Oxford Instruments plc
Half Year Report September 2008®

The Business of ScienceSummary of Half Year Results

2008
Orders
Revenue
Trading profit
Adjusted profit before tax (note 2)
Net borrowings
Shareholders’ equity

2007

£m

£m

97.5
92.8
3.5
2.6
(24.0)
63.6

83.1
78.3
2.0
1.8
(14.8)
55.6

2008

2007

pence

pence

per shareper share

Adjusted earnings
Basic earnings
Proposed dividends
Net assets

3.4
2.6
2.4
128.8

2.3
3.0
2.4
113.0

Employees at half year end *

1,564

1,510

* Previously the Group has excluded temporary employees in this figure. These employees have now been
included and the prior year figure has been restated accordingly.

Oxford Instruments plc

About Oxford Instruments
1

Oxford Instruments is a worldwide business,
supplying high technology tools and systems
into diverse markets which include industrial
analysis, research, education, space, energy
and the life sciences.
Our ability to observe and manipulate matterat the smallest scale allows us to exploit the
emerging potential to be found in bioscienceand nanotechnology. Our products support
those customers who address the global issuesof protecting the environment, conserving
energy, security and health.
Innovation has been at the heart of Oxford
Instruments since it was founded and it is thedriving force behind our growth and success.
The Group now employs over 1,500 people
worldwide, and has been listed on the
London Stock Exchange since 1983.

Oxford Instruments plc

Chairman’s Statement
2

Introduction
The Group performed well during the first halfof the year with reported sales up by 19% on thesame period last year. This strong performance washelped by currency movements, particularly thestrengthening of the Euro. On a constant currency
basis, growth was 12%. Adjusted profit before tax
for the half year was £2.6 million, ahead of thesame period last year (2007: £1.8 million). Again,
this result was helped by favourable currency
movements.
We made two acquisitions in the first half of theyear. Technologies and Devices International (TDI),
based in the US, brings to us technology for a low
cost process in the manufacture of High Brightness
Light Emitting Diodes (HBLEDs).
The Link
Analytical AB business, a Scandinavian distributorof analytical equipment, extends our global sales
network and has already begun to contribute toour sales growth.
In addition to these acquisitions, we have seencontinued organic growth across our coreproducts although this is at a slower rate than lastyear. This reflects some weakening in the growthof customer demand, particularly in the United

Oxford Instruments plc

States. However, environmental and health andsafety issues continue to drive growth and ourbroad range of differentiated products serving
these markets means that we have increased
market share in key areas.
We are now half way through our five year plan.
As reported in June, the first two years of theplan were in line with our targets and we havemaintained growth in sales and margin in the firsthalf of this year. Our business continues to perform
well. The results of our investments to dateprovide a sound platform for growth, however
should there be a prolonged market downturn,organic growth will be more difficult to achieve.
New opportunities for margin improvement arepresenting themselves in the current businessclimate as we have greater leverage with our
suppliers as well as opportunities to reduce othercosts. We remain vigilant and will continue to takesuch action as necessary to maximise shareholder
value.

Chairman’s Statement (continued)

3

Financial Summary
Revenues increased by 19% over the same period
last year to £92.8 million. Acquisitions contributed
8% of the growth with 7% coming from thestrengthening of our major trading currencies, theUS dollar, Euro and Japanese Yen. Orders of £97.5
million exceeded revenues by £4.7 million.
Gross margins rose from 40.2% to 41.2%, aided by
the favourable exchange rate movements in thecurrencies described above.
Underlying operating expenses increased by£0.4 million or 1.2%. Acquisitions and foreignexchange added a further £4.8 million, resulting in
an increase of £5.2 million in reported operating
expenses.
Trading profit increased by £1.5 million to £3.5
million, of which £0.8 million represented organic
growth at constant currency. Increases in interest(£0.2 million) and imputed interest on the pension
fund (£0.5 million) meant that adjusted profit
before tax (note 2) rose by £0.8 million to £2.6
million.

million exceptional gain on the disposal of theGroup’s holding in Oxford Diffraction Limited, a£0.5 million write down in the value of the Group’s
holding in ARKeX Limited and a £0.9 million
loss on the disposal of Plasma Technology’s loss
making Molecular Beam Epitaxy (MBE) business.
Amortisation of acquired intangibles rose by £1.6
million to £2.0 million and our policy of marking
to market our financial instruments resulted in acharge of £1.3 million (2007: credit £0.2 million).
In July 2007 the Group entered into a committed£50 million five year revolving credit facility withits banks. At the period end net debt was £24.0
million. The major movements in the period
included an increase in working capital of £2.3
million, acquisitions totalling £3.4 million, pension
deficit reduction payments of £1.1 million andinflows from disposals of £3.3 million. Debt
increased by £1.6 million due to the movements inforeign exchange rates in the period.
The Directors have recommended an interim
dividend of 2.4 pence, unchanged from theprevious year, payable on 6 April 2009.

Reported profit before tax of £1.3 million (2007:£2.3 million) included a net exceptional profit of£2.0 million (2007: £0.7 million) consisting of a £3.4

Oxford Instruments plc

Chairman’s Statement (continued)

4Operational Review
The Analytical business includes Industrial Analysis,
NanoAnalysis and Plasma Technology. As described
below, the business showed good growth in bothrevenue and profit in the half year.
Our Industrial Analysis business, which now
includes our X-ray source business, provides
high technology industrial instrumentation.
The business continued to grow in a large andcompetitive market.
We differentiate our
products through technical performance andcustomer service. In the half year we launched thenext generation of our best selling X-Met handheld X-ray fluorescence analyser, offering higher
performance than our competitors. In order tosimplify the business and improve efficiencies,
we have relocated the manufacturing previously
undertaken in our Chicago facility to our existing
factories in California and Shanghai.
Our NanoAnalysis business produces detectors
which analyse the chemical composition of asample at the atomic level. This business has had
a strong half year with demand holding up well
supported by the introduction of our unique newdetector, X-Max. This enables our customers to
improve efficiency by operating up to ten times
faster than previously.
Our Plasma Technology business provides
nanotechnology products for a range of
emerging industries. It has done well in thehalf year, supported by our new Atomic Layer
Deposition tools and the demand for capital

Oxford Instruments plc

equipment in the HBLED and photovoltaic devices
markets. The disposal of the MBE business in
September has allowed us to focus on these newopportunities. Further, our technical innovations
and improvements in our customer service levels
have helped us to increase our market share. We
are investing in our TDI business, acquired in April
this year, to develop an industrial tool for the
production of HBLEDs.
The
Superconductivity
business
comprises
NanoScience, Superconducting Wire, Austin
Scientific and Molecular Biotools. The business
continued to show revenue growth in the half year
whilst delivering a net loss, reflecting the inclusionof R&D expenditure previously reported as Oxford
Instruments Innovation together with our ongoinginvestment in Molecular Biotools.
Our NanoScience business provides equipment
to academic and research customers working at
ultra low temperatures and high magnetic fields.
Through our acquisition of VeriCold last year, we
gained access to new technology which enables
very low temperatures to be achieved without
the use of liquid helium. Demand for this typeof product has exceeded expectations. However,demand for traditional wet products which
continue to use liquid helium has reduced more
rapidly than expected. As a result of this shift indemand and improved factory efficiencies, thismonth we have reduced the workforce in thisbusiness by fifty people, a cut of 25%.

Chairman’s Statement (continued)

5

Our Superconducting Wire business based in
the United States showed increased revenues
through strong demand from our major customers
in the MRI scanner market, where our highquality superconducting wire has meant that
we are gaining market share. In addition, theInternational ITER project to conduct research into
power generation through nuclear fusion is now
reaching a critical phase and we are well placed
to win orders for superconducting wire for the
project.
Our Austin Scientific business manufactures andrefurbishes cryogenic pumps and refrigerators forthe semi-conductor market. This small business isfacing difficult trading conditions.
Our Molecular Biotools business has launched a new
product, PharmaSense™. This gives laboratories
an accessible, low cost tool for understanding the
behaviour of drugs in the human body. Interestfor this and our existing HyperSense® productremains significant, although our pharmaceuticalcustomers are now taking longer than previously
to gain their own internal funding.
PropertyIn the light of worsening conditions in the UKcommercial property market, we have renegotiatedthe term of the option to sell the present site of
our Plasma Technology factory, whilst preserving
its beneficial commercial conditions. By postponing
this move for two years we will reduce our capital
expenditure in the current financial year.

PeopleIn this increasingly competitive world, ouremployees have had to work harder to achieve
the high levels of performance that Oxford
Instruments requires. I would like to thank themfor their endeavours.
I am pleased to announce that Jock Lennox,
currently a senior partner at Ernst & Young, will
join the Group as an Independent Non-Executive
Director on 1 April 2009 with a view to him
succeeding Peter Morgan as Chairman of the Audit
Committee in due course.
As announced earlier this month, Steven Parker
has resigned from the Board in order to pursue a
new career direction. I would like to thank Stevefor his contribution to Oxford Instruments over the
past six years and to wish him continued success inthe future.
Outlook
Our strategy remains on course. Our productportfolio is strong, and we have good geographicalspread which should help to insulate us if there is a
softening in demand in the second half of the year.
The benefits of our recent acquisitions and new
product introductions together with the weaknessof Sterling are likely to have a positive effectduring the remainder of this financial year. These
factors underpin the Board’s continued confidence
in delivering a full year performance that is in linewith its expectations.
Nigel Keen
Chairman18 November 2008

Oxford Instruments plc

Group Income Statement

half year ended 30 September 2008 - unaudited

6

Half year to
30 Sept
2008
Revenue
Cost of sales
Gross profit
Trading expenses excluding cost of goods
soldTrading profit
Other operating income
Restructuring and non-recurring costs
Amortisation of acquired intangibles
Operating profit

Notes
3

£m
92.8
(54.6)
38.2

Half year to
30 Sept
2007
As restated *£m
78.3(46.8)
31.5

4
3(34.7)
3.5(29.5)
2.0(62.6)
10.6

6
7

3.4
(1.4)
(2.0)
3.5

0.7
(0.4)
2.3

0.7
(2.9)
8.4

0.1
4.7

0.1
4.6

0.3
9.3

4.8

0.2
4.9

9.6

Bank interest receivable
Expected return on pension scheme assets
Mark to market gain in respect of derivative
financial instruments
Financial income

Year to31 March
2008
As restated *£m
176.5(103.3)
73.2

Interest payable on bank loans andoverdrafts
Interest charge on pension scheme liabilities
Mark to market loss in respect of derivative
financial instruments
Financial expenditure

(0.6)
(5.1)

(0.4)
(4.5)

(1.7)
(9.0)

(1.3)
(7.0)

(4.9)

(2.3)
(13.0)

Profit before income tax

1.3

2.3

5.0

-

(0.8)

(2.3)

1.3

1.5

2.7

pence

pence

pence

Income tax expense
Profit for the period attributable to equity
shareholders of the parent

8

Earnings per share
Basic earnings per share
Diluted earnings per share

9
9

2.6
2.6

3.0
3.0

5.6
5.5

Dividends per share
Dividends paid
Dividends proposed

10
10

2.4
2.4

2.4
2.4

8.4
8.4

£m

£m

£m

1.2
1.2

1.2
1.2

4.1
4.1

£m
2.6

£m
1.8

£m
9.5

pence

pence

pence

3.4
3.4

2.3
2.2

11.7
11.7

Total dividends
Dividends paid
Dividends proposed

Adjusted profit before tax
Adjusted earnings per share
Basic earnings per share
Diluted earnings per share* see note 1

Oxford Instruments plc

299Group Statement of Recognised Income and Expense
half year ended 30 September 2008 - unaudited

Foreign exchange translation differences
Actuarial gain in respect of post retirement benefits
Taxation effect in respect of post retirement benefits
Net profit/(loss) recognised directly in equity
Profit for the period
Total recognised income for the period attributable toequity shareholders of the parent

Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

£m

£m

£m

0.7
0.7
1.3

(0.1)
(0.6)
(0.7)
1.5

3.1
7.1
(2.6)
7.6
2.7

2.0

0.8

10.3

Oxford Instruments plc

7Group Balance Sheetas at 30 September 2008 - unaudited

8
As at
30 Sept
2008
£m

As at
30 Sept
2007
£m

As at
31 March
2008
£m

22.4
50.7
9.8
82.9

23.0
41.2
0.6
11.8
76.6

22.4
44.0
0.6
9.6
76.6

39.4
48.1
0.5
1.3
7.6
96.9

30.9
44.1
0.5
1.2
8.5
85.2

34.9
53.5
0.7
0.6
7.9
97.6

179.8

161.8

174.2

2.5
21.3
0.1
3.0
36.7
63.6

2.5
21.1
0.1
(0.9)
32.8
55.6

2.5
21.2
0.1
2.3
36.4
62.5

30.7
1.1
20.7
7.1
59.6

20.2
2.4
28.9
7.4
58.9

24.9
2.4
21.2
6.1
54.6

0.1
0.8
45.2
1.6
5.1
3.8
56.6

0.1
3.0
38.2
2.1
0.6
3.3
47.3

0.1
0.7
46.2
2.7
3.3
4.1
57.1

Total liabilities

116.2

106.2

111.7

Total liabilities and equity

179.8

161.8

174.2

Notes
AssetsNon-current assets
Property, plant and equipment
Intangible assets
Available for sale equity securities
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
13
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

Oxford Instruments plc

Group Statement of Cash Flows
half year ended 30 September 2008 - unaudited

Profit for the period
Adjustments for:
Income tax expense
Net financial expense
Restructuring and non-recurring costs
Amortisation of acquired intangibles
Other operating income
Depreciation of property, plant and equipment
Amortisation of capitalised development costs
Earnings before interest, tax, depreciation andamortisation
Cost of equity settled employee share schemes
Cash payments to the pension scheme more than the
charge to the income statement
Operating cash flows before movements in working
capitalIncrease in inventories
Decrease/(increase) in receivables(Decrease)/increase in payables(Decrease)/increase in provisions
Cash generated/(absorbed) by operations
Interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of held for sale assets
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
Cash flows from financing activities
Proceeds from issue of share capital
Repayment of borrowings
Increase in borrowings
Dividends paid
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Effect of exchange rate fluctuations on cash and cash
equivalents held
Cash and cash equivalents at end of the period

Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

£m

£m

£m

1.3

1.5

2.7

2.2
1.4
2.0
(3.4)
1.8
1.3

0.8
0.4
(0.7)
1.8
1.0

2.3
3.4
2.9
(0.7)
4.1
1.9

6.6
0.2

4.8
-

16.6
0.2

(1.1)

(1.7)

(2.1)

5.7
(3.5)
7.1
(5.8)
(0.1)
3.4
(0.6)
(1.4)
1.4

3.1
(3.2)
1.7
(5.0)
(0.3)
(3.7)
(0.4)
(0.8)
(4.9)

14.7
(6.9)
(6.9)
2.3
0.3
3.5
(1.7)
(1.9)
(0.1)

-

7.7

7.7

3.0
0.3
0.1
(3.4)
(1.5)
(3.5)
(5.0)

0.1
(12.5)
(2.3)
(2.8)
(9.8)

0.3
(12.7)(3.8)(6.6)(15.1)

0.1
4.2
(1.2)
3.1
(0.5)
7.2

0.2
(1.0)
19.5
(1.2)
17.5
2.8
2.8

0.3
(1.0)
24.2
(4.1)
19.4
4.2
2.8

0.1
6.8

(0.1)
5.5

0.2
7.2

Oxford Instruments plc

9Notes on the Half Year Financial Statements
half year ended 30 September 2008 – unaudited

10

1

BASIS OF PRESENTATION OF ACCOUNTS

Oxford Instruments plc (the Company) is a company incorporated in England and Wales. The condensed
Group half year financial statements consolidate those of the Company and its subsidiaries (together
referred to as the Group). They have been prepared in accordance with International Financial ReportingStandard (IFRS) IAS 34 Interim Financial Reporting as adopted by the EU. They do not include all of theinformation required for full annual financial statements, and should be read in conjunction with theconsolidated financial statements of the Group for the year ended 31 March 2008.
The half year results are unaudited. The comparative figures for the financial year ended 31 March 2008
are not the company’s statutory accounts for that financial year. Those accounts have been reported onby the Company’s auditors and delivered to the Registrar of Companies. The report of the auditors was(i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by wayof emphasis without qualifying their report, and (iii) did not contain a statement under Section 237(2) or(3) of the Companies Act 1985.
As required by the Disclosure and Transparency Rules of the Financial Services Authority, the half year
financial information has been prepared applying the accounting policies and presentation that wereapplied in the preparation of the Group’s consolidated financial statements for the year ended 31 March
2008 except as noted below. During the period, the Directors reviewed the classification of costs relating
to the running of its sales offices in Germany, America and Japan and, given the current circumstances andoperating structure of the Group, considered that these costs are better reflected as sales and marketingcosts, rather than administrative costs. Consequently the previously published figures for the half year to
30 September 2007 and for the year to 31 March 2008 have been restated in this document. The effecthas been to increase sales and marketing costs and reduce administration and shared services by £1.4m
for the half year to 30 September 2007 and by £2.2m for the year to 31 March 2008.
The Directors also reviewed the classification of outward freight costs and considered that these were
better reflected as sales and marketing costs, rather than costs of goods sold. Consequently the previously
published figures for the half year to 30 September 2007 and for the year to 31 March 2008 have been
restated in this document. The effect has been to increase sales and marketing costs and reduce costsof goods sold by £0.2m for the half year to 30 September 2007 and by £0.5m for the year to 31 March2008.
The principal exchange rates used to translate the Group’s overseas results were as follows:

US DollarEuro
YenHalf year to 30 Sept 2008
Average
Period end
1.93
1.78
1.26
1.27
204
189

Oxford Instruments plc

Half year to 30 Sept 2007
Average
Period end
2.00
2.04
1.47
1.43
237
234

Year to 31 March 2008
Average
Period end
2.01
1.99
1.42
1.25
228
198

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited

2

11

RECONCILIATION BETWEEN PROFIT AND ADJUSTED PROFIT

Profit before income tax
Other operating income
Amortisation of acquired intangible assets
Restructuring and non-recurring costs
Financial instruments
Adjusted profit before income tax
Tax attributable to adjusted profit before income tax
Adjusted profit after income tax

Half year to
30 Sept
2008
£m
1.3
(3.4)
2.0
1.4
1.3
2.6
(0.9)
1.7

Half year to
30 Sept
2007
£m
2.3
(0.7)
0.4
(0.2)
1.8
(0.7)
1.1

Year to31 March
2008
£m
5.0
(0.7)
2.9
2.3
9.5
(3.7)
5.8

Adjusted figures are stated before other operating income, amortisation of acquired intangibles,
restructuring and non-recurring costs and unrealised changes in the fair value of financial instruments.
3

SEGMENT Information

Information is presented in the consolidated half year financial statements in respect of the Group’s
two business segments. These are the primary basis of our segmental reporting. Our Analytical businessprovides measurement and fabrication instruments for industrial and commercial customers. Our
Superconductivity business provides materials, tools and systems for industrial and government customers
working at the frontiers of science.
Segment results include items directly attributable to a segment as well as those which can be allocatedon a reasonable basis.
Half year to 30 September 2008
Analytical

Superconductivity

£m

£m

Total
£m

Revenue

63.3

29.5

92.8

Trading profit/(loss)

5.4

(1.9)

3.5

Other operating income

3.4

Amortisation of acquired intangibles(2.0)

Restructuring and non-recurring costs(1.4)

Operating profit

3.5

Net financial expense(2.2)

Profit for the period

1.3

Segment net assets

65.4

38.3

103.7

Unallocated net assets(40.1)

Total net assets

63.6

Research and development to enhance and develop existing products is undertaken within both theAnalytical and Superconductivity business segments. In addition, until closure during the second halfof the Group’s 2008 year, Oxford Instruments Innovation (OII) carried out initial investigations into new
product lines that would not normally be undertaken by the operating businesses. Trading profit in theprior year is shown both before and after OII costs. In the current year the activities formerly undertaken
by OII are now undertaken by business units.

Oxford Instruments plc

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited

123 	segment information (CONTINUED)
Half year to 30 September 2007
Analytical

Superconductivity

£m

£m

Total
£m

Revenue

49.6

28.7

78.3

Trading profit before costs of OII

2.8

0.6

3.4

Costs of OII(1.4)

Trading profit

2.0

Other operating income

0.7

Amortisation of acquired intangibles(0.4)

Operating profit

2.3

Net financial expense-

Income tax expense(0.8)

Profit for the period

1.5

Segment net assets

56.9

34.1

91.0

Unallocated net assets(35.4)

Total net assets

55.6

Year to 31 March 2008
Analytical

Superconductivity

£m

£m

Total
£m

Revenue

115.7

60.8

176.5

Trading profit before costs of OII

11.0

2.0

13.0

Costs of OII(2.4)

Trading profit

10.6

Other operating income

0.7

Amortisation of acquired intangibles(2.9)

Operating profit

8.4

Net financial expense(3.4)

Income tax expense(2.3)

Profit for the year

2.7

Segment net assets

61.0

37.4

98.4

Unallocated net assets(35.9)

Total net assets

62.5

Oxford Instruments plc

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited

13

4	trading expenses excluding cost of goods sold
Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2008
As restated

£m

£m

£m

18.6
8.8
6.3
1.0

14.8
8.7
6.1
(0.1)

32.2
18.8
11.5
0.1

34.7

29.5

62.6

Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

£m

£m

£m

8.5
(3.5)
1.3

7.9
(2.8)
1.0

16.2
(6.6)
1.9

6.3

6.1

11.5

Selling and marketing costs
Administration and shared services
Research and development (note 5)
Foreign exchange loss/(gain)

5

2007
As restated

RESEARCH AND DEVELOPMENT

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

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

6	other operating income
Other operating income represented the profit on disposal of the Group’s 23% holding in Oxford
Diffraction Limited which completed on 4 April 2008. Consideration after professional costs was £3.7m
and the carrying value at the time of disposal was £0.3m resulting in a non-recurring profit of £3.4m.
Other operating income during the year to 31 March 2008 represented the profit on disposal of previously
held for sale freehold properties in Abingdon and Eynsham, UK.
7

RESTRUCTURING AND NON-RECURRING COSTS

During the period the Group recognised an impairment charge of £0.5m against the cost of its investment
in and loans to ARKeX Limited. On 22 September 2008 the Group disposed of the Molecular Beam
Epitaxy (MBE) product line to Riber SA for a cash consideration of £0.3m. The carrying value of the MBE
assets at that time was £1.2m resulting in a loss on disposal of £0.9m.

Oxford Instruments plc

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited

14

8

TAXATIONThe Group estimates that its weighted average tax rate (excluding deferred taxation in respect of markto market losses in respect of derivatives and amortisation of acquired intangibles) will be 35% (200737%). The nil tax charge in the period arises because the tax charge has been reduced by deferred tax
credits arising in respect of mark to market losses in respect of derivatives and amortisation of acquired
intangibles. No tax liability is expected to arise from other operating income and no tax relief is expected
to be received in relation to the restructuring and non-recurring costs.
9	earnings per sharea) Unadjusted
The earnings per share is as follows:

Basic
DilutedHalf year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

pence

pence

pence

2.6
2.6

3.0
3.0

5.6
5.5

b) Adjusted
The earnings per share before other operating income, amortisation of acquired intangibles, restructuring
and non-recurring costs, and mark to market gains or losses in respect of certain derivatives is asfollows:

Basic
DilutedHalf year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

pence

pence

pence

3.4
3.4

2.3
2.2

11.7
11.7

A reconciliation of the profit for the periods used to calculate earnings per share to the adjusted profit
for the periods used to calculate the adjusted earnings per share shown above can be found in note 2.
c) Basic
The calculation of basic earnings per share is based on the profit or loss for the period after taxation anda weighted average number of ordinary shares outstanding during the period, excluding shares held by
the Employee Share Ownership 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

Oxford Instruments plc

Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

SharesSharesSharesmillionmillionmillion

49.4

49.3

49.3

(0.6)

(0.6)

(0.6)

48.8

48.7

48.7

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited15

9	earnings per share (continued)d) 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 toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

SharesSharesSharesmillionmillionmillion

48.8
0.4

48.7
0.2

48.7
0.3

49.2

48.9

49.0

Half year toHalf year toYear to30 Sept

30 Sept

31 March

10	dividends per share
The following dividends per share were paid by the Group:

Previous period interim dividend
Previous period final dividend

2008

2007

2008

pence

pence

pence

2.4
2.4

2.4
2.4

2.4
6.0
8.4

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

Interim dividend
Final dividend

Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

pence

pence

pence

2.4
2.4

2.4
2.4

2.4
6.0
8.4

The interim dividend for the year to 31 March 2009 of 2.4 pence was approved by the Board on 18
November 2008 and has not been included as a liability as at 30 September 2008. The interim dividend
will be paid on 6 April 2009 to shareholders on the register at the close of business on 6 March 2009.

Oxford Instruments plc

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited16

11	acquisitions
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, deferredconsideration of £0.5m was paid on 1 October 2008. Further contingent consideration of up to £2.8m
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 and developer of Hydride
Vapour Phase Epitaxy templates.
In the period subsequent to acquisition the company contributed revenue of £0.4m and a loss before taxof £0.7m to the Group. As the acquisition occurred close to the start of the period it is estimated thatthese amounts are consistent with those which would be reported had the acquisition taken place on
the first day of the year.
The following table gives a provisional 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

Provisional
book value
£m
0.2
0.1
(0.4)
-

Provisional

Provisional

fair value
adjustments
£m
3.7
0.1
(1.3)

fair value
to the Group
£m
3.9
0.1
(0.4)
0.1
(1.3)
2.4

Goodwill-

Total purchase cost *2.4

Less contingent consideration(0.7)

Less deferred consideration(0.5)

Net cash outflow in respect of the purchase/acquisition

1.2* Includes costs associated with the acquisition of £0.1m.
The book value of the assets acquired is based on the management accounts at the date of acquisition.
The fair value adjustment relates to the recognition of technology related intangible assets and associateddeferred tax.

Oxford Instruments plc

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited17

11	acquisitions (Continued)
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 based in Lidingo, Sweden for a net cash consideration of £0.6m. The Group then soldits 10% holding in Link Nordiska AB to the 90% majority shareholder for a nominal amount. Further
contingent consideration of up to £0.6m is payable based on post acquisition revenue growth. The
Group’s best estimate of this contingent consideration at the current time is £0.4m. The company is a
distributor of Oxford Instruments NanoAnalysis equipment in Scandinavia.
In the period subsequent to acquisition the company contributed a loss before tax of £0.1m to the Group.
Had the acquisition taken place on the first day of the financial year, additional revenue of £0.2m would
have been earned by the Group. The profit before tax would have been unchanged.
The following table gives a provisional analysis of the assets acquired and the goodwill arising.
Provisional

Intangible assets
Receivables
Net cash
Payables and provisions
Deferred tax liabilities
Total net assets acquired
Goodwill

Provisional

Provisional

fair value

fair value

book value

adjustments

to the Group

£m

£m

£m

0.3
0.4
(0.4)
-

0.9
(0.3)

0.9
0.3
0.4
(0.4)
(0.3)
0.9
0.1

Total purchase cost

1.0

Less contingent consideration(0.4)

Net cash outflow in respect of the purchase

0.6

Less cash acquired(0.4)

Net cash outflow on acquisition

0.2

The book value of the assets is 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 associateddeferred tax. The goodwill comprises the value attributable to the employee workforce as well as
expected revenue and cost synergies that will arise following the integration of the business into theGroup.
VeriCold Technologies GmbH
During the period the contingent consideration arising on the acquisition of VeriCold Technologies GmbHwas finalised. As a result goodwill has increased by £1.6m.

Oxford Instruments plc

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited

18

12 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO NET borrowing(Decrease)/increase in cash and cash equivalents
Effect of foreign exchange rate changes on cash andcash equivalents

Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

£m

£m

£m

(0.5)

2.8

4.2

0.1

(0.1)

0.2

Cash outflow from decrease in debt
Cash inflow from increase in debt
Borrowings acquired on acquisition
Effect of foreign exchange rate changes on borrowing
Movement in net borrowing in the period
Net (borrowing)/cash at start of the period
Net borrowing at end of the period

(0.4)
(4.2)
(1.6)
(6.2)
(17.8)(24.0)

2.7
1.0(19.5)(0.8)(16.6)
1.8(14.8)

4.4
1.0(24.2)(0.8)(19.6)
1.8(17.8)

Analysed as:
Cash and cash equivalents (per Balance Sheet)
Bank overdrafts

7.6
(0.8)

8.5
(3.0)

7.9
(0.7)

Cash and cash equivalents (per Statement of Cash
Flows)
Borrowing
Net borrowing at end of the period

6.8(30.8)(24.0)

5.5(20.3)(14.8)

7.2(25.0)(17.8)

Oxford Instruments plc

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2008 – unaudited

19

13 RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS’ FUNDS

Total recognised income for the period
Credit in respect of employee service costs settled byaward of share options
Proceeds from shares issued
Dividends paid
Opening equity shareholders’ funds
Closing equity shareholders’ funds

Half year toHalf year toYear to30 Sept

30 Sept

31 March

2008

2007

2008

£m

£m

£m

2.0

0.8

10.3

0.2
0.1
(1.2)
62.5
63.6

0.2
(1.2)
55.8
55.6

0.2
0.3
(4.1)
55.8
62.5

14 SUBSEQUENT EVENTS
On 1 October 2008 the Group announced the restructuring of its Nanoscience business which resulted ina reduction to the workforce by fifty people.

Oxford Instruments plc

Responsibility Statement and Principal Risks and Uncertainties
20

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
that have occurred during the first six months of the financial year and their impact on thecondensed set of financial 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
the financial position or performance of the entity during that period; and any changes in therelated party transactions described in the last annual report that could do so.
Jonathan Flint Chief Executive		
18 November 2008

Kevin Boyd Group Finance Director

Principal Risks and Uncertainties
The Group has in place a risk management structure and internal controls which are designed to identify,
manage and mitigate risk.
In common with all businesses, Oxford Instruments faces a number of risks and uncertainties which could
have a material impact on the Group’s long term performance.
On page 14 of it’s 2008 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 anduncertainties facing the Group’s long term performance. Many of these risks are inherent to Oxford
Instruments as a global business and they remain valid as regards their potential impact during theremainder of the second half of the year.
The impact of the economic and end market environments in which the Group’s businesses operate areconsidered in the Chairman’s Statement and outlook sections of this Half Yearly Report, together with anindication if management is aware of any likely change in this situation.

Oxford Instruments plc

Independent Review Report by KPMG Audit Plc to Oxford Instruments plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the halfyearly financial report for the six months ended 30 September 2008 which comprises the Group Income
Statement, Group Balance Sheet, Group Statement of Recognised Income and Expense, Group Statementof Cash Flows and the related explanatory notes. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparent misstatements or materialinconsistencies 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 thecompany in meeting the requirements of the Disclosure and Transparency Rules (“the DTR”) of the UK’s
Financial Services Authority (“the UK FSA”). Our review has been undertaken so that we might state to
the company those matters we are 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 thecompany for our review work, for this report, or for the conclusions 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 FSA.
As disclosed in note 1, 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 accordance with 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 statementsin the half-yearly 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 informationconsists of making enquiries, primarily of persons responsible for financial and accounting matters, andapplying 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 2008
is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of
the UK FSA.
KPMG Audit Plc
Chartered Accountants
2 Cornwall Street
Birmingham B3 2DL
18 November 2008

Oxford Instruments plc

21

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

Cert no. SGS-COC-003507