Oxford Instruments plc
Half Year Report September 2007

The Business of ScienceTMTechnology supporting the world
today and in the future

Summary of Half Year Results

Orders
Revenue
Trading profit
Adjusted profit before tax
Net (debt)/cash
Shareholders’ equity

Adjusted earnings
Basic earnings
Proposed dividends
Net assets
Employees at half year end

2007
£m
83.1
78.3
2.0
1.8
(14.8)
55.6

2006
£m
85.3
72.1
2.0
1.7
4.5
42.7

2007
pence
per share
2.3
3.0
2.4
113

2006
pence
per share
2.1
(2.9)
2.4
88

1,496

1,372

Group Profile
Oxford Instruments specialises in the supply ofhigh technology instruments for industry andresearch. The company employs over 1,400 people
worldwide, and has been listed on the London
Stock Exchange since 1983.
Innovation has been at the heart of Oxford
Instruments since it was founded by Sir Martin
Wood over 40 years ago, and it is the driving force
behind our growth and success. Together with ourskills and expertise, we have a solid foundationfrom which to turn our science into commerciallysuccessful products.
Our ability to observe and manipulate matterat the smallest scale will allow us to exploit the
emerging potential to be found in bioscienceand nanotechnology. Our products will support
those customers who address the global issues ofprotecting the environment, conserving energy,
security and healthcare.

1

Oxford Instruments plc

Chairman’s Statement

Introduction
The Group has shown a strong operational
performance in the first half with reported sales
up 9% on the same period last year. This growth isdespite the adverse effect of changes in exchange
rates, particularly the weakness of the US Dollar.
On a constant currency basis, the sales growth was
15%. Adjusted profit before tax (note 2) for thehalf year at £1.8m was ahead of the same period
last year (2006: £1.7m). On a constant currency
basis, adjusted profit before tax more thandoubled to £4.1m.
In recent years, a number of exceptional charges
have been made to reflect the cost of restructuring
our business to improve operational performance.
This restructuring is now complete and the benefits
are showing through. In addition, property
disposals have yielded an exceptional profit inthis period. As a result, reported profit before
tax, after exceptional items, for this half year has
increased by £3.0m to £2.3m (2006: loss £0.7m).
Our strategy to position the Group towards
growth markets is beginning to deliver tangible
results.
We have seen strong performances
throughout the business. However, as previously
reported, this progress has been offset to someextent by the expected reduction in sales relating
to the Restriction of Hazardous Substances (RoHS)
legislation and a softening in the North American
MRI market.

2

Both our internal product development andacquisition programmes are focused aroundour strategic objective to provide tools for the
emerging nanotechnology and life sciencesindustries.
Our focus on developing highly
commercial technologies that uniquely meet ourcustomers’ needs is proving successful. All recent
new product introductions have delivered theirplanned returns.
Two years ago we set out our plan to double thesize of the business in five years through organic
and acquisitive growth. In the first half of thisfinancial year, we have continued to make good
progress against this plan. We have met our
growth targets for organic growth. In addition we
have made two acquisitions, VeriCold Technologies
GmbH and Worldwide Analytical Systems AG(WAS), which are described in the operational
review. These acquisitions will contribute to
growth in the second half of the year and beyond,and give us access to important new markets andtechnologies.

Financial Summary

Operational Review

On a constant currency basis, revenues for the firsthalf increased by 15% over the same period lastyear. Of this growth, 13% was organic and 2%(£1.3 million) came from acquisitions made in the
period. Reported revenues grew by 9% to £78.3
million. Orders taken in the period exceeded thisby £4.8 million at £83.1 million.

Our Industrial Analysis business continues togrow with strong performances in its core marketof high technology industrial instrumentation.
Demand continues to increase for instruments
which provide information on the compositionof materials to enable the user to monitor
compliance with environmental regulation. Whilst
demand for RoHS equipment has slackened, othersectors such as Positive Material Identification(PMI) continue to fuel growth. The recent concern
about the presence of lead in toys has illustrated
the increasing importance of spectrographic
analysis to ensure quality and safety control in awide range of industries. Oxford Instruments isworking with leading toy manufacturers in using
X-ray fluorescence analysers to ensure imported
toys are free from hazardous substances.

Gross margins fell from 41.6% to 40.0%, impacted
by the adverse exchange rate movements describedabove.
Total operating expenses increased by £1.3 million
to £29.3 million, £0.4 million of which came fromthe acquisitions.
Adjusted profit before tax (note 2) was £1.8
million (2006: £1.7 million), £0.1 million of which
was contributed by acquisitions. Reported profit
before tax of £2.3 million (2006: loss £0.7 million)
included £0.7 million exceptional gain on the saleof two properties.
Net debt at the period end was £14.8 million.
The major movements in the period included
an increase in working capital of £6.8 million,acquisitions totalling £12.5 million, pension deficit
reduction payments of £2.1 million and inflows
from the sale of property of £7.7 million.
During the period under review we reached
an agreement with those of our employees
who are members of our UK defined benefit
pension scheme. This resulted in an increase in
the contributions that they make to the scheme
coupled with a reduction in future benefits thatwill accrue to members of the scheme. While thisdoes not affect the reported pension deficit, it will
reduce the risk associated with future movementsin pension liabilities.
The Directors have recommended an interim
dividend of 2.4 pence, unchanged from theprevious year, payable on 7 April 2008.

In July, we acquired WAS based in Uedem,
Germany. WAS has a recognised product range in
optical emission spectroscopy. This complements
the X-ray fluorescence spectroscopy productsof our Industrial Analysis Division, where wealready have a leading position. The acquisition
strengthens our position, particularly in the metals
recycling market, where we now have a full setof tools covering both heavy and light elements.
The integration of WAS is proceeding to plan andthe acquisition is expected to contribute to sales
growth and profits in the second half of the year.
Our X-Ray Technology business based in California
produces small X-ray sources for the analytical
instrumentation market. Sales here have reduced
from the record high levels reached last year, due
to the RoHS market decline. However, long termprospects for this business remain strong.
NanoAnalysis had a strong half year. The newdetectors introduced last year, INCAx-act and X3,
are selling well and have contributed to record
results from this business. INCAx-act utilises “dry”
technology which allows the user to perform highsensitivity chemical analysis without needing to
use liquid nitrogen to cool the detectors in the
instrument.

3

Oxford Instruments plc

Chairman’s Statement (continued)

Plasma Technology saw a significant increasein turnover in the half year. This was seen in
all its sectors but was particularly helped by
the new OpAl Atomic Layer Deposition (ALD)
system. OpAl is a smaller version of the FlexAl
ALD product launched last year which allows
customers to fabricate structures one atom thickfor applications including electronics manufacture.
For example, many displays on mobile phones arefabricated using ALD. Orders are already aheadof expectations for this new product. Whilst sales
growth has been achieved, the cost of the extra
investment in sales and distribution in this businesshas reduced net margins during this half year.
Our NanoScience business, under a new
management team, is pursuing a strategy toconvert its innovative technology into competitivemarket leading products. Existing products on themarket use liquid helium as a cooling agent. Thisis difficult to handle and is becoming increasingly
expensive. Our acquisition of VeriCold, basedin Ismaning, Germany, in July gives us the key
technology to enable us to provide the very
low temperatures associated with our products
without liquid helium. Work is underway on the
introduction of new products merging VeriCold
technology with the existing Nanosciencecapability in cryogenics and magnetic fields.
Triton™ and Integra™ are the first examples
of products employing this technology synergy.
Triton is a new type of cooling device that does
not require a supply of liquefied gases to operate.
This opens up previously inaccessible markets,
such as airport security, where very cold detectors
will be required. Integra is a device which recondenses the helium used to maintain very low
temperatures, significantly reducing requirements
for this expensive commodity. It opens up newmarket possibilities such as the tools required todevelop quantum computing. Triton and Integra
have been successful with early order intake
exceeding expectations and initial customer
reaction enthusiastic. Professor Amir Yacoby at

4

Harvard University said “One of the objectives insetting up my new laboratory has been to expand
our activity in cryogenic physics, without increasing
our liquid helium usage. In using Integra we expect
to have an additional cryogenic system with very
little liquid helium consumption and withoutcompromising the measurement capabilities
demanded of our research”.
Our Superconducting Wire business showedsteady revenue performance with increased
volume offsetting the lower Sterling value ofthe sales made in US Dollars. The requirementsof the Deficit Reduction Act passed by the US
Senate in February 2006 caused a slowdown in
new MRI installations in the USA, though sales
elsewhere remain strong. The international ITER
project, to produce power through nuclear fusion,
continues to progress. Our high performance
wire products have been qualified for use in the
project and first orders of superconducting wire
are expected by the end of the financial year. We
are increasing our production capacity to meetthis potentially significant demand. In June, weannounced the creation of an alliance between
Oxford Superconducting Technology and Alstom
Magnets & Superconductors, focused on winning
supply contracts in the EU for superconducting
wire for ITER.
Austin Scientific manufactures and refurbishes
cryogenic pumps and refrigerators. Following
the successful move into new industrial sectorsof its market this business is showing strong sales
growth albeit from a low base.
Our Molecular Biotools business has graduatedfrom being a technology start up to a profitabletrading entity. This has been driven by the successof our HyperSense® Dynamic Nuclear Polarisationequipment. DNP is a technique for dramatically
improving the sensitivity of NMR analysis and has
proven a success with researchers around the world.
In the half year, ten units have been delivered tocustomers, doubling last year’s production rate.

ChinaPeopleOur trading in China remains strong with demand
being particularly buoyant for our NanoScienceand Industrial Analysis products. Orders in the halfyear have risen by 38% reflecting our increasingly
effective distribution channels and strong brandimage.

Significant cultural change has been achieved in
the Group. This underpins our successful drivefor growth. I would like to thank our workforce
for their continued effort to transform Oxford
Instruments into a world class organisation.
Outlook

Property
In July, we announced the completion of thesale of our vacant properties at Abingdon andEynsham in the UK. These properties had become
surplus to operating requirements following an
earlier restructuring of our business. The net
proceeds from the sale were £7.7m (book value£7m).
In September we received planning permission for
a new facility for our Plasma Technology business.
This will provide us with a state-of-the-art facility
and further enhance our opportunities for growth.
A large proportion of the funding for this site will
come from the already contracted sale of ourcurrent property in Yatton.

The core markets of the business remain strong
and our operational performance continues toimprove. The Board continues to be confident
that the Group’s full year performance will meet
expectations.
Nigel Keen
Chairman
20 November 20075

Group Income Statement

Oxford Instruments plc

Half year ended 30 September 2007 – unaudited

Half year to
30 Sept
2007

Revenue
Cost of sales
Gross profit
Trading expenses excluding cost of goods
soldTrading profit
Other operating income
Amortisation of acquired intangibles
Restructuring and non-recurring costs
Operating profit/(loss)
Financial income
Financial expenditure
Profit/(loss) before income tax
Income tax expense
Profit/(loss) for the period attributable toequity shareholders of the parent

Notes
3

£m
78.3
(47.0)
31.3

Half year to
30 Sept
2006
As restated£m
72.1(42.1)
30.0

4
3(29.3)
2.0(28.0)
2.0(58.3)
8.3

6

0.7
(0.4)
2.3
4.9
(4.9)
2.3

(0.1)
(2.4)
(0.5)
4.3
(4.5)
(0.7)

(1.1)
(5.2)
2.0
8.5
(9.2)
1.3

(0.8)

(0.7)

(2.8)

1.5

(1.4)

(1.5)

pence

pence

pence

7
8

9

£m
161.6
(95.0)
66.6

Earnings per share
Basic earnings per share
Diluted earnings per share

10
10

3.0
3.0

(2.9)
(2.9)

(3.2)
(3.2)

Dividends per share
Dividends paid
Dividends proposed

11
11

2.4
2.4

2.4
2.4

8.4
8.4

£m

£m

£m

1.2
1.2

1.2
1.2

4.0
4.0

£m
1.8

£m
1.7

£m
7.5

pence

pence

pence

2.3
2.2

2.1
2.1

9.6
9.5

Total dividends
Dividends paid
Dividends proposed

Adjusted profit before tax

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

6

Year to31 March
2007

2

10
10

Group Statement of Recognised Income and Expense

Oxford Instruments plc

Half year ended 30 September 2007 – unaudited

Foreign exchange translation differences
Actuarial gain in respect of post retirement benefits
Deferred tax in respect of post retirement benefits
Recycling of fair value movements of available forsale equity securities
Net (loss)/profit recognised directly in equity
Profit/(loss) for the period
Total recognised income/(expense) for the year
attributable to equity shareholders of the parent

Half year to
30 Sept
2007
£m
(0.1)
(0.6)

Half year to
30 Sept
2006
£m
(1.1)
-

Year to31 March
2007
£m
(1.7)
22.1
(6.7)

(0.7)
1.5

(1.1)
(1.4)

0.2
13.9
(1.5)

0.8

(2.5)

12.4

7

Group Balance Sheet

Oxford Instruments plc

As at 30 September 2007 – unaudited

As at
30 Sept
2007
£m

As at
30 Sept
2006
£m

As at
31 March
2007
£m

23.0
41.2
0.6
11.8
76.6

21.7
16.8
1.0
18.9
58.4

21.5
18.1
0.6
11.6
51.8

30.9
44.1
0.5
1.2
8.5
85.2

28.6
37.7
0.2
5.4
6.9
78.8

25.6
45.1
0.5
0.5
3.9
7.0
82.6

161.8

137.2

134.4

2.5
21.1
0.1
(0.9)
32.8
55.6

2.4
20.2
0.1
(0.2)
20.2
42.7

2.5
20.9
0.1
(0.8)
33.1
55.8

20.2
2.4
28.9
7.4
58.9

0.4
54.2
54.6

0.2
30.8
31.0

0.1
3.0
38.2
2.1
0.6
3.3
47.3

0.5
0.4
33.5
0.1
0.1
5.3
39.9

1.0
1.1
40.2
1.8
0.2
3.3
47.6

Total liabilities

106.2

94.5

78.6

Total liabilities and equity

161.8

137.2

134.4

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
Held for sale assets

Total assets
EquityCapital and reserves attributable to theCompany’s equity holders
Share capital
Share premium
Other reserves
Translation reserve
Retained earnings
15
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

8

Group Statement of Cash Flows

Oxford Instruments plc

Half year ended 30 September 2007 – unaudited

Profit/(loss) 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 research and development
Earnings before interest, tax, depreciation andamortisation
Loss on disposal of property, plant and equipment
Cost of equity settled employee share schemes
Restructuring costs paid
Cash payments to the pension scheme (more)/lessthan the charge to the income statement
Operating cash flows before movements in working
capitalIncrease in inventories
Decrease/(increase) in receivables
Decrease in payables
Decrease in provisions
Cash (absorbed)/generated by operations
Interest paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of held for sale assets
Proceeds from sale of available for sale equity
securities
Interest received
Acquisition of subsidiaries, net of cash acquired
Acquisition of property, plant and equipment
Capitalised development expenditure
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from the disposal of own shares
Increase/(decrease) in borrowings
Dividends paid
Net cash from financing activities
Net increase/(decrease) in cash equivalents
Cash and cash equivalents at beginning of theperiodEffect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the period

Half year to
30 Sept
2007
£m
1.5

Half year to
30 Sept
2006
£m
(1.4)

Year to31 March
2007
£m
(1.5)

0.8
0.4
(0.7)
1.8
1.0

0.7
0.2
2.4
0.1
1.8
0.5

2.8
0.7
5.2
1.1
3.4
1.5

4.8
-

4.3
(1.7)

13.2
0.2
0.2
(2.9)

(1.7)

0.7

(0.7)

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

3.3
(1.6)
6.5
(5.7)
(0.2)
2.3
(0.1)
(1.4)
0.8

10.0
0.6
(2.3)
(0.3)
8.0
(0.3)
(2.5)
5.2

7.7

-

0.1
-

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

0.1
(0.1)
(2.5)
(2.2)
(4.7)

0.3
0.2
(0.3)
(4.4)
(5.6)
(9.7)

0.2
18.5
(1.2)
17.5
2.8

(2.4)
(1.2)
(3.6)
(7.5)

0.8
(1.9)
(4.0)
(5.1)
(9.6)

2.8
(0.1)
5.5

12.7
(0.2)
5.0

12.7
(0.3)
2.8

9

Notes on the Half Year Financial Statements

Oxford Instruments plc

Half year ended 30 September 2007 – unaudited

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. They do not include all of 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 2007.
The half year results are unaudited. The summary of results for the year ended 31 March 2007 is an
extract from the published consolidated financial statements of the Group for that period which havebeen reported on by the Group’s auditors and delivered to the Registrar of Companies. The audit report(i) was unqualified, (ii) did not include a reference 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
237(2) or (3) of the Companies Act 1985.
The half year financial information has been prepared applying the accounting policies and presentationthat were applied in the preparation of the Group’s published consolidated financial statements for theyear ended 31 March 2007. At the prior year end the Directors reviewed the classification of operating
costs between costs of goods sold and overhead categories and consequently the previously publishedfigures for the half year to 30 September 2006 have been restated in this document. The effect has been
to reduce cost of sales by £5.8m and increase selling and marketing costs, administration and sharedservices and research and development by £1.4m, £3.9m and £0.5m respectively. The previously publishedfigures for the year to 31 March 2007 do not require restatement since the new classification was applied
when these were first published.
The principal exchange rates used to translate the Group’s overseas results were as follows:
Half year to 30 Sept 2007
Average
Period end
US Dollar
Euro
Yen

2

2.00
1.47
237

2.04
1.43
234

1.84
1.46
213

1.87
1.47
221

Year to 31 March 2007
Average
Period end
1.89
1.47
221

1.96
1.47
232

Half year to
30 Sept
2006
£m
(0.7)
0.1
2.4
(0.1)
1.7

Year to31 March
2007
£m
1.3
1.1
5.2
(0.1)
7.5

RECONCILIATION BETWEEN PROFIT AND ADJUSTED PROFIT

Profit/(loss) before tax
Other operating income
Amortisation of acquired intangible assets
Restructuring and non-recurring costs
Financial instruments (see below)
Adjusted profit before tax

10

Half year to 30 Sept 2006
Average
Period end

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

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2007 – unaudited

Oxford Instruments plc

Under IAS 39, derivative financial instruments are recognised initially at fair value – this includes the fixed
forward and option based foreign exchange contracts the Group has entered into in order to manage
its exposure to foreign exchange rate movements. Subsequent to initial recognition, derivative financial
instruments are measured at fair value. The Group does not take advantage of the hedge accounting rules
provided for in IAS 39 since that standard requires certain stringent criteria to be met in order to hedge
account, which, in the particular circumstances of the Group, are considered by the Board not to bringany significant economic benefit. Accordingly, the Group accounts for its derivative financial instruments
as trading instruments with the profit or loss on remeasurement to fair value being taken immediately
to the income statement. Adjusted profit for the year is stated before changes in the valuation of these
instruments so that the underlying performance of the Group can more clearly be seen.
3

RESULTS BY BUSINESSInformation 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 2007
Analytical£m
49.6

Superconductivity
£m
28.7

Total
£m
78.3

Trading profit before costs of OII
Costs of OII
Trading profit
Other operating income
Amortisation of acquired
intangibles
Operating profit
Net financial expense
Income tax expense
Profit for the period

2.8

0.6

3.4
(1.4)
2.0
0.7

Segment net assets
Unallocated net assets
Total net assets

56.9

Revenue

(0.4)
2.3
(0.8)
1.5
34.1

91.0
(35.4)
55.6

Research and development to enhance and develop existing products is undertaken within both theAnalytical and Superconductivity business segments. In addition Oxford Instruments Innovation (OII)
carries out initial investigations into new product lines that would not normally be undertaken by
the operating businesses. Trading profit is shown both before and after OII costs so as to give a moremeaningful indication of the performance of the business segments.

11

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2007 – unaudited3

Oxford Instruments plc

RESULTS BY BUSINESS (CONTINUED)

Half year to 30 September 2006

Revenue
Trading profit/(loss) before costs
of OII
Costs of OII
Trading profit
Amortisation of acquired
intangibles
Restructuring and non-recurring
costs
Operating loss
Net financial expense
Income tax expense
Loss for the period
Segment net assets
Unallocated net assets
Total net assets

Analytical£m
43.3

Superconductivity
£m
28.8

Total
£m
72.1

3.6

(0.1)

3.5
(1.5)
2.0
(0.1)
(2.4)
(0.5)
(0.2)
(0.7)
(1.4)

36.5

31.0

67.5
(24.8)
42.7

Analytical
£m
100.7

Superconductivity
£m
60.9

Total
£m
161.6

Trading profit before costs of OII
Costs of OII
Trading profit
Amortisation of acquired
intangibles
Restructuring and non-recurring
costs
Operating profit
Net financial expense
Income tax expense
Loss for the period

10.1

1.6

11.7
(3.4)
8.3

Segment net assets
Unallocated net assets
Total net assets

37.6

Year to 31 March 2007

Revenue

12

(1.1)
(5.2)
2.0
(0.7)
(2.8)
(1.5)
29.8

67.4
(11.6)
55.8

Notes on the Half Year Financial Statements (continued)

Oxford Instruments plc

half year ended 30 September 2007 – unaudited

4	trading expenses excluding cost of goods sold
Half year to
30 Sept
2007

Year to31 March
2007

Year to31 March
2007£mHalf year to
30 Sept
2006
As restated
£m

7.9
(2.8)
1.0

7.8
(2.2)
0.5

16.2
(5.6)
1.5

6.1

6.1

12.1

£m
13.2
10.1
(0.1)
6.1
29.3

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

Half year to
30 Sept
2006
As restated
£m
12.5
9.8
(0.4)
6.1
28.0

£m
26.7
20.3
(0.8)
12.1
58.3

RESEARCH AND DEVELOPMENT

Total research and development spend by the Group is as follows:
Half year to
30 Sept
2007

Total cash spent on research and development during
the yearLess: amount capitalised
Add: amortisation of amounts previously capitalised
Research and development charged to income
statement£m6	other operating income
Other operating income comprises the profit on disposal of held for sale freehold properties in Abingdon
and Eynsham, UK.

13

Notes on the Half Year Financial Statements (continued)

Oxford Instruments plc

half year ended 30 September 2007 – unaudited

7	financial income

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

Half year to
30 Sept
2007
£m
0.1
4.6

Half year to
30 Sept
2006
£m
0.1
4.1

Year to31 March
2007
£m
0.2
8.2

0.2
4.9

0.1
4.3

0.1
8.5

Half year to
30 Sept
2007£m

Half year to
30 Sept
2006£mYear to31 March
2007
£m

0.4
4.5
4.9

0.1
4.4
4.5

0.3
8.9
9.2

8	financial expenditure

Interest payable and similar charges on bank loans
and overdrafts
Interest charge on pension scheme liabilities

9

TAXATIONThe Group estimates that its weighted average tax rate for the full year will be 37% (2006 40%) and thetax charge for the period has been calculated using this rate. In the prior year no tax relief was obtainedin respect of the restructuring and non-recurring costs.
It has been announced that the UK corporation tax rate will change from 30% to 28% with effect from
1 April 2008. This has resulted in the Group’s deferred tax asset being reduced by £0.6m. To the extent
that this amount relates to deferred tax assets which, on initial recognition, were recognised in equity it
has been charged directly to equity. The balance has been charged to income.

14

Notes on the Half Year Financial Statements (continued)

Oxford Instruments plc

half year ended 30 September 2007 – unaudited10	earnings per sharea) 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:

Profit/(loss) for the period

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

Half year to
30 Sept
2007
£m
1.5

Half year to
30 Sept
2006
£m
(1.4)

Year to31 March
2007
£m
(1.5)

Sharesmillion
49.3
0.6

Sharesmillion
48.8
0.8

Sharesmillion
48.9
0.7

48.7

48.0

48.2

b) Diluted
The following table shows the effect of share options on the calculation of diluted basic earnings per
share. However, in the prior period since there was a loss in the period that effect was antidilutive and so
was excluded from the calculation of diluted basic earnings per share in that period.

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
2007
SharesmillionHalf year to
30 Sept
2006
SharesmillionYear to31 March
2007
Sharesmillion

48.7
0.2

48.0
0.2

48.2
0.3

48.9

48.2

48.5

c) 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 are as
follows:

Basic
DilutedHalf year to
30 Sept
2007
pence
2.3
2.2

Half year to
30 Sept
2006
pence
2.1
2.1

Year to31 March
2007
pence
9.6
9.5

15

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2007 – unaudited

Oxford Instruments plc

10	earnings per share (continued)
A reconciliation of the profit for the periods used to calculate basic earnings per share to the adjusted
profit used to calculate the adjusted earnings per share shown above is set out below:

Adjusted profit before income tax (note 2)
Taxation
Adjusted profit for the period

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

Half year to
30 Sept
2006
£m
1.7
(0.7)
1.0

Year to31 March
2007
£m
7.5
(2.8)
4.7

Half year to
30 Sept
2007
pence
2.4
2.4

Half year to
30 Sept
2006
pence
2.4
2.4

Year to31 March
2007
pence
2.4
6.0
8.4

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

Previous period interim dividend
Previous period final dividend

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
2007
pence
2.4
2.4

Half year to
30 Sept
2006
pence
2.4
2.4

Year to31 March
2007
pence
2.4
6.0
8.4

The interim dividend for the year to 31 March 2008 of 2.4 pence was approved by the Board on 20
November 2007 and has not been included as a liability as at 30 September 2007. The interim dividend
will be paid on 7 April 2008 to shareholders on the register at the close of business on 29 February 2008.

16

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2007 – unaudited

Oxford Instruments plc

12	acquisitions
Worldwide Analytical Systems AG
During the period from 25 July 2007 to 2 August 2007 the Group acquired 100% of the voting rights ofWorldwide Analytical Systems AG based in Uedem, Germany for a net cash consideration of £9.5m. The
company is a leading manufacturer of Arc/Spark optical emission instrumentation.
In the period subsequent to acquisition the Company contributed profit of £0.1m to the Group. The
additional revenue and profit which would have been earned by the Group had the acquisition takenplace on the first day of the financial year is not known since it is not possible to calculate the synergistic
benefits which would have arisen in that period. The following table gives a provisional analysis of theassets acquired and the goodwill arising.

Intangible assets
Property, plant and equipment
Deferred tax assets
Inventories
Receivables
Net overdraft
Payables and provisions
Deferred tax liabilities
Borrowings
Total net assets acquired
Goodwill
Net cash outflow in respect of the purchase*
Add overdraft acquired
Net cash outflow on acquisition

Provisional
book value
£m
0.1
1.2
2.0
1.1
(0.3)
(2.4)
(0.8)

Provisional
fair value
adjustments
£m
13.5
0.3
(0.2)
(0.5)
(4.7)
-

Provisional
fair value
to the Group
£m
13.6
1.2
0.3
1.8
1.1
(0.3)
(2.9)
(4.7)
(0.8)
9.3
0.2
9.5
0.3
9.8

* Includes costs associated with the acquisition of £0.2m.
The review of intangible assets acquired is still ongoing and will be completed by the year end. The
book value of the assets acquired is based on the management accounts at the date of acquisition. The
fair value adjustments relate to the recognition of technology related intangible assets, the reduction ofcertain inventories to net realisable value and the provision for certain liabilities. The goodwill comprises
the value attributable to the employee workforce as well as expected revenue and cost synergies that willarise following the integration of the business into the Group.

17

Notes on the Half Year Financial Statements (continued)
half year ended 30 September 2007 – unaudited

Oxford Instruments plc

12	acquisitions (CONTINUED)
VeriCold Technologies GmbHOn 19 August 2007 the Group acquired 100% of the voting rights in VeriCold Technologies GmbH basedin Ismaning, Germany for a net cash consideration of £2.0m. Further contingent consideration of up to€5.5m is payable based on post acquisition orders revenue growth. The Group’s best estimate of thiscontingent consideration at the current time is £2.1m. The Company is a manufacturer of pulse tube
refrigerators.
In the period subsequent to acquisition the Company contributed neither a profit nor a loss. The
additional revenue and profit which would have been earned by the Group had the acquisition takenplace on the first day of the financial year is not known since it is not possible to calculate the synergistic
benefits which would have arisen in that period. The following table gives a provisional analysis of theassets acquired and the goodwill arising.

Intangible assets
Property, plant and equipment
Deferred tax assets
Inventories
Receivables
Payables and provisions
Deferred tax liabilities
Total net assets acquired
Goodwill
Total purchase costLess contingent consideration
Net cash outflow in respect of the purchase/acquisition

Provisional
book value
£m
0.1
0.8
0.2
(1.2)
-

Provisional
fair value
adjustments
£m
6.7
0.3
(0.3)
(0.4)
(2.4)

Provisional
fair value
to the Group
£m
6.7
0.1
0.3
0.5
0.2
(1.6)
(2.4)
3.8
0.3
4.1
(2.1)
2.0

* Includes costs associated with the acquisition of £0.1m.
The review of intangible assets acquired is still ongoing and will be completed by the year end. The bookvalue of the assets acquired is based on the management accounts at the date of acquisition. The fairvalue adjustments relate to the recognition of both customer and technology related intangible assets,
the reduction of certain inventories to net realisable value and the provision for certain liabilities. The
goodwill comprises the value attributable to the employee workforce as well as expected revenue andcost synergies that will arise following the integration of the business into the Group.
13 PENSIONSThe Group does not perform actuarial valuations at the half year unless a particularly significant event
has occurred during that period. The Group has applied actuarial assumptions at 30 September 2007
consistent with those used at 31 March 2007. Accordingly, no actuarial gain or loss arises in respect ofpensions. The actuarial assumptions will be reviewed at 31 March 2008.

18

Notes on the Half Year Financial Statements (continued)

Oxford Instruments plc

half year ended 30 September 2007 – unaudited

14 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO NET CASH
Half year to
30 Sept
2007
£m
2.8

Half year to
30 Sept
2006
£m
(7.5)

Year to31 March
2007
£m
(9.6)

(0.1)
2.7

(0.2)
(7.7)

(0.3)
(9.9)

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

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

2.4
(5.3)
9.8
4.5

1.9
(8.0)
9.8
1.8

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

8.5
(3.0)

5.4
(0.4)

3.9
(1.1)

Cash and cash equivalents (per Statement of Cash
Flows)
Borrowings
Net (debt)/cash at end of the period

5.5(20.3)(14.8)

5.0
(0.5)
4.5

2.8
(1.0)
1.8

Half year to
30 Sept
2007
£m
0.8

Half year to
30 Sept
2006
£m
(2.5)

Year to31 March
2007
£m
12.4

0.2
(1.2)
55.8
55.6

(1.2)
46.4
42.7

0.2
0.8
(4.0)
46.4
55.8

Increase/(decrease) in cash and cash equivalents
Effect of foreign exchange rate changes on cash andcash equivalents

15 RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS’ FUNDS

Total recognised income/(expense) 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

19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 of interim financial statements; and a description of the principal risks and uncertainties for theremaining 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
20 November 200720

Kevin Boyd
Group Finance Director

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 2007 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 the
Company 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 2007
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
20 November 200721

Shareholder Information

Oxford Instruments plc

Half year ended 30 September 2007 – unaudited

Shareholder Information
Financial calendar
27th February 2008 		
29th February 2008 		
29th February 2008 		
31 March 2008		
7 April 2008 		
Mid June 2008 		
Mid June 2008		
Late July			Late September 2008 		
Late September 2008 		
Late September 2008 		
Late September 2008 		
Late October 2008 		

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

Administrative enquiries
Administrative enquiries concerning shareholdingsin Oxford Instruments plc, such as the loss of ashare certificate, dividend payments, or a changeof address should be directed, in the first instance,
to the Registrar whose address is:
Capita Registrars
Northern House, Woodsome Park, Fenay Bridge,
Huddersfield, West Yorkshire HD8 0LA
Tel 0870 1623100
Fax 0208 639 2342
Correspondence
shouldrefer
toOxfordInstruments plc and state clearly the registeredname and address of the shareholder. Please notify
the Registrar promptly of any change of address.
Dividend bank mandates
If you wish dividends to be paid directly into a bankor building society account and notification to besent to your shareholder register address, pleasecontact the Company’s Registrar for a dividend
mandate form.

22

Consolidation of share certificatesIf your total registered ordinary shareholding isrepresented by several share certificates, you may
wish to have these replaced by one consolidated
certificate. There is no charge for this service.
You should send your share certificates to theCompany’s Registrar, together with a letter of
instruction.
Shareholder enquiries
Shareholders who have questions relating to theGroup’s business or who wish to have additional
copies of the Report and Accounts or Half Year
Statement should apply to:Company Secretary
Oxford Instruments plc
Tubney Woods, Abingdon, Oxon OX13 5QX
Tel 01865 393200
Fax 01865 393442
E-mail info.oiplc@oxinst.com
Website www.oxford-instruments.com
Company registration
Registered office: Tubney Woods
Abingdon Oxon OX13 5QXRegistered number: 775598
Registered in EnglandShareholder Information (continued)

Half year ended 30 September 2007 – unaudited

Website – www.oxford-instruments.com
Oxford Instruments has an extensive web sitewhich gives details of all our products and services,
contact information, vacancies and latest news
announcements. An interactive investor relations
section gives information on recent trading
reports, share price data and up and coming
events. During 2007, the web site will be extended
to offer an e-catalogue option for our spares andaccessories and a password controlled extranet for
use by our partners and customers. This and otherdevelopments are part of our strategy of improving
communications between Oxford Instruments andits stakeholders.

Oxford Instruments plc

Share dealing scheme
In association with JPMorgan Cazenove Limited a
low cost share dealing service has been introduced
providing shareholders with a simple way ofbuying and selling Oxford Instruments plc ordinary
shares. Further information is available from theCompany Secretary or:
JPMorgan Cazenove Limited
20 Moorgate, London, EC2R 6DA
Tel 020 7588 2828
Fax 020 7155 9000

23

Oxford Instruments Directory

Oxford Instruments plc

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

Industrial Analysis

Plasma Technology

Innovation

X-ray Fluorescence, X-ray
Technology, Optical Emission
Spectroscopy, Coating Thickness
Measurement
Halifax Road, High Wycombe,
Bucks HP12 3SE, UK
Tel +44 (0) 1494 442255
Fax +44 (0) 1494 524129
email analytical@oxinst.com

Plasma etching, deposition
equipment and nanostructure
fabrication
North End, Yatton, Bristol
BS49 4AP, UK
Tel +44 (0) 1934 837000
Fax +44 (0) 1934 837001
email plasma.technology@oxinst.com

Tubney Woods, Abingdon,
Oxon OX13 5QX, UK
Tel +44 (0) 1865 393200
Fax +44 (0) 1865 393333
email innovation@oxinst.co.uk

P.O. Box 85 (Nihtisillankuja 5)
FI-02631 Espoo, Finland
Tel: +358 9 329 411
Fax:+358 9 32941 300
Email info@oxinst.fi
945 Busse Road,
Elk Grove Village,
Illinois 60007, USA
Tel +1 847 439 4404
Fax +1 847 439 4425
email info@msys.oxinst.com
360 El Pueblo Road
Scotts Valley, CA, 95066, USA
Tel +1 831 439 7929
Fax +1 831 439 6051
email sales@oxfordxtg.com

NanoAnalysis
X-ray Microanalysis and Electron
Backscatter Diffraction
Halifax Road, High Wycombe,
Bucks HP12 3SE, UK
Tel +44 (0) 1494 442255
Fax +44 (0) 1494 524129
email nanoanalysis@oxinst.com
Majsmarken 1
Hobro
DK 9500
Denmark
TEL: +45 9657 2600
FAX: +45 9657 2609
email hkl@oxinst.com

24

NanoScience
Physical Science : low temperatureand high vacuum environments
Tubney Woods, Abingdon,
Oxon OX13 5QX, UK
Tel +44 (0) 1865 393200
Fax +44 (0) 1865 393333
email nanoscience@oxinst.com

Molecular Biotools
In-vitro dynamic nuclear
polarising (DNP) systems, NMR, andimaging systems
Tubney Woods, Abingdon,
Oxon OX13 5QX, UK
Tel +44 (0) 1865 393200
Fax +44 (0) 1865 393333
email molecularbiotools@oxinst.com
8403 Cross Park Drive, Suite 3F
Austin, Texas 78754, USA
Tel +1 512 339 0640
Fax +1 512 339 0620
email benchtopNMR@ma.oxinst.com

Oxford Superconducting
Technology
Superconducting wire and/MRI
support services
600 Milik Street, P O Box 429,
Carteret,
New Jersey 07008-0429, USA
Tel +1 732 541 1300
Fax +1 732 541 7769
email sales@ost.oxinst.com
Austin Scientific
Cryogenic pumps and compressors
4114 Todd Lane, Austin,
Texas 78744, USA
Tel +1 512 441 6893
Fax + 1 512 443 6665
email cryo-sales@oxinst.com

Oxford Instruments plc

Regional Sales and Service Offices
China
Room 714, Tower 3
Henderson Centre,
No. 18 Jianguomennei Avenue,
Beijing 100005, China
Tel: 86 (0)10 6518 8160/1/2
Fax: 86 (0)10 6518 8155
email bj@oichina.cn
Room 14-F,
No. 1 Plaza,No. 800 Nanjing East Road
Shanghai 200001, P. R. China
Tel : +86 (0)21 6360 8530/1/2/3
Fax: +86 (0)21 6360 8535
email sh@oichina.cn
No.129, Lane 150
Pingbei Road, Xinzhuang
Industrial Area,
Minhang District, Shanghai,
201109, China
Tel: +86 (0)21 6490 8580/8280
Fax: +86 (0)21 6490 4042
email sh@oichina.cn
Room2112 Bai Hui Plaza,
193 Zhong Shan Wu Road,
Guangzhou 510030, China
Tel : +86 (0)20 8364 9990/1
Fax: +86 (0)20 8364 9996
email gz@oichina.cn
Czech Republic
Velvarska 13, CZ-160 00 Praha
Czech Republic
Tel +420 233 343 264
Fax +420 224 311 724
email info@oxford.de

FranceBâtiment Ariane
Domaine Technologique de Saclay
4 rue René Razel
91892 Saclay
FranceTel : +33 1 69 85 25 25
Fax +33 1 69 41 46 80
email info@oxford-instruments.fr
Germany
Otto-von-Guericke-Ring 10,65205 Wiesbaden, Germany
Tel +49 6122 937 0
Fax +49 6122 937 100
email info@oxford.de
India
Office no 17, Shreeji Arcade,
Almeida Road, Panchapakhadi,
Thane 400 602 India
Tel/Fax +91 22 25452424
email india.analytical@oxinst.com
Japan
Haseman Bldg., 2-11-6 Tomioka,
Koto-ku, Tokyo 135-0047, Japan
Tel +81 (0)3 5245 3251
Fax +81 (0)3 5245 4472
email info@oxinst.co.jp
Shin-Osaka Nishiura Bldg.,
2-7-38 Nishi-Miyahara,
Yodogawa-ku,
Osaka 532-0004, Japan
Tel +81 (0)6 6350 0555
Fax +81 (0)6 6350 0880
email info@oxinst.co.jp

Latin America
13575 58th Street N. - Suite 154,
Clearwater, Florida 33760, USA
Tel +1 727 538 7702
Fax +1 727 538 4205
email oxford@gate.net
RussiaDenisovskiy per. 26
105005 Moscow
Russian Federation
Tel +7 (095) 933 51 23
Fax +7 (095) 933 51 24
email info@oxford.de
Singapore
371 Beach Rd,#17-07 Keypoint
Singapore 199597
Tel +65 6337 6848
Fax +65 6337 6286
email
oi.admin@oxford-instruments.com.sg
Taiwan1F, No. 23, Jing-Shang 19th Street,
Hsinchu Taiwan
Tel +886 3 5788696
Fax +886 3 5789993
email
oi.admin@oxford-instruments.com.tw
USA
300 Baker Avenue,
Suite 150,
Concord
MA 01742
USA
Tel +1 978 369 9933
Fax +1 978 369 8287
email info@ma.oxinst.com
7020 Koll Center Parkway, Suite 140
Pleasanton, CA 94566, USA
Tel +1 510 656 8820
Fax +1 925 461 5340
email info@ma.oxinst.com

25

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