Release date: 10 November 2020

Oxford Instruments plc

Announcement of half-year results for the six months to 30 September 2020
Oxford Instruments plc, a leading provider of high technology products and systems for industry and research, today announces its halfyear results for the six months to 30 September 2020.

Revenue1
Adjusted2 operating profit1
Adjusted2 profit before tax1
Profit before tax1
Adjusted2 basic earnings per share1
Dividend per share (half-year)
Cash generated from operations1
Net cash1.

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
140.3
157.6
24.3
26.2
23.7
25.8
20.2
18.9
32.8p
36.0p
4.1p
23.3
15.3
81.4
14.2

% change
reported(11.0%)(7.3%)(8.1%)+6.9%(8.9%)% change
constant
currency(11.0%)(11.5%)+52.3%

Continuing operations.

Financial highlights:
•
•
•
•
•
•
•

Reported orders up 6.0% to £175.7m (2019: £165.7m), an increase of 5.9% at constant currency; book-to-bill ratio of 1.25
Order book of £204.6m (31 March 2020: £175.0m), up 16.9% (16.6% at constant currency)
Reported and constant currency revenue down by 11.0% to £140.3m, affected by customer site closures and the introduction of
new covid-related working practices
Adjusted operating profit from continuing operations down 7.3% at £24.3m (a decline of 11.5% at constant currency)
Adjusted operating margin of 17.3% (2019: 16.6%), sustained at 16.6% constant currency despite the revenue decline
Net cash grew to £81.4m, aided by good operating cash flow (97% cash conversion). At the end of September, the Group had total
headroom of approximately £214m, including the undrawn £105m credit facility
Robust half-year trading performance and strong order book supports an interim dividend of 4.1p

Operational highlights:
•
•

•
•
•
•

Continued progress with our Horizon strategy; accelerating market intimacy and the transformation of our customer services
Strong order growth driven by:• Continued demand from both academic and commercial customers• Buoyant demand in Semiconductor & Communications, Quantum Technology and Advanced Materials market segments• Good growth in North America and Asia offset by a modest decline in Europe
Revenues held back by covid-related disruption in customer installation and acceptances; manufacturing sites remained operational
and are adapting to new covid-safe working practices
Strong margin performance driven by improved service profitability, tangible gains from Horizon strategy and cost controls
Continued investment in our strategic product development programme; R&D spend maintained at £12.7m providing a healthy
pipeline of future product launchesLong-term growth drivers for end markets remain robust

Summary and Outlook:

Ian Barkshire, Chief Executive of Oxford Instruments plc, said:"The Group is positioned to be a leading provider of high technology products and services to the world’s leading industrial customers
and scientific research communities to image, analyse and manipulate materials down to the atomic and molecular level. This allows us
to live up to our purpose of facilitating a greener economy, increased connectivity, improved health and leaps in scientific understanding.
"We have seen strong order growth in the first half of the year with a good improvement in the order book. Orders have grown across
our academic and commercial customer base, particularly for our compound semiconductor process solutions and quantum cryogenic
and magnet systems. Covid-related customer disruption has affected installation and commissioning activities. This, along with theintroduction of new covid-safe working practices across our manufacturing sites, has led to a fall in revenue over the first half. Gainsfrom our Horizon strategy and cost control enabled sustained operating margins despite lower revenue. The dedication, agility andresilience of our employees during this difficult period underpins our confidence in our ability to service and support the needs of ourcustomers.

"We are adjusting to the external and internal effects of the pandemic and expect uncertainty to remain high. However, robust trading
during the first half, combined with a strong order book, gives us confidence for the second half, absent a material increase incovid‑related disruption that could impact facility or customer site access. We expect full-year performance to be a little behind last year
on a constant currency basis, ahead of current analyst forecasts.
"The transformation of the Group through our Horizon strategy has provided a solid foundation for future growth. Our focus on markets
with sustainable long-term growth drivers, our continuous drive for greater efficiencies and our ability to respond to evolving customer
needs mean that we remain well positioned to navigate the current challenges and return to long-term sustainable growth and margin
improvement."

Enquiries:
Oxford Instruments plc
Ian Barkshire, Chief Executive
Gavin Hill, Group Finance Director

Tel: 01865 393200

MHP Communications
Rachel Hirst

Tel: 020 3128 8572

Number of pages: 30

2.

Throughout this report we make reference to adjusted numbers. A full definition of adjusted numbers can be found in Note 2 to theCondensed Consolidated Financial Statements. Where we make reference to constant currency numbers, these are prepared on a monthby-month basis using the translational and transactional exchange rates which prevailed in the previous year rather than the actual exchange
rates which prevailed in the year. Transactional exchange rates include the effect of our hedging programme.

NOTE: Oxford Instruments plc compiled analyst forecasts for adjusted operating profit (year to 31 March 2021), published since theAGM trading update, range from £36m to £45m.

Chief Executive’s Review
Introduction
As a global provider of high technology products and solutions to the world’s leading industrial companies and scientific researchcommunities, we recognise our responsibility and role in the advancement of society, helping to create a more sustainable future.
Through our core purpose we are addressing some of the world’s most pressing challenges, by enabling a greener economy, increased
connectivity, improved health, and leaps in scientific understanding. The underlying long-term growth drivers for our chosen markets
remain relevant and robust despite the coronavirus.
The Group has delivered a resilient first half performance considering the severity of the global disruption caused by the covid
pandemic. This disruption has impacted our customers and end markets by varying amounts depending on regional and local
responses to contain the virus, which have included reduced access to customer sites, protracted administrative processes and travel
restrictions. Whilst we have kept all our sites open during this time, implementing covid-safe workplaces impacted our manufacturing
capacity in the first half.
While these factors had a significant impact on first quarter performance, we have seen a steady improvement through the second
quarter with continued positive momentum in orders and revenue through the period. The combination of prudent cost control
measures, improved commercial practices, the transformation of our customer service approach and ongoing gains from our operational
excellence programme supported a sustained operational margin for the Group despite reduced revenue.
We have continued to make good progress with the implementation of our Horizon strategy and have accelerated certain elements toalign our operations more closely to their end markets. This has resulted in the transfer of our Magnetic Resonance business to theMaterials & Characterisation sector, allowing us to better exploit sales, marketing and service synergies, providing increased reach andimproved support for our target customers and applications.
We remain focused on addressing a broad and diverse range of attractive end markets where our key enabling technologies enable
customers to image, analyse and manipulate materials down to the atomic and molecular level, supporting their long-term growth. By
addressing the academic, applied R&D and high-tech manufacturing segments, we are engaged throughout the technology cycle andare well positioned to benefit from each wave of commercialisation and technology disruption.

Results
Reported orders for the Group increased to £175.7m (2019: £165.7m) up 6.0% (5.9% at constant currency), reflecting strong growthfrom commercial customers and improved demand from academic and Government-funded institutions. Looking at our end markets, we
saw strong growth across the Semiconductor & Communications, Quantum Technology and Advanced Materials segments, partially
offset by lower contributions from the Healthcare & Lifescience, Energy & Environment and Research & Fundamental Science
segments. This in turn led to strong growth in the Materials & Characterisation sector and a modest decline from our Research &Discovery sector. The initial phase in the transformation of our customer service approach supported good order growth for the Service& Healthcare sector. At a regional level, good order growth across North America and Asia was partially offset by a small decline inorders in Europe, where customer activity, local restrictions and reduced access have been most pronounced. Within Asia, orders for
China grew by 18% supported by strong growth within Semiconductor and Advanced Materials end markets.
Revenue for the Group was impacted throughout the period by covid-related disruption to the fulfilment of customer orders. This
resulted in a decline in reported and constant currency revenue to £140.3m (2019: £157.6m) a reduction of 11.0%, with a decline acrossthe Materials & Characterisation and Research & Discovery sectors of 10.9% and 16.4% respectively. The Service & Healthcare sector
delivered modest growth supported by increased demand for the services related to our own products. The combination of customer
disruption and product mix in the period resulted in the proportion of revenue from academic customers increasing slightly to 54%(2019: 52%) in the first half. Operating margin was maintained at 16.6% on a constant currency basis supported by gains realised in the
period from our Horizon strategy and cost controls.
From an end market perspective, we saw good constant currency revenue growth for the Semiconductor & Communications (30% ofGroup revenue) customer segment with strong growth for Quantum Technology (6% of revenue). In the Advanced Materials segment(27% of revenue), despite positive order and revenue growth to commercial customers, we saw a double-digit decline in revenue due todeferred shipments and temporary academic customer site closures. The Healthcare & Lifescience (20% of revenue) and Energy &Environment (8% of revenue) segments were strongly impacted by the logistics of accessing customer sites and the reduced academic
customer activity in Europe and America during the period. Revenue for the Research & Fundamental Science market segment (9% ofrevenue) was in line with the comparable period last year.
From a geographical perspective, regional Government and customer responses to the pandemic dominated revenue profiles, with thestrongest impacts being felt in North America and Europe, down 26% and 12% respectively. Asia delivered revenue broadly in line withprevious first half as it recovered earlier from the first wave of the pandemic, allowing access to customer sites.
With good order growth and a deferral of revenue in the period, the order book, representing orders for future delivery, increased by
17% on a constant currency basis since March 2020, with significant growth in Materials & Characterisation and good growth acrossResearch & Discovery and Service & Healthcare. The book-to-bill ratio for the period increased to 1.25.
Continued good cash collection, reflected in cash conversion of 97% in the period, resulted in an improved net cash position of £81.4m,
up from £67.5m at year end.
Sector performance
Turning to the performance of the individual sectors:
Materials & Characterisation provides products and solutions that enable the fabrication and characterisation of materials down to theatomic scale, predominantly supporting customers across applied R&D as well as the production and manufacture of high technology
products. Orders for the sector increased by 16.5% to £91.0m (2019: £78.1m), with growth from both academic and commercial
customers, underpinned by strong growth to customers within the Semiconductor & Communications segment and improved demand
within the Advanced Materials, Quantum and Healthcare & Lifescience segments. Order growth was strong in North America and Asia,
supported by good growth in Europe. Reported and constant currency revenue of £65.2m (2019: £73.2m) declined by 10.9%,
predominantly due to covid-related issues at our customers’ sites. The impact was most pronounced among our higher-margin
measurement and characterisation solutions where growth from Semiconductor & Communications and Quantum customers was offset
by delayed shipments to other segments within Europe and North America. Reduced revenue, combined with a lower proportion ofhigher margin product, negatively impacted profitability within the period with reported adjusted operating profit declining by 27.0% to£8.9m (2019: £12.2m), representing a reduction of 32.0% at constant currency. Consequently, reported operational margin fell by 300
basis points (down 400 basis points at constant currency) to 13.7% (2019: 16.7%). The combination of strong orders and delayed
shipments resulted in order book growth of 43.8% to £76.8m (March 2020: £53.4m).
Research & Discovery provides advanced solutions that create unique environments and enable the imaging and analyticalmeasurements down to the atomic and molecular level, used predominately within scientific research and applied R&D. Revenue andorders for the sector were significantly impacted in the first quarter by covid-related disruption to our academic customers in life
sciences and semiconductor research.
Whilst we have seen increased momentum through the second quarter, this initial impact led to reduced volumes of our scientificcameras and optical microscopy solutions in the period. This more than offset strong order and an in-line revenue performance across
our product portfolio of cryogenic platforms, specialised high magnetic field systems and scientific X-ray tubes. This resulted in reported
and constant currency revenue being down 16.4% to £48.3m (2019: £57.8m) in the period. Growth in Quantum Technology related
revenue was more than offset by reductions across Healthcare & Lifescience and Semiconductor & Communications end markets withother segments remaining broadly in line with the previous year. Profitability for the sector was supported by realising tangible

operational improvements through our Horizon strategy and careful cost management in the period. This resulted in an improvement inreported operational margin of 220 basis points to 13.3% (2019: 11.1%) up 120 basis points at constant currency, with reported
adjusted operating profit flat at £6.4m (2019: £6.4m) representing a reduction of 7.5% at constant currency. The reported order bookincreased by 5.3% to £101.7m (March 2020: £96.5m).
Service & Healthcare provides customer service and support for our own products and the service of third-party MRI scanners inJapan. In the period we accelerated the transformation of our customer service approach to better support our customers as they
manage through the covid pandemic. This has involved changing our service product offerings and the way in which we provide support
to our customers around the world. Through the provision of increased digital products, remote services and better leveraging our global
footprint we maintained high levels of support for our customers throughout the period. Revenue grew by 1.1% on a reported andconstant currency basis to £26.8m (2019: £26.5m). Increased reported and constant currency operational profit margin for the sector of
490 basis points to 33.6% (2019: 28.7%) was supported by improved operational efficiencies and favourable product mix.
Reported and constant currency adjusted operating profit increased by 18.4% to £9.0m (2019: £7.6m). Order growth of 3.8% on areported basis to £30.4m (2019: £29.3m) was driven by increased demand for services related to our own products and represents
3.1% growth at constant currency.
Covid response
The early actions we took in response to covid enabled us to maintain business continuity throughout the evolving phases of thepandemic. Our approach has enabled us to respond quickly to the associated ongoing global business disruption. These actions
included establishing procedures and working practices to make our manufacturing sites and offices safe to work in, and ensuring those
staff working off-site had full and secure access to the systems they required to undertake their roles.
Our priorities during this time have remained the health and wellbeing of our employees and the provision of support to our customers,
helping them navigate their own operational challenges. Our hybrid workplace model, with its clear practices and procedures, guides
each of our sites in line with the local situation and government guidelines. This has provided clarity and structure across our global
business enabling us to maintain and optimise business continuity.
We have continued to develop and refine working practices across our sites and business functions to enable increased operational
output and efficiencies. This has included the introduction of shifts in some of our facilities to deliver improved output whilst maintaining
covid-safe workspaces.
The Group prudently took part in the UK Government’s Job Retention Scheme given the highly uncertain market outlook at the start ofthe crisis. This involved a small number of employees being furloughed where they could not undertake their work remotely. However,by the end of June all furloughed colleagues had returned to work. In light of the resilience of the Group’s performance in the period, we
have now repaid all of the UK Government support.
Horizon progress
We have continued with the implementation of our Horizon strategy to strengthen our resilience through the ongoing market disruption
as well as deliver sustainable future growth and margin improvement. In the period we continued the development of our capabilities
and maintained our focus on improved market intimacy, operational excellence, enhanced delivery of R&D programmes and customer
service transformation. This included continued investment in the development of our employees and undertaking selective recruitment
to further enhance specific skills and capabilities to provide the foundation for future growth.
In response to covid-related market disruption and associated changes to our customer needs, we accelerated the delivery of ourmarket intimacy programmes and the transformation of our service offering. From a market intimacy perspective, we expanded our
digital marketing capabilities to offer additional webinars, online product launches, virtual conferences and higher value website content.
Deeper market intimacy continues to provide valuable insights into our customers’ strategic priorities, which allows us to identify
additional opportunities for growth in existing and new adjacent markets. The strength of our market intimacy, alongside our enhanced
digital presence and the success of recently launched products, has supported order growth in the period. From a service and support
perspective, with travel restrictions and reduced customer site access, we accelerated the development and deployment of our digitaland remote service capabilities and improved our “in region” service reach and capacity by cross-training our existing service teams.
Our operational excellence programme continued to progress and contributed to margin enhancement in the period.
R&D
The development and delivery of highly innovative and market-leading products and key enabling technologies that deliver ongoing,sustainable value for our customers remains a central pillar within our Horizon strategy. Throughout the period, we have remained
focused on our strategic R&D programme maintaining our progress and investment in this area, providing a healthy pipeline of future
product launches. In the period we launched several new products in line with original expectations and further enriched our IP portfolio.
R&D spend in the period of £12.7m (2019: £13.0m) is broadly in line with the previous year and represents 9.1% of sales.

PeopleI would like to thank all our employees for their commitment during these challenging times, the support they have given each other andtheir innovative approaches to ensuring our customers continue to receive a world-class experience from Oxford Instruments.
Our employees are fundamental to our ongoing business progress and I remain delighted by their continued engagement with our
Horizon strategy. Their passion to both improve our business and support our customers has been demonstrated through their actions
and agility throughout the unprecedented disruption caused by the coronavirus.
Dividend
Robust trading and positive cash generation through the period has resulted in the Board declaring an interim dividend of 4.1p per
share, following last year’s declared interim dividend of 4.1p, which, during the early stages of the pandemic, the Board decided not topay.
Summary and outlook
The Group is positioned to be a leading provider of high technology products and services to the world’s leading industrial customers
and scientific research communities to image, analyse and manipulate materials down to the atomic and molecular level. This allows us
to live up to our purpose of facilitating a greener economy, increased connectivity, improved health and leaps in scientific understanding.
We have seen strong order growth in the first half of the year with a good improvement in the order book. Orders have grown across ouracademic and commercial customer base, particularly for our compound semiconductor process solutions and quantum cryogenic andmagnet systems. Covid-related customer disruption has affected installation and commissioning activities. This, along with theintroduction of new covid-safe working practices across our manufacturing sites, has led to a fall in revenue over the first half. Gainsfrom our Horizon strategy and cost control enabled sustained operating margins despite lower revenue. The dedication, agility andresilience of our employees during this difficult period underpins our confidence in our ability to service and support the needs of ourcustomers.
We are adjusting to the external and internal effects of the pandemic and expect uncertainty to remain high. However, robust trading
during the first half, combined with a strong order book, gives us confidence for the second half, absent a material increase incovid‑related disruption that could impact facility or customer site access. We expect full-year performance to be a little behind last year
on a constant currency basis, ahead of current analyst forecasts.
The transformation of the Group through our Horizon strategy has provided a solid foundation for future growth. Our focus on markets
with sustainable long-term growth drivers, our continuous drive for greater efficiencies and our ability to respond to evolving customer
needs mean that we remain well positioned to navigate the current challenges and return to long-term sustainable growth and margin
improvement.
Ian Barkshire
Chief Executive
10 November 2020

Operations Review
Materials & Characterisation

Revenue
Adjusted2 operating profit
Adjusted2 operating margin
Operating profit after adjusting items
1.
2.

2020
£m
65.2
8.9
13.7%
7.8

2019
£m
73.2
12.2
16.7%
11.0

Growth(10.9%)(27.0%)

Constant
currency
growth1(10.9%)1(32.0%)1

For definition, refer to note on page 2 of highlights.
Details of adjusting items can be found in Note 2 of the Condensed Consolidated Financial Statements.

The Materials & Characterisation sector comprises Asylum Research, NanoAnalysis, Magnetic Resonance and Plasma Technology. In
the period we transferred the Magnetic Resonance business to this sector, better aligning the portfolio with end customer applications
and enabling further exploitation of synergies across the sales, marketing, and service teams. The sector has a broad customer baseacross a wide range of applications for the imaging and analysis of materials down to the atomic level as well as the fabrication ofsemiconductor devices and structures through our range of advanced semiconductor etch and deposition process systems. Our
portfolio of imaging and analysis systems includes our range of market-leading X-ray and electron analysis systems used in conjunction
with electron and ion microscopes as well as our performance-leading atomic force microscopes and NMR analysers. The sector has astrong focus on supporting and accelerating our customers’ applied R&D, enabling the development of new devices, next generation
higher performance materials and enhancing productivity in advanced manufacturing, quality assurance (QA) and quality control (QC).

We provide leading product performance, improved ease of use and enhanced productivity, with analytics and information to aid theinterpretation of acquired data.
Materials & Characterisation delivered strong growth in reported orders; covid-related disruptions negatively impacted shipments andinstallations in the period, resulting in a reduction in revenue, adjusted operating profit and operating margin for the sector. Strong order
performance was supported by continued positive underlying demand from our end markets, our enhanced market intimacy and thesuccess of recently launched products.
Order growth was evenly split across commercial and academic customers with the strongest growth in Asia and good growth in North
America, Europe was broadly in line with the previous first half. Revenue was significantly impacted by covid-related disruptions,affecting regions, markets, and customer types differently. This resulted in a reduction in revenue from commercial customers, while
academic-related revenues were broadly in line with the previous year.Strongest declines were in Europe and North America where theseverity and length of disruption has been largest; revenue in Asia was broadly in line with the previous year. Consequently, theproportion of revenue from commercial customers reduced to 52% (2019: 57%). The order book for future deliveries grew by 43.8% to£76.8m (2019: £53.4m).
From an end market perspective, we continued to see strong underlying demand and order growth from the Semiconductor &Communications and Advanced Materials segments, despite further weakening from automotive and aerospace customers. We also
had good order growth from Quantum Technology and Healthcare & Lifescience segments. Orders in Energy & Environment were down
due to subdued academic activity in the period. The combination of regional variations within our end markets and differing levels ofcovid disruption resulted in good revenue growth in Semiconductor & Communications and Quantum Technology, and a reduction
across Advanced Materials, Energy & Environment and Healthcare & Lifescience, predominately due to their higher proportion ofcustomers within Europe and North America. Semiconductor & Communications represented 47% of sales in the sector, Advanced
Materials 35% with Energy & Environment 11%, and Healthcare & Lifescience 3%.
The Semiconductor & Communications segment delivered double-digit order and revenue growth and remains a significant focus for thesector. We provide imaging and analysis products as well as etch and deposition process solutions used across a broad range of silicon
and compound semiconductor device applications. We saw strong growth of our imaging and analysis solutions into mainstream silicon
semiconductor and electronics applications in line with end market growth. Here our market-leading spatial resolution, ease of use andanalytical integrity support the development of next generation technologies, the transfer to production of new designs and the quality
control and assurance within production. AztecWave™, which we launched in the period, allows a step change in the ease of use andmeasurement of the low concentration materials and essential dopants required to achieve performance from semiconductor wafers,
devices and bond wires.
The compound semiconductor market remains buoyant with resilient long-term sustainable growth drivers due to the ability ofcompound semiconductor devices to transform the energy efficiency of power electronics, dramatically increase connectivity andbandwidth, and enable faster communications. In the period, our strategic focus on improving the key process steps for the criticallayers which determine end device performance supported order growth into power electronics applications such as example chargers,
optoelectronic structures and lasers used in data communications, and sensors for autonomous vehicles. Order growth of ourmeasurement and semiconductor processing solutions has been further supported by our strategy to tailor product offerings for the
specific needs of academic, corporate R&D and production customers.
Our expertise in semiconductor processing and characterisation is providing good growth within Quantum Technology markets where
the uniformity, high purity and surface structure of the deposited materials are critical to the performance and lifetime of quantum
devices. We have developed dedicated processing solutions for the specific materials being used within quantum R&D to directly
address customer needs.
Our growth in the Advanced Materials segment is due to the continued drive to develop, control and repeatably manufacture stronger,
lighter and higher performing materials across a broad range of end markets including automotive, textiles, displays, energy generationand construction. Our imaging and analysis products help our customers develop new higher performing materials and improve their
manufacturing yields.
These advanced materials provide the pathway to transform end application performance, supporting the move towards reduced raw
material usage and a lower end-to-end carbon footprint. As an example, the launch of our faster structural material analyser, SymmetryS2™, in combination with our new application specific software, is being used by a major steel manufacturer to refine their processes inthe development and process control of next generation advanced steels and super alloys required by automotive manufacturers to
reduce vehicle weight whilst retaining structural integrity. The enhanced speed of our system and automated software, which uses a
proprietary machine learning algorithm, reduces the characterisation process from many hours down to minutes.
We have had continued strong demand and order growth in the analysis of advanced polymers, which are being developed for andutilised across a diverse range of applications including lower cost photovoltaics, enhanced performance displays and flexible bio
implants. Our advanced atomic force microscopes enable the accurate characterisation of the mechanical and physical properties andthe robustness of the polymers under changing environmental conditions. These properties determine their value and utility for eachtarget application.

Whilst orders and revenue within the Environment & Energy segment declined in the period due to covid-related market disruption we
continue to see sustainable long-term growth drivers and opportunities for growth across applications such as batteries andphotovoltaics.
In the period we launched AZtecBattery™, a tailored software solution to provide quality control and assurance for the feedstocks used
to manufacture the anodes and cathodes within batteries. Our analysis solutions are also being used to optimise the lifetime andperformance of batteries through the characterisation of the composition and structure of the electrolytes that enable the transfer ofcharge during operation of the battery.
The Healthcare & Lifescience segment, which is a relatively small proportion of the sector, provides an opportunity for growth as wedevelop and tailor solutions for specific applications. In the period we received increased orders supported by the launch of
AZtecPharma™, which has the required regulatory certification and traceable workflows for use across the pharmaceutical andbiomedical industry.
It has been developed in collaboration with major manufacturers who are using it to identify foreign body contamination within and on
the surface of medicine tablets. Our video rate atomic force microscopes are being used across a broad range of biomechanics andviral studies, including covid, due to its ability to observe the dynamic responses of biological material to environmental andpharmaceutical treatments in real time.
Research & Discovery

Revenue
Adjusted2 operating profit
Adjusted2 operating margin
Operating profit after adjusting items
1.
2.

2020
£m
48.3
6.4
13.3%
3.2

2019
£m
57.8
6.4
11.1%
3.2

Growth
(16.4%)-%

Constant
currency
growth1(16.4%)1(7.5%)1

For definition, refer to note on page 2 of highlights.
Details of adjusting items can be found in Note 2 of the Condensed Consolidated Financial Statements.

The Research & Discovery sector includes Andor Technology, NanoScience and X-Ray Technology. This sector provides advanced
solutions that create unique environments and enable imaging and analytical measurements down to the molecular and atomic level,
used predominantly in fundamental and applied research. We build on our relationships with customers, working on breakthroughapplications in research to gain insights and support future commercial applications. We have strong brand recognition and leading
product performance in our chosen market segments.
Revenues and orders for the sector were significantly impacted by disruptions caused by coronavirus in the period. The disruption was
most severe in the first quarter with continued improvement and positive momentum through the second quarter. The severity of the
impact in the first quarter was largely due to the reduced activity at many of our target customer sites due to temporary closures,
reduced occupancy or restricted access as well as reduced manufacturing capacity as we adapted our sites to covid-safe workplaces
and established new working practices. Customer disruption was most pronounced within Europe and North America and across ouracademic research customers in life science applications leading to reduced orders and revenues for our scientific cameras and optical
microscopy solutions in the period. This more than offset strong order growth in Quantum Technology and Advanced Materials and an
in-line revenue performance for our portfolio of cryogenic and high magnetic field systems and scientific X-ray tubes.
This resulted in reported revenue for the sector falling 16.4% to £48.3m. From an end market perspective, growth in Quantum
Technology was more than offset by reductions in Healthcare & Lifescience and Semiconductor & Communications markets with
Advanced Materials, Research & Fundamental Science and Energy & Environment segments being broadly in line with the previous firsthalf year.
Profitability for the sector was enhanced by the realisation of tangible gains from the Horizon business improvements established inprevious years and through careful cost management in the period.
This resulted in an increase in reported operational margins to 13.3% (2019: 11.1%) representing an improvement to 12.3% at constantcurrency. Reported adjusted operating profit remained at £6.4m representing a fall of 7.5% at constant currency.
Looking at the end market segments, within Healthcare & Lifescience, as previously mentioned, demand in Europe and North America
was significantly subdued during the first quarter with temporary or partial site closures at academic research facilities and central
research laboratories. The long-term fundamental market drivers of improving the health and wellbeing of society remain robust, driven
by the need to better understand fundamental disease mechanisms at the cellular and molecular level, and for the development of newtreatments, therapies and personalised medicines. As our customers’ restrictions have eased, we have seen increased order levels withbookings in the second quarter being in line with the previous year. Our portfolio of advanced microscopy systems, analysis andvisualisation software solutions and scientific cameras remain key enabling technologies to help our customers better understand theorigins and progression of diseases such as cancer and neurological disorders like Alzheimer’s, as well as the development of new
medicines and treatments. As an example, the CRISPR technique, which can be thought of as a pair of genetic scissors that can cut

and edit specific sequences of DNA and was recognised with this year’s Nobel prize, is an important part of the cell biologists’ tool box
with increased interest in its potential within cancer research. The method relies on extremely weak light signals and therefore requires
highly sensitive scientific cameras such as our iXon™. Within the segment, we received increased demand from customers and our
OEM partners involved in covid-related initiatives. This included use of our cameras within diagnostic testing equipment and researchers
using our broad range of products to study the virus, understanding its genetic sequence, mutations, how it attacks patients’ cells andorgans and the response from their immune system.
Sales of our analysis and visualisation software were broadly in line with the previous year with customers able to utilise our products
whilst working remotely from their facilities. Conversely, sales of our optical microscopy systems were significantly impacted in the firstquarter with continued recovery through the second quarter and a building pipeline of future sales opportunities.
Quantum Technology continues to attract increased funding from governments and commercial customers because of the potential totransform computing, cryptography and sensor capabilities, in turn disrupting diverse end markets such as banking and healthcare. Thishas supported increased demand for our cryogenic platforms and high field magnet systems for both fundamental research intoquantum effects, new quantum materials and in the development toward practical quantum computers. Our recently launched Proteox™
cryogenic system is gaining market traction across leading academic and commercial customers and we are delighted to be a key
partner with Rigetti, a US based quantum systems provider, in a UK government funded consortium to build the UK’s first commercial
quantum computer. Proteox™ will be at the heart of the system and we will be part of the team to build and operate the computer which
will be housed at our Oxford facility.
Within the Advanced Materials segment our cryogenic platforms, high field magnet systems, scientific cameras and optical components
are being used to explore and characterise the fundamental properties of next generation materials such as graphene-related twodimensional sheets for use across a broad range of applications, including semiconductors, sensors and communication devices.
Within Research & Fundamental Science we continue to see long-term customer interest in our specialised cryogenic andsuperconducting magnet systems, and high-end scientific cameras across a broad range of research themes including astronomy andfundamental physics, chemistry and materials research. In the half we received further grants to develop more sensitive cameras for the
tracking of space debris with continued long-term interest in astronomy applications. The SOFIA space telescope, which NASA used torecently discover water on the moon, uses one of our cameras to guide the telescope and optically track the objects of interest. In the
period, the first two systems for the Institute of Physics in Beijing were installed as part of the multisystem order into their extreme
environments laboratory.
Service & Healthcare

Revenue
Adjusted2 operating profit
Adjusted2 operating margin
Operating profit after adjusting items
1.
2.

2020
£m
26.8
9.0
33.6%
9.0

2019
£m
26.6
7.6
28.%
7.6

Growth
+1.1%+18.4%

Constant
currency
growth1+1.1%1+18.4%1

For definition, refer to note on page 2 of highlights.
Details of adjusting items can be found in Note 2 of the Condensed Consolidated Financial Statements.

The Service & Healthcare sector comprises the Group’s maintenance service contracts, billable repairs, training and support services,and spare part sales related to Oxford Instruments’ own products; and the support and service of third-party MRI scanners in Japan.
In the first half the sector delivered order and revenue growth driven by increased demand for support services related to our own
products. Revenue from our Japan MRI service operations were broadly in line with the previous year, with our team continuing toprovide the same levels of support to hospitals throughout the disruption. Improved operational efficiencies and higher value products
contributed to improved profitability in the half with adjusted operating profit increasing 18.4% to £9.0m with reported operating margin
up 490 basis points to 33.6%.
To meet the changing needs of our customers as a result of covid, as previously mentioned, we accelerated the transformation of ourcustomer support services including adapting our service offerings, introducing remote access products and changing the way in which
we are organised and deliver our services.
With travel restrictions in place across many international borders we maximised our “in-region” capacity through cross-training of ourexisting engineers to cover a broader portfolio. Where customer site access was not possible, we were able to utilise our virtual reality“Live Assist” capabilities to enable remote product repair and commissioning. In the period we also made it easier for customers toreach our technical support teams through the launch of a live chat functionality on our website, allowing them to either quickly resolve
their query or efficiently establish the next course of action. These new approaches were well received by customers, improving theirproductivity and minimising downtime, whilst increasing our own service capacity and efficiency. With customers’ attitudes changing wehave now released remote-only service contract options for some of our products.

For those customers who had restricted access to their facilities during the pandemic we helped them connect to and remotely operate
their equipment or securely access their data remotely for further analysis. We also assisted customers to safely shut down theirsystems remotely, and as they returned to their workplaces, to resume operations and bring their systems back online.
In addition, we increased the number and range of virtual training programmes that were available both for purchase and with freeaccess.
Whilst we have accelerated the early phase of the transformation of our services offering, we have significant scope for further
developments that will increase the value and breadth of support to our customers and contribute to the ongoing success of our Horizon
strategy.

Finance Review
In January 2020, the Group disposed of its minority equity stake in the Scienta Omicron joint venture to existing Shareholders. In thefollowing month, the Group completed the disposal of its OI Healthcare business in the US. For the purposes of comparative reporting,OI Healthcare has been classified as a discontinued operation.
Reported orders increased by 6.0% to £175.7m (2019: £165.7m), an increase of 5.9% at constant currency. At the end of the period, theGroup’s order book for future deliveries stood at £204.6m (31 March 2020: £175.0m). The order book grew 16.9% on a reported basis
and 16.6% at constant currency.
Reported and constant currency revenue on a continuing basis declined by 11.0% to £140.3m (2019: £157.6m).
Adjusted operating profit from continuing operations decreased by 7.3% to £24.3m (2019: £26.2m). Adjusted operating profit, excluding
currency effects, decreased by 11.5% with a currency tailwind of £1.1m. Adjusted operating margin from continuing operations
increased by 70 basis points to 17.3% (2019: 16.6%). Excluding currency effects, adjusted operating margin was flat at 16.6%.
Adjusted profit before tax from continuing operations declined by 8.1% to £23.7m (2019: £25.8m), representing a margin of 16.9%(2019: 16.4%).
Amortisation of acquired intangibles was £4.3m and the business incurred a credit of £0.8m relating to the movement in the mark-tomarket valuation of uncrystallised currency hedges for future years. There were no other adjusting items in the period.
After adjusting items, the Group recorded an operating profit of £20.8m (2019: £19.3m), an increase of 7.8%, and profit before tax of£20.2m (2019: £18.9m), an increase of 6.9%.
Continuing adjusted basic earnings per share fell by 8.9% to 32.8p (2019: 36.0p). Continuing basic earnings per share were 27.7p(2019: 26.0p), growth of 6.5%.
Cash generated from operations of £23.3m (2019: £15.3m) represents 97% (2019: 62%) cash conversion. Net cash increased from£67.5m on 31 March 2020 to £81.4m, aided by good operating cash flow.
At the end of September, our revolving credit facility remained undrawn, leaving approximately £105m of committed facilities. This
represents total headroom of about £214m. The Group has outstanding private placement loan notes of £27.9m, which mature on
31 March 2021, at which point headroom will fall to £186m.
Adjusted operating profit is stated before amortisation of acquired intangibles, restructuring costs, the mark-to-market valuation of
unexpired currency hedges, and other adjusting items, as set out in Note 2 to the Financial Statements.

Revenue
Adjusted operating profit
Income Statement
The Group’s Income Statement is summarised below.

Revenue
Adjusted gross profit
Administrative expenses
Share of profit/(loss) of associate

2020
£m
140.3
24.3

2019
£m
157.6
26.2

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
140.3
157.6
71.5
79.5
(47.6)(52.2)——

Growth(11%)(7.3%)

Change(11.0%)(10.1%)

0.4
24.3
(0.6)
23.7
(4.3)
—
0.8
20.2
(4.3)
15.9

(1.1)
26.2
(0.4)
25.8
(4.4)
—
(2.5)
18.9
(4.0)
14.9

Adjusted effective tax rate1

20.7%

20.2%

Continuing adjusted earnings per share – basic
Continuing earnings per share – basic

32.8p
27.7p

36.0p
26.0p

(8.9%)+6.5%

Continuing adjusted earnings per share – diluted
Continuing earnings per share – diluted

32.4p
27.4p

35.6p
25.8p

(9.0%)+6.2%

Dividend per share

4.1p

—

Foreign exchange
Adjusted operating profit
Net finance costs
Adjusted profit before tax
Amortisation of acquired intangibles
Non-recurring items
Mark-to-market of currency hedges
Profit before tax
Tax from continuing operations
Profit for the period from continuing operations1.

(7.3%)(8.1%)+6.9%

The adjusted effective tax rate is calculated excluding amortisation of acquired intangibles, the mark-to-market of financial derivatives, andother adjusting items.

Orders and revenue
Total reported orders grew by 6.0% (5.9% at constant currency) to £175.7m. Orders, at constant currency, grew by 16.5% for Materials& Characterisation, declined by 6.9% for Research & Discovery and grew by 3.1% for Service & Healthcare. The decline in Research& Discovery was principally due to a reduction in orders for our cameras and spectroscopy products in the academic sector.
Reported and constant currency revenue of £140.3m (2019: £157.6m) decreased by 11.0%. Reported revenue fell by 10.9% forMaterials & Characterisation and 16.4% for Research & Discovery. Service & Healthcare reported revenue grew by 1.1%.
The book-to-bill ratio (orders received to goods and services billed in the period) for the year was 1.25.
Revenue, at constant currency, declined by 10.9% for Materials & Characterisation partly due to customer disruption from covid that
hampered our ability to ship product to customer sites, and the impact on production capacity from the implementation of new safe
working practices. A constant currency decline of 16.4% in Research & Discovery was impacted by production constraints as our
manufacturing sites adapted to new covid working practices, as well as being unable to complete high value product installations in Asia
ahead of the period end owing to customer site closures and travel constraints on service personnel.
Service & Healthcare constant currency revenue grew by 1.1%, with good growth from the service of our own products.
Revenue from Asia of £63.9m (a constant currency decline of 0.8%) constitutes 46% of total Group revenue, with China being 54%
and 25% of the regional and Group totals respectively. Revenue from Europe of £40.5m (a constant currency decline of 12.0%) is 29%
of total Group revenue. North America’s constant currency revenue declined by 26% to £33.8m, proportionate to 24% of total Grouprevenue. The Rest of World revenue for the period was £2.0m, constant currency growth of 40%.
The total reported order book grew by 16.9% (16.6% at constant currency) to £204.6m (2019: £175.0m). The order book, at constantcurrency, compared to 31 March 2020, increased by 44.9% for Materials & Characterisation, 5.5% for Research & Discovery and fell by
1.3% for Service & Healthcare. This good growth has been supported by revenue not recognised in the year owing to delayed
shipments and installations.

£m
Revenue1: Half year to 30 September 2019
Underlying movement
Foreign exchange
Revenue1: Half year to 30 September 2020
Revenue growth: reported
Revenue growth: constant currency
1.

Materials &Characterisation
73.2
(8.0)
—
65.2

Research &Discovery
57.8
(9.5)
—
48.3

Service &Healthcare
26.6
0.2
—
26.8

Total
157.6
(17.3)—
140.3(10.9%)(10.9%)(16.4%)(16.4%)

+1.1%
+1.1%

(11.0%)(11.0%)

From continuing operations.

Adjusted gross profit
Adjusted gross profit fell by 10.1% to £71.5m (2019: £79.5m), representing a gross profit margin of 51.0%, a decline of 40 basis points
over last year.

Adjusted operating profit
Adjusted operating profit from continuing operations decreased by 7.3% to £24.3m (2019: £26.2m), representing an adjusted operating
profit margin of 17.3%, an increase of 70 basis points against last year. At constant currency, the adjusted operating profit margin was
16.6%, in line with last year.
Materials & Characterisation margin declined by 300 basis points to 13.7% (2019: 16.7%) with the margin in NanoAnalysis falling onlower revenue. Margins in Plasma Technology have remained broadly constant and we have seen good growth in Asylum Research’s
margins. Following an internal reorganisation, the Magnetic Resonance product range and the costs of a small research facility in
Finland are now recorded within Materials & Characterisation. Both were previously recorded within Research & Discovery. At constantcurrency the margin was 12.7%.
Research & Discovery’s adjusted operating margin increased to 13.3% (2019: 11.1%), growth of 220 basis points. At constant currency,
the margin was 12.3%. Margin growth was supported by the installation of some significant complex magnet and cryogenic systems for
NanoScience. Good cost control and favourable product mix within Andor Technology prevented margin dilution from a fall in revenue.
Service & Healthcare margin increased by 490 basis points to 33.6% (2019: 28.7%) owing to our focus on improving service revenue on
our own products, combined with some large upgrades in Andor Technology. At constant currency, the margin was 33.6%.
Currency effects (including the impact of transactional currency hedging) have increased reported adjusted operating profit by £1.1m
when compared to blended hedged exchange rates for the comparative period.

£mAdjusted operating profit1: Half year to 30 September 2019
Underlying movement
Foreign exchange
Adjusted operating profit1: Half year to 30 September 2020
Margin: Half year to 30 September 2019
Margin: Half year to 30 September 2020
1.

Materials &Characterisation
12.2
(3.9)
0.6
8.9

Research &Discovery
6.4
(0.5)
0.5
6.4

Service &Healthcare
7.6
1.4
—
9.0

Total
26.2
(3.0)
1.1
24.3

16.7%
13.7%

11.1%
13.3%

28.6%
33.6%

16.6%
17.3%

From continuing operations.

Adjusting items
Amortisation of acquired intangibles of £4.3m relates to intangible assets recognised on acquisitions, being the value of technology,
customer relationships and brands.
The Group uses derivative products to hedge its short-term exposure to fluctuations in foreign exchange rates. It is Group policy to havein place at the beginning of the financial year hedging instruments to cover 80% of its forecast transactional exposure for that year. The
Group has decided that the additional costs of meeting the extensive documentation requirements of IFRS 9 to apply hedge accounting
to these foreign exchange hedges cannot be justified. Accordingly, the Group does not use hedge accounting for these derivatives.
Net movements on mark-to-market derivatives in respect of transactional currency exposures of the Group in future periods aredisclosed in the Income Statement as foreign exchange and excluded from our calculation of adjusted profit before tax. In the current
year this amounted to a credit of £0.8m (2019: £2.5m charge). The period-end asset primarily reflects an uncrystallised gain arising froma rise in the value of Sterling at the balance sheet date against a blended rate achieved on US Dollar, Euro and Japanese Yen forward
contracts that will mature over the next twelve months.
There were no other adjusting items booked in the period.
Net finance costs
The Group’s adjusted net finance costs were £0.6m (2019: £0.4m), the small increase due to a refund of overpaid interest last year.
Profit before tax
Continuing adjusted profit before tax fell by 8.1% to £23.7m (2019: £25.8m). The adjusted profit before tax margin of 16.9% (2019:16.4%) was above last year due good cost control offsetting lower revenue, as well as a small currency tailwind.
Continuing profit before tax of £20.2m (2019: £18.9m) is after the mark-to-market movement on derivative financial instruments, andamortisation of acquired intangibles.
Tax
The adjusted tax charge from continuing operations of £4.3m (2019: £4.0m) represents an effective tax rate of 20.7% (2019: 20.2%), theincrease reflecting a change in the geographical mix of profits earned.

Earnings per share
Continuing adjusted basic earnings per share decreased by 8.9% to 32.8p (2019: 36.0p); continuing adjusted diluted earnings per sharefell by 9.0% to 32.4p (2019: 35.6p). Continuing basic earnings per share increased by 6.5% to 27.7p (2019: 26.0p) and continuing
diluted earnings per share grew by 6.2% to 27.4p (2019: 25.8p).
The number of undiluted weighted average shares increased marginally to 57.3m.
Foreign exchange
The Group faces transactional and translational currency exposure, most notably against the US Dollar, Euro and Japanese Yen.
Translational exposures arise on the consolidation of overseas company results into Sterling. Transactional exposures arise where thecurrency of sale or purchase transactions differs from the functional currency in which each company prepares its local accounts. With
many of the manufacturing sites residing in the UK, the Group has a significant cost base in Sterling.
Foreign currency exposure
The Group’s foreign currency exposure for the half year is summarised below.

£m (equivalent)
Sterling
US Dollar
Euro
Japanese Yen
Chinese Renminbi
Other

Revenue
26.0
66.9
30.3
14.3
2.4
0.4
140.3

Adjusted
operatingprofit(30.8)
28.1
18.4
8.6
0.6
(0.6)
24.3

The Group maintains a hedging programme against its net transactional exposure using internal projections of currency tradingtransactions expected to arise over a period extending from 12 to 24 months. As at 30 September 2020, the Group had currency
hedges in place extending up to 18 months forward.
For the second half of this financial year, our assessment of the currency impact is, based on hedges currently in place and forecast
rates, a reduction in revenue of £1.0m and an increase in adjusted operating profit of £0.2m. As an example sensitivity for the second
half of the year, if we assume a 5% appreciation of Sterling against our major trading currencies from forecast rates, then, with thebenefit of hedging in place, the estimated impact is a reduction in revenue and adjusted operating profit of £7.9m and £1.3m
respectively. Uncertain volume and timing of shipments and acceptances, currency mix and FX volatility may significantly affect second
half currency effects. Forecast rates for the second half are - GBP:USD 1.30; GBP:EUR 1.11; GBP:JPY 135.
Disposal of OI Healthcare – discontinued operations
On 24 February 2020, the Group sold the OI Healthcare business in the US to MXR Imaging, Inc, for a consideration of $14.9m(£11.5m). The business has been treated as a discontinued operation within the comparatives.
Disposal of Scienta Omicron
On 29 January 2020, the Group sold its 47% share in Scienta Omicron to a group of existing Shareholders in the joint venture fora consideration of SEK 147m (£11.7m). For the comparative period, the Group did not record a profit from the joint venture.
Dividend
The Group’s policy is to increase the dividend each year in line with the increase in underlying earnings, considering movements
in currency. Following the high uncertainty created by the impact of covid, the Board decided not to pay the 2019/20 interim dividend of
4.1p per share and then did not declare a final dividend. A better than expected trading performance, growth in the order book and good
cash generation has resulted in the Board proposing an interim dividend of 4.1p for the 2020/21 financial year. The interim dividend will
be paid on 14 April 2021 to shareholders on the register as at 5 March 2021. Monies received under the UK government’s furlough
scheme were fully repaid in the period.
Cash flow
The Group cash flow is summarised below.

Adjusted operating profit
Depreciation and amortisation
Adjusted EBITDA
Working capital movement
Equity settled share schemes

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
24.3
26.2
4.1
4.5
28.4
30.7
(3.0)
(11.3)
1.1
2.0

Share of profit/(loss) from associate
Business reorganisation items
Pension scheme payments above charge to operating profit
Cash generated from operations
Interest
Tax
Capitalised development expenditure
Expenditure on tangible and intangible assets
Decrease in long-term receivables
Dividends paid
Proceeds from issue of share capital and exercise of share options
Payments made in respect of lease liabilities
Decrease in borrowings
Net increase in cash and cash equivalents from continuing operations

—
0.5
(3.7)
23.3
(1.0)
(4.0)
(0.5)
(1.1)
—
—
0.1
(1.3)
—
15.5

—
—
(6.1)
15.3
(1.1)
(3.5)
(2.2)
(1.5)
0.5
(2.2)
0.2
(1.4)
—
4.1

Note: Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation of acquired intangibles and the mark-to-market of financial
derivatives.

Cash generated from operations
Cash generated from operations of £23.3m (2019: £15.3m) represents 97% (2019: 62%) cash conversion. Cash conversion is definedas cash generated from operations before non-recurring items and pension scheme payments, less capitalised development
expenditure, capital expenditure and payments made in respect of finance leases/adjusted operating profit.
Working capital rose by £3.0m. Inventories rose by £0.6m with additional finished goods due to shipments held over the year end
following closure of customer sites. Receivables declined by £2.1m and payables and customer deposits decreased by £4.5m, partly
due to a clearing of payable balances prior to implementation of a new ERP in Asylum Research just after the half year end.
The reduction in the cost of equity settled share schemes is due to a catch-up charge relating to a correction in the valuation ofmanagement share option incentive schemes made in the comparative period.
PensionPension costs relate to recovery payments made to the UK defined benefit pension scheme. Under the current actuarial plan, payments
are scheduled to continue until 2026.
Interest
Net interest paid was £1.0m (2019: £1.1m), broadly in line with last year.
Tax
Tax paid was £4.0m (2019: £3.5m).
Investment in Research and Development (R&D)
Total cash spend on R&D in the half year was £12.7m, equivalent to 9.1% of sales (2019: £13.0m, 8.2% of sales). A reconciliation
between the adjusted amounts charged to the Income Statement and the cash spent is given below:

R&D expense charged to the Income Statement
Amounts capitalised as fixed assets
Amortisation of R&D costs previously capitalised as intangibles
Amounts capitalised as intangible assets
Total cash spent on R&D during the year

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
13.2
11.9
—
0.1
(1.0)
(1.2)
0.5
2.2
12.7
13.0

Net debt and funding
Net debt
Good cash generation in the half year increased the Group’s net cash position from £67.5m to £81.4m. Cash generated from operations
was £23.3m (2019: £15.3m). The Group invested in capitalised development costs of £0.5m and tangible and intangible assets of£1.1m.
Movement in net debt
Net cash as at 31 March 2020
Cash generated from operations
Interest
Tax
Capitalised development expenditure

£m
67.5
23.3
(1.0)
(4.0)
(0.5)

Capital expenditure on tangible and intangible assets
Dividends paid
Other items
Net cash as at 30 September 2020

(1.1)
—
(2.8)
81.4

Funding
On 2 July 2018, the Group entered into a new unsecured multi-currency revolving facility agreement, which is committed until June 2023
with one-year extension options at the end of the first and second years. The facility has been entered into with two banks andcomprises a Euro-denominated multi-currency facility of €50.0m and a US Dollar-denominated multi-currency facility of $80.0m.
We have agreed with our banks to extend the facility by one year to June 2024, with an option to request an extension for a further year
in one year’s time.
The Group has outstanding bilateral private placement notes of £27.9m, which mature on 31 March 2021.
Debt covenants are net debt to EBITDA less than 3.0 times and EBITDA to interest greater than 4.0 times. As at 30 September 2020
the business had net cash.
Pensions
The Group has a defined benefit pension scheme in the UK. This has been closed to new entrants since 2001 and closed to future
accrual from 2010.
At 30 September 2020, the net surplus arising from our defined benefit pension scheme obligations was £1.1m (31 March 2020:£30.7m). A significant fall in corporate bond yields has resulted in a lower discount rate and, combined with changes to the assumed
level of inflation, has resulted in a higher value being placed on the scheme’s liabilities. The increase in liabilities has been partiallymitigated by contributions paid and the return on the scheme’s assets being higher than the discount rate over the period. Total scheme
assets at 30 September 2020 were £352.9m (31 March 2020: £321.4m) while liabilities were £351.8m (31 March 2020: £290.7m).
We terminated the US defined benefit pension scheme at the end of the last fiscal year. All payments made last year were in full andfinal settlement of the scheme’s liabilities.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in
the Performance Highlights, Chief Executive’s Review and Operations Review sections of this Half-year Report. The financial position of
the Group, its cash flows, liquidity position and borrowing facilities are described in the Finance Review.
Considering the global health crisis resulting from the outbreak of covid and the impact that has already materialised in terms of
disruption to operations and customer activity, it is reasonable to expect that the future performance of the Group will be adversely
affected. Due to the continuing global uncertainty, there is greater volatility and uncertainty in trading outcomes for the year ahead. The
Board has prepared and reviewed several scenarios for the Group’s future performance based on varying degrees of disruption causedby covid on orders, trading and cash flow performance. In addition, the Group has overlaid the risk of long-term adverse movements inforeign exchange rates to our cash flow forecasts as an additional sensitivity to those forecasts. The outcome of this assessment showsthat the Group can operate within its current facilities, without the need to obtain any new facilities, for a period of not less than twelve
months from the date of this report. The Board is satisfied, having considered the current cash position, the sensitivity analysis, as wellas its committed funding facilities, that the Group has adequate resources to continue in operational existence for the foreseeable
future. Consequently, the Condensed Consolidated Financial Statements continue to be prepared on a going concern basis.
Forward-looking statements
This document contains certain forward-looking statements. The forward-looking statements reflect the knowledge and information
available to the Company during the preparation and up to the publication of this document. 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.
Gavin Hill
Group Finance Director
10 November 2020

Principal Risks and Uncertainties
Information regarding the risk management process in place at the Group is set out on page 50 of the 2020 Annual Report. The
principal risks and uncertainties identified through that process are set out on pages 50 to 54 of the 2020 Annual Report and can befound on the Group’s website at www.oxinst.com.

In keeping with the risk management process, the Group has performed a quarterly update of its risk register as at 30 September 2020.
It has evaluated the disclosures made on pages 50 to 54 of the 2020 Annual Report and has concluded that the risks identified remain
relevant for the remainder of the year ending 31 March 2021 and that there are no other significant risks to be disclosed.
A summary of the risks identified is set out below:
•
•
•
•
•
•
•
•
•
•
•
•

impact of covid;routes to market;
technical risk;
supply chain risk;
political risk;
Brexit-related risks;
IT risk;
legal/compliance risk;
adverse movements in long-term foreign currency rates;
people;operational risk; andpensions.

The ongoing negotiations relating to the United Kingdom’s future trading relationship with the European Union at the end of thetransition phase mean that uncertainty over the potential impact of Brexit remains. The Group has assessed the key risks arising from
Brexit and concluded that the most significant short-term risks arise from potential disruption to the movement of goods both into andout of Great Britain and Northern Ireland.
The future impact of covid continues to create uncertainty and the potential for heightened disruption at an operational and customer
level remains. The possible impacts arising from both Brexit and covid create significant uncertainty at a macro-economic level.
Operationally, this uncertainty could cause supply chain disruption leading to an adverse impact on production and, ultimately, deliveries
to customers.

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; andthe interim management report includes a fair review of the information required by:(a) DTR 4.2.7R of the Disclosure Guidance 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 the condensed set of Financial Statements; and a descriptionof the principal risks and uncertainties for the remaining six months of the year; and(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in thefirst 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 the related party transactions described in the last Annual Report that could do so.

Ian Barkshire
Chief Executive
Gavin Hill
Group Finance Director
10 November 2020

Condensed Consolidated Statement of Income
Half year ended 30 September 2020 – unaudited

Revenue
Cost of sales
Gross profit
Research and development
Selling and marketing

Note
4

5

Half year to 30 September 2020
Half year to 30 September 2019 as restated2
Adjusting
Adjusting
Adjusted
items1
Total
Adjusted
items1
Total
£m
£m
£m
£m
£m
£m
140.3
—
140.3
157.6
—
157.6
(68.8)—(68.8)(78.1)—(78.1)
71.5
—
71.5
79.5
—
79.5
(13.2)—(13.2)(11.9)—(11.9)(19.8)—(19.8)(23.4)—(23.4)

Administration and sharedservices
Foreign exchange gain/(loss)
Operating profit/(loss)
Interest credit on pension
scheme net assets
Other financial income
Financial income
Financial expenditure
Profit/(loss) before income
tax
Income tax (expense)/credit
Profit/(loss) for the halfyear from continuing
operations
Loss from discontinued
operations after tax
Profit/(loss) for the halfyear attributable to equity
holders of the parent
Earnings per share
Basic earnings per share
From continuing operations
From discontinued operations
From profit for the half year
Diluted earnings per share
From continuing operations
From discontinued operations
From profit for the half year
Dividends per share
Dividends paid
Dividends proposed3
1.
2.
3.

(14.6)(4.3)(18.9)(16.9)(4.4)(21.3)

0.4

0.4
24.3
—

0.8
(3.5)
0.4

1.2
20.8

(1.1)
26.2
—

(2.5)
(6.9)
—

(3.6)
19.3
—

4

0.1
0.5
(1.1)
23.7

—
—
—
(3.5)

0.1
0.5
(1.1)
20.2

0.5
0.5
(0.9)
25.8

—
—
—
(6.9)

0.5
0.5
(0.9)
18.9

(4.9)
18.8

0.6
(2.9)

(4.3)
15.9

(5.2)
20.6

1.2
(5.7)

(4.0)
14.9

—

—

—

(0.3)

(0.4)

(0.7)

18.8

(2.9)

15.9

20.3

(6.1)

14.2

pence

pence

pence

pence

32.8
—
32.8

27.7
—
27.7

36.0
(0.5)
35.5

26.0
(1.2)
24.8

32.4
—
32.4

27.4
—
27.4

35.6
(0.5)
35.1

25.8
(1.2)
24.6

7

3

3

9

—
4.1

3.8
4.1

Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items can be foundin Note 2.
Details of restatement of prior period numbers can be found in the basis of preparation. The restatement had no impact on total profit for theprior period.
Payment of the prior period interim dividend which was proposed by the Board on 12 November 2019 has been suspended until further
notice.

Revenue
Cost of sales
Gross profit/(loss)
Research and development
Selling and marketing
Administration and shared services
Share of profit of associate, net of tax
Foreign exchange loss
Operating profit/(loss)
Interest credit on pension scheme net assets
Other financial income
Financial income
Financial expenditure
Profit/(loss) before income tax
Income tax (expense)/credit
Profit/(loss) for the year from continuing operations(Loss)/profit from discontinued operations after tax
Profit/(loss) for the year attributable to equity holders of the parent
Earnings per share

Note
4

5

4

7

Year to 31 March 2020
Adjusting
Adjusted
items1
£m
£m
317.4
—
(158.6)
(0.4)
158.8
(0.4)
(26.6)(7.1)(47.7)—(34.7)
(8.3)
0.7
6.5
—
(1.4)
50.5
(10.7)
—
—
0.3
—
0.3
—
(1.3)
—
49.5
(10.7)
(9.3)
2.5
40.2
(8.2)
(0.5)
2.3
39.7
(5.9)
pence

Total
£m
317.4
(159.0)158.4(33.7)(47.7)(43.0)
7.2
(1.4)
39.8
—
0.3
0.3
(1.3)
38.8
(6.8)
32.0
1.8
33.8
pence

Basic earnings per share
From continuing operations
From discontinued operations
From profit for the year
Diluted earnings per share
From continuing operations
From discontinued operations
From profit for the year
Dividends per share
Dividends paid
Dividends proposed
1.

3

3

70.2
(0.9)
69.3

55.9
3.1
59.0

69.5
(0.9)
68.6

55.3
3.1
58.4

9

14.4
—

Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items can be foundin Note 2.

Condensed Consolidated Statement of Comprehensive Income
Half year ended 30 September 2020 – unaudited

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
15.9
14.2

Profit for the half year/year
Other comprehensive (expense)/income:Items that may be reclassified subsequently to profit or loss
Foreign exchange translation differences
Net cumulative foreign exchange gain on disposal of subsidiaries
recycled to the Income Statement
Items that will not be reclassified to profit or loss
Remeasurement (loss)/gain in respect of post-retirement benefits (Note 11)
Tax credit/(charge) on items that will not be reclassified to profit or loss
Total other comprehensive (expense)/income
Total comprehensive (expense)/income for the half year
attributable to equity Shareholders of the parent

Year to31 March
2020
£m
33.8

(2.0)

2.7

2.5

—

—

(4.4)

(33.7)
6.4(29.3)

3.3
(0.6)
5.4

26.8
(5.1)
19.8

(13.4)

19.6

53.6

Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2020 – unaudited

As at 1 April 2020
Total comprehensive income:
Profit for the half year
Other comprehensive(expense)/income:– Foreign exchange translationdifferences- Remeasurement loss in respect of
post‑retirement benefits–Tax credit on items that will not bereclassified to profit or loss
Total comprehensive expense
attributable to equity Shareholdersof the parent
Transactions with owners recorded
directly in equity:– Proceeds from exercise of shareoptions– Credit in respect of employee service
costs settled by award of share options– Tax credit in respect of share options– Proceeds from shares issued– Dividends

Sharecapital
£m
2.9

Share
premium
£m
62.2

Other
reserves£m
0.2

Translation
reserve£m
11.5

Retainedearnings
£m
174.8

Total
£m
251.6

—

—

—

—

15.9

15.9

—

—

—

(2.0)

—

(2.0)

—

—

—

—

(33.7)(33.7)

—

—

—

—

6.4

6.4

—

—

—

(2.0)

(11.4)(13.4)

—

—

—

—

—

—

—
—
—
—

—
—
0.2
—

—
—
—
—

—
—
—
—

1.1
—
—
—

1.1
—
0.2
—

Total transactions with owners
recorded directly in equity:
As at 30 September 2020
As at 1 April 2019
Total comprehensive income:
Profit for the half year
Other comprehensive
income/(expense):– Foreign exchange translationdifferences–Remeasurement gain in respect of
post‑retirement benefits–Tax charge on items that will not bereclassified to profit or loss
Total comprehensive income
attributable to equity Shareholdersof the parent
Transactions with owners recorded
directly in equity:– Proceeds from exercise of shareoptions-Credit in respect of employee service
costs settled by award of share options– Tax credit in respect of share options– Proceeds from shares issued– Dividends
Total transactions with owners
recorded directly in equity:
As at 30 September 2019

As at 1 April 2019
Total comprehensive income:
Profit for the year
Other comprehensive
income/(expense):– Foreign exchange translationdifferences–Net cumulative foreign exchange gain
on disposal of subsidiaries recycled to
the Income Statement–Remeasurement gain in respect of
post‑retirement benefits–Tax charge on items that will not bereclassified to profit or loss
Total comprehensive(expense)/income attributable toequity Shareholders of the parent
Transactions with owners recorded
directly in equity:– Proceeds from exercise of shareoptions–Credit in respect of employee service
costs settled by award of share options– Tax credit in respect of share options– Proceeds from shares issued– Dividends
Total transactions with owners
recorded directly in equity:
As at 31 March 2020

—
2.9

0.2
62.4

—
0.2

—
9.5

1.1
164.5

1.3
239.5

2.9

61.7

0.2

13.4

124.0

202.2

—

—

—

—

14.2

14.2

—

—

—

2.7

—

2.7

—

—

—

—

3.3

3.3

—

—

—

—

(0.6)

(0.6)

—

—

—

2.7

16.9

19.6

—

—

—

—

0.2

0.2

—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

2.0
—
—
—

2.0
—
—
(8.3)

—
2.9

—
61.7

—
0.2

—
16.1

(6.1)
134.8

(6.1)
215.7

Share
capital
£m
2.9

Share
premium
£m
61.7

Other
reserves£m
0.2

Translation
reserve£m
13.4

Retainedearnings
£m
124.0

Total
£m
202.2

—

—

—

—

33.8

33.8

—

—

—

2.5

—

2.5

—

—

—

(4.4)

—

(4.4)

—

—

—

—

26.8

26.8

—

—

—

—

(5.1)

(5.1)

—

—

—

(1.9)

55.5

53.6

—

—

—

—

0.2

0.2

—
—
—
—

—
—
0.5
—

—
—
—
—

—
—
—
—

3.1
0.2
—
(8.2)

3.1
0.2
0.5
(8.2)

—
2.9

0.5
62.2

—
0.2

—
11.5

(4.7)
174.8

(4.2)
251.6

Condensed Consolidated Statement of Financial Position
As at 30 September 2020 – unaudited

As at
As at
30 September 30 September
2020
2019
Note
£m
£m
AssetsNon-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment in associate
Retirement benefit asset
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current income tax receivable
Derivative financial instruments
Cash and cash equivalents

20.5
7.0
130.3
—
1.1
13.9
172.8

24.5
8.8
149.8
4.6
3.4
16.0
207.1

21.8
8.2
135.5
—
30.7
17.3
213.5

59.1
68.1
0.2
1.0
109.3
237.7
410.5

65.5
75.1
0.8
0.9
42.1
184.4
391.5

58.8
71.1
0.2
0.9
95.4
226.4
439.9

2.9
62.4
0.2
9.5
164.5
239.5

2.9
61.7
0.2
16.1
134.8
215.7

2.9
62.2
0.2
11.5
174.8
251.6

—
5.1
—
0.7
1.1
6.9

27.9
5.8
—
1.0
6.6
41.3

—
6.5
0.9
0.9
10.2
18.5

27.9
120.4
2.2
—
4.5
—
1.1
8.0
164.1
171.0
410.5

—
109.1
3.4
0.8
3.5
6.1
4.2
7.4
134.5
175.8
391.5

27.9
125.1
2.1
—
4.6
—
2.6
7.5
169.8
188.3
439.9

Half year toHalf year to
30 September 30 September
2020
2019
Note
£m
£m
15.9
14.2
7
—
0.7
15.9
14.9

Year to31 March
2020
£m
33.8
(1.8)
32.0

6
11

10

Total assets
EquityCapital and reserves attributable to the Company’s equity Shareholders
Share capital
Share premium
Other reserves
Translation reserve
Retained earnings
Liabilities
Non-current liabilities
Bank loans
Lease payables
Derivative financial instruments
Provisions
Deferred tax liabilities
Current liabilities
Bank loans
Trade and other payables
Lease payables
Retirement benefit obligations
Current income tax payables
Accrued dividend
Derivative financial instruments
Provisions
Total liabilities
Total liabilities and equity

As at
31 March
2020
£m

10

11

10

Consolidated Statement of Cash Flows
Half year ended 30 September 2020 – unaudited

Profit for the half year/year
Loss/(profit) for the half year/year from discontinued operations
Profit for the half year/year from continuing operations
Adjustments for:
Income tax expense

4.3

4.0

6.8

Net financial expense
Fair value movement on financial derivatives
Restructuring costs
Adjustments relating to defined benefit pension schemes
Profit on disposal of associate
Impairment of inventory
Impairment of capitalised development costs
Amortisation of acquired intangibles
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
Amortisation of capitalised development costs
Amortisation of capitalised software costs
Adjusted earnings before interest, tax, depreciation andamortisation
Charge in respect of equity settled employee share schemes
Share of profit of associate
Restructuring costs received/(paid)
Cash payments to the pension scheme more than the charge tooperating profit
Operating cash flows before movements in working capital
Increase in inventories
Decrease in receivables(Decrease)/increase in payables and provisions
Increase/(decrease) in customer deposits
Cash generated from operations
Interest paid
Income taxes paid
Net cash from operating activities – continuing operations
Net cash from operating activities – discontinued operations
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Net cash flow on disposal of associate
Capitalised development expenditure
Decrease in long-term receivables
Interest received
Net cash (used in)/generated from investing activities – continuing
operations
Net cash generated from investing activities – discontinued
operations
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from exercise of share options
Payments made in respect of lease liabilities
Repayment of borrowings
Dividends paid
Net cash used in financing activities – continuing operations
Net cash generated from financing activities – discontinued
operations
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the period

6

0.6
(0.8)
—
—
—
—
—
4.3
1.4
1.7
1.0
—

0.4
2.5
—
—
—
—
—
4.4
1.5
1.8
1.2
—

1.0
1.4
0.2
(0.6)
(6.5)
0.4
7.1
8.7
3.4
3.5
2.7
0.3

28.4
1.1
—
0.5

30.7
2.0
—
—

60.4
3.1
(0.7)
(0.6)

(3.7)
26.3
(0.6)
2.1
(8.4)
3.9
23.3
(1.0)
(4.0)
18.3
—
18.3

(6.1)
26.6
(4.8)
3.5
(9.5)
(0.5)
15.3
(1.6)
(3.5)
10.2
0.7
10.9

(10.0)
52.2
(2.3)
3.3
2.5
6.6
62.3
(1.0)
(6.1)
55.2
—
55.2

0.1
(1.2)
—
(0.5)
—
—

—
(1.5)
—
(2.2)
0.5
0.5

0.1
(4.4)
11.7
(2.8)
1.4
—

(1.6)

(2.7)

6.0

—
(1.6)

1.0
(1.7)

8.7
14.7

0.1
—
(1.3)
—
—
(1.2)

—
0.2
(1.4)
—
(2.2)
(3.4)

0.5
0.2
(3.3)
(0.6)
(8.2)
(11.4)

—
(1.2)
15.5
95.4
(1.6)
109.3

0.3
(3.1)
6.1
35.2
0.8
42.1

—
(11.4)
58.5
35.2
1.7
95.4

Notes to the Half-year Financial Statements
Half year ended 30 September 2020 – unaudited

1 Basis of preparation
Reporting entity
Oxford Instruments plc 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 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 2020.
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 2020 are not the Company’s statutory
accounts for that financial year. Those accounts have been reported on by the Company’s auditor and delivered to the registrar ofcompanies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drewattention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of theCompanies Act 2006.
Significant accounting policies
As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of Financial
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 2020 except as noted below.
Prior period restatement
The prior period to 30 September 2019 has been restated as a result of the Group disposing of the OI Healthcare business in the US on
21 February 2020. Further information can be found in Note 7.
Composition of segments
During the period, the Directors reviewed the composition of the aggregated operating segments. The customer base of the Magnetic
Resonance operating segment was found to be more closely aligned to that of the Materials & Characterisation segment and thedecision was taken to move the Magnetic Resonance segment from the Research & Discovery segment to the Materials &Characterisation segment. The management of the segment was also realigned at the same time. The segmental information for theprior period has been restated to reflect the amended aggregated operating segments.
The prior year segmental information has also been restated to reflect the disposal of the OI Healthcare business in the US.
Estimates
The preparation of half-year Financial Statements requires management to make judgements, estimates and assumptions that affectthe 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 the Group’s accounting
policies and key sources of estimation uncertainty were the same as those that applied to the Consolidated Financial Statements as at
and for the year ended 31 March 2020.
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 in operational existence for theforeseeable future.
In reaching this opinion the Directors noted that the Group had a net cash balance of £81.4m at 30 September 2020 and generated£18.4m of cash from operating activities in the first half of the year in spite of the disruption to the business caused by covid. In addition,
the Directors regularly monitor forward-looking indicators such as order intake which give confidence that not only does the Group haveadequate financial resources to continue in operational existence for the foreseeable future, it also has a strong pipeline of opportunities
for the future. The Board is satisfied, having considered its funding facilities, as well as the forward-looking indicators, that the Group
has adequate resources to continue in operational existence for the foreseeable future.
Exchange rates
The principal exchange rates used to translate the Group’s overseas results were as follows:

Period end rates
US Dollar
Euro
Japanese Yen
Average translation rates
Half year to 30 September 2020
April
May

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
1.29
1.23
1.10
1.13
136
133
US Dollar
1.25
1.25

Year to31 March
2020
£m
1.24
1.13
134

Euro Japanese Yen
1.14
1.13

134
134

1.24
1.27
1.33
1.32

June
July
AugustSeptember
Average translation rates
Year to 31 March 2020
April
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary
February
March

1.11
1.11
1.11
1.11

US Dollar

133
136
140
139

Euro Japanese Yen

1.30
1.28
1.27
1.26
1.23
1.23
1.26
1.28
1.30
1.32
1.30
1.27

1.16
1.15
1.13
1.12
1.11
1.12
1.14
1.16
1.17
1.18
1.19
1.16

144
142
138
136
132
132
136
139
142
143
144
139

2 Non-GAAP measures
In the preparation of adjusted numbers, the Directors exclude certain items in order to assist with comparability between peers and to
give what they consider to be a better indication of the underlying performance of the business. These adjusting items are excluded in
the calculation of adjusted operating profit, adjusted profit before tax, adjusted profit for the year from continuing operations, adjusted
EBITDA, adjusted EPS, adjusted cash conversion and adjusted effective tax rate. Details of adjusting items are given below.
Adjusted EBITDA is calculated by adding back depreciation of property, plant and equipment, depreciation of right-of-use assets
and amortisation of intangible assets to adjusted operating profit, and can be found in the Consolidated Statement of Cash Flows.
The calculation of adjusted EPS can be found in Note 3. Adjusted effective tax rate is calculated by dividing the share of tax attributable
to adjusted profit before tax by adjusted profit before tax. The definition of cash conversion is set out in the Finance Review.
Reconciliation between operating profit and profit before income tax and adjusted profit from continuing operations

Statutory measure from continuing operations
Restructuring costs
Business reorganisation items
Adjustments relating to defined benefit
pension schemes
Impairment of inventory
Impairment of capitalised development costs
Profit on disposal of associate
Amortisation of acquired intangibles
Fair value movement on financial derivatives
Total non-GAAP adjustments
Adjusted measure from continuing operations
Income tax expense
Adjusted profit for the year fromcontinuing operations
Adjusted effective tax rates

Half year to 30 September Half year to 30 September
20202019 as restatedOperating Profit before
Operating Profit before
profit income tax
profit income tax
£m
£m
£m
£m
20.8
20.2
19.3
18.9

Year to31 March 2020
Operating Profit before
profit income tax
£m
£m
39.8
38.8

—
—

—
—

—
—

—
—

0.2
0.2

0.2
0.2

—
—
—
—
4.3
(0.8)
3.5
24.3

—
—
—
—
4.3
(0.8)
3.5
23.7
(4.9)

—
—
—
—
4.4
2.5
6.9
26.2

—
—
—
—
4.4
2.5
6.9
25.8
(5.2)

(0.6)
0.4
7.1
(6.5)
8.7
1.4
10.7
50.5

(0.6)
0.4
7.1
(6.5)
8.7
1.4
10.7
49.5
(9.3)

18.8

26.2

20.6

50.5

24.3

20.7%

20.2%

40.2
18.8%

Restructuring costs
These represent the costs of one-off changes to senior management within the Research & Discovery segment.
Adjustments relating to defined benefit pension schemes
During the year ended 31 March 2020, the Group recognised a one-off accounting gain on the termination of its US defined benefit
pension scheme.
Impairment of inventory

During the year ended 31 March 2020, the Group implemented a new ERP system at a site within the Research & Discovery division. In
reconciling the inventory on the new system, a need for an impairment in respect of certain historic inventory differences was identified.
This was treated as an adjusting item due to its one-off nature.
Impairment of capitalised development costs
During the year ended 31 March 2020, the Group reviewed the capitalised development costs to ensure they remained directly related
to targeted product or software developments. The one-off non-cash impairment relates to the Materials & Characterisation segment,
comprising software intangibles in Asylum Research, historical balances on general process development in Plasma Technology andproduct development in NanoAnalysis that has been affected by a reduction in orders as a result of covid.
Profit on disposal of associate
During the year the Group made a profit on disposal of its shareholding in Scienta Scientific AB. See Note 6. This has been treatedas an adjusting item due to its non-recurring nature.
Amortisation and impairment of acquired intangibles
Adjusted profit excludes the non-cash amortisation and impairment of acquired intangible assets and goodwill.
Fair value movement on financial derivatives
Under IFRS 9, all derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, they arealso measured at fair value. In respect of instruments used to hedge foreign exchange risk and interest rate risk, the Group does nottake advantage of the hedge accounting rules provided for in IFRS 9 since that standard requires certain stringent criteria to be met inorder to hedge account, which, in the particular circumstances of the Group, are considered by the Board not to bring any significant
economic benefit. Accordingly, the Group accounts for these derivative financial instruments at fair value through profit or loss. To theextent that instruments are hedges of future transactions, adjusted profit for the year is stated before changes in the valuation of these
instruments so that the underlying performance of the Group can be more clearly seen.
Share of taxation
Adjusting items include the income tax on each of the items described above.
Reconciliation of changes in cash and cash equivalents to movement in net cash

Net increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Repayment of borrowings
Movement in accrued interest
Movement in net cash in the half year
Net cash at start of the year
Net cash at the end of the half year
Reconciliation of net cash to Statement of Financial Position

Loan notes – unsecured
Cash and cash equivalents
Net cash at the end of the half year

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
15.5
6.1
(1.6)
0.8
13.9
6.9
—
—
—
0.6
13.9
7.5
67.5
6.7
81.4
14.2

Year to31 March
2020
£m
58.5
1.7
60.2
0.6
—
60.8
6.7
67.5

Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
(27.9)(27.9)
109.3
42.1
81.4
14.2

Year to31 March
2020£m(27.9)
95.4
67.5

3 Earnings per share
Basic and diluted EPS from continuing operations are based on the result for the year from continuing operations, as reported in
the Group Income Statement. Basic and diluted EPS from total operations are based on the result for the year attributable to equity
Shareholders of the parent. Adjusted and diluted adjusted EPS are based on adjusted profit for the year from continuing operations. The
profit measures noted above are divided by the weighted average number of ordinary shares outstanding during the year, excluding
shares held by the Employee Share Ownership Trust. The table below reconciles these different profit measures.

Half year toHalf year to 30 September
30 September
2019Year to31 March

Profit for the year attributable to equity Shareholders of the parent
Discontinued operations
Adjusting items:
Business reorganisation items
Adjustments relating to defined benefit pension schemes
Impairment of inventory
Impairment of capitalised development costs
Profit on disposal of associate
Amortisation of acquired intangibles
Fair value movement on financial derivatives
Adjusted income tax expense
Adjusted profit for the year from continuing operations

2020
£m
15.9
—

as restated
£m
14.2
0.7

2020
£m
33.8
(1.8)

—
—
—
—
—
4.3
(0.8)
(0.6)
18.8

—
—
—
—
—
4.4
2.5
(1.2)
20.6

0.2
(0.6)
0.4
7.1
(6.5)
8.7
1.4
(2.5)
40.2

The weighted average number of shares used in the calculation excludes shares held by the Employee Share Ownership Trust, and is
as follows:

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

Half year toHalf year to
30 September 30 September
2020
2019
SharesSharesmillionmillion
57.4
57.4
(0.1)
(0.2)
57.3
57.2

Year to31 March
2020
Sharesmillion
57.4
(0.1)
57.3

The following table shows the effect of share options on the calculation of diluted earnings per share:
For the purposes of calculating diluted and diluted adjusted EPS, the weighted average number of ordinary shares is adjusted to include
the weighted average number of ordinary shares that would be issued on the conversion of all potentially dilutive ordinary shares
expected to vest, relating to the Company’s share-based payment plans. Potential ordinary shares are only treated as dilutive when
their conversion to ordinary shares would decrease EPS or increase loss per share.

4 Segment information
The Group has eight operating segments. These operating segments have been combined into three aggregated operating segments tothe extent that they have similar economic characteristics, with relevance to products and services, 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 aggregated operating segments are as follows:•••

the Materials & Characterisation segment comprises a group of businesses focusing on applied R&D and commercial customers,
enabling the fabrication and characterisation of materials and devices down to the atomic scale;the Research & Discovery segment comprises a group of businesses providing advanced solutions that create unique environments
and enable measurements down to the molecular and atomic level which are used in fundamental research; andthe Service & Healthcare segment provides customer service and support for the Group’s products and the service of third-party
healthcare imaging systems.

The Group’s internal management structure and financial reporting systems have been amended to differentiate the three aggregatedoperating segments based on the economic characteristics discussed above.
Reportable segment results include items directly attributable to a segment as well as those which can be allocated on a reasonablebasis. 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 in reporting to the Group’s Board of Directors.
The results of the half year to 30 September 2019 and year to 31 March 2020 have been restated to reflect Magnetic Resonancemoving from the Research & Discovery segment to the Materials & Characterisation segment. Further information can be found in Note1.
The results of the half year to 30 September 2019 have been restated to reflect the classification of the OI Healthcare business as a
discontinued operation. OI Healthcare was included within the Service & Healthcare aggregated operating segment. Further information
can be found in Note 7.

Results from continuing operations

Half year to 30 September 2020
Total segment revenue
Segment adjusted operating profit from continuing operations

Materials &Characterisation
£m
65.2
8.9

Research &Discovery
£m
48.3
6.4

Service &Healthcare
£m
26.8
9.0

Total
£m
140.3
24.3

Half year to 30 September 2019 as restatedTotal segment revenue
Segment adjusted operating profit from continuing operations

Materials &Characterisation
£m
73.2
12.2

Research &Discovery
£m
57.8
6.4

Service &Healthcare
£m
26.6
7.6

Total
£m
157.6
26.2

Year to 31 March 2020 as restatedTotal segment revenue
Segment adjusted operating profit from continuing operations

Materials &Characterisation
£m
145.8
21.0

Research &Discovery
£m
117.8
14.5

Service &Healthcare
£m
53.8
15.0

Total
£m
317.4
50.5

Service &Healthcare£mUnallocatedGroup items
£m

Total
£m

9.0
—
—
—
—
9.0

—
—
0.8
0.5
(1.1)
0.2

24.3
(4.3)
0.8
0.5
(1.1)
20.2

Reconciliation of reportable segment profit from continuing operations
Materials &Research &Characterisation
Discovery
Half year to 30 September 2020£m£m
Segment adjusted operating profit from continuing
operations
8.9
6.4
Amortisation of acquired intangibles
(1.1)
(3.2)
Fair value movement on financial derivatives——
Financial income——
Financial expenditure——
Profit before income tax from continuing operations
7.8
3.2

Half year to 30 September 2019 as restated
Segment adjusted operating profit from continuing
operations
Amortisation of acquired intangibles
Fair value movement on financial derivatives
Financial income
Financial expenditure
Profit/(loss) before income tax from continuing
operations

Year to 31 March 2020 as restated
Segment adjusted operating profit from continuing
operations
Restructuring costs
Adjustments relating to defined benefit pension
schemes
Impairment of inventory
Impairment of capitalised development costs
Profit on disposal of associate
Amortisation of acquired intangibles
Fair value movement on financial derivatives
Financial income
Financial expenditure
Profit/(loss) before income tax from continuing
operations

Materials &Characterisation£mResearch &Discovery£mService &Healthcare£mUnallocatedGroup items
£m

Total
£m

12.2
(1.2)
—
—
—

6.4
(3.2)
—
—
—

7.6
—
—
—
—

—
—
(2.5)
0.5
(0.9)

26.2
(4.4)
(2.5)
0.5
(0.9)

11.0

3.2

7.6

(2.9)

18.9

Materials &Characterisation£mResearch &Discovery£mService &Healthcare£mUnallocatedGroup items
£m

Total
£m

21.0
(0.1)

14.5
(0.1)

15.0
—

—
—

50.5
(0.2)

—
—
(6.3)
—
(2.3)
—
—
—

—
(0.4)
(0.8)
6.5
(6.4)
—
—
—

—
—
—
—
—
—
—
—

0.6
—
—
—
—
(1.4)
0.3
(1.3)

0.6
(0.4)
(7.1)
6.5
(8.7)
(1.4)
0.3
(1.3)

12.3

13.3

15.0

(1.8)

38.8

5 Research and development (“R&D”)
The total adjusted research and development spend by the Group is as follows:
Half year toHalf year to
30 September 30 September
2020
2019
£m
£m
13.2
11.9
—
0.1
(1.0)
(1.2)
0.5
2.2
12.7
13.0

R&D expense charged to the Consolidated Statement of Income
Add: amounts capitalised as fixed assets
Less: amortisation of R&D costs previously capitalised as intangibles
Add: amounts capitalised as intangible assets
Total cash spent on R&D during the year

Year to31 March
2020
£m
26.6
0.1
(2.7)
2.8
26.8

6 Investment in associate
The Group held a 47% interest in the ordinary share capital of Scienta Scientific AB. Scienta Scientific AB is registered and has its
principal place of business in Sweden. On 28 January 2020, the Group sold its holdings in Scienta Scientific AB for £11.7m in cash.
The Group’s share of profit in its equity accounted associate for the prior half year was £nil and for the period to 28 January 2020 was£0.7m. The Group did not receive any dividend from the associate in the current or prior periods.
The profit on disposal recognised in the accounts to 31 March 2020 was £6.5m.

7 Disposal of subsidiary and discontinued operations
On 21 February 2020, the Group disposed of its OI Healthcare business in the US for a final consideration of $14.9m, of which $1.5m
is held in escrow for twelve months pending any claims from the purchaser.
In the year to 31 March 2020 the OI Healthcare business was classified as a discontinued operation. It was considered a major class ofbusiness on the basis of its size and that it was previously an operating segment and referred to in the Group’s Strategic Report.
The 2019 half-year results have been restated to reflect the classification of the OI Healthcare business as a discontinued operation.
During the current period to 30 September 2020 there were no transactions relating to discontinued operations.

Results of discontinued operations
Revenue
Expenses
Adjusted loss before tax
Income tax credit
Adjusted loss after tax
Adjusting items:
Amortisation of acquired intangibles
Income tax on adjusting items
Loss from discontinued operations after tax

Results of discontinued operations
Revenue
Expenses
Adjusted loss before tax
Income tax credit
Adjusted loss after tax
Adjusting items:
Restructuring costs
Amortisation of acquired intangibles
Income tax on adjusting items

Half year toHalf year toHalf year toHalf year to 30 September 30 September 30 September
30 September
2020
2019
2019
2020
Industrial
as restatedIndustrial
OI Healthcare
Analysis OI Healthcare
Analysis
£m
£m
£m
£m
—
—
8.7
—
—
—
(9.1)
—
—
—
(0.4)
—
—
—
0.1
—
—
—
(0.3)
—
—
—
—

—
—
—

(0.5)
0.1
(0.7)

—
—
—

Year toYear to 31 March 2020
31 March 2020
Industrial
OI Healthcare
Analysis
£m
£m
14.8
—
(15.5)
—
(0.7)
—
0.2
—
(0.5)
—
(0.1)
(0.8)
0.3

(0.2)
—
—

Loss after tax
Gain on disposal
Profit/(loss) from discontinued operations after tax

(1.1)
3.1
2.0

(0.2)
—
(0.2)

Half year toHalf year to 30 September
30 September
2019Year to2020
as restated 31 March 2020£m£m£m
Cash flows from discontinued operations
Net cash generated from operating activities
Net cash generated from investing activities
Net cash used in financing activities

Earnings per share from discontinued operations
Adjusted basic loss per share
Adjusted diluted loss per share
Total basic loss per share
Total diluted loss per share

—
—
—

0.7
1.0
0.3

—
8.7
—

Half year toHalf year to 30 September
30 September
2019
2020
as restated
pence
pence
—
(0.5)
—
(0.5)
—
(1.2)
—
(1.2)

Year to31 March
2020
pence
(0.9)
(0.9)
3.1
3.1

8 Taxation
The total effective tax rate on profits for the half year is 21.3% (prior half year as restated: 21.2%). The weighted average tax rate inrespect of adjusted profit before tax (see Note 2) for the half year is 20.7% (prior half year as restated: 20.2%).
For the full year the Group expects the tax rate in respect of adjusted profit before tax to be 21.0%.

9 Dividends per share
The following dividends per share were paid by the Group:

Previous period interim dividend
Previous period final dividend

Half year toHalf year to
30 September 30 September
2020
2019
pence
pence
—
3.8
—
—
—
3.8

Year to31 March
2020
pence
3.8
10.6
14.4

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 to
30 September 30 September
2020
2019
pence
pence
4.1
4.1
—
—
4.1
4.1

Year to31 March
2020
pence
4.1
—
4.1

The interim dividend for the year to 31 March 2020 of 4.1p was approved by the Board on 12 November 2019, and had been intended
to be paid on 14 April 2020 to Shareholders on the register at close of business on 6 March 2020. On 30 March 2020, the Board
decided to suspend payment of this dividend. Subsequently, the Board has decided not to pay this dividend.
The interim dividend for the year to 31 March 2021 of 4.1p was approved by the Board on 9 November 2020 and has not been included
as a liability as at 30 September 2020. The interim dividend will be paid on 14 April 2021 to Shareholders on the register at the close ofbusiness on 5 March 2021.

10 Financial instruments
Fair values of financial assets and liabilities

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fairvalue hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if thecarrying amount is a reasonable approximation of fair value.

Assets carried at amortised cost
Trade receivables
Other receivables
Cash and cash equivalents
Assets carried at fair value
Derivative financial instruments:– Foreign currency contracts
Liabilities carried at fair value
Derivative financial instruments:– Foreign currency contracts
Liabilities carried at amortised
cost
Trade and other payables
Bank loans
Lease payables

Half year to 30 September Half year to 30 September
2020
2019
Carrying
Carrying
Fair value
amountFair value
amountFair value
hierarchy
£m
£m
£m
£m
54.4
9.7
109.3

63.4
7.0
42.1

Year to 31
March 2020
Carrying
amountFair value
£m
£m
59.7
7.7
95.4

2

1.0

1.0

0.9

0.9

0.9

0.9

2

(1.1)

(1.1)

(4.2)

(4.2)

(3.5)

(3.5)

(57.5)(27.9)(7.3)(56.6)(27.9)(9.2)(65.9)(27.9)(8.6)

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in theabove table.
Derivative financial instruments
Derivative financial instruments are marked-to-market using market prices.
Fixed and floating rate borrowings
The fair value of fixed and floating rate borrowings is estimated by discounting the future contracted principal and interest cash flows
using the market rate of interest at the reporting date.
Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the carrying amount is deemed to reflect the fair value. All otherreceivables/payables are discounted to determine their fair value. Advances received are excluded from other payables above as these
are not considered to be financial liabilities.
Lease payables
The lease liability is measured at amortised cost using the effective interest method.
Fair value hierarchy
The table above gives details of the valuation method used in arriving at the fair value of financial instruments. The different levels havebeen identified as follows:•••

Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); andLevel 3: inputs for the asset or liability that are not based on observable market data.

There have been no transfers between levels during the year.

11 Retirement benefit obligations
The Group operates a defined benefit plan in the UK. A full actuarial valuation of the UK plan was carried out as at 31 March 2018
which, for reporting purposes, has been updated to 30 September 2020 by a qualified independent actuary.
At 31 March 2020, the scheme actuary calculated a retirement benefit asset of £30.7m. In the period to 30 September 2020, there has
been a significant fall in corporate bond yields, which reduced the discount rate from 2.5% to 1.6%, and an increase in the assumed
level of CPI and RPI inflation rates by 0.3% (to 2.2% and 2.9% from 1.9% and 2.6% respectively at 31 March 2020). The impact ofthese changes has increased the benefit obligation to £351.8m (31 March 2020: £290.7m).

The Group has agreed a basis for deficit recovery payments with the trustees of the UK pension scheme. The deficit recovery payments
are payable through to and including 2026 and will rise by approximately 3% per annum. The deficit recovery payment for the period
was £3.9m (year to 31 March 2020: £7.6m). In addition, the scheme’s assets generated a higher return than the discount rate. As aresult, the fair value of plan assets increased to £352.9m (31 March 2020: £321.4m).
The overall effect is that for the purposes of IAS 19 the surplus on the scheme reduced from £30.7m to £1.1m.

12 Related parties
All transactions with related parties are conducted on an arm’s length basis and in accordance with normal business terms.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are notdisclosed in this Note.
Included in the Consolidated Statement of Financial Position at 30 September 2019 was a current loan receivable of £0.8m due from
Scienta Scientific AB. The loan was repaid in February 2020. During the prior period to 30 September 2019, the Group received interest
charged on the loan of £0.1m (year to 31 March 2020: £0.1m).

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 thesix months ended 30 September 2020 which comprises the Condensed Consolidated Statement of Income, Condensed Consolidated
Statement of Comprehensive Income, Condensed Consolidated Statement of Changes in Equity, Condensed Consolidated Statementof Financial Position and Condensed Consolidated Statement of Cash Flows.
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.

Directors’ responsibilities
The half-yearly financial report is the responsibility of and has been approved by the Directors. The Directors are responsible forpreparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s
Financial Conduct Authority.
As disclosed in Note 1, the annual Financial Statements of the Group are prepared in accordance with International Financial ReportingStandards (IFRSs) as adopted by the European Union. The condensed set of Financial Statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting’’, as adopted by theEuropean Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of Financial Statements in 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 Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial andaccounting 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 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 thehalf-yearly financial report for the six months ended 30 September 2020 is not prepared, in all material respects, in accordance with
International Accounting Standard 34, as adopted by the European Union, and the Disclosure Guidance and Transparency Rules of theUnited Kingdom’s Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities inrespect of half-yearly financial reporting in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s
Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so

by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
Reading, UK
10 November 2020
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).