78.7
(0.2)
78.5
(14.3)(14.3)(31.8)(31.8)(15.1)(11.8)(26.9)
1.4
1.4
1.4
1.4
18.9
(10.6)
8.3

Half Year to 30 Sept 2013
Before Adjusting
Total
adjustingitems*
items*
£m
£m
£m
166.3
166.3
(91.4)(91.4)
74.9
74.9(12.0)(12.0)(26.9)(26.9)(14.2)(5.9)(20.1)
0.2
0.2
22.0
(5.9)
16.1

Other financial income
Financial income

0.1
0.1

-

0.1
0.1

0.2
0.2

3.5
3.5

3.7
3.7

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

(1.0)

-

(1.0)

(1.2)

-

(1.2)

(2.6)
(3.6)

(2.1)
(2.1)

(4.7)
(5.7)

(0.4)
(1.6)

(0.5)
(0.5)

(0.9)
(2.1)

Profit before income tax

3

15.4

(12.7)

2.7

20.6

(2.9)

17.7

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

6

(3.5)

2.5

(1.0)

(4.4)

(0.1)

(4.5)

11.9

(10.2)

1.7

16.2

(3.0)

13.2

pence

pence

pence

pence

Earnings per share
Basic earnings per share

7

20.9

2.9

28.6

23.2

Diluted earnings per share

7

20.8

2.9

28.3

23.1

Dividends per share
Dividends paid
Dividends proposed

8
8

3.36
3.70

3.05
3.36

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

Oxford Instruments plc
7

Half Year Results Announcement for the six months ended 30 September 2014

Condensed Consolidated Statement of Income
Half year ended 30 September 2014 – unaudited

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

Notes
3

4

Before adjusting
items*£m
360.1(196.6)163.5(25.1)(56.7)(33.1)
1.7
50.3
0.3
0.3

Year to 31 March 2014
AdjustingTotal
items*
£m
£m
360.1
(3.7)
(200.3)(3.7)
159.8(25.1)(56.7)(22.6)(55.7)
1.7(26.3)
24.0
4.1
4.4
4.1
4.4

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

(2.0)
(1.5)
(3.5)

(0.9)
(0.9)

(2.0)
(2.4)
(4.4)

Profit before income tax

47.1(23.1)

24.0

(8.7)
38.4

2.9
(20.2)(5.8)
18.2

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

6

Earnings per share
Basic earnings per share
Diluted earnings per share

7
7

Dividends per share
Dividends paid
Dividends proposed

8
8

pence

pence

67.7
67.3

32.1
31.9

11.2
12.4

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

Oxford Instruments plc
8

Half Year Results Announcement for the six months ended 30 September 2014

Condensed Consolidated Statement of Comprehensive Income
Half year ended 30 September 2014 - unaudited
Half year to
30 Sept
2014
£m
1.7

Half year to
30 Sept
2013
£m
13.2

Year to31 March
2014
£m
18.2

0.5

(5.5)

(8.4)

-

0.1
-

-

Items that will not be reclassified subsequently to
profit or loss
Remeasurement (loss)/gain in respect of post retirement
benefits
Tax on items that will not be reclassified to profit or loss
Total other comprehensive expense(10.1)
2.1
(7.5)

3.6
(2.2)
(4.0)

(1.9)
(1.0)
(11.3)

Total comprehensive (expense)/income for theperiod attributable to equity shareholders of theparent

(5.8)

9.2

6.9

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

Oxford Instruments plc
9Half Year Results Announcement for the six months ended 30 September 2014

Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2014 – unaudited

Balance at 1 April 2014

Other
reserves£m

Foreignexchangetranslation
reserve£m

Retainedearnings
£m

Total
£m

61.3

0.1

(4.4)

80.3

140.2

-

-

-

-

1.7

1.7

-

0.5

Share
capital£mSharepremium
account£m

2.9

Total comprehensive income:
Profit for the year
Other comprehensive income:
-

-

-

0.5

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

-

-

-

-

-

-

–

Remeasurement loss in respect of post-retirement benefits

-

-

-

-

(10.1)(10.1)–Tax on items recognised directly in other comprehensive income

-

-

-

-

2.1

2.1

-

-

-

0.5

(6.3)

(5.8)

–

Foreign exchange translation differences

Total comprehensive income/(expense) attributable to equity
shareholders of the parent
Transactions with owners recorded directly in equity:–

Debit in respect of employee service costs settled by award of
share options

-

-

-

-

(0.2)

(0.2)

–

Tax charge in respect of share options

-

-

-

-

(0.2)

(0.2)

–

Proceeds from shares issued

-

0.1

-

-

-

0.1

–

Dividends paid

-

-

-

-

(7.1)

(7.1)

Total transactions with owners recorded directly in equity:
Balance at 30 September 2014

Balance at 1 April 2013

-

0.1

-

-

(7.5)

(7.4)

2.9

61.4

0.1

(3.9)

66.5

127.0

Share
capital£mSharepremium
account£m

Foreignexchange
Other translation
reserves
reserve£m£m

Retainedearnings
£m

Total
£m

2.8

60.6

0.1

4.0

70.2

137.7

—

—

—

—

13.2

13.2

—

(5.5)

Total comprehensive income:
Profit for the year
Other comprehensive income:
—

—

—

(5.5)

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

—

—

0.1

—

—

0.1

–

Remeasurement loss in respect of post-retirement benefits

—

—

—

—

3.6

3.6

–

Tax on items recognised directly in other comprehensive
income

—

—

—

—

(2.2)

(2.2)

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

—

—

0.1

(5.5)

14.6

9.2

–

Foreign exchange translation differences

Transactions with owners recorded directly in equity:–

Credit in respect of employee service costs settled by award of
share options

—

—

—

—

0.8

0.8

–

Tax charge in respect of share options

—

—

—

—

(0.7)

(0.7)

–

Proceeds from shares issued

—

0.1

—

—

—

0.1

–

Dividends paid

—

—

—

—

(6.4)

(6.4)

Total transactions with owners recorded directly in equity:

—

0.1

—

—

(6.3)

(6.2)

Balance at 30 September 2013

2.8

60.7

0.2

(1.5)

78.5

140.7

Oxford Instruments plc
10Half Year Results Announcement for the six months ended 30 September 2014

Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2014 – unaudited continued

Balance at 1 April 2013

Other
reserves£m

Foreignexchangetranslation
reserve£m

Retainedearnings
£m

Total
£m

60.6

0.1

4.0

70.2

137.7

—

—

—

—

18.2

18.2

—

(8.4)

Share
capital£mSharepremium
account£m

2.8

Total comprehensive income:
Profit for the year
Other comprehensive income:
—

—

—

(8.4)

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

—

—

—

—

—

—

–

Remeasurement loss in respect of post-retirement benefits

—

—

—

—

(1.9)

(1.9)

–

Tax on items recognised directly in other comprehensive income

—

—

—

—

(1.0)

(1.0)

—

—

—

(8.4)

15.3

6.9

—

—

—

—

1.6

1.6
(0.4)

–

Foreign exchange translation differences

Total comprehensive (expense)/income attributable to equity
shareholders of the parent
Transactions with owners recorded directly in equity:–

Credit in respect of employee service costs settled by award of
share options–

Tax charge in respect of share options

—

—

—

—

(0.4)

–

Proceeds from shares issued

0.1

0.7

—

—

—

0.8

–

Dividends paid

—

—

—

—

(6.4)

(6.4)

Total transactions with owners recorded directly in equity:

0.1

0.7

—

—

(5.2)

(4.4)

Balance at 31 March 2014

2.9

61.3

0.1

(4.4)

80.3

140.2

Oxford Instruments plc
11Half Year Results Announcement for the six months ended 30 September 2014

Condensed Consolidated Statement of Financial Position
As at 30 September 2014 - unaudited
As at
30 Sept
2014
£m

As at
30 Sept
2013
£m

As at
31 March2014£mas represented**

34.5
240.7
12.8
288.0

32.1
84.1
19.3
135.5

34.4
249.0
11.4
294.8

77.2
79.6
1.2
3.9
18.9
180.8

61.0
70.3
0.1
4.2
56.9
192.5

67.8
80.9
1.5
5.3
32.6
188.1

468.8

328.0

482.9

2.9
61.4
0.1
(3.9)
66.5
127.0

2.8
60.7
0.2
(1.5)
78.5
140.7

2.9
61.3
0.1
(4.4)
80.3
140.2

156.4
8.0
54.7
9.4
228.5

24.7
11.4
42.6
5.1
83.8

141.4
13.1
46.3
12.6
213.4

95.5
2.3
5.2
1.1
9.2
113.3

84.3
4.4
4.6
0.4
9.8
103.5

15.5
99.2
3.7
0.5
10.4
129.3

Total liabilities

341.8

187.3

342.7

Total liabilities and equity

468.8

328.0

482.9

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

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

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

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

Current liabilities
Bank loans
Trade and other payables
Current income tax payables
Accrued dividend
Derivative financial instruments
Provisions**See note 1 for details of re-presentation of comparative information

Oxford Instruments plc
12Half Year Results Announcement for the six months ended 30 September 2014

Condensed Consolidated Statement of Cash Flows half year ended 30 September 2014 - unaudited

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

Half year to
30 Sept
2014
£m
1.7

Half year to
30 Sept
2013
£m
13.2

Year to31 March
2014
£m
18.2

1.0
5.6
0.2
0.9
(1.4)
—
10.9
2.6
1.7

4.5
(1.6)
—
0.8
—
—
5.1
2.3
1.8

5.8
—
3.7
7.8
—
0.1
14.7
5.0
3.9

23.2
0.1
(0.2)
(1.3)

26.1
0.2
0.8
(0.1)

59.2
0.3
1.6
(6.4)

(2.9)

(2.4)

(5.4)

18.9
(9.6)
1.6
(11.1)
3.9
3.7
(2.4)
(4.4)
(3.1)

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

49.3
(2.9)
(3.8)
(3.3)
(10.9)
28.4
(1.0)
(6.2)
21.2

(0.8)
(3.3)
(4.5)
(8.6)

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

(165.7)(6.8)(5.4)(177.9)0.1
15.0(15.5)(1.9)(2.3)(14.0)
32.6
0.3
18.9

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

0.8
156.9
—
(6.4)
151.3
(5.4)
39.2
(1.2)
32.6

Half year to
30 Sept2014£m(14.0)

Half year to
30 Sept
2013
£m
18.5

Year to31 March
2014
£m
(5.4)

0.3
(13.7)(15.0)
15.5(13.2)(124.3)(137.5)(0.8)
17.7(24.7)
—
(7.0)
39.2
32.2

(1.2)
(6.6)
(156.9)—(163.5)39.2(124.3)

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

Oxford Instruments plc
13

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements
Half year ended 30 September 2014 – unaudited
1

BASIS OF PREPARATION OF ACCOUNTS

Reporting entity
Oxford Instruments plc (the Company) is a company incorporated in England and Wales. The condensed
consolidated half year financial statements consolidate the results of the Company and its subsidiaries (together
referred to as the Group). They have been prepared and approved by the Directors in accordance with International
Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting as adopted by the EU. They do not include allof the information required for full annual financial statements, and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 March 2014.
The financial information contained herein is unaudited and does not constitute statutory accounts as defined by
Section 435 of the Companies Act 2006. The comparative figures for the financial year ended 31 March 2014 are notthe company’s statutory accounts for that financial year. Those accounts have been reported on by the company’s
auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include areference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and(iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Significant accounting policies
As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set offinancial statements has been prepared applying the accounting policies and presentation that were applied in the
preparation of the Company’s published consolidated financial statements for the year ended 31 March 2014, except
as explained below.
Adoption of new and revised standards
The following standards and interpretations are applicable to the Group and have been adopted as they aremandatory for the year ended 31 March 2015.
IFRS 10 – Consolidated financial statements: This new standard provides a single model to be applied in the control
analysis for all investees, including entities that currently are SPEs in the scope of SIC-12. The adoption of thisstandard has had no significant impact.
Amendments to IAS 36 – Impairment of assets and recoverable amount disclosures for non-financial assets: The
amendments reverse the unintended requirement in IFRS 13 Fair Value Measurement to disclose the recoverable
amount of every cash-generating unit to which significant goodwill or indefinite-lived intangible assets have been
allocated. Under the amendments, recoverable amount is required to be disclosed only when an impairment loss has
been recognised or reversed. The adoption of this standard has had no significant impact.
Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities: The amendments clarify the offsetting
criteria, specifically when an entity currently has a legal right of set off; and when gross settlement is equivalent to net
settlement. The adoption of this standard has had no significant impact.
At present, there are no other new standards, amendments to standards or interpretations mandatory for the first time
for the year ending 31 March 2015.
Estimates
The preparation of half year financial statements requires management to make judgements, estimates andassumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates.
In preparing these Half Year Financial Statements, the significant judgements made by management in applying thegroup’s accounting policies and key sources of estimation uncertainty were the same as those that applied to theConsolidated Financial Statements as at and for the year ended 31 March 2014.

Oxford Instruments plc
14

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unaudited
1

BASIS OF PREPARATION OF ACCOUNTS continued

Going concern
The condensed consolidated half year financial statements have been prepared on a going concern basis, based on
the Directors’ opinion, after making reasonable enquiries, that the Group has adequate resources to continue inoperational existence for the foreseeable future.
Re-presentation of comparative information
As required by IFRS3 the accounts as at 31 March 2014 have been re-resented in respect of the finalisation of theacquisition accounting which was provisional at the time the 31 March 2014 accounts were published.
Exchange rates
The principal exchange rates used to translate the Group’s overseas results were as follows:
Period end rates

Half year to
30 Sept
2014
1.62
1.28
178

Half year to
30 Sept
2013
1.62
1.20
159

Year to31 March
2014
1.67
1.21
172

Average translation rates
Half year to 30 September 2014
April
May
June
July
AugustSeptember

US Dollar

Euro

Yen

1.68
1.68
1.70
1.68
1.66
1.62

1.21
1.22
1.24
1.25
1.26
1.27

172
172
172
173
173
175

Average translation rates 2014
April
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary
FebruaryMarch

US Dollar
1.53
1.53
1.52
1.53
1.54
1.58
1.62
1.63
1.65
1.65
1.66
1.67

Euro
1.19
1.18
1.17
1.16
1.17
1.18
1.18
1.19
1.20
1.21
1.22
1.21

Yen
147
152
152
151
151
155
158
163
171
171
169
171

US DollarEuro
Yen

Oxford Instruments plc
15

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unaudited
2

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

Profit before income tax
Reversal of acquisition related fair value adjustments toinventory
Acquisition related costs
Amortisation and impairment of acquired intangibles
Contingent consideration deemed no longer payable
Unwind of discount in respect of deferred consideration
Mark to market (gain)/loss in respect of derivative
financial instruments
Settlement loss on US pension scheme
Adjusted profit before income tax
Share of taxation
Adjusted profit

Half year to
30 Sept
2014
£m
2.7

Half year to
30 Sept
2013
£m
17.7

Year to31 March
2014
£m
24.0

0.2
0.9
10.9
(1.4)
0.5

0.8
5.1
0.5

3.7
7.8
14.7
0.9

1.6
15.4
(3.5)
11.9

(3.5)
20.6
(4.4)
16.2

(4.1)
0.1
47.1
(8.7)
38.4

The reversal of acquisition related fair value adjustments to inventory are excluded from adjusted profit to provide ameasure that includes results from acquired businesses on a consistent basis over time to assist comparison of
performance.
Acquisition related costs comprise professional fees incurred in relation to mergers and acquisitions activity and any
consideration which, under IFRS 3 (revised), falls to be treated as a post-acquisition employment expense.
In common with a number of other companies adjusted profit excludes the non-cash amortisation and impairment ofacquired intangible assets and the unwind of discounts in respect of contingent consideration relating to businesscombinations. In the current period, £1.4m relating to contingent consideration on the acquisition of RMG Technology
Limited which the directors no longer consider will be payable, has been released to other operating income.
In calculating the share of tax attributable to adjusted profit before tax in 2011 a one-off recognition of deferred tax
assets relating to the Group’s UK businesses of £11.3m was excluded. At that time the Group announced its intention
to exclude the reversal of this deferred tax from the calculation of the share of tax attributable to adjusted profit before
tax in the years in which it reverses. In the year to 31 March 2014 deferred tax of £2.2m was reversed. In the current
period deferred tax of £0.8m (2013: £1.2m) has reversed and consequently been excluded from the tax attributable toadjusted profit before tax.
In the year to 31 March 2014, the Group purchased annuities for 27 members of the US defined benefit pension
scheme. A loss of £0.1m crystallised on purchase.
Under IAS 39, all derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition,
they are also measured at fair value. In respect of instruments used to hedge foreign exchange risk and interest raterisk the Group does not take advantage of the hedge accounting rules provided for in IAS 39 since that standard
requires certain stringent criteria to be met in order to hedge account, which, in the particular circumstances of theGroup, are considered by the Board not to bring any significant economic benefit. Accordingly, the Group accounts forthese derivative financial instruments at fair value through profit or loss. To the extent that instruments are hedges of
future transactions, adjusted profit for the year is stated before changes in the valuation of these instruments so thatthe underlying performance of the Group can be more clearly seen.

Oxford Instruments plc
16

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unaudited
3

SEGMENT INFORMATIONThe Group has five operating segments. These operating segments have been combined into three aggregatedoperating segments to the extent that they have similar economic characteristics, with relevance to products andservices, type and class of customer, methods of sale and distribution and the regulatory environment in which they
operate. Each of these three aggregated operating segments is a reportable segment.
The Group’s internal management structure and financial reporting systems differentiate the three aggregatedoperating segments on the basis of the economic characteristics discussed below:•••

the Nanotechnology Tools segment contains a group of businesses supplying similar products, characterisedby a high degree of customisation and high unit prices. These are the Group’s highest technology products
serving research customers in both the public and private sectors;
the Industrial Products segment contains a group of businesses supplying high technology products andcomponents manufactured in medium volume for industrial customers; andthe Service segment contains the Group’s service business as well as service revenues from other parts of theGroup.

Reportable segment results include items directly attributable to a segment as well as those which can be allocated ona reasonable basis. Inter-segment pricing is determined on an arm’s length basis. The operating results of each are
regularly reviewed by the Chief Operating Decision Maker, which is deemed to be the Board of Directors. Discrete
financial information is available for each segment and used by the Board of Directors for decisions on resource
allocation and to assess performance. No asset information is presented below as this information is not presented inreporting to the Group’s Board of Directors.
Half year to 30 September 2014

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

Nanotechnology
Tools
£m
92.7
0.1
92.8

Industrial
Products
£m
54.1
0.4
54.5

6.6

5.5

Nanotechnology
Tools
£m
77.0
0.1
77.1

Industrial
Products
£m
57.0
1.0
58.0

7.4

8.1

Nanotechnology
Tools
£m
180.5
0.1
180.6

Industrial
Products
£m
113.3
1.4
114.7

21.2

15.6

Service
£m
31.7
31.7

Total
£m
178.5

6.8

18.9

Service
£m
32.3
32.3

Total
£m
166.3

6.5

22.0

Service
£m
66.3
0.1
66.4

Total
£m
360.1

13.5

50.3

Half year to 30 September 2013

External revenue
Inter-segment revenue
Total segment revenue
Segment operating profit
Year to 31 March 2014

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

Oxford Instruments plc
17

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unaudited
Reconciliation of reportable segment profit

Operating profit for reportable segments
Reversal of acquisition related fair value adjustments toinventory
Acquisition related costs
Settlement loss on US pension scheme
Amortisation of acquired intangibles
Contingent consideration deemed no longer payable
Financial income
Financial expenditure
Profit before income tax

4

Half year to
30 Sept
2014
£m
18.9

Half year to
30 Sept
2013
£m
22.0

Year to31 March
2014
£m
50.3

(0.2)
(0.9)
(10.9)
1.4
0.1
(5.7)
2.7

(0.8)
(5.1)
3.7
(2.1)
17.7

(3.7)
(7.8)
(0.1)
(14.7)
4.4
(4.4)
24.0

Half year to
30 Sept
2014£m

Half year to
30 Sept
2013£mYear to31 March
2014
£m

14.3
(0.4)
1.6

12.0
(0.3)
0.7

25.1
(0.8)
2.1

(1.7)
4.5

(1.8)
2.4

(3.9)
5.4

18.3

13.0

27.9

RESEARCH AND DEVELOPMENT

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

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

Oxford Instruments plc
18

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unaudited
5

ACQUISITIONS

Andor Technology plc
On 21 January 2014 the Group acquired 100% of the issued listed share capital of Andor Technology plc for a net
cash consideration of £158.1m. Andor is a market leading supplier of high performance optical cameras, microscope
systems and software.
The book and fair values of the assets and liabilities acquired are given in the table below. Fair value adjustments
have been made to better align the accounting policies of the acquired business with the Group accounting policies
and to reflect the fair value of assets and liabilities acquired. The business has been acquired for the purpose of
integrating into the Nanotechnology Tools segment where it is believed that synergies can be obtained particularly inrespect of routes to market.
Book value£m

Adjustments£m

Fair value£mIntangible fixed assets
Tangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Deferred tax
Cash

9.4
6.0
11.1
10.3
(13.5)
(0.5)
17.2

70.2
(4.0)
2.5
0.5
(2.0)
(16.0)
—

79.6
2.0
13.6
10.8
(15.5)(16.5)
17.2

Net assets acquired
Goodwill

40.0

51.2

91.2
84.1

Total consideration
Cash acquired

175.3(17.2)Net cash outflow relating to the acquisition

158.1

The goodwill arising is not tax deductible and is considered to represent the value of the acquired workforce andsynergistic benefits expected to arise from the acquisition.
RoentgenAnalytik Systeme GmbHOn 31 December 2013 the Group acquired 100% of the issued share capital of Roentgenanalytik Systeme GmbH for a
net cash consideration of £1.6m.The company specialises in designing and supplying instruments for coating
thickness measurement and material analysis, using X-ray fluorescence (XRF).
The book and fair values of the assets and liabilities acquired are given in the table below. Fair value adjustments
have been made to better align the accounting policies of the acquired business with the Group accounting policies
and to reflect the fair value of assets and liabilities acquired. The business has been acquired to strengthen Oxford
Instruments’ range of X-ray Fluorescence (XRF) materials and coating thickness analysers.

Oxford Instruments plc
19Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unauditedBook value£m

Adjustments£m

Fair value£mIntangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Cash

—
0.2
0.1
(0.3)
0.1

1.2
—
—
0.2
—

1.2
0.2
0.1
(0.1)
0.1

Net assets acquired
Goodwill

0.1

1.4

1.5
0.2

Total consideration
Cash acquired

1.7
(0.1)

Net cash outflow relating to the acquisition

1.6

The goodwill arising is tax deductible in full and is considered to represent the value of the acquired workforce andsynergistic benefits expected to arise from the acquisition.
RMG Technology Ltd
On 8 November 2013 the Group acquired 100% of the issued share capital of RMG Technology Limited for an initial
net cash consideration of £5.7m. RMG is a UK business specialising in Laser Induced Breakdown Spectrography.
The book and fair values of the assets and liabilities acquired are given in the table below. Fair value adjustments
have been made to better align the accounting policies of the acquired business with the Group accounting policies.
The business has been acquired for the purpose of integrating into the Industrial Analysis segment where it will add a
unique hand-held analyser to the Group’s product portfolio.
Book value£m

Adjustments£m

Fair value£mIntangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Deferred tax
Cash

—
0.1
0.2
(0.3)
—
0.4

8.2
—
—
—
(1.6)
—

8.2
0.1
0.2
(0.3)
(1.6)
0.4

Net assets acquired
Goodwill

0.4

6.6

7.0
0.5

Total consideration
Cash acquired
Contingent consideration at acquisition

7.5
(0.4)
(1.4)

Net cash outflow relating to the acquisition

5.7

The goodwill arising is not tax deductible and is considered to represent the value of the acquired workforce andsynergistic benefits expected to arise from the acquisition. Further contingent consideration of up to £4m is payable
based on revenue of the acquired business in the year to 31 March 2015.

Oxford Instruments plc
20

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unaudited

6

TAXATION

The total effective tax rate on profits for the half year is 36% (2013: 25%). The weighted average tax rate in respect ofadjusted profit before tax (see note 2) for the half year is 23% (2013: 21%).
7

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

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

Half year to
30 Sept
2014
Sharesmillion
57.1

Half year to
30 Sept
2013
Sharesmillion
56.9

Year to31 March
2014
Sharesmillion
57.0

(0.2)

(0.2)

(0.2)

56.9

56.7

56.8

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

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

Half year to
30 Sept
2014
SharesmillionHalf year to
30 Sept
2013
SharesmillionYear to31 March
2014
Sharesmillion

56.9
0.4

56.7
0.5

56.8
0.4

57.3

57.2

57.2

Oxford Instruments plc
21

Half Year Results Announcement for the six months ended 30 September 2014

Notes on the Half Year Financial Statements (continued)
Half year ended 30 September 2014 – unaudited
8

DIVIDENDS PER SHARE

The following dividends per share were paid by the Group:

Previous period interim dividend
Previous period final dividend

Half year to
30 Sept
2014
pence
3.36
3.36

Half year to
30 Sept
2013
pence
3.05
3.05

Year to31 March
2014
pence
3.05
8.15
11.20

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

Interim dividend
Final dividend

Half year to
30 Sept
2014
pence
3.70
3.70

Half year to
30 Sept
2013
pence
3.36
3.36

Year to31 March
2014
pence
3.36
9.04
12.40

The final dividend for the year to 31 March 2014 was approved by shareholders at the Annual General Meeting heldon 9 September 2014. Accordingly is it no longer at the discretion of the company and has been included as a liability
as at 30 September 2014. It was paid on 23 October 2014.
The interim dividend for the year to 31 March 2015 of 3.7 pence was approved by the Board on 11 November 2014,
10.1% higher than the previous year and has not been included as a liability as at 30 September 2014. The interim
dividend will be paid on 9 April 2015 to shareholders on the register at the close of business on 6 March 2015.

Oxford Instruments plc
22

Half Year Results Announcement for the six months ended 30 September 2014

Principal Risks and Uncertainties
The Group has in place a risk management structure and internal controls which are designed to identify, manage andmitigate risk.
In common with all businesses, Oxford Instruments faces a number of risks and uncertainties which could have amaterial impact on the Group's long term performance.
On pages 16 and 17 of its 2014 Annual Report and Accounts (a copy of which is available at www.oxfordinstruments.com), the Company set out what the Directors regarded as being the principal risks and uncertainties
facing the Group's long term performance and these are reproduced in the table below. Many of these risks are
inherent to Oxford Instruments as a global business and they remain valid as regards their potential impact during theremainder of the second half of the year.
Specific Risk

Context

Risk

Technical Risk

The Group provides
high technology
equipment andsystems to its
customers.

Failure of theadvanced
technologies
applied by theGroup toproducecommercial
products,
capable of being
manufactured
and sold
profitably.

Economic
Environment

Acquisitions

Foreignexchangevolatility

The recent global
recession andprevailing economic
downturn haveresulted in cuts toboth government andprivate sector
spending.

Demand for theGroup’s products
may be lower
than anticipated.

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

Appropriateacquisition
targets may not
be available in
the necessary
timescale.
Alternatively,
once acquired,targets may failto provide theplanned value.

A significant
proportion of theGroup’s profit ismade in foreign
currencies.

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

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

Lower
profitability andfinancial
returns.

Lower
profitability andfinancial
returns.
Management
focus taken
away from thecore businessin order tomanageintegration
issues.

Lower
profitability andfinancial returns

Associated strategic
priorities‘Realising the Brand’ Using ‘Voice of the
Customer’ to drive
rapid new productdevelopment.
‘Liberate Cash’ Support and develop
our employees tomaximise their value
add.

‘Realising the Brand’ Developing a strong
brand in existing anddeveloping markets.
‘Delivering
Shareholder Value’ Focus on balanced
and attractive global
markets.
‘Realising the Brand’ Developing a strong
brand in existing anddeveloping markets.
‘Inventing the Future’ Using “Voice of the
Customer” to drive
rapid new productdevelopment.
‘Adding Personal
Value’ – Supportingand developing our
employees.
‘Delivering
Shareholder Value’ Focus on balanced
and attractive global
markets.
‘Liberating Cash’ –Developing acompetitive global
supply base that
supports our growth.

Mitigation
The Group has moved awayfrom large scale, single
customer development
programmes towards morecommercially orientatedproducts.
The New Product Introduction
programme that any new R&D
projects must pass throughprovides a framework within
which the commercial viability of
projects are scrutinised andassessed.
The Group has a broad spreadof customers, applications andgeographical markets.
The Group is expanding in theso called BRIC nations, whosemarkets have been more
resilient during the economic
downturn.
Extensive financial andtechnical due diligence isundertaken by the Group during
any acquisition programmes.
Each transaction has acomprehensive post acquisition
integration plan which isreviewed at the highest level.

The Group seeks to mitigate theexposure to transactional risk by
the use of natural hedges
wherever possible.
The remaining transactional
foreign exchange risk in any
year is mitigated through theuse of forward and nonpremium based option
exchange contracts.

Oxford Instruments plc
23

Half Year Results Announcement for the six months ended 30 September 2014
Outsourcing

Pensions

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

Failures in the
supply chain
impacting sales.

The Group’s
calculated pension
deficit is sensitive tochanges in theactuarialassumptions.

Movements inthe actuarial
assumptions
may have anappreciable
effect on thereported pension
deficit.

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

The employee
leaves theGroup.

Lower
profitability andfinancial
returns.

A number of theGroup’s employees
are business critical.

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

‘Liberating Cash’ –Developing acompetitive global
supply base that
supports our growth.

Relationships with outsourcing
businesses are monitored
closely and any potential issues
are acted upon swiftly to avoid
disruption.

‘Realising the Brand’ Developing a strong
brand in existing anddeveloping markets.

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

‘Delivering
Shareholder Value’ Focus on balanced
and attractive global
markets.

The Group has closed its
defined benefit pension
schemes in the UK and US tofuture accrual.

‘Liberating Cash’ –Developing acompetitive global
supply base that
supports our growth.
‘Adding Personal
Value’ – Supportingand developing our
employees.
‘Inventing the Future’ –Providing anenvironment for
inventing andinnovation.

Routes tomarketIn some instances theGroup’s products arecomponents of higher
level systems andthus the Group does
not control its route tomarket.

The systems
integrator
switches supplierdenying theGroup’s route tomarket.

Lower
profitability andfinancial
returns.

‘Inventing the Future’– Developing productsthat offer the best
technical solution.
‘Realising the Brand’ –Ensuring that end
customers appreciate
the benefits of Oxford
Instruments
technology.

The Group has a funding plan inplace to reduce the pension
deficit over the short to medium
term.

The Group undertakes a regular
employee survey andimplements and reviews
resulting action plans.
A comprehensive succession
planning process is in place,
together with a talent network
which identifies and manages
contacts with people who could
provide external succession for
critical current and future roles.
A management development
programme provides exposure
to key skills needed for growth.
Regular individual performance
reviews take place.
Use of the stage gate processand ‘Voice of the Customer’ tomake sure that the Group’s
products are the best in themarket.
Co-marketing with system
integrators to promote themerits of the Group’s products
to end customers.
Seeking to increase the numberof integrators supplied by theGroup .

The impact of the economic and end market environments in which the Group's businesses operate are considered in
the Half Year Statement of this Half Year Report, together with an indication if management is aware of any likely
change in this situation.

Oxford Instruments plc
24Half Year Results Announcement for the six months ended 30 September 2014
Responsibility Statement of the Directors in respect of the Half Year Financial Statements
We confirm that to the best of our knowledge:•

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

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

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

Jonathan Flint, Chief Executive
11 November 2014

Kevin Boyd, Group Finance Director

Oxford Instruments plc
25

Half Year Results Announcement for the six months ended 30 September 2014

Independent review report to Oxford Instruments plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 September 2014 which comprises the Condensed Consolidated Statement of
Income, the Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Statement of
Financial Position, Condensed Consolidated Statement of Changes in Equity, Condensed Consolidated Statement of
Cash Flows and the related explanatory notes.
We have read the other information contained in the half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company inmeeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct
Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters weare required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company for our review work, for this report, or for theconclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The
condensed set of financial statements included in this half-yearly financial report has been prepared in accordancewith IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the halfyearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410
Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing(UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 September 2014 is not prepared, in allmaterial respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Greg Watts
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill, Snow Hill Queensway
Birmingham, B4 6GH
11 November 2014

Oxford Instruments plc
26

For more information please email: info.oiplc@oxinst.com

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may not be used, applied or reproduced for any purpose or form part of any order or contract or regarded as the representation relating to the
products or services concerned. Oxford Instruments’ policy is one of continued improvement. The Company reserves the right to alter, without
notice the specification, design or conditions of supply of any product or service. Oxford Instruments acknowledges all trademarks andregistrations. © Oxford Instruments plc, 2014. All rights reserved.