Oxford Instruments plc
Reports and Financial Statements 2009

Contents

About Us1

50 Years of Scientiﬁc Excellenceand Innovation

2-3

Financial Summary

4-5Group Structure

6-7

Chairman’s Statement

8

Chief Executive’s Statement

10-13

Financial Review

14-18

Directors’ Biographies

20

Directors and Advisers

21

Report of the Directors

22-24

Corporate and Social Responsibility

25-27

Corporate Governance

28-33

Directors’ Remuneration Report

34-39

Reports and Financial Statements

40-49

Notes to the Financial Statements

50-76

Parent Company Financial Statements

77-82

Historical Financial Summary

83

Shareholder Information

84

Worldwide Directory85

Oxford Instruments plc

About Us

This year we celebrate 50 years of continuous
scientific innovation and excellence. Throughout
this period the expertise of our people has
been the driving force behind our growth andsuccess. The quest for new ideas, the creationof innovative products and the provision of aquality service has built a world class brand.
Oxford Instruments is a worldwide business supplying hightechnology tools and systems for the analysis and manipulationof matter at the smallest scale. Our diverse markets include
industrial analysis and quality control, research, education,
space, energy and the environment.
As mankind faces the great challenges of the 21st Century,
Oxford Instruments is providing scientists with the tools
to tackle issues concerned with alternative energy, climatechange, environmental pollution and healthcare.
For example, today Oxford Instruments is providing
equipment to the developers of new photovoltaic devices
who are seeking to produce more cost effective solutions forturning sunlight into electricity. We are also working withinternational agencies on the ITER programme to develop
a technology that seeks to demonstrate the production oflarge quantities of carbon free energy. Oxford Instruments’equipment is being used in the development of High
Brightness Light Emitting Diodes which offer the possibilityof lighting which is so efﬁcient that if adopted widely it
would make signiﬁcant cuts in worldwide CO2 emissions.
Our hand-held analysers are being used to detect heavy metal
pollution more effectively than has ever been done before,
meeting ever more stringent environmental regulations.
Our instruments are being used to model everything from thehuman genome to pharmaceuticals that are being developed
as therapies for the diseases which are afﬂicting the world’s
ageing and growing population.
The future matters. Scientists can make the world a better
place and Oxford Instruments gives them the tools, theexpertise and the support to do so.

Oxford Instruments plc

1

50 Years of Scientiﬁc Excellence and Innovation
1959

1961

1962

1967

1978

1981

1983

1986

Development of
MRI begins

The Oxford Instrument
Company founded byMartin and Audrey Woodto supply high-ﬁeld
magnets to a limited
market1983 - Floated on London
Stock Exchange

Oxford Instrument’s
develops the world’s ﬁrst
superconducting
magnetPurchase of Plasma
Techology business

Oxford Instruments delivers
world’s ﬁrst MRI system

1961- Breakthrough insuperconductivity withdiscovery of new Materials

Queen’s Award forTechnical Innovation fordeveloping the 10T
magnet and dilution
refrigerator

1960

1970

1990

1980
2

Oxford Instruments plc

1990

1995

1997

2005

2008

Jonathan Flint joins as
Chief Executive
OI Medical sold

Acquisition of Link
Analytical to form Oxford
Instruments Microanalysis
Group. OIKK opens inTokyo, JapanOI China opens in Beijing,
China

Development of innovative
X-ray tubes at XTG

Unique Cryogen freeand silicon drift detector
technologies developed

1959 The Oxford Instrument Company
founded to supply high-ﬁeld magnets
to a limited market
1961 Breakthrough in superconductivity withdiscovery of new materials
1962 Oxford Instruments develops theworld’s ﬁrst superconducting magnet
1967 Queen’s Award for Technical Innovation
1970 Acquired small medical company
1972 Queen’s Award for Export
1974 Acquired Newport Instruments –making components and Instruments
based on NMR
1975 Oxford Medical formed
1978 Development of MRI begins
1980 Oxford Analytical Instruments formed
Lab-X XRF analyser launched
1981 Oxford Instruments delivers world’s ﬁrst
MRI system
1982 Joint venture with BOC and later
Siemens to supply MRI
1983 Floated on London Stock Exchange
1985 Queen’s Award for Export and Queen’sAward for Technology
1986 Purchase of Plasma Techology business1987 Queen’s Award for Export
1990 Acquisition of Link Analytical to form
Oxford Instruments Microanalysis Group
1991 OIKK opens in Tokyo
1995 Development of innovative X-ray tubes
at XTG. Acquired Vickers Medical forneurology systems
1997 OI China opens in Shanghai, China
1999 Millenium Science Forum established2001 OI Group restructured
2005 OI Medical sold. Jonathan Flint joins as
Chief Executive
2006 New 5 year plan to double size of thecompany in place2007 Queen’s Award for Innovation
2008 Unique Cryogen free and silicon drift
detector technologies developed

2000
Oxford Instruments plc

3Group Financial Summary 2009

Group Orders
2009£204.2m

2008£180.2 m

2009£206.5m

2008£176.5m+13%

Revenue+17%

Adjusted Proﬁt Before Tax
2009£11.1m

2008

£9.5m

+17%

Adjusted EPS
2009

14.8 p2008

11.7 p+3.1p

Trading Proﬁt. Return on Sales (%)

4

2009

6.3%

2008

6.0%

+30

basis
pointsOxford Instruments plc

Group Results
Year ended 31 March

2009
£m

2008
£m

Orders

204.2

180.2

Revenue

206.5

176.5

Trading proﬁt

13.1

10.6

Adjusted proﬁt before tax (note 1)

11.1

9.5

Net borrowings (note 21)(28.3)(17.8)

Equity

61.9

62.5

2009
pence per
share

2008
pence pershare

Total basic earnings(13.9)

5.6

Adjusted earnings (note 1)

14.8

11.7

Proposed dividends

8.4

8.4

Net assets

125.4

126.5

Employees at year end *

1,449

1,545

* Includes temporary employees.

Oxford Instruments plc

5

6

SUPERCONDUCTING TECHNOLOGY

X-RAY TECHNOLOGYNANOSCIENCE

INDUSTRIAL ANALYSISPLASMA TECHNOLOGYNANOANALYSIS

Oxford Instruments plc Group Structure

Oxford Instruments plc

ANALYTICALNANOANALYSIS
An industry-leading range of accurate, fast and easy-to-use tools
for materials analysis on an electron microscope.
Markets include scientiﬁc research and materials analysis, failure
analysis, and Quality Control/Analysis. Industrial sectors include
petrochemical, pharmaceutical, semiconductor and automotive.

INDUSTRIAL ANALYSIS

MOLECULAR BIOTOOLSAUSTIN SCIENTIFIC

Materials identiﬁcation and/or thickness gauging analysis
instrumentation to industrial customers with diverse needs.
Markets include environmental monitoring, metal analysis, coating
thickness measurement and Quality Control/Analysis.

X-ray Technology
World-class manufacturer of high efﬁciency, small form factor
X-ray tubes for use in a range of measurement equipment.
Key markets include the analysis industry, research anddevelopment, healthcare and aerospace.

PLASMA TECHNOLOGY
Market leading high performance, ﬂexible tools for customers
involved in research and development, and batch production.
Markets include academic and corporate research into
semiconductor materials and process, High Brightness LEDs, failure
analysis and photovoltaics.

SUPERCONDUCTIVITYNANOSCIENCEHigh performance environments for low temperature and highmagnetic ﬁeld applications in fundamental physics research andprocess development down to the atomic scale.
Key markets include physical science research, industrial Quality
Control and quantum computing.

SUPERCONDUCTING TECHNOLOGYWorld-leading superconducting wire for use in medical andscientiﬁc applications.
Service and support for MRI customers in USA and Japan.
Markets include research, energy and healthcare.

AUSTIN SCIENTIFIC
Robust, high quality cryogenic vacuum pumps, helium compressors
and cold heads for customers in the semiconductor, medical andresearch sectors.
High quality support, refurbishment and maintenance services for
all cryogenic system users.

MOLECULAR BIOTOOLS(MAGNETIC RESONANCE)
Benchtop NMR analysers, low ﬁeld MRI and imaging tools.
Markets include life science research and development,
pharmaceuticals, and industrial Quality Control and Analysis.

Oxford Instruments plc

7

Chairman’s Statement

The Group continued to grow during the year with order intake up 13% to £204.2
million. Revenue rose by 17% to £206.5m and adjusted proﬁt before tax increased
by 17% to £11.1 million. This strong performance was delivered despite a marked
softening in some of our markets during the second half of the year, and was helped
signiﬁcantly by currency movements.
Our strategy is to generate shareholder value by being a leading provider of tools
and systems used by customers who need to observe and manipulate matter at thesmallest scale. Our products offer high technology solutions to both the research andindustrial sectors.
In 2006 we announced a ﬁve year objective to double the size of the business andimprove our margins signiﬁcantly. Despite the difﬁculties in some of our end user
markets, we have shown another full year of progress toward this objective. It isdifﬁcult to predict the impact and duration of the current economic downturn but
we have taken extensive management action to ensure that we are well positioned
to meet our targets as markets improve.
In the year we have taken steps to lower our cost base, resulting in a reduction inGroup headcount of some 15%. The costs associated with these actions, which amountto £8.7 million, have been taken as an exceptional charge and the reorganisation
will result in ongoing annual savings of c. £11 million. I would like to thank all our
employees for their commitment and professionalism during this period of farreaching change across the Group.
During the year, the Group has focused strongly on cash generation. Operating cash
ﬂow increased to £14.4 million (2008: £0.1 million outﬂow). Our net debt closed theyear at £28.3 million (2008: £17.8 million). Of the increase in net debt, £10.3 million is
as a result of changes in foreign exchange rates altering the sterling value of our cash
and borrowings. We have a ﬁve year rolling debt facility of £50 million maturing in2012 and a further £14.5 million of overdraft and other facilities. In January 2009 thedrawings under our facility were switched to sterling to prevent currency movementfrom further eroding our borrowing headroom.
We are recommending that the full year dividend be maintained at the current rateof 8.4 pence.
In the year we announced the retirement of Steve Parker from the Board of theCompany. I would like to thank Steve for his contribution over the 9 years he waswith us. On 1 April 2009 Jock Lennox joined the Board as a Non-Executive Director
with a view to his succeeding Peter Morgan as Chairman of the Audit Committee.
Having served as a Non-executive Director since 1999, Peter will retire from the Board
at the forthcoming AGM. We wish him every good fortune for the future.
Trading so far in the current year has been in line with our expectations. Demand
from our customers in research markets remains resilient. Our industrial markets haveshown signs of stabilisation, although the level of demand remains below that of 12months ago.
Oxford Instruments was formed in 1959 and this year celebrates 50 years of scientiﬁc
excellence and innovation. Our business model has proven resilient to the current
economic downturn as we have a broad spread of customers, applications andgeographic markets. We are conﬁdent that we will be able to deliver long term
proﬁtable growth providing sustainable value for our shareholders.
Nigel Keen Chairman
9 June 20098

Oxford Instruments plc

“Our business model has proven resilient to the current
economic downturn as we have a broad spread ofcustomers, applications and geographic markets.”

Oxford Instruments plc

9Chief Executive’s Statement

Operational Review
In 2006 we set out a plan to double the turnover of the Company and increase trading
proﬁt margins from 3% to 13% over ﬁve years starting from a base year of 2005/06. We
are now reporting on the third year of this plan.
Our sales growth this year has been in line with our targets under the ﬁve year plan.
This result was supported by currency movements (+19%) and acquisitions (+6%) offset
by a decline in volumes in industrial markets (-8%). Despite these challenging times wehave not needed to alter the pricing of our products and this underpinned a rise in grossmargins from 41.5% to 43.9%. Trading proﬁt margins increased from 6.0% to 6.3%.
The Group’s policy is to hedge its net forward foreign currency exposure on a rolling 12month basis. As a result, in the ﬁnancial year, the positive effect of currency movements
on trading proﬁt has been moderated. Excluding the effects of hedging, the trading
proﬁt margin was 10.4%.
We have responded to market pressures by continuing our programme of new productintroductions and by offering improved levels of customer service. It is a testimony to
our innovation skills that Oxford Instruments was named Best Technology Company
2008 at the PLC Awards, which recognise excellence amongst smaller companies quoted
on the London Stock Exchange.
Environmental and safety issues for our customers continue to be a major sales driver.
Research markets have held up well, supported by a number of government stimulus
packages in countries around the world. Industrial markets however declined markedly
in November 2008, particularly affecting the Industrial Analysis and Austin Scientiﬁcbusinesses. During the ﬁnal quarter of the ﬁnancial year, industrial demand appears tohave stabilised, but to date we have not seen a return to growth. However we are now
seeing the ﬁrst sign of an increase in enquiries from the USA driven by the planned $21
billion investment in science by the Obama administration.
During the second half of the year, in recognition of the likely difﬁcult trading conditions
ahead, we instigated a wide-ranging restructuring of the business with the aim ofshaping the Group to be effective in more difﬁcult times and to position us well whenmarkets recover. In January we announced a reduction in the number of employees byapproximately 15% (228 staff) reducing operating costs by £11 million. In the current
half-year, we plan to further reduce our stafﬁng levels by approximately 30 at a cost of£0.4 million. This will further reduce our operating costs by £1.4 million in a full year.
Although these changes affect most of our sites worldwide, we have been able to retain
key skills and capabilities. Relocation of products and staff has enabled us to close two
operating sites. These initiatives, together with a focus on cost control, have helped toprotect earnings in the face of reduced sales volumes since November 2008. We willcontinue to monitor our markets and ﬂex our capacity accordingly.
In the ﬁrst half of the year we acquired Technology and Devices International (TDI), whichbrought expertise in fabrication of high brightness light emitting diodes (HBLEDs), and
Link Analytical AB which secured access to the Scandinavian market for our analytical
instrumentation products. In light of volatile market conditions and difﬁculties inmaking accurate valuations, we did not pursue other acquisition opportunities during
the second half of the year. However, the acquisitions already made have integrated
well, and net of disposals, contributed an additional £10.4 million to our turnover in theyear. In April 2008, we sold our non-strategic minority shareholding in Oxford Diffraction
Ltd to Varian Inc for a consideration of £3.8 million. In September we sold our non-coreMolecular Beam Epitaxy business to Riber SA for a consideration of £0.3 million.

10

Oxford Instruments plc

“We are well positioned to beneﬁt from a future
strengthening of demand as soon as it occurs”

We currently report in two operating sectors, Analytical andSuperconductivity. Starting from the current ﬁnancial year
we plan to change the reporting structure to bring it intoline with revised operational arrangements within the Group.
This will see the formation of 3 sectors: Nanotechnology,
Industrial Products and Service. These sectors align moreclosely with the way in which we now manage the business and
go to market. The businesses in each sector have underlying
common attributes, which will aid the extraction of cost andrevenue synergies and improve the clarity of our reporting.
Our half year results for 2009/10 will be reported under thisnew structure.
Analytical Businesses
Orders and revenues for the year were £129.5 million (2008:£115.8 million) and £134.7 million (2008: £115.7 million)
respectively. Trading proﬁt was £11.1 million1 (2008: £11.0
million). Our Analytical businesses provide measurement andfabrication instruments for industrial and research companies.
The business units are Industrial Analysis (including X-Ray
Technology), NanoAnalysis and Plasma Technology.
Our Industrial Analysis business, which produces tools thatenable our customers to analyse the chemical constituentsof materials, suffered a decline during the year following
a downturn in global industrial markets. Overall, our orderintake was 26% down compared to the level we had expected
at the beginning of the year. However, effects of the market
downturn were mitigated by the introduction of two new
products. The X-MET5100, the latest version of our best
selling hand-held X-ray ﬂuorescence analyser was launchedin September 2008 and enhanced our market share. These
instruments are used for a variety of environmental and quality
control applications. Our new Foundry-Master Pro OpticalEmission Spectrometer offers superior resolution performancefor our customers in the steel industry. Despite reducing
demand for steel products generally, this product sold well andhas exceeded our expectations.
Our X-Ray Technology business produces small X-ray sources
for the analytical instrumentation market. The X-ray sources
produced by this business are now found in most Oxford
Instruments industrial products. This control of a key technology
gives the Group a capability unique amongst our competitors.
Production levels were down on the previous year, affectedby the broader downturn in industrial demand, but margins
continue to be strong.
1 Current year results include part of the costs of OII which were reported separately
in 2008 (see note 2)

Oxford Instruments plc

11

Chief Executive’s Statement Continued

Our NanoAnalysis business is the leading provider of a range
of detectors used in conjunction with electron microscopes
to enable our customers to analyse chemical and structuralproperties of materials. This business continued to perform
well despite a worldwide slowdown in the sales of electron
microscopes. Revenues were assisted by the launch of
our new X-Max Energy Dispersive Spectrometer, using anovel large area silicon drift detector. X-Max has a greater
sensitivity than any other equivalent product on the market
and this contributed to a very rapid uptake by our customers.
Our Electron Backscatter Diffraction (EBSD) equipment isselling well, with volumes up signiﬁcantly in the year. Thesesystems, which are also used in conjunction with electron
microscopes, enable the detailed crystal structure of materials
to be analysed. This technique, which has traditionally beenused on ferrous metals, is now ﬁnding wider applications. For
example, EBSD is now being used to optimise the performanceof next generation photovoltaic devices. These new products
and applications have partially insulated Oxford Instrumentsfrom the wider reduction in sales of electron microscopes.
Plasma Technology provides a range of fabrication tools forcompound semiconductor devices and other nano structures.
The business performed well during the year with orders
up 25% on the prior year, supported by strong demand forresearch tools for next generation photovoltaic devices andfor the production of HBLEDs. Demand for photovoltaic
research tools continues to be strong. There was some
softening in demand for HBLEDs for lighting caused by theslow down in the construction industry. However, this wasoffset by increased demand from the electronics industry,where HBLEDs are increasingly used as a replacement for
ﬂuorescent sources in the displays of laptop computers andtelevisions.
Our acquisition of TDI Inc based in Maryland, USA has brought
to the Group a unique technology for Hydride Vapour Phase
Epitaxy (HVPE). This business is now managed as part ofPlasma Technology and offers an opportunity to produce
HBLEDs using a new and more efﬁcient process. We have
now industrialised this process and produced a tool to enable
commercial fabrication of HBLEDs using HVPE. Demand forthis product is expected to be strong. However, the recent
downturn in semi-conductor investment means that earlyorders will be delayed.
Superconductivity Businesses
Orders and revenues in the year were £74.7 million (2008: £64.4
million) and £71.8 million (2008: £60.8 million) respectively.
Trading proﬁts were £2.0 million1 (2008: £2.0 million). Our
Superconductivity businesses provide materials, tools andsystems for industrial and government customers working at
the frontiers of science. The businesses in Superconductivity
are: NanoScience, Superconducting Wire, MRI Service, Austin
Scientiﬁc and Molecular Biotools.

12

Our NanoScience business provides equipment to customers
researching in areas which require very high magnetic ﬁelds
or very low temperatures. These techniques are required ina new generation of electronics which use quantum effects.
The applications for these devices include miniature highspeed cameras and ultra high density computer memory. The
achievement of very low temperatures without the use of
liquid helium is key to these new markets. Our pulse tube
cooler technology obtained through last year’s acquisitionof VeriCold provides this capability. Progress in transferring
this new technology from Germany to the UK has been good,and we are now able to deliver these products at highly
competitive prices, with short lead times. We have increased
production capacity to cope with the larger than expecteddemand for this type of product. Demand for our traditional“wet” products (which continue to use liquid helium)
continues, albeit at a lower level than in recent years.
Our Superconducting Wire business produced record
revenues in the year driven by our increasing market sharewith MRI scanner manufacturers. In addition, demand forour specialist high performance wire has been strong fromresearch customers. We are in negotiation with a numberof national agencies to provide a signiﬁcant quantity ofsuperconducting wire for the ITER programme which seeks to
produce clean energy using thermonuclear fusion. Our wire
has successfully passed the qualiﬁcation requirements and it
is expected that contracts will be awarded shortly. If we aresuccessful we would expect some deliveries to be made in
the current ﬁnancial year with increasing volumes over thesubsequent three years.
Our MRI Service business maintains MRI scanners throughout
the United States and Japan. This business provides a steadyrevenue stream and we have been successful in winning a
number of new service contracts.
Our Austin Scientiﬁc business produces, services and maintains
high technology pumps and compressors for industrial andresearch customers. The downturn in demand, particularly inthe semiconductor sector meant that this business suffered adecline in revenues of 6% in the year. Cost cutting measuresand the introduction of new products have now returned
proﬁtability to previous levels despite this reduced turnover.
Our Molecular Biotools business produces instrumentation forresearch and industrial customers using advanced techniques.
Our pharmaceutical research customers are now following
more conservative spending plans. As a result, we have scaled
back our research spend in this side of the business. We retain
the capability to exploit fully the beneﬁts of this market when
the upturn comes. In light of the change of emphasis, thisbusiness will focus on the application of magnetic resonancetechniques and has been renamed Magnetic Resonance.

Oxford Instruments plc

Emerging Markets
Emerging markets continue to offer good opportunities for
Oxford Instruments to grow its business more quickly thanmarket average and we have put greater focus on developing
our sales in China, India, Russia and Latin America.
We had another strong year in China with orders up by
17% despite difﬁcult trading circumstances in industrial
markets. Sales from our factory in Shanghai grew 80% andwe had a healthy order backlog at year end. The factoryalso serves as the location for a growing team of softwaredevelopment experts. Our ofﬁce in Mumbai, India, had areasonable year with growth in our NanoAnalysis businessoffsetting a decline in industrial sales particularly in the steel
segment. We saw an increase in the level of activity fromresearch customers in Russia, however it is unclear whether
this will be sustained at the same level looking ahead. Our
focus on the Latin American markets resulted in an increaseof 17% in order volume with growth being particularly strong
in the research segment.
Property
During the year we postponed the planned move of our
Plasma Technology business to a new purpose built facility.
We have re-negotiated the term of the option to sell ourpresent Plasma Technology site, whilst preserving its beneﬁcial
commercial conditions. Postponing this move by two years
has improved our cash position and reduced risk.

PeopleThis year has been particularly difﬁcult for our employees as
they have coped with the ramiﬁcations of the global market
downturn.
They have responded with professionalism
and resilience and I would like to thank them for theircontributions.
Outlook
Trading so far in the current year has been in line with our
expectations. Demand from our customers in research markets
remains resilient. Our industrial markets have shown signs ofstabilisation, although the level of demand remains belowthat of 12 months ago.
We have now achieved three consecutive years of growth andmargin improvement. Given the tough market conditions, weare unlikely to see growth in the current year. However, theactivities undertaken to reduce costs and provide enhanced
value and service to our customers, assisted by favourable
currency conditions, are designed to support our continued
drive for margin improvement. We are well positioned to
beneﬁt from a future strengthening of demand as soon as
it occurs.
Jonathan Flint
Chief Executive
9 June 2009

We closed our leased manufacturing and distribution site in
Chicago. The activities previously undertaken in this facility
have now successfully been moved to other sites in the USA
and to our manufacturing plant in Shanghai. We also closed
our operation in Hobro, Denmark and successfully transferred
its expertise to our High Wycombe site.

Oxford Instruments plc

13

Financial Review

Trading Performance
Revenues for the year grew by 17.0% to £206.5 million (2008: £176.5 million) helpedby acquisitions which, net of disposals, contributed £10.4 million (+6%) in the year andthe effect of favourable foreign exchange rates which added £33.7 million (+19%). On
an organic constant currency basis, revenues fell by 8% primarily due to the downturn
suffered by our Industrial Analysis business.
Gross margins improved from 41.5% to 43.9% aided by efﬁciency gains in a number ofbusiness units but particularly by a strong performance from the Analytical division’s
Plasma Technology business.
Trading proﬁt increased by £2.5 million to £13.1 million (2008: £10.6 million), giving a
6.3% margin (2008: 6.0%). Of the growth in the year, operating efﬁciencies contributed£5.2 million, acquisitions added £0.4 million and favourable exchange rates a further£2.7 million. These gains were offset by £5.8 million resulting from the downturn involume.
Trading proﬁt was impacted by a loss on the settlement of currency hedges of £8.3
million in the year. Had the Group not hedged its foreign exchange exposure, trading
proﬁt margins would have been 10.4%.
Reported operating expenses increased by £15.0 million to £77.6 million (2008: £62.6
million). Of this increase, £8.2 million was the increase in the loss on the currency
hedges described above (see note 3), £4.4 million came from the acquisitions and £6.0
million was the result of translating overseas expenses at a weaker sterling exchange
rate. On a constant currency organic basis, operating expenses fell by £3.6m due toimproved efﬁciencies and some early effects of the restructuring programmes describedin the Operational Review.
Amortisation of acquired intangibles
Amortisation of acquired intangibles increased by £1.4 million to £4.3 million as a resultof the acquisitions made in the last two years.
Reorganistion costs and impairment
These are described in note 5 and consist of the proﬁt made on the disposal of theGroup’s holding in Oxford Diffraction Limited which had been previously held as aninvestment, the loss on the disposal of the Molecular Beam Epitaxy business and the costsof the restructuring programme discussed in the Chairman’s Statement. This includes
redundancies across the Group, the closure of our sites in Chicago and Denmark with
operations being relocated to other Group locations and the curtailment of further
research and development within the Group’s Molecular Biotools business to reﬂect thesigniﬁcant reduction in Research and Development spend within the pharmaceuticalindustry
As we reported in our Interim Management Statement in February it is anticipatedthat the restructuring programme will result in annual savings of approximately £11
million.
In addition, as discussed in our Half Year Report we impaired the carrying value of ourinvestment in ARKeX Limited, a high technology venture capital backed company basedin Cambridge, England, which was spun out of the Group in 2004.

14

Oxford Instruments plc

“Trading proﬁt up 23% to £13.1 million.
Adjusted proﬁt before tax up 17% to £11.1 million.”

Financial income and expenditureWithin ﬁnancial income and expenditure, total net interest
payable decreased by £0.1 million to £1.3 million as interest
rates fell. The interest charge on pension scheme liabilities
exceeded the expected return on pension scheme assets by £0.7
million, a difference of £1.0 million over the prior year.
Currency hedging
The Group uses derivative products to hedge its exposure to
ﬂuctuations in foreign exchange rates. It is Group policy tohave in place at the beginning of a ﬁnancial year hedging
instruments to cover 80% of its forecast transactional exposurefor that period.
In common with a number of other companies, we havedecided that the additional costs of meeting the extensive
documentation requirements of IAS39 to apply hedge
accounting to the foreign exchange hedges cannot be justiﬁed.
Accordingly the Group does not use hedge accounting forthese derivatives. Net movements on marking to market suchderivatives at the balance sheet date are disclosed in theincome statement as Financial Expenditure and excluded fromour calculation of adjusted proﬁt before tax (note 1).
Commodity hedging
The Group also uses derivative products to hedge its exposure
to ﬂuctuations in the price of copper, a major component for
the Superconducting Wire business. Given the small numberof contracts involved we apply hedge accounting for thesetransactions and consequently the results of marking to market
are excluded from the Income Statement.
Taxation
The underlying tax rate on the proﬁt before tax for thecontinuing businesses before reorganisation costs andimpairments, amortisation of acquired intangibles and marking
to market of hedging derivatives was 35% (2008: 39%). The
rate is higher than the main UK rate due to higher rates oftax paid in overseas jurisdictions, particularly the United States,
Germany and Japan.
The Group has signiﬁcant tax losses in the UK available to set
off against future taxable proﬁts from certain business streams.
A deferred tax asset of £11.3 million (2008: £9.6 million) has
been recognised against US tax losses and certain temporary
differences. Of this, £4.0 million (2008: £5.9 million) relates tothe deﬁcit in the pension schemes. No deferred tax asset has
been recognised against past UK tax losses. A deferred tax
liability of £7.6 million has been recognised in respect of theintangible assets arising from acquisitions. This liability willunwind as the intangible assets are amortised.

Oxford Instruments plc

15

Financial Review Continued

Earnings
After a tax credit of £2.6 million (2008: charge £2.3 million)
the reported net loss for the ﬁnancial year was £6.7 million(2008: proﬁt £2.7 million). With a weighted average numberof shares of 48.8 million (2008: 48.7 million), the basic loss per
share was 13.9 pence (2008: earnings 5.6 pence).

Dividends
The Group’s proposed ﬁnal dividend of 6.0p per share (2008:
6.0p), payable on 29 October 2009, gives a total dividend
for the year of 8.4p per share (2008: 8.4p). Dividend coverfor the underlying business before reorganisation costs
and impairments, amortisation of acquired intangibles andmarking to market of hedging derivatives was 1.8 times.

Adjusted proﬁt before tax (note 1), which we believe gives
a better indication of the underlying performance of thebusiness, grew by £1.6 million to £11.1 million which translates
into an adjusted earnings per share of 14.8 pence (2008: 11.7
pence), an increase of 26%.

Investment in research and development (R&D)
The total cash spent on research and development in theyear was £16.3 million (2008: £16.2 million). A reconciliation
between the cash spent and the amounts charged to the
Income Statement is given below:
2009£ million
16.3
(6.4)
3.4
13.3

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

2008£ million
16.2
(6.6)
1.9
11.5

The net book value of capitalised R&D at the end of the ﬁnancial year was £17.7 million (2008: £14.4 million).

Balance sheet
Net operating assets, excluding goodwill, acquired intangibles
and associated deferred tax, fell by £3.2 million to £71.7
million.
Net working capital (excluding derivative ﬁnancial
instruments) reduced by £1.9 million in the year comparedwith an increase of £10.9 million in the prior year.

Intangible assets rose by £10.9 million (2008: £25.9 million)
primarily as a result of the R&D capitalisation outlined above
and intangible assets resulting from the two acquisitions. A
reconciliation is given below:

Development
costs£ million
14.4

Technology
and customer
relatedacquiredintangibles£ million
19.2

Goodwill£ million
10.4

Total
£ million
44.0

VeriCold and Metorex
TDI
Nordiska
Capitalised Development Costs
Disposals and impairments
Amortisation charge for the year
Effect of movement in foreign currency

6.4
(1.1)
(3.4)
1.4

3.6
0.9
(4.3)
3.9

1.9
0.2
(0.5)
1.9

1.9
3.6
1.1
6.4
(1.6)
(7.7)
7.2

Carried forward

17.7

23.3

13.9

54.9

Brought forward

16

Debtor days reduced from 59 days to 58 days while stock turns
decreased from 3.0 to 2.9.

Oxford Instruments plc

Pensions
The Group has deﬁned beneﬁt pension schemes in the UK
and the US. Both have been closed to new entrants since2001. The total deﬁcit, before tax, under IAS19 on thesepension schemes decreased in the year by £6.8 million to£14.4 million. Assets of the schemes at 31 March 2009 were£125.1 million. The reduction in deﬁcit is primarily due to anincrease in the discount rate applied to liabilities, which isbased on corporate bond yields.
The latest triennial actuarial valuation of the UK scheme wascarried out as at 31 March 2006 and resulted in an actuarial
deﬁcit of £17.7 million. A long-term plan for recovering thedeﬁcit over 10 years was agreed between the Company and
the Pension Trustee, which involves annual payments of £2.1
million for the ﬁve years to March 2011, rising to £3.2 million
for the subsequent ﬁve years. A new actuarial valuation is
now underway which will be completed by June 2010 at thelatest.

Cash
Earnings before interest, tax, depreciation and amortisation(EBITDA) increased by £3.7 million to £20.3 million. Working
capital in the year reduced by £1.4 million compared withan increase of £11.2 million in the prior year. This led tooperating cash ﬂow of £14.4 million, an increase of £14.5
million on the prior year. Other elements of cash ﬂow thatvaried signiﬁcantly compared with the prior year were theamount spent on acquisitions of £4.4 million (2008: £12.7
million) and the amount received from the sale of investmentsof £3.1 million (2008: nil).

At the last reporting date, September 2008, the majority of
the Group’s debt was denominated in US dollars and Euros
as it had been borrowed to fund acquisitions of assets
denominated in those currencies and thus provided a balance
sheet hedge. In addition, the US dollar and Euro are theGroup’s main trading currencies. The signiﬁcant weakeningof sterling in the last quarter of calendar 2008 greatly
increased the Group’s borrowings when expressed in sterlingand correspondingly reduced the Group’s borrowing capacity.
To mitigate the risk of a further decline in sterling, the Groupswitched its borrowings into sterling in January 2009. The
increase in net debt due to the movement of exchange rates
was £10.3 million in the year.
Net debt at the year end was £28.3 million. The Group has acommitted £50 million revolving credit facility that expires in
July 2012 and overdraft and other facilities of £14.5 million.
Employees
The number of employees at 31 March 2009 was 1,449, a
decrease of 96 over the prior year due to the effects of therestructuring programme. An additional 132 will have left by
the end of the ﬁrst quarter of the current year.
Share price
The closing mid-market price of the ordinary shares at the endof the ﬁnancial year was £1.10, compared with £1.85 at the
beginning of the year. The highest and lowest prices recordedin the ﬁnancial year were £2.51 and £1.07 respectively.

Key Performance Indicators
The following key performance indicators show how we have progressed against our priorities:

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

Oxford Instruments plc

2009

2008

+17.0%-2.1%+9.2%+11.6%

6.3%

6.0%

7.8%

9.2%

17

Financial Review Continued

Risks to be managed
Oxford Instruments provides high technology equipment andsystems. There is necessarily some technical risk associatedwith developing advanced technologies. This risk has reduced
in recent years as the business has moved away from large
scale single customer development programmes towards
more commercially orientated products.
Our business plan requires the introduction of new products
to gain market share to support our growth. There is therisk that future product introductions may not yield the sales
forecast, especially in industries where investment has been
cut back in the light of current economic conditions.
Global ﬁnancial market conditions impact on demand but weremain well positioned, enjoying a broad spread of customers,
applications and geographical markets.
A signiﬁcant proportion of Oxford Instruments’ proﬁt is madein foreign currencies and we will therefore continue to have
exposure to exchange ﬂuctuations going forward. We aim to
mitigate this risk by natural hedges where possible and theuse of forward contracts. We also rely on the purchase of
a number of commodity materials and, when prices rise, wecannot always pass on this cost directly to customers. Hedging
has been introduced on copper purchases.
Finally, our calculated pension deﬁcit is sensitive to changes
in the actuarial assumptions that may have an appreciable
effect on the reported pension deﬁcit.

18

Going concern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position
are set out in the Chief Executive’s Statement. The ﬁnancial
position of the Group, its cash ﬂows, liquidity position andborrowing facilities are described in this Financial Review.
The relatively diverse nature of the Group together with its
current ﬁnancial strength provides a solid foundation. The
Directors have reviewed the Group’s forecasts and ﬂexed
them to incorporate a number of potential scenarios relating
to changes in trading performance and believe that the Groupwill be able to operate within its existing debt facility which
expires in July 2012. This review also considered hedging
arrangements in place. As a consequence, the Directors
believe that the Group is well placed to manage its businessrisks successfully despite the uncertain economic outlook.
The Financial Statements have been prepared on a going
concern basis, based on the Directors’ opinion, after making
reasonable enquiries, that the Group has adequate resources
to continue in operational existence for the foreseeable
future.
Save as described in the preceding statements, there havebeen no material events or signiﬁcant changes in the ﬁnancial
position of the Group since year end.

Kevin Boyd
Group Finance Director
9 June 2009

Oxford Instruments plc

Oxford Instruments plc

19

Directors’ Biographies

ChairmanNigel Keen, Non-Executive Chairman, joined the Board in 1999.
He has a degree in engineering from Cambridge University,
is a Fellow of the Institute of Chartered Accountants andhas been involved in the formation and development ofhigh technology businesses for more than thirty years. He
is Chairman of Laird PLC, Axis-Shield plc, Bioquell Plc andDeltex Medical Group plc and a Non-Executive Director of ISIS
Innovation Ltd. (Oxford Instruments and Oxford University
maintain a close relationship and the Group’s Directors arestrongly represented on the Board of ISIS Innovation, theUniversity’s intellectual property company).
Executive Directors
Jonathan Flint joined the Group as Chief Executive in April
2005. He holds a BSc in Physics from Imperial College andan MBA from Southampton University. He is a Fellow of
the Institute of Physics and Institute of Engineering andTechnology. He has held senior management positions
within Vislink plc, BAE Systems, GEC Marconi and Matra Space
Systems.
Kevin Boyd joined Oxford Instruments in August 2006 as
Group Finance Director. He holds a BEng in Electronic andInformation Engineering from Queen’s University Belfast
and is a Chartered Engineer (FIET) and Chartered Accountant(FCA), having qualiﬁed with Arthur Andersen. Prior tojoining Oxford Instruments he was Group Finance Directorof Radstone Technology plc, Finance Director of Siroyan Ltd
and held senior ﬁnance positions in the TI Group (now Smiths
Group plc).
Charles Holroyd was appointed to the Board as Group
Business Development Director in November 2005, having
joined Oxford Instruments in 1999. He has a BSc in Electricaland Electronics Engineering from Bristol University and an
MBA from INSEAD. Previously he held senior management
positions within United Industries plc, B Elliott plc, Bowthorpeplc and Chloride Group plc.

20

Non-Executive Directors
Professor Sir Michael Brady, Deputy Chairman and Independent
Non-Executive Director, joined the Board in 1995 and is BP
Professor of Information Engineering at Oxford University.
He is also a Fellow of the Royal Society and a Fellow of theRoyal Academy of Engineering. He is a founding Director of
Guidance Ltd. Mirada Medical Ltd and Matakina Ltd (a New
Zealand based company), Chairman of Dexela Ltd, a Directorof ISIS Innovation Ltd and Senior Independent Director of
IXICO Ltd.
Professor Michael Hughes, Senior Independent Non-Executive
Director, joined the Board in November 2004. He is Chairman
of EA Technology Ltd, a Non-Executive Director of South
Staffordshire Group plc and Chairman of North West Electricity
Networks (Jersey) Ltd. Previously held senior management
positions in GEC plc and Midlands Electricity plc.
Jock Lennox, Independent Non-Executive Director, joined theBoard on 1 April 2009. He was a Senior Audit Partner at Ernst& Young until April 2009. He is Non-Executive Director of
Hill & Smith Holdings plc, a member of the Council of theInstitute of Chartered Accountants of Scotland (chairing the
Qualiﬁcation Board) and is a Director of Golden Lane Housing
Ltd (the residential property partner of Mencap). He is also amember of the Advisory Board of Alchemy, the private equity
ﬁrm.
Peter Morgan, Independent Non-Executive Director, joined
the Board in 1999. He is a Director of Strategic ThoughtGroup plc, Hyder Consulting plc and the Association of Lloyd’s
Members. He is a UK delegate to the European Economic andSocial Committee in Brussels. He is a former Executive Directorof IBM UK and IBM Europe, a former Director General of theInstitute of Directors and was a Member of the Council of
Lloyd’s from 2000 to 2009. Peter Morgan will be retiring fromthe Board at the 2009 AGM.
Bernard Taylor, Independent Non-Executive Director, joined
the Board in 2002 and is Vice-Chairman of Evercore Partners.
He is a member of The Council of the University of Oxford
and is Chairman of the University’s Audit Committee. He is
Chairman of ISIS Innovation Limited and a Royal Commissioner
on the 1851 Commission. He is also a Fellow of the Royal
Society of Chemistry and an Honorary Fellow of St. John’sCollege, Oxford.

Oxford Instruments plc

Directors and Advisers

Honorary President
Sir Martin Wood OBE FRS Hon FREng DL

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

Company Secretary
Susan Johnson-Brett

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

Board Committees
Audit: JF Lennox, Chairman; JM Brady; MA Hughes;
PWL Morgan; BJ Taylor
Remuneration: NJ Keen, Chairman; JM Brady; MA Hughes;
JF Lennox; PWL Morgan; BJ Taylor
Nomination: NJ Keen, Chairman; JM Brady; MA Hughes;
JF Lennox; PWL Morgan; BJ Taylor
Administration: Any two Directors
JF Lennox was appointed Chairman of the Audit Committee
on 2 June 2009 in place of Peter Morgan who will retire
from the Board at the forthcoming Annual General Meeting.

Kevin Boyd

Bernard Taylor

Michael Hughes

Jock Lennox

Charles Holroyd

Oxford Instruments plc

Peter Morgan

Jonathan Flint

Michael Brady

Nigel Keen

21

Report of the Directors
The Directors present their Report and the Financial
Statements of Oxford Instruments plc for the year ended 31
March 2009.
Principal activity and business reviews
The Company is the ultimate holding company of a groupof subsidiary undertakings (‘the Group’) engaged in the
research, development, manufacture and sale of hightechnology tools and instruments. The Company is required
to set out in this report a fair view of the business of theGroup during the ﬁnancial year ended 31 March 2009, theposition of the Group at the end of the ﬁnancial year anda description of the principal risks and uncertainties facing
the Group. The information which fulﬁls these requirements
includes a business and ﬁnancial review on pages 8 to 18 andcorporate and social responsibilities on pages 25 to 27, which
are incorporated in this report by reference. The business, thestrategy, the research and development activities and likely
future prospects are reviewed in the Chairman’s Statementon page 8, the Chief Executive’s Statement on page 10, andthe Financial Review on pages 14 to 18.
Results and dividends
The results for the year are shown in the Group Income
Statement on page 46. The Directors recommend a ﬁnal
dividend of 6p per ordinary share, which together with theinterim dividend of 2.4p per ordinary share makes a total of
8.4p per ordinary share for the year (2008: 8.4p). Subject toshareholder approval, the ﬁnal dividend will be paid on 29
October 2009 to shareholders registered at close of businesson 2 October 2009.
Risks and Uncertainties
The Board exercises proper and appropriate corporate
governance for the group. It ensures that there are effective
systems of internal controls in place to safeguard shareholders
interests and the Group’s assets, including the assessment andthe management of the risks that the businesses are exposed
to, and to monitor and manage the compliance with all thelegal requirements that affect the Group’s worldwide businessactivities.
The Executive Directors report to the Board on changes in thebusiness and in the external environment which may affectthe risks which the Group faces. The Executive Directors also
provide the Board with monthly ﬁnancial information. Other
key performance indicators are reviewed quarterly.
There are a number of risks and uncertainties which may havea material affect on the Oxford Instruments Group. These aredescribed below.
Market Risk
Oxford Instruments provides a range of high technology
equipment and systems. There is a risk that the demand forthis type of product will vary from time to time because ofcompetitor action or economic cycles. The Group operates
across a broad range of geographical regions. Its turnoveris approximately equally split between Asia, Europe andNorth America. This spread reduces risk in any one territory.
Similarly, the Group operates in both the research andindustrial markets, mitigating the risk of a downturn in any
one product area.
The potential risk of the loss of any key customer is limited asno single customer accounts for more than 5% of turnover.

22

Technical Risk
The Group’s business plan is based around the introductionof new products generated by its R&D programme in orderto sustain competitive advantage. There is a risk that newtechnologies and products may take longer to develop thanoriginally planned or cost more. There is an extensive ‘Voice of
the Customer’ programme which assesses customer demandat all stages in the R&D programme. However, there is a riskthat the eventual market realised may not be as originallyplanned.
Acquisitions
Part of the growth plan for Oxford Instruments relies onacquisitions which provide the Group with complementary
technologies. There is the risk that appropriate acquisition
targets will not be available in the necessary timescale or that,once acquired, targets fail to provide the planned value. Thisrisk is mitigated through extensive ﬁnancial and technicaldue diligence during the acquisition programme.
Financial Risk
The principal ﬁnancial risks faced by the Group are foreign
currency, interest rates, copper pricing, liquidity and the
movement in the assets and liabilities of the deﬁned beneﬁt
pension schemes.
Foreign exchange transaction risk is managed principally
through forward contracts covering approximately 80% of
forecast net forward exposures for twelve months ahead.
Foreign exchange translation risk, which results fromconverting foreign currency to Sterling, is not hedged. In
general, it is the objective where possible to hedge foreign
currency investments with borrowings in the same currency,
however as discussed in the Financial Review, the Groupswitched all foreign currency borrowing into sterling inJanuary to address the risk of further falls in the value ofsterling eroding borrowing capacity.
The long term objective to manage interest rate risk is tomaintain a balance between ﬁxed and ﬂoating rate debt
managed through interest rate swaps.
Copper is the largest constituent by value in the manufactureof superconducting wire. The risk of movements in the priceof copper is through a combination of forward contracts andcontracts with customers which specify that the copper pricerisk is shared with the customer.
The Group manages its liquidity risk through the use ofregularly updated cash ﬂow forecasts. The Group maintains
sufﬁcient lines of credit from high quality lenders to cover
expected cash requirements and provide reasonable
headroom. These facilities are described in detail in the
Financial Review.
As described in the notes to the Financial Statements, theGroup provides deﬁned beneﬁt pensions to a number of its
employees in the UK and USA. The schemes were closed to
new entrants in 2001. In addition to employees who continue
to accrue pension beneﬁts, the schemes also have memberswith deferred pension beneﬁts and members receiving
pensions. The Group works closely with the trustees andtheir advisors to ensure that pension fund assets are invested
appropriately and agrees with the trustees the technicalprovisions used to value liabilities. The calculated value ofthe relationship between the pension scheme assets and its
liability to provide pensions for the members is sensitive tochanges in the actuarial assumptions and relatively smallchanges in these assumptions may have an appreciable effecton the reported position of the pension funds. The Groupagrees with the trustees of the schemes deﬁcit recovery plans
which are affordable and sustainable.

Oxford Instruments plc

Report of the Directors Continued
Directors
Biographies of all the Directors at the date of this report
appear on page 20.

Neither the insurance nor the indemnity provided coverfor situations where the Director has acted fraudulently or
dishonestly.

Steve Parker was a Director until he retired from the Board on
13 November 2008. Jock Lennox joined the board on 1 April
2009. All other Directors served throughout the year.

Share capital
The Company only has one class of share capital which
comprises ordinary shares of 5p each. All shares forming
part of the ordinary share capital have the same rights andcarry one vote each. There are no unusual restrictions on thetransfer of a share. The full rights and obligations attaching
to the Company’s ordinary shares, as well as the powers of the
Directors, are set out in the Company’s Articles of Association,
copies of which can be obtained from Companies House or by
writing to the Company Secretary.

Directors’ interests
The beneﬁcial interests of the Directors in the Company’s
share capital, all in fully paid up shares at 31 March 2009,are shown below. Details of share options are shown in the
Directors’ Remuneration Report on pages 34 to 40.

Kevin Boyd
Mike Brady
Jonathan Flint
Charles Holroyd
Mike Hughes
Nigel KeenPeter Morgan
Bernard Taylor

2009
Shares
6,087
2,500
838
36,964
12,216
126,580
20,000190

2008
Shares
5,249
2,500
35,477
12,216
126,580
20,000190

Jock Lennox, appointed since the year end on 1 April 2009,
had on appointment no beneﬁcial interest in the share capitalof the Company.
No Director was beneﬁcially interested in the shares ofany subsidiary company at any time during the year. In theyear to 31 March 2009 no Director had a material interest
in any contract of signiﬁcance with the Company or any of
its subsidiaries other than the contract between Imperialise
Limited and the Company for the services of Nigel Keen, as
described in the Directors’ Remuneration Report on page 39.
There have been no changes since the year end.
Insurance cover and Directors’ indemnities
For some years the Group has purchased insurance to coverits Directors and Ofﬁcers against their costs in defending
themselves in any legal proceedings taken against them inthat capacity and in respect of damages resulting from theunsuccessful defence of any proceedings.
To the extent permitted by UK law, the Group indemniﬁes its
Directors and Ofﬁcers.

Schroder Investments
Threadneedle Asset Management
Sir Martin and Audrey WoodGAM International Management Ltd
Howson Tattersall Invest Counsel (CA)BAE Pension Fund Investment Management
Aberdeen Asset Management PLC
Legal & General Investment Management Ltd

Oxford Instruments plc

During the year to 31 March 2009 the issued share capital wasincreased by 0.07% with the issue of 32,115 ordinary shares(2008: 179,340) following the exercise of options under theCompany’s share option schemes. At 31 March 2009, theissued share capital of the Company was 49,409,351 ordinary
shares of 5p each, of which 569,394 shares (1.15%) are held
in an offshore employee beneﬁt trust. Details of the sharecapital and options outstanding as at 31 March 2009 are set
out in note 23 of the Financial Statements. There have been
no further changes in the issued share capital of the Company
since the year end.
At this year’s Annual General Meeting, the Directors areseeking authority to increase authorised share capital from£2,900,000 to £4,101,000 (Resolution 6) and propose to renew
the authority granted to them at last year’s AGM to:(a) allot ordinary shares up to an aggregate nominal value of£815,254 and, excluding those shares up to an aggregate
nominal value of £1,630,508 where full pre-emption
rights are applied (Resolution 7);(b) allot up to 2,470,460 ordinary shares without ﬁrst offering
them to existing shareholders (Resolution 8); and(c) to buy back up to 10% of the Company’s issued sharecapital (Resolution 9). Details of these resolutions are set
out in the notice of the meeting.
Substantial shareholdings
As set out below, the Directors have been notiﬁed inaccordance with Chapter 5 of the Disclosure and Transparency
Rules of beneﬁcial interests of 3% or more of the Company’s
issued ordinary share capital, the only class of voting capital,
at 9 June 2009.

Shares
000

% of
Total

5,781,118
4,411,593
3,693,530
3,164,891
2,765,397
2,303,177
2,022,533
1,951,296

11.7
8.9
7.5
6.4
5.6
4.7
4.1
3.9

23

Report of the Directors Continued
Payment of Suppliers
The Group does not follow a standard payment practice but
agrees terms and conditions for its business transactions witheach of its suppliers. Payment is then made in accordance withthese terms. Trade creditors of the Company and the Group’s
UK subsidiaries at 31 March 2009 were equivalent to 23 days’(2008: 36) and 58 days’ (2008: 56) purchases respectively, basedon the amounts invoiced by suppliers during the year and theamounts owed to trade creditors at the end of the year.
Charitable Donations
During the year, the Group made charitable donations of£14,797.
Fixed Assets
Whilst the market value of some ﬁxed assets may differ frombook value, the Directors believe that the differences are notmaterial.

Disclosure of Information to Auditors
Pursuant to Section 234ZA(2) Companies Act 1985 the Directors
who held ofﬁce at the date of approval of this Directors’
Report conﬁrm that, so far as they are each aware, there is no
relevant audit information of which the Company’s Auditors
are unaware; and each Director has taken all the steps thathe might reasonably have been expected to have taken
as a Director to make himself aware of any relevant audit
information and to establish that the Company’s Auditors areaware of that information.
Annual General Meeting
The Notice of the Annual General Meeting to be held on 15
September 2009 is set out in a letter to shareholders together
with explanatory notes relating to the resolutions.
A resolution to re-appoint KPMG Audit Plc as Auditor will be
proposed at the Annual General Meeting.
By Order of the Board
Susan Johnson-Brett, Company Secretary
9 June 200924

Oxford Instruments plc

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

Oxford Instruments plc

Health and Safety
Oxford Instruments is committed to ensuring providing
high standards of safety in the working conditions for its
employees and to the continual improvement of its healthand safety (H&S) performance. During 2008/09, reportable
accidents were reduced and the collection of minor accident
information has improved to provide a more complete viewof safety performance. Two of the Group’s major sites are
now certiﬁed to the OHSAS18001 H&S Management Systemstandard and this, or similar standards, will be implemented
at its other sites. Health and Safety training and awarenessis implemented on a site by site basis, tuned to the speciﬁc
needs and requirements of each site.
Responsibility for H&S lies with the Board. Charles Holroyd,an Executive Director, is responsible for formulating theGroup’s H&S strategy and objectives, reviewing performanceagainst these objectives and for ensuring that key H&S issues
are effectively identiﬁed and managed.
The Board reviews the H&S performance of all the Group’s
operations. All Group business divisions report progress on
health and safety issues either monthly for large sites, orquarterly for smaller sites, to the Group Health, Safety andEnvironment Manager who is responsible for keeping Charles
Holroyd, and consequently the Board, informed of serious
issues. The Group Health, Safety and Environment Manager is
responsible for auditing each site at least annually.
Employees are kept informed of current H&S issues throughinformation provided by local H&S Committees or forums
whose members include staff from all areas of the business.
In addition, information is published on the Group intranet,
notice boards and in monthly cascades and quarterly business
reports. Employees are actively encouraged to suggest
improvements that can be made in working conditions andpractices.
Environment
The Board is committed to pursuing high standards ofenvironmental performance, including the maintenance ofsafe and healthy working environments. During the next
ﬁnancial year, the ISO 14001 Environmental Management
System standard will be implemented at two sites to assess its
beneﬁt in managing environmental issues.
The Group continues to focus on resource efﬁciency in orderto minimise the effect of its operational processes on theenvironment. During the year, a focus on energy usage,
particularly electricity, was initiated to reduce its carbon
footprint. At the High Wycombe site, the consumption ofelectricity has been reduced by 250,000 kWh over sevenmonths and carbon emissions reduced by 180 tonnes. The
methodologies adopted will be rolled out to other sites during
2009/10. New technologies that can increase the savings onelectricity and carbon emissions will be investigated. The
Chief Executive also receives a monthly report on the numberof kilometres travelled by air. Whilst these programmes
beneﬁt the environment, there is also a positive effect on theﬁnancial performance of the Company.

25

Corporate and Social Responsibility Continued

Electricity use comparison 2008/2009 - Oxford Instruments High Wycombe
2009

Kwh

Target

2008

50000

40000

30000

20000

10000

0
2

3

4

5

6

7

8

9

10

11

Week no.

12

13

14

15

16

17

18

19

Source: SSE - Scottish and Southern Energy plc

European directives continue to be enacted that havebeneﬁcial effects on the environment. The current Directives
with which the Group complies include the Waste Electricaland Electronic Equipment (WEEE) Directive, the Restriction
on use of Hazardous Substances (RoHS) Directive, theRegistration, Evaluation, Authorisation of use of Chemicals(REACh) Directive and the Energy use of Products (EuP)
Directive.

Employees
The Board recognises that the Group’s employees are its
most important asset and critical to the overall delivery of its
business strategy. All employees are kept informed of progressagainst the Group’s strategic plan through regular video
presentations on the intranet and face-to-face meetings with
the Chief Executive, monthly team meetings, the Company
intranet and newsletters.

Many of the Group’s innovative new products are designed
to beneﬁt the environment. For example, the recently
developed cryogen free products from the NanoScience and
NanoAnalysis businesses replace the use of liquid helium,
which is a dwindling and non-renewable resource. The new
products are both safer to use and more environmentallyfriendly.

Relations with employees are based on respect. The Group iscommitted to a working environment where there is mutual
trust and where everyone is accountable for their own actions
and share responsibility for the performance and reputationof the Group.

The Group looks not only to improve the environmental
performance of its own operations but also manufactures
equipment that supports customers who have to comply withcurrent regulations. For example, the X-Met range of handheld analysers and the X-Strata range of benchtop analysers
are used to check compliance to the RoHS directive and the
WEEE directive. A different version of the X-Met can be usedin assessing contaminated land for the presence of heavy
metals and is currently being used on the 2012 Olympics sitenear London.
All major sites have a responsibility to recycle waste materials.
These materials include cardboard, paper, wood and metals.
Employees are encouraged to recycle paper, packaging,bottles and cans.
All corporate literature is now printed on environmentallyfriendly paper, using Forestry Stewardship Council (FSC)
accredited printers. This, together with the vegetable oils
used to coat the paper, means that these documents are biodegradable and recyclable.

The Group’s aim is to ensure there are equal opportunities forall employees with no discrimination on account of race, age,gender, sexual orientation, disability, and political or religious
beliefs. In return, employees are expected to act with integrity
and maintain high ethical standards.
Ability and contribution are the determining factors in theselection, training, career development and promotionof all employees. The Group is committed to continuing
professional development, managing individual and teamperformance and developing and valuing core skills. Having
the right skills-mix ensures that the business grows throughproducing innovative products that meet or exceed customer
requirements. Each year, the Chairman hosts The Chairman’s
Awards for Innovation. These awards reward and recognise
technical and process innovation. Employees are encouraged
to enter projects and/or activities that show innovation inits broadest sense and at the same time have brought value
to the business. Winners receive a trophy and a cash prize,
awarded at a gala dinner. This year saw the highest number,and the highest standard of entries, since the competition
began.
The team from High Wycombe won the Process Innovation
Award for their success in reducing electricity usage at their
site.

26

Oxford Instruments plc

Corporate and Social Responsibility Continued
It is the Group’s policy to provide competitive remunerationreferenced against external market data. Business andindividual performance determine actual remunerationand salaries are reviewed on an annual basis. Financial
participation in the Group is encouraged through the Share
Incentive Plan in the UK, Executive Share Options granted to
management, and through bonus schemes based on ﬁnancial
performance.
A wide-ranging restructuring and efﬁciency programme was
implemented during the year, resulting in a reduction in theworkforce of 15%. Employee support services were offeredin all affected sites. Where out-placement services were taken
up, a 50% success rate in ﬁnding alternative employment has
been achieved to date.
Customers
The Group believes that integrity in dealing with customers
is a prerequisite for a successful and sustained business
relationship. This principle governs all aspects of the business.
The Group values its customers and the trust that they placein the Group, and will safeguard the information provided bycustomers in accordance with relevant laws and contractual
commitments.
The Group’s ‘Voice of the Customer’ work ensures that theinterests of all customers are at the core of the business.
Oxford Instruments’ customers expect to receive and do
receive high quality, reliable goods and services. Innovativeand commercially successful products are developed to meetcurrent and future requirements. These products are offered
at competitive prices, and are backed by a global network ofskilled support teams.
Business Partners
All companies in the Group work hard to establish mutual
trust, respect and mutually beneﬁcial relations with its
business partners, including suppliers, banks and collaborative
associates.
There is a Group supplier management process in place which
promotes a common supply chain strategy split by commodity,
driving the business towards fewer high level suppliers. This
process has resulted in substantial savings across the Group,
as well as enabling reductions in working capital

Oxford Instruments plc

The Strategic Sourcing Team regularly inspect and audit
suppliers, and closely manage outsourcing to low cost
countries. ‘Road maps’ and regular strategic reviews are inplace for strategically important suppliers. In accordance with
ISO9001 and ISO 14001, only quality approved organisations
are used.
Communities
The well-being of the communities in which the Group operates
is important to its long term development and success. The
Group offers worthwhile and valuable employment in a safe
and well cared for working environment, and encourages ahealthy work/life balance.
The Group is an active supporter of local, national andinternational science communities both on a corporate level,a business group level and an individual level.
The Group also sponsors a number of international andnational awards and events including the prestigious Sir
Martin Wood Prize through the Millennium Science Forum inJapan.
Business groups and employees are supported in any activities
that promote good relations with the local communities bycontributing to, and supporting, local charities and community
activities. The focus is on supporting science in business, andencouraging innovation and the promotion of science inschools and universities.
Employees are encouraged to contribute to local charities
using the Give-As-You-Earn scheme, and this year theGroup was awarded a Bronze Award for Payroll Giving by
The Institute of Fundraising. Local social clubs run annual
fundraising activities for a chosen charity and the Groupsupports these efforts with an additional donation.

Jonathan Flint Chief Executive
9 June 200927

Corporate GovernanceIntroduction
The Board is committed to ensuring that high standards ofcorporate governance are maintained by the Group.

The details of the way the Board operates, including aschedule of matters reserved to the Board for decision, are
set out in the Board Reference File.

The Board endorses the main and supporting principles andthe provisions set out in the Combined Code on Corporate
Governance which is appended to the Listing Rules of the
Financial Services Authority (“the Code”), except as detailed
below.

The Board retains control over strategy, investments andcapital expenditure, and limits the decisions which can betaken by management in the areas of strategic and ﬁnancial
management and reporting, capital structure, corporate
actions, mergers and acquisitions, major contracts andother commitments, litigation and regulatory proceedings,
remuneration and share incentive plans.

The Board’s policies and procedures are documented in the
Board Reference File that sets out the roles and delegatedauthorities applying to the Directors, the Board and theBoard Committees.
Compliance
The Board considers that, throughout the period under review,
the Group has complied with the provisions recommended
in Section 1 of the Code, other than in respect of Provision
B.2.1 with the appointment of Nigel Keen as Chairman of theRemuneration Committee as described below.
Board of Directors and management structure
Board of Directors
The Board comprises the Chairman, ﬁve Non-Executive
Directors and three Executive Directors. The Directors’
biographies and details of length of service are shown on
page 20. All the Directors have written letters of appointmentthat have been approved by the Board.
The division of responsibilities between the role of Chairman
and the Chief Executive has been set out in writing andagreed by the Board.
Management Team
General Committee
The Board delegates management of the business to the Chief
Executive. To assist in this, the Chief Executive has created a
General Committee that consists of, the Executive Directors,
the Group Operations Director, the Group Technical Director
and the Group Human Resources Director.
The General Committee meets at least twice a month either
physically or by video or telephone conference and focuses onGroup wide performance and risk management.
Executive Committee
The General Committee is supported by an Executive
Committee that comprises the members of the General
Committee with the addition of the Managing Director ofeach of the individual businesses.
Operation of the Board
The Board is responsible to shareholders for delivering
sustainable incremental shareholder value throughentrepreneurial leadership within a framework of controls for
managing risk. The Board sets the Group’s strategy, maintains
the policy and decision making framework in which thisstrategy is implemented, veriﬁes that the necessary ﬁnancial
and human resources are in place to meet strategic aims,
monitors performance against key ﬁnancial and non-ﬁnancial
indicators, oversees the system of risk management and setsvalues and standards in governance matters.

28

Where the Board delegates authority to management it is ona structured basis, which requires that proper management
oversight exists at the appropriate level.
The Board meets on a regular basis, at least ten times a year,
and otherwise as required. Of the ten regular meetings,
typically eight are held at Group locations, and the remaining
two are held by telephone conference. During the year, two
additional Main Board Meetings were scheduled bringing
the total number of Board meetings held during the year to
twelve.
Board meetings involve reviews of ﬁnancial and businessperformance against the plan approved by the Board. Risk
management review, both at Group level and also for eachof the business units, is embedded in the reporting system.
On a rotating basis, the Board receives presentations fromthe business units and key functional areas enabling it to
explore speciﬁc issues in more detail. Any matter requiring
a decision by the Board will be supported by a pre-circulated
paper analysing all relevant aspects of the proposal andrecommending a course of action.
Board papers are distributed in advance of the relevant
meeting in sufﬁcient time to allow the Directors to prepare
for meetings. Minutes of Committee meetings are circulated
to the relevant Directors. In the very few instances when a
Director has not been able to attend Board or Committee
meetings, his or her comments on the papers to be consideredat the meeting are communicated in advance to the relevant
Chairman.
The Non-Executive Directors meet without the Executive
Directors at least annually, with the Chairman leading thesemeetings. The Non-Executive Directors also meet annually
without the Chairman in attendance. The Deputy Chairman
chairs these meetings.
The Company Secretary and the Company Secretary’s Ofﬁce
are responsible for implementing Board procedures and foradvising the Board on corporate governance matters.
Board balance and independence
The Code requires the Board should be of sufﬁcient size thatthe balance of skills and experience is appropriate for therequirements of the business and that there is a balance of
Executive and Non-Executive Directors such that no individual
or small group of individuals can dominate the Board’s
decision making.
The composition of the Board and the combination of diverse
backgrounds and expertise of the Non-Executive Directors
meet these principles.

Oxford Instruments plc

Corporate Governance Continued
Nigel Keen, Chairman, has a degree in engineering from
Cambridge University, is a Fellow of the Institute of Chartered
Accountants and has been involved in the formation anddevelopment of high technology businesses for more than
thirty years. He fulﬁlled the independence criteria at the timeof his appointment as set out in the Combined Code. He is
Chairman of the Nomination and Remuneration Committees
as the Board considers that for a SmallCap company the
Chairman’s prime roles are: to procure an excellent strategy
for the business; to recruit and retain the best available
management team to execute this strategy; to put in placea Board of independent directors whose experience can add
value to the work of the management; and to ensure thatthe business maintains the highest standard of corporate
governance. Taking in to consideration the size of theCompany, the Board believes that in order to fulﬁl theseobligations it is appropriate and necessary for the Chairman of
the Board to also be Chairman of the Nomination Committee
and the Remuneration Committee. Nigel Keen also serves
as Chairman of Oxford Instruments Pension Trustee Limited,which is the Trustee of the UK deﬁned beneﬁt pension
scheme. The Board of the Company and the Board of theTrustee to the Pension Scheme have each independently
considered whether it is preferable to have the Chairmanof the Company as Chairman to the Board of the Trustee of
the Pension Scheme notwithstanding the conﬂicts of interest
inherent in the same person holding both these positions andthey each have unanimously conﬁrmed that they believe that
it is in the interest of all parties for this to continue.

and international expansion. He became Chairman of
the Audit Committee on 2 June 2009 and is a member ofthe Remuneration and Nomination Board Committees.
His appointment was recommended by the Nomination
Committee following a thorough evaluation process. The
Board believes that as his skills, experience and knowledge
will enhance the Board and that he is well qualiﬁed to be
Chairman of the Audit Committee following the retirementof Peter Morgan, the previous Audit Committee Chairman.

Mike Brady, Deputy Chairman, has been a member of theBoard since June 1995. He is BP Professor of Information
Engineering at Oxford University and is one of the UK’s leading
engineers. He brings a depth of technical expertise to Board
discussions. His independence of mind gained from a career
as a senior academic supervisor of research programmes in a
major technical discipline at Oxford University, his technicalexpertise as the only Non-Executive Director from a scientiﬁc
profession and the value of that expertise to Board discussions,the breadth of his professional and business interests
unrelated to the Group, his continual constructive probingof the technical aspect of proposals being considered by the
Board, the composition of the Board generally and the factthat he qualiﬁes as independent in all other criteria referred
to in the Combined Code, leads the Board to conclude that it
is appropriate that he continue in ofﬁce and that he should
properly be considered as independent despite the fact that
he has been a Director for more than nine years.

Further information on each of the Non-Executive Directors is
to be found in the Directors’ Biographies on page 20.

Mike Hughes, Senior Independent Non-Executive Director,
has been a member of the Board since November 2004. He iscurrently the Chairman of EA Technology Ltd, a Non-Executive
director of the South Staffordshire Group plc and Chairman
of NWEN Jersey Ltd. Previously he held senior management
positions within GEC before becoming CEO of Midlands
Electricity plc and then Executive Vice President of GPU Inc
International Operations Group.
Jock Lennox was appointed to the Board as an Independent
Non-Executive Director on 1 April. Until April 2009 he
was a Senior Audit Partner at Ernst & Young where hegained extensive experience advising clients in a variety ofindustries on ﬁnancial reporting, ﬁnancing, transactions

Oxford Instruments plc

Peter Morgan, Chairman of the Audit Committee, joined theBoard in April 1999. He is a Director of Strategic ThoughtGroup plc, Hyder Consulting plc and the Association of Lloyd’s
Members. He is a UK delegate to the European Economic andSocial Committee in Brussels. He is a former executive Directorof IBM UK and IBM Europe, a former Director General of theInstitute of Directors and was a Member of the Council of
Lloyd’s from 2000 to 2009. Peter will be retiring from theBoard at the 2009 AGM.
Bernard Taylor was appointed to the Board as a NonExecutive director in 2002. He has worked at various City
institutions, including Robert Fleming & Co. Ltd where he
was Deputy Chairman and Chief Executive and at J.P. Morgan
plc where he was Vice-Chairman (Investment Banking). He is
Vice Chairman of Evercore Partners and Chief Executive of its
European business. He is also a Fellow of the Royal Society ofChemistry, Chairman of ISIS Innovation Ltd and a member of
The Council of the University of Oxford.

In the opinion of the Board each of the Non-Executive
Directors is currently independent under the guidelines set
out in the Combined Code. This opinion is based on current
participation and performance on both the Board and Board
Committees including consideration of the length of service
at Oxford Instruments plc.
Term of appointment of Non-Executive Directors
Each Non-Executive Director is appointed for an initial termof three years. The requirement to submit Directors forreappointment at regular intervals is met by applying theCompany’s Articles of Association.
These require that at each Annual General Meeting: (1) not lessthan one-third of the Directors who are subject to retirementby rotation must retire; (2) any Director has to retire who was
not appointed at either of the two previous Annual General
Meetings and who has served as a Director for more than two
years since appointment or last reappointment; and (3) any
Non-Executive Director who has been in ofﬁce for more thannine years should offer themselves for re-election each year.
In addition, Directors who have been appointed since
the previous Annual General Meeting have to resubmit
themselves for election at the ﬁrst Annual General Meeting
following their appointment.

29Corporate Governance Continued
Board development and evaluation
Board development
On appointment, Directors undertake an induction process
which is designed to develop knowledge and understandingof the Group’s businesses through visits to various Group
operating sites, discussion of relevant technology, as well as
product demonstrations, brieﬁngs from management andfamiliarisation with investor perceptions of the Group.
The operating business units’ senior management teams
present to the Board on a regular basis.
Non-Executive Directors are encouraged to meet individual
members of the senior management team and have done soduring the year under review.
Throughout the year, Non-Executive Directors attend Oxford
Instruments’ events, exhibitions and award presentations.
The Company Secretary and her ofﬁce act as advisers to
the Board on matters concerning governance and ensurecompliance with Board procedures. All Directors have accessto this advice and a procedure also exists for Directors to takeindependent professional advice at the Group’s expense. No
such advice was sought during the year. The appointment andremoval of the Company Secretary are matters for the Board
as a whole.
Board evaluation
In the year ended 31 March 2009 the Board completed its
annual effectiveness evaluation exercise, including a speciﬁc
review of the effectiveness of its principal committees and

Main
Board
12
12
12
12
12
7
11
12
11
10

members. This was an internal exercise under the controlof the Chairman using a detailed questionnaire completedby all Directors in relation to the key areas of Board
accountability and the arrangements in place to enableeffective focus on these areas. Topics covered included
Group strategy, performance, delegation and accountability,
success, development and reward, Board and Committee
composition, Board induction and training, internal control
and risk management. In addition, whereas in previous
years each Director took part in a 360 evaluation process
involving completion of an assessment questionnaire, thisyear assessment was carried out by each director preparing
a written statement concerning governance of the Company
and discussing the statement with the Chairman at theindividual one-to-one interviews which the Chairman holdswith each director. The Chief Executive is also involved in
the process by giving his input on the way the Board helps
him in his role. The output from these evaluations allows
the Chairman to review objectively the overall balance of theBoard.
Attendance at meetings
No one other than the Committee Chairman and members
is entitled to be present at a meeting of the Nomination,
Audit or Remuneration Committee, but others may attend
by invitation of the Committee. No Director votes on matterswhere he has a conﬂict of interest. Further details of theindividual Committees’ activities are described below.
The following table sets out the frequency of, and attendance
at, Board and principal Board Committee meetings for theyear to 31 March 2009:

Audit
Committee¹
6
6
6
6
6
4
5
6
6
6

Remuneration
Committee
5
5
2
4
5
5
4

Number of meetings held
Nigel Keen
Jonathan Flint
Kevin BoydCharles Holroyd
Steve Parker 2
Mike Brady
Mike HughesPeter Morgan
Bernard Taylor
Note:¹ The Chairman of the Board and the Executive Directors attend the Audit Committee by invitation
2
Steve Parker resigned from the Board on 13 November 2008

Board Committees
The Board has formed the following Committees:
Nomination, Remuneration, Audit and Administration.
Membership of Board Committees, which is set out on page21, is determined by the Board on the recommendation of theNomination Committee and is reviewed regularly. The written
terms of reference of the Board Committees are available on
the Company’s website and from the Company on request.
They will be on display at the Annual General Meeting.

30

Nomination
Committee
2
2
1
2
2
2
2

Nomination Committee
The Nomination Committee comprises all the independent
Non-Executive Directors, under the chairmanship of the
Chairman of the Board. The Nomination Committee is
responsible for assisting the Board in the formal selection andappointment of Directors and considers succession planningfor the Board. It also considers potential candidates andrecommends appointments of new Directors to the Board.
The appointments are based on merit and against objective
criteria including the time available and the commitment thatwill be required of the potential Director.

Oxford Instruments plc

Corporate Governance Continued
There is a formal, rigorous and transparent procedure forthe appointment of new Non-Executive Directors to theBoard, the prime responsibility for which is delegated to theNomination Committee. Each appointment process begins
with an evaluation of the balance of skills, knowledge andexperience existing on the Board that is effected througha series of one-on-one meetings between the Committee
Chairman and Directors. The Nomination Committee takes
external advice when considered appropriate.
A description of the role and capabilities required is preparedusing the information gathered. Candidates meet with the
Chairman and the Deputy Chairman and a ﬁnal selection ofpotential appointees meets several Directors individually.
Following these meetings, the Nomination Committee
considers each Director’s feedback and makes a ﬁnal
recommendation to the Board concerning any appointment.
On joining the Board, new Non-Executive Directors are given
an induction programme including site visits and meetings
with senior management. This induction is supported by
brieﬁng papers prepared by the Company Secretary. Major
shareholders are provided with an opportunity to meet any
new Non-Executive Directors.
The Nomination Committee recommends to the Board
whether a Non-Executive Director’s appointment should be
renewed for a further three years at the end of each threeyear term, taking into account the performance of theindividual.
The Nomination Committee also annually reviews theperformance of the Chief Executive and succession planningwithin the business.
Remuneration Committee
The Remuneration Committee comprises all the Non-Executive
Directors. The Chairman of the Board, Nigel Keen, who fulﬁlled
the independence criteria at the time of his appointment as set
out in the Code, is Chairman of the Remuneration Committee
because as set out on page 29 above, the Board considers thatin a SmallCap company it is essential that the Chairman be
involved in setting remuneration policy. The members of theCommittee are appointed by the Board.
The Remuneration Committee is responsible for recommending
to the Board the remuneration packages for Executive
Directors and the bonus and share option strategy for theGroup’s executive management. Independent professional
advice is sought when considered necessary. Under its termsof reference the Chairman of the Board may be Chairman of
the Committee. The Board as a whole is responsible for ﬁxing
the remuneration of the Non-Executive Directors, including
the Chairman.
The Chief Executive is invited to attend Remuneration
Committee meetings as deemed appropriate, for example
when consideration is being given to the performance ofother Executive Directors and on signiﬁcant group widechanges in salary structure and terms and conditions affecting
other employees at senior executive level. Further details of
the Remuneration Committee are included in the Directors’
Remuneration Report set out on pages 34 to 40.

Oxford Instruments plc

Audit Committee
The Audit Committee comprises all the independent NonExecutive Directors and is chaired by Peter Morgan. Peter
Morgan stood down in June 2009 and Jock Lennox was
appointed to the Chair in his place. The Chairman of theBoard and members of senior management such as theChief Executive and Group Finance Director are invited toattend all or part of any meetings or to present such reports
as are required for the Committee to discharge its duties.
The external auditors are invited to attend meetings of theCommittee on a regular basis, including at the half year, atthe planning stage before the audit and after the audit at thereporting stage. At least once a year the Committee meetswith the external auditors without the executives present.
The primary objective of the Audit Committee is to assist theBoard of Directors in fulﬁlling its responsibilities relating toexternal ﬁnancial reporting and associated announcements,
oversight of the external audit process including considerationof the independence of the Group’s external auditors, theresourcing and plans of the Internal Audit function andthe adequacy and effectiveness of the ﬁnancial control
environment.
The Audit Committee’s terms of reference include all matters
indicated by the Combined Code. The terms of reference areconsidered annually by the Audit Committee and are thenreferred to the Board for approval. The Audit Committee
structure requires the inclusion of one member with relevant
recent ﬁnancial experience, currently the Committee
Chairman, and expects all Audit Committee members to be
ﬁnancially literate.
The Audit Committee Chairman reports the outcome of
meetings to the Board and the Board receives minutes of
all Audit Committee meetings. The Audit Committee has
unrestricted access to Group documents and information, as
well as to employees of the Group and the external auditor.
The Committee reviews all public statements containing
ﬁnancial information, including the half year and annual
ﬁnancial statements and interim management statements,
together with the related Stock Exchange announcements,
having received information on the accounting principles,policies and practices adopted in the Group’s accounts,changes proposed to those principles, policies and practices,signiﬁcant accounting issues and contingent liabilities
affecting the Group, potential tax contingencies and theGroup’s compliance with statutory tax obligations.
The Audit Committee is responsible for the development,
implementation and monitoring of the Group’s policy on
external audit. The Audit Committee reserves oversight
responsibility for monitoring the independence and objectivityof the external auditors.
A review takes place annually of the performance of theexternal auditors following the completion of the annual
audit.

31

Corporate Governance Continued
To assess the effectiveness of the external auditors, the Audit
Committee reviews:

UÊ The external auditors’ fulﬁlment of the agreed audit planand variations from the planUÊ The robustness and perceptiveness of the auditors in theirhandling of key accounting and audit judgements

UÊ The external auditors’ comments in respect of ﬁnancial
controls
To fulﬁl its responsibility regarding the independence of theexternal auditors, the Audit Committee reviews the changes
in key external audit staff in the external auditor’s plan for thecurrent year, the arrangements for day-to-day managementof the audit relationship, a report from the external auditors
describing their arrangements to identify, report and manage
any conﬂicts of interest and the overall extent of non-audit
services provided by the external auditors. In addition theCommittee reviews the provision of non-audit services by theexternal auditors where the proposed fee exceeds £20,000.
Details of the audit fees, together with fees for non-audit
services for the year, are set out in note 3 (page 53) to the
Financial Statements.
The Audit Committee is required to assist the Group Board
to fulﬁl its responsibilities relating to the adequacy andeffectiveness of the ﬁnancial control environment. This
includes consideration of the adequacy of both the resourcing
and the plans of the Internal Audit function.
To fulﬁl these duties the Committee reviews:

UÊ The Group’s risk framework and risk policies
UÊ The external auditors’ annual internal control reportUÊ The Internal Audit function’s terms of reference,
reporting lines and access to the Audit Committee and all
members of the Board, and its plans and achievement of
the planned activity

UÊ Internal Audit reports on key audit areas and signiﬁcant
control environment deﬁciencies

UÊ Reports on the systems of ﬁnancial controls and ﬁnancial
risk management
The Group’s Business Malpractice Policy comprises an internal
process that has been communicated directly to all employees
by which employees can raise a concern, including concerns
relating to fraud, damage to the environment, criminal activity
or danger to health and safety, in the knowledge that it will
be taken seriously, treated as conﬁdential and that no action
will be taken against them. The Policy is reviewed annuallyby the Committee. During the year, one such issue has beenraised through the policy and satisfactorily resolved.
Administration Committee
The Administration Committee consists of a minimum of two
Directors and deals with items of a routine and administrative
nature. The Board receives copies of the minutes of the
Administration Committee.

32

Investor relations
The Group places considerable importance on regularcommunications with its shareholders with whom it has
an ongoing programme of dialogue. All shareholders areencouraged to participate in the Annual General Meeting at
which the Chairman and Chief Executive present an overview
of the Group’s business and review the results and makecomments on strategy and current business activity.
The Non-Executive Directors meet informally withshareholders both before and after the Annual General
Meeting and respond to shareholder queries and requests.
The Chairman and the Senior Independent Director makethemselves available to meet any shareholders, as required.
All Group announcements are posted on the Group website,www.oxford-instruments.com, as soon as they are released.
The Investor Relations section of the website provides
ﬁnancial and other information on the Group.
Annual General Meeting (AGM)
The Annual General Meeting is an opportunity for the
Board to meet shareholders. At its AGM, the Group complies
with the provisions of the Combined Code relating to thedisclosure of proxy votes, the separation of resolutions andthe attendance of Committee Chairmen. The Group arranges
for the Annual Report and Accounts and related papers to beposted on its website and, where shareholders have elected
to receive papers copies, posted to shareholders so as to allow
at least 20 working days for consideration prior to the AGM.
The next AGM will be held on 15 September 2009.
Risk management
Within the Group there is an ongoing embedded process for
identifying, evaluating and managing the signiﬁcant risks
faced by the Group. Day-to-day management of this process
has been delegated by the Board to the Executive Directors.
A standard process is in place throughout the Group that
requires the senior management of each business to identify
signiﬁcant business risks and to classify them both as toprobability and potential impact.
Once identiﬁed, mitigating action, where possible, isformulated and responsibility within the management
team assigned. On a regular basis each business reviews andupdates its risk summary which is then reported to the Chief
Executive. If a material risk changes or arises, the Managing
Director of the business reports this in writing to the Chief
Executive at which time there is a discussion on the adequacyof the mitigating actions taken. Details of all major risks
identiﬁed and the mitigating actions in place are reported
to and reviewed by the Board. The Directors’ Report gives
an overview of the major risks and uncertainties faced by theGroup.
In addition, the Board considers risks to the Group’s strategic
objectives which are not addressed within the Group’sbusinesses and develops appropriate actions to manage andmitigate these risks.

Oxford Instruments plc

Corporate Governance Continued
Internal control
The Board is ultimately responsible for the Group’s system ofinternal control and for reviewing its effectiveness. However,such a system is designed to manage rather than eliminate
the risk of failure to achieve business objectives and canprovide only reasonable and not absolute assurance againstmaterial mis-statement or loss. Day-to-day responsibility for
maintaining adequate systems of internal control is delegatedto the Executive Directors.
During the year the Directors have reviewed the effectivenessof the Group’s system of internal controls.
These internal control procedures have been in place forthe year under review and up to the date of approval of thereport. They are regularly reviewed by the Board and accord
with the Turnbull guidance. These controls include ﬁnancial,
operational, compliance and risk management.
The key components designed to provide effective internal
control within the Group are as follows:UÊ there is a formal schedule of matters reserved to theBoard for decision; other than these matters, theBoard delegates to the Chief Executive and reviews thedelegation of authorities throughout the management
structure;UÊ the Group’s management structure comprises the General
Committee whose members have Group wide ﬁnancial
responsibilities and to whom day-to-day responsibility
for the management of the Group is delegated. The
management system is based on the identiﬁcation of
separate businesses for each of the Group’s activities,
the heads of these businesses together with the Chief
Executive, the Group Finance Director and certain
other members of the senior management team form
the Group’s Executive Committee. There are clearlydeﬁned lines of management responsibilities at alllevels up to and including the Group Board and theGroup’s accounting and reporting functions reﬂect thisorganisation;

UÊ ﬁnancial executives within Group businesses reportto their own operational head but there is also a wellestablished and acknowledged functional reporting
relationship through to the Group Finance Director;

UÊ the Board reviews strategic issues and options formallyonce a year during the annual strategic planning process
and during the year as appropriate. In addition the
Executive Directors maintain a three year planning modelof the Group and its individual businesses;

UÊ annual budgets are prepared for each of the Group’sbusinesses which include monthly ﬁgures for turnover,
proﬁt, capital expenditure, cash ﬂow and borrowings.
The budgets are reviewed through the Groupmanagement structure and result in a Group ﬁnancial
budget which is considered and approved by the Board;UÊ the Board approves all acquisition and divestment
proposals and there are established procedures forthe planning, approval and monitoring of capital
expenditure;UÊ for all major investments the performance of at least
the ﬁrst twelve months against the original proposal isreviewed by the Board;UÊ each Group site, except for representative sales ofﬁces,
is required to submit a self assessment internal control
questionnaire on a regular basis;UÊ internal audit is carried out through a system ofregular reviews of the internal controls at each site byaccountants from other parts of the Group and in Japanand China, due to language differences, by local external
auditors. These reviews are coordinated by a manager in
Head Ofﬁce;UÊ work performed is based on a standardised Group format
but involves random testing, together with a review of
the internal control questionnaire;UÊ where required, action plans are drawn up by thebusinesses in conjunction with the Group FinanceDirector to remedy any signiﬁcant control weaknesses
that are identiﬁed from completion of the internal
control questionnaire or as a result of the internal
audit. The results of audit reviews are reported to local
management, the Group Finance Director and the Audit
Committee and checks on the progress of the action
items arising are made;UÊ the Board receives regular updates on treasury, tax,
property, insurance, litigation, human resources andhealth and safety matters;

UÊ authorisation limits are set at appropriate levels
throughout the Group; compliance with these limits ismonitored by the Group Finance Director and internal
audit;

UÊ all requests to quote for substantial ﬁxed price contracts
are reviewed by the Chief Executive and/or the Group
Finance Director to assess both technical and ﬁnancial
risk and to ﬁx an appropriate balance between risk
and reward. However, no procedure can guarantee theavoidance of losses on ﬁxed price contracts of a technicalnature; andUÊ with respect to the UK pension scheme the Grouphas its own trustee representatives, involves its own
independent actuary with whom actuarial assumptions
are reviewed, agrees the investment policy with trustees,
ensures there is an independent actuarial valuation every
three years, reviews members beneﬁts and contributions
regularly and audits the annual changes in pensionablesalaries.
Susan Johnson-Brett, Company Secretary
9 June 2009UÊ the businesses prepare monthly management accounts
which compare the actual operating result with both thebudget and the prior year. The businesses also prepare
rolling reforecasts for orders, turnover, operating proﬁt
and cash. Both are reviewed by the Board monthly;

Oxford Instruments plc

33

Directors’ Remuneration Report
Remuneration Committee
Details of the composition of the Remuneration Committee areset out on page 21. The Committee deﬁnes and communicatesto the Executive Directors the Company’s policy on the
remuneration, beneﬁts and terms of employment for each
Executive Director. As part of this process, it aims to provide
a formal framework for the development of remuneration
policy for Executive Directors and for ﬁxing the remuneration
packages of individual Directors. The Board, as a whole, is
responsible for ﬁxing the remuneration of the Non-Executive
Directors, including the Chairman.

Overall the remuneration package aims to be appropriate
to attract, motivate and retain high calibre executives. The
Remuneration Committee’s policy on early termination
is to provide compensation which reﬂects the Company’scontractual obligations, whilst recognising the principle of
mitigation of losses.

No Director is involved in deciding his own remuneration.

The Non-Executive Directors do not have service contracts
but their appointments are subject to review every three
years and the rotation provisions of the Company’s Articles
of Association.

The Committee also reviews and approves new long term
incentive schemes and changes to existing schemes, together
with awards under these schemes, and general increases insalaries and bonus arrangements for staff. The remuneration
policy and practice for employees are taken into accountwhen setting remuneration for Executive Directors.
Over the past year the Committee continued to use Hewitt
New Bridge Street to provide independent external advice
on the Executive Directors’ remuneration and the Committeesought input as required from the Chief Executive.
The Chairman maintains contact with principal shareholders
regarding remuneration policy as appropriate.
Remuneration policy
The Remuneration Committee has established a policy on
the remuneration of Executive Directors and the Board has
established a policy for the remuneration of the Chairman
and the Non-Executive Directors.
Executive Directors
The Company has an incentive-driven Executive Director
remuneration policy that promotes the delivery of theGroup strategy, seeks to align the interests of Directors andshareholders and reﬂects the performance of each Director. The
Remuneration Committee considers carefully the motivational
effects of the incentive structure in order to ensure that itis effective and does not have any unintentionally negative
impact on matters such as governance and environmental
and social issues. A signiﬁcant proportion of total potential
rewards are provided through performance-based schemes.

Jonathan Flint
Kevin Boyd
Steve Parker2
Charles Holroyd
Total

Salary1
£000
286
198
*105
177

Service contracts
Each of the Executive Directors has a service contract. In linewith Company policy no Executive Director has a notice periodof more than one year.

Non-Executive Directors
The Company’s policy is to appoint Non-Executive Directors
to the Board with a breadth of international skills andexperience that is relevant to Oxford Instruments’ global
business. Appointments are made by the Board upon
the recommendations and advice from the Nomination
Committee.
Executive Directors’ remuneration
Executive Directors receive base salary, annual performance
awards, pension contributions and other beneﬁts andlong term performance awards. Base salaries, beneﬁts andperformance awards of the Executive Directors are reviewed
annually by the Remuneration Committee.
Compensation is determined with reference to an appropriatecomparator group of companies, which is reviewed annually.
Consideration is also given to the Director’s experience,
performance and responsibilities. It is anticipated that there
will be no increase in base salary for Executive Directors
during the 2009/10 ﬁnancial year.
Beneﬁts comprise provision of a car or car allowance, lifeand health insurance, participation in a bonus scheme andcontributions towards a pension.
Emoluments of the current Executive Directors showing
the breakdown between basic and performance related
remuneration are:Performance
relatedremuneration
£000
101
48
**32
44

Beneﬁts
£000
13
13
*3
11

Total
remuneration
2009
£000
400
259
140
232
1,031

Total
remuneration
2008
£000
475
301
280
243
1,299

¹ See paragraph below
2
Resigned 13 November 2008
* Using average exchange rates applying for each quarter (see note 34)** Using exchange rate applying as at 31March 2009 of 1.43 (see note 34)
UK employees are able to elect to cease making personal contributions into therelevant pension schemes. Their salaries are reduced by the amount of theirpension contributions and the Company pays the same amount directly to thepension schemes. Accordingly, the annual salaries of Jonathan Flint, KevinBoyd and Charles Holroyd were reduced to £248,000, £171,000 and £146,000
respectively.

34

For reasons of clarity, the salaries shown in the table above for these Directors
are the amount they would have been paid had they not given up these salary
entitlements. These ‘notional’ base salaries are used to calculate salary linked
remuneration such as bonus and some beneﬁts.

Oxford Instruments plc

Directors’ Remuneration Report Continued
Steve Parker resigned as a Director of the Company on
13 November 2008 and ceased to be an employee on 30
November 2008. In accordance with his contract he has been
paid six months’ salary ($145,000 (£101,399**)) ceasing at
the end of May 2009. In addition he was paid a severance
payment of $56,785 (£35,491*) in compensation for agreeing
to a US separation and release agreement and UK compromise
agreement. His bonus has been calculated according to theﬁnancial performance of the Group and prorated according
to service during the year. Medical beneﬁts continue to beprovided by the Company until the end of November 2010. To
allow the business to continue to beneﬁt from his expertisein US markets, Steve Parker continues to be retained asa consultant until December 2010, at an expected cost of$75,000 (£52,448**) per annum* Using average exchange rate applying during Q3 of 1.60 (see note 34)** Using exchange rate applying as at 31 March 2009 of 1.43 (see note 34)

Annual Performance Incentive Bonus
Bonuses are earned primarily on the achievement of ﬁnancial
targets, with further elements payable on meeting speciﬁc
objectives. Bonuses are paid after the completion of thestatutory annual audit.
The Executive Directors’ bonus scheme for the year ended 31
March 2009 set performance targets which would pay bonuses
for on-target performance at the rate of 50% of base salaryfor Jonathan Flint, and 35% of base salary for Kevin Boyd,Charles Holroyd, and Steve Parker. The bonus potential has
a maximum of 100% of salary for Jonathan Flint and 75% ofsalary for the other Executive Directors. Bonuses are earned on
full year performance. The level of award for the year ended
31 March 2009 took account of the continuing improvementin ﬁnancial performance reﬂected in achievement against
speciﬁc ﬁnancial targets in relation to orders, proﬁt and cash
generation and a measurable progress in meeting deﬁned
strategic objectives for the Group. However, in view of the
difﬁcult economic conditions and in line with managers
across the business, the Executive Directors have foregone asigniﬁcant fraction of the bonus calculated according to theﬁnancial results achieved.
For the ﬁnancial year to 31 March 2010, the structure of
Executive Directors’ annual bonuses will be similar to that for
the year to 31 March 2009.
Pension Plans
Oxford Instruments Pension Scheme
For UK based Executive Directors and employees employedprior to April 2001, a contributory pension, depending on
length of service, of up to two thirds of pensionable salaryis provided on retirement through the Oxford Instruments
deﬁned beneﬁt pension scheme.
This is a contracted-out contributory pension scheme which
provides beneﬁts based on earnings at or near retirement
and is funded through a separate trust.
Early retirement is possible on a reduced pension from age
50 with the consent of the Company. Pensions in payment
are guaranteed to increase by a level of inﬂation up to a
maximum of 3% per year on pension earned before 1 April
1997 and a maximum of 5% per year thereafter, subject toany applicable statutory requirements. In the case of death
before retirement from active service a spouse’s pension of
one half of the member’s prospective pension is payable plus
a capital sum of three times the member’s basic salary and a
refund of the member’s contributions.

Oxford Instruments plc

Defined Contribution Pension Arrangements (UK)
Following the closure of the Company’s deﬁned beneﬁt scheme
to new members in April 2001, employees and Executive
Directors appointed now are offered membership of the
Oxford Instruments Stakeholder Plan, a deﬁned contribution
scheme, or the Executive Director can elect that contributions
be made into a deﬁned contribution plan of his or her choicein accordance with contractually agreed contribution rates.
Under this arrangement only base salary is pensionable. Suchcontributions are treated as a non-salary beneﬁt as they arepaid directly to the pension plan and are not included in thecalculation of bonus entitlements and share awards.
Oxford Instruments Holdings Inc
Defined Benefit Pension Plan (USA)All employees of Oxford Instruments Superconducting
Technology and Austin Scientiﬁc engaged before 1 February
2006 were entitled to become members of the Plan. The
Plan is non-contributory on the part of the participant andrequires ﬁve 1,000 hour years of employment before theparticipant realises any vested interest in the plan. Upon
Normal Retirement Date (age 65), members of the Plan areentitled to a monthly pension beneﬁt based on an actuarial
calculation taking into account his or her years of service, age,and the salary earned over the last ﬁve years of employment.
The beneﬁt terms are complex but in summary the plan
provides accrued beneﬁt equal to 1.6% of average annual
base salary multiplied by the number of years of credited
service (not to exceed 35 years).
The Oxford Instruments Holdings Inc Savings &Investment Plan 401K (USA)This is a savings plan open to all US employees of Oxford
Instruments. Provided the employee does not exceed
the maximum dollar value for contributions that the US
government allows, the employer matches half the employee’s
contribution up to the ﬁrst 6% of base salary and, where
the employee is over the age of 50, up to an extra US$5,000
contribution. After two years service 25% of the employer’s
contributions vest and 100% vest after three years.
Executive Director pension arrangements
Under the terms of their service contracts Jonathan Flint
and Kevin Boyd can ask the Company to contribute to apension plan of their own choice. The Company contributes a
maximum of 14% of base salary if matched by a contributionof 10% by the Director. Cash bonuses are excluded fromcontribution calculations. During the year the Company
contributed £40,040 (2008: £38,062) into a personal deﬁned
contribution plan in respect of Jonathan Flint and £27,720(2008: £26,250) into the UK Oxford Instruments Stakeholder
Pension Plan in respect of Kevin Boyd.
Charles Holroyd is the only current Executive Director who
is a member of the UK deﬁned beneﬁt pension scheme.
His pensionable pay is capped at £123,600. The Company
contributes to the scheme at a rate of 12.7% of pensionablesalary and Charles Holroyd has chosen to contribute at a rate
16.3% for a 1/50th accrual rate and to enable him to takeall beneﬁts at the age of 65. The following table shows thecompulsory member’s contributions, the increase in accrued
entitlement during the year in excess of inﬂation and theaccrued entitlement at the end of the reporting period,
together with the transfer value of the accrued pensions:35

Directors’ Remuneration Report Continued

Charles Holroyd

Charles Holroyd

Age as at
31 March
2009
Years
53

Accruedyears ofserviceYears
9Member’s
contributions
during the
year
£000
19

Transfer value of accrued pension
2009
2008
£000
£000
257
230

Steve Parker, who resigned as a Director on 13 November
2008, was up until this point an active member of the Oxford
Instruments Holdings Inc Deﬁned Beneﬁt Pension Plan and
was also a contributing member of the Oxford Instruments
Holdings Inc 401k Savings Plan. The Company contributed
an estimated US$16,060 (2008: US$26,000) to the Oxford
Instruments Holdings Inc Pension Scheme in respect of Steve
Parker. The Company also contributed US$4,605 (2008:
US$10,687) to the Oxford Instruments 401K plan on his behalf
Steve Parker is fully vested in both these schemes.
Share Incentive Schemes
The Company has a number of share option schemes forincentivising Executive Directors and employees of theGroup:

UÊ the Executive Share Option Scheme (ESO);UÊ the Senior Executive Long Term Incentive Scheme (SELTIS);
UÊ Individual Options (Individual);UÊ All employee Save-As-You-Earn Scheme (SAYE); andUÊ All employee Share Incentive Plan (SIP).
The ESO scheme is the principal vehicle used to incentivise
the Executive Directors and senior management. The SELTIS
and Individual schemes are used at the discretion of theRemuneration Committee. Until 1 April 2008, the SAYE
scheme was open to all UK permanent staff employed for atleast six months on the date of invitation to join the scheme.
The SAYE scheme has been replaced by a Share Incentive
Plan (SIP) which since 1 April 2008 has been open to all UK
permanent staff employed for at least six months.
ESO schemes (1995 and 2001)
These shareholder and Inland Revenue approved schemes
grant options over new shares to be issued at the time of
exercise and also over existing shares. Options granted to anindividual in excess of £30,000 are classiﬁed as unapproved
options.
All future awards of ESO share options will be made underthe 2001 ESO scheme. The aggregate market value of shares
over which options under the 2001 ESO scheme may be
granted to an individual participant in any ﬁnancial year
may not normally exceed twice base salary. However, in
exceptional circumstances the limit is three times base salary,provided that to the extent an individual is granted options
in excess of the standard limit, there will be a corresponding
reduction in the number of shares under options granted in
the following two years. For the purpose of calculating theselimits, the Company’s share price will be averaged over thethree months before the options are granted.

36

Additional
annualpensionearnedduring theyear£000 pa3

Additional
annual pension
Earned during
The year inexcess of
inﬂation£000 pa
3

Accruedannualpensionentitlement
at year end£000 pa
22

Change in transfer value overyear less member contributions£000
8

Options are granted at the middle market price on the lastdealing day prior to grant and are exercisable after three
years but not more than ten years from the date of grant.
Performance conditions
The Remuneration Committee considers that the
combination of TSR and EPS performance conditions willencourage shareholder value creation and improved ﬁnancial
performance. In selecting appropriate targets the Committee
takes into account both the recent performance of theCompany and its projections for future growth and thesearrangements are set out below.
1995 ESOOver a period of three consecutive years the growth inearnings per share (EPS) of the Company expressed as apercentage is to exceed the growth in the Retail Price Index(RPI) expressed as a percentage plus a further 2% per year
over the same period.
2001 ESO
Prior to December 2008, the performance conditions are
based equally on the Company’s total shareholder return (TSR)
performance and on its EPS performance (adjusted to exclude
non-recurring items, amortisation of acquired intangible
assets and the effects of ﬁnancial instruments). In December
2008, options were granted with a performance condition
based solely on EPS performance. This change was made in
conjunction with a change to the performance conditions
relating to the Company’s SELTIS Scheme (see below).
When the 2001 ESO scheme was established the Remuneration
Committee set the initial conditions for the full vesting ofoptions at 30% per year growth in EPS and TSR. This wasconsidered consistent with the recovery phase of the business.
It was intended that over time the performance conditions
would revert to a lower target, more appropriate to thebusiness going forward. For 2002 and 2003 full exercise of
options requires 25% and 20% per year growth respectively
in EPS and TSR. For options granted between 2004 and 2008
15% growth in EPS and TSR is required. TSR is measured
by comparing its average net return over the three month
period preceding the beginning of each performance periodwith its average net return (calculated in the same manner)over the same period at the end of each performance period.
In December 2008, options were granted to the Executive
Directors with a single EPS performance condition. 50% of
the option will vest where the Company’s EPS grows by atleast RPI +5% per annum rising on a straight-line basis to fullvesting for EPS growth of RPI +10% per annum or better.
Options granted at the same time to other employees will
fully vest where the growth in EPS is at least RPI +5% perannum.

Oxford Instruments plc

Directors’ Remuneration Report Continued
Only 50% of the options granted in September 2001 are
exercisable, as the TSR performance test failed, none of theoptions granted in 2002 are exercisable due to failure ofboth tests, 50% of the options granted in December 2002,
July 2003 and July 2004 are exercisable as for each grant the
EPS performance test failed, 49% of options granted in JulyEPS / TSR performance
Average of 15% or more pa
Average of 7.5% - 14.99 pa
Average of 7.5% pa
Less than an average of 7.5% pa

Proportion of options exercisable against each criteria
50%
Pro-rata between 12.25% and 50%
12.25%
Nil

The performance conditions for options under the 2001 ESO
scheme are measured over a single three year period. No
extension of the performance period is permitted although
once performances conditions have been met participants
have the remainder of the ten year period of the option inwhich to exercise the option.
Retention conditions
Options granted under the scheme prior to September
2007 may be exercised according to the following schedule:
one third of the original grant being exercisable from thethird anniversary of grant; a further third on the fourthanniversary; and the ﬁnal third on the ﬁfth anniversary of the
grant. Changes approved by the shareholders at the Annual
General Meeting in 2007 mean that the options granted in
September 2007 have no retention conditions. As part of thischange, the Executive Directors have each agreed to build up
a shareholding equivalent in value to 100% of basic salary byretaining or purchasing shares equivalent in value to 50% of
gains (after deductions) from options granted in or after 2007
under the ESO or SELTIS schemes.
Share appreciation rights
At the Annual General Meeting in 2005, shareholders gave
their approval to the granting of Share Appreciation Rights(SAR) and to the satisfaction of outstanding unapproved
options with share appreciation rights. Under SAR, in effect,
an option is settled by only issuing shares to the value of thegain and these shares are issued at no consideration. Thismeans that the number of shares to which an option holder
may become entitled depends on the Company’s share price atthe time of exercise. In December 2008, the Company granted
options over 184,411 shares under the SAR arrangements.
SELTISThe SELTIS scheme is similar to the ESO schemes, with the
exception that options are exercisable at no cost to the option
holder. All shares used to satisfy SELTIS awards are currently
purchased in the market. A resolution is to be proposed at
the Annual General Meeting to allow SELTIS awards to besatisﬁed by newly issued shares.
The value of shares over which options may be granted under
the SELTIS scheme to any one participant in a ﬁnancial year
may not exceed 50% of annual remuneration (excluding
beneﬁts in kind). For the purpose of calculating this limit,
the market value is the closing middle market price of theCompany’s shares on the day before the date of grant.
SELTIS options granted since the establishment of the 2001
ESO scheme
Prior to December 2008, the performance conditions are
the same as those applying to awards under the 2001 ESO
scheme in the same ﬁnancial year as detailed above. In

Oxford Instruments plc

and December 2005 have vested with the failure of the TSR
performance test and partial vesting of the EPS performance
test. The options granted in July and September 2006 will
become exercisable proportionately by reference to the levelof both TSR and EPS target growth performance. Details are
set out in the table below.

December 2008, SELTIS options were granted with a single
TSR performance condition which compares the Company’s
TSR performance with that of a comparator group made upof the FTSE Small Cap index (excluding companies within
the Food & Drug Retailers, General Retailers, Banks, Nonlife
Insurance, Life Insurance, Real Estate, General Financial,
Equity Investment Instruments and Nonequity Investment
Instruments Sectors). 50% of the option will vest where
the Company’s TSR performance at least equals the TSR
performance of the median company in the comparatorgroup rising on a straightline basis to full vesting where theCompany’s TSR performance is equal to or greater than thatof the upper quartile company on the same basis.
Retention conditions
SELTIS options granted under the scheme prior to July 2007
are subject to a retention condition, to the effect that on
exercise the option holder must retain ownership of sharesequivalent to half of the market value of the shares (aftertax) until the sixth anniversary of the date of grant. As partof the change on retention conditions going forward, theExecutive Directors have agreed to build up a shareholding
equivalent in value to 100% of basic salary by retaining orpurchasing shares equivalent to the value of 50% of gains(after deductions) from options granted in and after 2007
under the ESO or SELTIS schemes.
Individual options
Individual options are granted at the discretion of theRemuneration Committee. There are currently no Individual
options which are outstanding.
SAYE options
The SAYE scheme is administered in accordance with Inland
Revenue guidelines. There are no performance conditions.
Share Incentive Plan (SIP)The SIP was launched on 1 April 2008 and is administered inaccordance with Inland Revenue guidelines. In accordancewith the Plan rules, employees are able to purchase shares up
to the value of £1,500 (or where lower, 10% of taxable pay)
per annum out of pre-tax pay. Shares (“Partnership Shares”)
are purchased by the Plan’s trustee on the employee’s
behalf and are held in trust. The Company also purchases
one additional share for every ﬁve Partnership Shares thatthe employee purchases to be held for the beneﬁt of theemployee (the “Matching Shares”). The risk of forfeitureattached to the Matching Shares will normally be removed
on the third anniversary of purchase subject to continued
employment and the retention of the Partnership Shares.
Both Partnership and Matching Shares can be taken out of
the trust tax free to the recipient provided they have been
held for at least ﬁve years. All shares acquired by the SIP arepurchased in the market by the trustee.

37

Directors’ Remuneration Report Continued
As at the 31 March 2009 the outstanding options for Jonathan Flint, Kevin Boyd, Charles Holroyd and Steve Parker under the
1995 and 2001 ESO, the SELTIS and SAYE schemes were as follows:

Name
Jonathan
Flint

Kevin
Boyd

CharlesHolroyd

Steve
Parker**Scheme
ESO
ESO
ESO
ESO
SELTISSELTISSELTISSELTIS
ESO
ESO
ESO
SELTISSELTISSELTIS
SAYE
SAYE
SAYE
ESO
ESO
ESO
ESO
ESO
ESO
SELTISSELTISSELTISSELTIS
ESO
ESO
ESO
ESO
ESO
ESO
SELTISSELTISSELTIS

March
2009
220,000
100,000
100,000
98,000110,000
50,00050,00024,500150,000
40,00066,66775,00012,50012,5001,032
699
0150,000
40,00025,00019,60025,00025,00075,00012,50012,5009,800
20,00012,50019,60030,00035,00030,00012,50012,5009,800

Movements during the year
GrantedExercised*Lapsed
220,000(102,000)
110,000(25,500)
150,000

75,000(649)
150,000(20,400)

75,000(10,200)(20,000)(12,500)(20,400)(10,200)

March
2008
0
100,000
100,000
200,000
0
50,00050,00050,000040,00066,6670
12,50012,500
1,032
699
649
0
40,00025,00040,00025,00025,000012,50012,50020,00040,00025,00040,00030,00035,00030,00012,50012,50020,000Exercise
price
£1.35
£2.32
£2.10
£2.19
Nil
Nil
Nil
Nil
£1.35
£2.32
£2.0375
Nil
Nil
Nil
£1.83
£2.14
£1.75
£1.35
£2.32
£2.10
£2.19
£2.18
£1.875
Nil
Nil
Nil
Nil
£2.32
£2.10
£2.19
£2.18
£1.875
£1.48
Nil
Nil
Nil

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

Date forlatestexercise
15/12/18
27/09/17
14/07/16
14/07/15
15/12/15
25/07/14
14/07/13
14/07/12
15/12/18
27/09/17
03/09/16
15/12/15
25/07/14
03/09/13
31/07/10
31/07/09
31/07/08
15/12/18
27/09/17
14/07/16
14/07/15
14/07/14
14/07/13
15/12/15
25/04/14
14/07/13
14/12/12
30/11/09
30/11/09
30/11/09
30/11/09
30/11/09
30/11/09
25/07/14
14/07/13
14/12/12* Lapsed as performance conditions were not met.
** Steve Parker resigned as a Director of the Company on 13 November 2008 and as an employee on 30 November 2008. All ESO options are now exerciseable and thelatest date for their exercise is 30 November 2009 . The date for latest exercise of his SELTIS options will remain unchanged.

During the year, no director exercised options under anyof the above schemes. As at 31 March 2009, Jonathan Flint
and Charles Holroyd have cumulatively 122,500 (2008:nil)and 80,099 (2008: 50,649) options respectively under various
schemes capable of exercise. Details of the share price during
the year are on page 17.
Outside appointments
The Board allows Executive Directors to accept appropriate
outside commercial non-executive appointments provided
the aggregate commitment is compatible with their duties
as Executive Directors. Subject to approval by the Board, theExecutive Director concerned may retain fees paid for these
services.
At 31 March 2009, the Executive Directors held no suchoutside appointments.

38

ChairmanUnder an arrangement between the Company andImperialise Limited, Nigel Keen is retained to act as Chairmanof the Company and Chairman of the Trustee to the
Oxford Instruments Pension Scheme and he must accountto Imperialise Limited for his services. His current term of
appointment commenced on 25 February 2008 and is forthree years, terminable on 6 months’ notice by the Company
In addition, Imperialise Limited is paid a sum equivalent to
the employer’s national insurance contributions on thesefees as it is responsible for the cost of national insurance
on payments to Nigel Keen, whereas national insurance
contributions in respect of the other Non-Executive Directors
are made directly to the UK Inland Revenue. The fees for
Nigel Keen’s services to the Company were reviewed witheffect from 25 February 2008.

Oxford Instruments plc

Directors’ Remuneration Report Continued
Independent Non-Executive Directors
Non-Executive Directors are appointed for an initial periodof three years with subsequent reviews. They do not havea contract of employment and their appointment can beterminated without notice. Non-Executive Directors receiveﬁxed fees agreed by the full Board after reference to similarroles in an appropriate comparator group of companies andreimbursement of expenses incurred in attending Board andother meetings. It is the Board’s policy for the Non-Executive
Directors to be paid a level of fee that reﬂects the timecommitment and responsibilities of the role and is sufﬁcient
to attract individuals with appropriate knowledge andexperience.
Remuneration of the Chairman and Non-Executive Directors:

Nigel Keen, Chairman 1
Mike Brady
Mike HughesPeter Morgan
Bernard Taylor
Total

2009
£000
113
32
32
32
27
236

2008
£000
92
30
28
30
25
205

Performance graph
The graph below shows for the ﬁve years ended 31 March2009 the Total Shareholder Return (TSR) on a holding of theCompany’s ordinary shares compared with a hypotheticalholding of shares made up of shares of the same kind andnumber as those by reference to which the FTSE Small Cap,FTSE Techmark and FTSE Electronic and Electrical Equipment
indices are calculated. These indices have been chosen as they
are considered to be the most appropriate comparator groups
for the Company. TSR has been calculated by reference to therelevant share price for each constituent company assuming
dividends are reinvested.
In accordance with the Directors’ Remuneration Report
Regulations, the four tables setting out the Executive and
Non-Executive Directors’ remuneration, pensions and shareoptions contained within the report have been audited; allother information including the statements of policy havenot been audited.
This report was adopted by the Remuneration Committee at a
meeting on 2 June 2009 and has been approved subsequently
by the Board for submission to shareholders at the Annual
General Meeting to be held on 15 September 2009.

1

Nigel Keen’s fees above include a payment of £12,800 to Imperialise Limited in
respect of employers’ national insurance contributions. He also received fees of£20,000 (2008: £1,954) for his services as Chairman to the Trustee of the Oxford
Instruments Pension Scheme together with a payment of £2,560 to Imperialise
Limited in respect of employers’ national insurance contributions.

Nigel Keen Chairman of the Remuneration Committee
9 June 2009

The Chairman and Non-Executive Directors receive no otherbeneﬁts.

220
Oxford Instruments

FTSE Techmark

FTSE E&EE

FTSE Small Cap

200
180

160

140

120

100

80
60

Source: Thomson Financial Datastream
April 1 2004

Oxford Instruments plc

March 31 200939

Directors’ Responsibilities in relation to the Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report
and the Group and Parent Company ﬁnancial statements inaccordance with applicable law and regulations.
Company law requires the Directors to prepare Group andParent Company ﬁnancial statements for each ﬁnancial
year. Under that law they are required to prepare the Groupﬁnancial statements in accordance with IFRSs as adopted by
the EU and applicable law and have elected to prepare the
Parent Company ﬁnancial statements in accordance with
UK Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice).

Under applicable law and regulations, the Directors arealso responsible for preparing a Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statementthat comply with that law and those regulations

The Group ﬁnancial statements are required by law and
IFRSs as adopted by the EU to present fairly the ﬁnancial
position and the performance of the Group; the Companies
Act 1985 provides in relation to such ﬁnancial statementsthat references in the relevant part of that Act to ﬁnancial
statements giving a true and fair view are references to theirachieving a fair presentation.

The Directors are responsible for the maintenance andintegrity of the corporate and ﬁnancial information included
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of ﬁnancial statements
may differ from legislation in other jurisdictions.

The Parent Company ﬁnancial statements are required bylaw to give a true and fair view of the state of affairs of the
Parent Company.

Responsibility statement of the Directors in respect of theannual ﬁnancial report

In preparing each of the Group and Parent Company ﬁnancial
statements, the Directors are required to:UÊ select suitable accounting policies and then apply themconsistently;

UÊ make judgments and estimates that are reasonable andprudent;

UÊ for the Group ﬁnancial statements, state whether they
have been prepared in accordance with IFRSs as adopted
by the EU;UÊ for the Parent Company ﬁnancial statements, state
whether applicable UK Accounting Standards havebeen followed, subject to any material departures
disclosed and explained in the Parent Company ﬁnancial
statements; andUÊ prepare the ﬁnancial statements on the going concern
basis unless it is inappropriate to presume that the Groupand the Parent Company will continue in business.

40

The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time
the ﬁnancial position of the Parent Company and enable
them to ensure that its ﬁnancial statements comply with theCompanies Act 1985. They have general responsibility fortaking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud andother irregularities.

The Directors conﬁrm that, to the best of their knowledge:

UÊ the ﬁnancial statements, prepared in accordance withthe applicable set of accounting standards, give a trueand fair view of the assets, liabilities, ﬁnancial positionand proﬁt or loss of the Company and the undertakings
included in the consolidation taken as a whole; andUÊ the Directors’ report includes a fair review of thedevelopment and performance of the business and theposition of the issuer and the undertakings includedin the consolidation taken as a whole, together with adescription of the principal risks and uncertainties thatthey face.

Jonathan Flint
Director
9 June 2009

Kevin Boyd
Director

Oxford Instruments plc

Report of the Independent Auditors to the members of Oxford Instruments plc
We have audited the Group and Parent Company ﬁnancial
statements (the ‘’ﬁnancial statements’’) of Oxford Instruments
plc for the year ended 31 March 2009 which comprise the
Accounting Policies, the Group Income Statement, the Groupand Parent Company Balance Sheets, the Group Statement of
Cash Flows, the Group Statement of Recognised Income andExpense and the related notes. These ﬁnancial statements
have been prepared under the accounting policies set
out therein. We have also audited the information in the
Directors’ Remuneration Report that is described as having
been audited.
This report is made solely to the Company’s members, asa body, in accordance with section 235 of the Companies
Act 1985. Our audit work has been undertaken so that wemight state to the Company’s members those matters we are
required to state to them in an auditor’s report and for noother purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than thecompany and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The Directors’ responsibilities for preparing the Annual
Report and the Group ﬁnancial statements in accordancewith applicable law and International Financial ReportingStandards (IFRSs) as adopted by the EU, and for preparing
the parent company ﬁnancial statements and the Directors’
Remuneration Report in accordance with applicable law
and UK Accounting Standards (UK Generally Accepted
Accounting Practice) are set out in the Statement of Directors’
Responsibilities on page 40.
Our responsibility is to audit the ﬁnancial statements and thepart of the Directors’ Remuneration Report to be audited inaccordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the ﬁnancial
statements give a true and fair view and whether the ﬁnancial
statements and the part of the Directors’ Remuneration Report
to be audited have been properly prepared in accordance with
the Companies Act 1985 and, as regards the Group ﬁnancial
statements, Article 4 of the IAS Regulation. We also report
to you whether in our opinion the information given in the
Directors’ Report is consistent with the ﬁnancial statements.
The information given in the Directors’ Report includes thatspeciﬁc information presented in the Chairman’s Statement,
Chief Executive Statement and Financial Review that is crossreferred from the Business Review section of the Directors’
Report.

We read the other information contained in the Annual
Report and consider whether it is consistent with the audited
ﬁnancial statements. We consider the implications for ourreport if we become aware of any apparent misstatements
or material inconsistencies with the ﬁnancial statements. Our
responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosuresin the ﬁnancial statements and the part of the Directors’
Remuneration Report to be audited. It also includes anassessment of the signiﬁcant estimates and judgments madeby the directors in the preparation of the ﬁnancial statements,and of whether the accounting policies are appropriate to theGroup’s and Company’s circumstances, consistently appliedand adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considerednecessary in order to provide us with sufﬁcient evidence togive reasonable assurance that the ﬁnancial statements andthe part of the Directors’ Remuneration Report to be audited
are free from material misstatement, whether caused byfraud or other irregularity or error. In forming our opinion
we also evaluated the overall adequacy of the presentationof information in the ﬁnancial statements and the part of the
Directors’ Remuneration Report to be audited.
OpinionIn our opinion:

UÊ the Group ﬁnancial statements give a true and fair view,in accordance with IFRSs as adopted by the EU, of thestate of the Group’s affairs as at 31 March 2009 and of its
loss for the year then ended;UÊ the Group ﬁnancial statements have been properly
prepared in accordance with the Companies Act 1985 andArticle 4 of the IAS Regulation;

UÊ the Parent Company ﬁnancial statements give a trueand fair view, in accordance with UK Generally Accepted
Accounting Practice, of the state of the Parent Company’s
affairs as at 31 March 2009;UÊ the Parent Company ﬁnancial statements and the partof the Directors’ Remuneration Report to be audited
have been properly prepared in accordance with theCompanies Act 1985; andUÊ the information given in the Directors’ Report isconsistent with the ﬁnancial statements.

In addition we report to you if, in our opinion, the Company
has not kept proper accounting records, if we have notreceived all the information and explanations we require
for our audit, or if information speciﬁed by law regarding
Directors’ remuneration and other transactions is notdisclosed.
We review whether the Corporate Governance Statement
reﬂects the Company’s compliance with the nine provisionsof the 2006 Combined Code speciﬁed for our review by
the Listing Rules of the Financial Services Authority, andwe report if it does not. We are not required to consider
whether the board’s statements on internal control cover all
risks and controls, or form an opinion on the effectiveness ofthe group’s corporate governance procedures or its risk andcontrol procedures.

Oxford Instruments plc

KPMG Audit Plc
Chartered Accountants
Registered Auditor
2 Cornwall Street
Birmingham
B3 2DL
9 June 200941

Accounting Policies
The Group ﬁnancial statements have been prepared andapproved by the Directors in accordance with International
Financial Reporting Standards as adopted by the EU(“Adopted IFRSs”). The Company has elected to prepare its
parent company ﬁnancial statements in accordance with UK
GAAP; these are presented on pages 77 to 82.
The accounting policies set out below have, unless otherwise
stated been applied consistently to all periods presented inthese Group ﬁnancial statements.
(a) New accounting standards
During the current year two interpretations issued by theInternational Financial Interpretations Council are effective
for the current period. These are: IFRIC 11 ‘IFRS 2 – Group andTreasury Share Transactions’ and IFRIC 14 ‘IAS 19 – the Limit ona Deﬁned Beneﬁt Asset, minimum funding requirements andtheir interaction’. The adoption of these interpretations has
not led to any changes in the Group’s accounting policies.
Amendments to IAS 39 Financial Instruments: Recognition andMeasurement and IFRS 7 Financial Instruments: Disclosures
issued during the year also had no effect on the Group’s
accounting policies.
(b) Basis of preparation
The ﬁnancial statements are prepared on the historical costbasis except as described below under the heading ‘Financial
Instruments”.
The preparation of ﬁnancial statements in conformity with
IFRSs requires management to make judgements, estimatesand assumptions that affect the application of policies
and reported amounts of assets and liabilities, income andexpenses. The estimates and associated assumptions are
based on historical experience and various other factors thatare believed to be reasonable under the circumstances, theresults of which form the basis of making the judgements
about carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on
an ongoing basis. The key judgements made in respect of theappropriateness of the Group accounting policies relate to:UÊ Fair value measurements on business combinations
The measurement of fair values on a businesscombination requires the recognition and measurementof the identiﬁable assets, liabilities and contingent
liabilities. The key judgements involved are theidentiﬁcation and valuation of intangible assets which
require the estimation of future cash ﬂows and theselection of a suitable discount rate.

UÊ Impairment of intangible assets (including goodwill) andtangible assets
Goodwill is held at cost and tested annually for
impairment, and amortised intangibles and tangible
assets are tested for impairment where there areindications of impairment. These impairment tests require
the Group to make an estimate of the expected cash
ﬂows and to select suitable discount rates. These require
an estimation of the value-in-use of these assets.

UÊ Measurement of defined benefit scheme liabilities
The Group recognises and measures costs relating todeﬁned beneﬁt pension schemes in accordance with IAS
19 ‘Employee Beneﬁts’. In applying IAS 19 the costs areassessed in accordance with the advice of independent
qualiﬁed actuaries. This requires the exercise of42

judgement in relation to the estimation of futurechanges in salaries and inﬂation, as well as mortality
rates, and the selection of suitable discount rates. Further
detail is provided in note 25.

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

UÊ Deferred tax assets
A deferred tax asset is recognised in the period if it isprobable that future taxable proﬁts will be available
against which the asset can be utilised. This requires theexercise of judgement in relation to the estimation of
future taxable proﬁt.
Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects onlythat period or in the period of the revision and future periods
if the revision affects both current and future periods. The
key areas where estimates have been used and assumptions
applied are in the calculation of provisions, the valuationof acquired intangible assets, the impairment testing of
goodwill and the estimation of deﬁned beneﬁt pension plan
liabilities.
During the year, the Directors reviewed the classiﬁcation of
costs relating to the running of its sales ofﬁces in Germany,
America and Japan, and given the current circumstances andoperating structure of the Group, considered that these costs
are better reﬂected as sales and marketing costs, rather thanadministrative costs. Consequently the previously publishedﬁgures for the year to 31 March 2008 have been restatedin this document. The effect has been to increase sales andmarketing costs and reduce administration and sharedservices by £2.2m for the year to 31 March 2008.
The Directors also reviewed the classiﬁcation of outward
freight costs and considered that these were better reﬂected
as sales and marketing costs, rather than cost of sales.
Consequently the previously published ﬁgures for the year
to 31 March 2008 have been restated in this document. The
effect has been to increase sales and marketing costs andreduce cost of sales by £0.5m for the year to 31 March 2008.
(c) Basis of consolidation
The Group accounts include the accounts of Oxford Instruments
plc and its subsidiary companies adjusted to eliminate intragroup balances and any unrealised gains and losses or income
and expenses arising from intra-group transactions. The
results of subsidiary companies are included from the monthof their acquisition or to the month of their disposal.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation,
are translated into sterling at exchange rates ruling at thebalance sheet date. The revenues and expenses of foreign
operations are translated into sterling at average quarterly
exchange rates. Foreign exchange differences arising on
retranslation are recognised directly in a separate translation
reserve.
(d) Foreign currency
Transactions in foreign currencies are translated at the foreignexchange rate ruling at the date of the transaction. Monetary

Oxford Instruments plc

Accounting Policies Continued
assets and liabilities denominated in foreign currencies at thebalance sheet date are translated at the foreign exchange
rate ruling at that date. Foreign exchange differences arisingon translation are recognised in the income statement. Nonmonetary assets and liabilities that are measured in terms ofhistorical cost in a foreign currency are translated using theexchange rate at the date of the transaction.

(f) Property, plant and equipment
Property, plant and equipment is stated at historic cost lessprovisions for impairment (see accounting policy l) anddepreciation which, with the exception of freehold land which
is not depreciated, is provided on a straight-line basis overeach asset’s estimated economic life. The principle estimatedeconomic lives used for this purpose are:(e) Financial instruments
Financial assets and liabilities are recognised in the Group’s
Balance Sheet when the Group becomes a party to thecontractual provisions of the instrument.
(i) The Group’s investments in equity securities are classiﬁed
as available for sale ﬁnancial assets. Subsequent to initialrecognition, they are measured at fair value and changes
therein, other than impairment losses and foreign exchange
gains and losses on available for sale monetary items,
are recognised directly in equity. When an investment
is derecognised, the cumulative gain or loss in equity istransferred to proﬁt and loss.

Freehold buildings, long leasehold landand buildings
Leasehold improvements (less than 50
years duration)
Furniture and ﬁttings
Machinery and other equipment
Computer equipment and software
Vehicles(ii) Derivative ﬁnancial instruments of the Group are used
to hedge its exposure to interest rate, foreign currency andcommodity pricing risks arising from operational, ﬁnancing
and investment activities. The Group does not hold or
issue derivative ﬁnancial instruments for trading purposes.
Derivatives comprising interest rate swaps, foreign exchange
contracts and options and metal futures contracts areclassiﬁed as ‘fair value through proﬁt and loss’ under IAS 39,
unless designated as hedges. Derivatives not designated ashedges are recognised initially at fair value. Subsequent toinitial recognition, changes in fair value of such derivatives
and gains or losses on their settlement are recognised in net
ﬁnancial income or expense.
(iii) Cash ﬂow hedges
Changes in the fair value of the derivative hedging
instruments designated as cash ﬂow hedges are recognisedin equity to the extent that the hedge is effective. To theextent that the hedge is ineffective, changes in fair value
are recognised in the income statement. If the hedging
instrument no longer meets the criteria for hedge accounting,expires or is sold, terminated or exercised, then hedge
accounting is discontinued prospectively. The cumulative gainor loss previously recognised in equity remains there until theforecast transaction occurs. When the hedge item is a nonﬁnancial asset, the amount recognised in equity is transferredto the carrying amount of the asset when it is recognised. In
other cases the amount recognised in equity is transferred tothe income statement in the same period that the hedged
item affects proﬁt or loss.
(iv) The fair value of forward exchange contracts is theirquoted market price at the balance sheet date, being thepresent value of the quoted forward price. The gain or loss on
remeasurement to fair value of forward exchange contracts is
recognised immediately in the income statement.
(v) Interest bearing borrowings are recognised initially atfair value less attributable transaction costs. Subsequent toinitial recognition, interest bearing borrowings are stated
at amortised cost with any difference between cost andredemption value being recognised in proﬁt or loss over theperiod of the borrowing on an effective interest basis.

Oxford Instruments plc

50 years
Period of lease
10 years
5 to 10 years
4 years
4 years(g) Intangible assets(i) Goodwill
All business combinations are accounted for by applying thepurchase method. Goodwill represents amounts arising on
acquisition of subsidiaries. In respect of business acquisitions
that have occurred since 31 March 2004, goodwill represents
the difference between the cost of the acquisition and the
net fair value of the identiﬁable intangible assets, othernet assets, liabilities and contingent liabilities acquired. In
respect of acquisitions prior to this date, goodwill is included
on the basis of its deemed cost, which represents the amountrecorded under previous GAAP.
Goodwill arising on acquisitions is stated at cost and allocatedto cash-generating units that are anticipated to beneﬁt fromthe combination. It is not amortised but is tested annually for
impairment (see accounting policy l).
(ii) Development costs
Research and development costs are charged to the income
statement in the year in which they are incurred unlessdevelopment expenditure meets certain strict criteria for
capitalisation. These criteria include demonstration of thetechnical feasibility of completing a new intangible asset
that will be available for sale and that the asset will generate
probable future economic beneﬁts. Where expenditure
meets the criteria, development costs are capitalised andamortised through the income statement over their useful
economic lives.
(iii) Acquired intangible assets
An intangible asset acquired with a subsidiary undertaking
is recognised as an intangible asset if it is separable from theacquired business or arises from contractual or legal rights,
is expected to generate future economic beneﬁts and its
fair value can be reliably measured. The asset is amortised
through the income statement over it useful economic life.
(iv) Amortisation
Amortisation of intangible assets is charged to the income
statement on a straight-line basis over their estimated useful
economic lives as follows:
Capitalised development costs
Technology related acquired
intangibles
Customer related acquired
intangibles

3 to 5 years
5 to 10 years
6 months to 8 years

43Accounting Policies Continued(h) Trade and other receivables
Trade and other receivables are initially recognised at fairvalue and subsequently stated at their cost less appropriate
allowances for amounts which are expected to be nonrecoverable.
(i) Inventories
Inventories are stated at the lower of cost and net realisablevalue. Cost includes materials, direct labour, an attributableproportion of production overheads based on normal
operating capacity and all other expenditure incurred inacquiring the inventories and bringing them to their existing
location and condition. Net realisable value is the estimatedselling price in the ordinary course of business, less theestimated costs of completion and selling expenses.
Provision is made for obsolete, slow moving and defective
stock where appropriate in the light of recent usage, expected
future requirements, new product introduction plans andlikely realisable values.
(j) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and calldeposits. Bank overdrafts that are repayable on demand andform an integral part of the Group’s cash management areincluded as a component of cash and cash equivalents for the
purpose of the statement of cash ﬂows.
(k) Held for sale assets
Immediately before classiﬁcation as held for sale, themeasurement of the assets is brought up-to-date in accordancewith applicable IFRSs. Then, on initial classiﬁcation as held for
sale, non-current assets are recognised at the lower of theircarrying amount and fair value less costs to sell.
Impairment losses on initial classiﬁcation as held for sale areincluded in the income statement, even when the asset has
previously been revalued. The same applies to gains andlosses on subsequent remeasurement.
(l) Impairment of non-current assets
All non-current assets are tested for impairment whenever
events or circumstances indicate that their carrying value may
be impaired. Additionally, goodwill is subject to an annual
impairment review.
An impairment loss is recognised in the income statement
to the extent that an asset’s carrying value exceeds its
recoverable amount, which represents the higher of theasset’s net realisable value and it value in use. An asset’svalue in use represents the present value of the future cash
ﬂows expected to be derived from the asset or from the
cash generating unit to which it relates. The present value
is calculated using a discount rate that reﬂects the current
market assessment of the time value of money and the risks
speciﬁc to the asset concerned.
Impairment losses recognised in previous periods for an asset
other than goodwill are reversed if there has been a change inestimates used to determine the asset’s recoverable amount,but only to the extent that the carrying amount of the asset
does not exceed its carrying amount had the impairment loss
not been recognised in previous periods. Impairment losses
in respect of goodwill are not reversed.

(i) Deﬁned contribution plans
Obligations for contributions to deﬁned contribution pension
plans are recognised as an expense in the income statement
as incurred.
(ii) Deﬁned beneﬁt plans
The Group’s net obligation in respect of deﬁned beneﬁt
pension plans is calculated separately for each plan by
estimating the amount of future beneﬁt that current andpast employees have earned in return for their service inthe current and prior periods; that beneﬁt is discounted todetermine its present value, and the fair value of any plan
assets is deducted. The calculation is performed by a qualiﬁed
actuary using the projected unit credit method.
All actuarial gains and losses in calculating the Group’s net
obligation are recognised in the statement of recognised
income and expense in the year.
The charge to the income statement reﬂects the current
service cost. The expected return on scheme assets and theinterest cost on scheme liabilities are included within ﬁnancial
income or ﬁnancial expenditure in the income statement
respectively.
(iii) Share-based payment transactions
The fair value of equity settled share option programmes ismeasured at grant date and charged to the income statement
on a straight line basis over the period during which theemployees become unconditionally entitled to the options.
The amount recognised as an expense is adjusted to reﬂect
the actual number of share options that vest except where
forfeiture is only due to market performance conditions not
being met.
(n) Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of apast event and it is probable that an outﬂow of economic
beneﬁts will be required to settle the obligation. A provision
for warranty is recognised when the underlying products
are sold. A provision for restructuring is recognised when
the Group has approved a detailed and formal restructuring
plan and the restructuring has either commenced or has beenannounced publicly. A provision for onerous contracts is
recognised when the expected beneﬁts to be derived by theGroup from a contract are lower than the unavoidable cost of
meeting its obligations under the contract.
(o) Trade and other payables
Trade and other payables are initially recognised at their fairvalue and subsequently stated at amortised cost.
(p) Revenue
Revenue is recognised in the income statement when thesigniﬁcant risks and rewards of ownership have transferredto the buyer. Revenue excludes value added tax and similar
sales based taxes, represents sales to external customers
of products and services and is stated before commissions
payable to agents. Revenue is recognised on shipment,
except for installation and service contracts. Revenue frominstallation is separately recognised on completion of theinstallation. Revenue from contracts for maintenance andsupport is recognised on a pro-rata basis over the contract
period.

(m) Employee beneﬁts
The Group operates a number of deﬁned beneﬁt and deﬁned
contribution plans which require contributions to be made to
independent trustee administered funds.

44

Oxford Instruments plc

Accounting Policies Continued(q) Income tax
Income tax on the proﬁt or loss for the year comprises
current and deferred tax. Income tax is recognised in theincome statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised inequity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted
at the balance sheet date, and any adjustment to tax payable
in respect of previous years.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the
carrying amounts of assets and liabilities for ﬁnancial reporting
purposes and the amounts used for taxation purposes. A
deferred tax asset is recognised only to the extent that it isprobable that future taxable proﬁts will be available against
which the asset can be utilised.
Additional income taxes that arise from the distribution ofdividends are recognised at the same time as the liability to
pay the related dividend.
(r) Segment reporting
A segment is a distinguishable component of the Group thatis engaged in providing products or services in a particularbusiness segment (business segment), or in providing
products or services within a particular economic environment(geographic segment), which is subject to risks and rewards
that are different from those of other segments.

The Directors anticipate that the adoption of these Standards
and Interpretations in the future periods are unlikely to havea material impact on the ﬁnancial statements of the Group
except for:(i) additional segment disclosures when IFRS 8 comes into
effect for periods commencing on or after 1 January
2009. Upon adoption of IFRS 8, the Group will be
required to disclose segment information based on theinternal reports regularly reviewed by the Group’s Chief
Executive in order to assess each segment’s performanceand to allocate resources to them. Currently the Group
presents segment information in respect of business andgeographical segments (see note 2). Effective from 1
April 2009, the Group has realigned its internal reporting
structure and future segmental reporting under IFRS 8 will
reﬂect this new structure. In future, the Group will report
three sectors: Nano Technology, Industrial Products andService as these will form the basis of internal reporting;(ii) treatment of the acquisition of subsidiaries when
IFRS 3 comes into effect for business combinations
for which the acquisition date is on or after 1
April 2010. Under the revised IFRS 3 the followingchanges are likely to be most relevant to the Group:v

v

Contingent consideration will be measured at fairvalue with subsequent changes therein recognised inincome statement.
Transaction costs, other than share and debt issue
costs will be expensed as incurred.

The Group’s primary reporting format is business segments
and its secondary format is geographical segments. Segment
results, assets and liabilities, include items directly attributable
to a segment as well as an allocation of central items. Transfer
prices between business segments are set on an arms length
basis.
(s) Adopted IFRS not yet applied
At the date of authorisation of these ﬁnancial statements,
the following standards and interpretations, which have notbeen applied in these ﬁnancial starments, were in issue but
not yet effective:
IFRS 1 (amended)/IAS 27 (amended): Cost of an investment
in a Subsidiary, Jointly Controlled Entity or Associate
IFRS 8: Operating Segments
IFRS 23: Borrowing Costs
IFRS 2: Share-Based Payment: Vesting Conditions andCancellations
IFRIC 13: Customer Loyalty Programmes
IAS 1 (revised): Presentation of Financial Statements
IFRS 3: Business Combinations
IAS 32 (amended)/IAS 1 (amended): Puttable Financial
Instruments and Obligations Arising on Liquidation

Oxford Instruments plc

45Group Income Statement year ended 31 March 2009
2009

Revenue
Cost of sales
Gross profit
Trading expenses excluding cost of sales
Trading profit
Reorganisation costs and impairment
Amortisation of acquired intangibles
Operating profit

Notes
2

3

5

Bank interest receivable
Expected return on pension scheme assets
Financial income
Interest payable on bank loans and overdrafts
Interest charge on pension scheme liabilities
Mark to market loss in respect of derivative ﬁnancial instruments
Financial expenditure

1(Loss)/profit before income tax
Income tax credit/(expense)(Loss)/profit for the year attributable to equity shareholders of theparent9£m
206.5(115.8)90.7(77.6)
13.1

2008*As restated£m
176.5(103.3)73.2(62.6)
10.6

(6.8)
(4.3)
2.0

0.7
(2.9)
8.4

0.2
9.6
9.8

0.3
9.3
9.6

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

(1.7)
(9.0)
(2.3)
(13.0)

(9.3)

5.0

2.6

(2.3)

(6.7)

2.7

pence

pence

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

10
10(13.9)(13.9)

5.6
5.5

Dividends per share
Dividends paid
Dividends proposed

11
11

8.4
8.4

8.4
8.4

1

£m
(9.3)
6.8
4.3
9.3
11.1

£m
5.0
(0.7)
2.9
2.3
9.5

pence

pence

14.8
14.8

11.7
11.7

* See Accounting Policies (b) Basis of preparation

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

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

46

10
10

Oxford Instruments plc

Group Statement of Recognised Income and Expense year ended 31 March 2009
Note
Foreign exchange translation differences
Actuarial gain in respect of post retirement beneﬁts
Net loss on effective portion of changes in fair value of cash ﬂow
hedges, net of amounts recycled
Tax on items recognised directly in equity
Net profit recognised directly in equity(Loss)/proﬁt for the year
Total recognised income for the year attributable to equity
shareholders of the parent

Oxford Instruments plc

25
19
9

2009
£m
5.6
6.4

2008
£m
3.1
7.1

(0.6)
(1.6)
9.8
(6.7)

(2.6)
7.6
2.7

3.1

10.3

47

Group Balance Sheet as at 31 March 2009
2009
£m

2008
£m

13
14
15
16

23.5
54.9
11.3
89.7

22.4
44.0
0.6
9.6
76.6

17
18

39.9
57.6
0.6
0.2
13.3
111.6

34.9
53.5
0.7
0.6
7.9
97.6

201.3

174.2

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

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

20
21

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

22
22
22
22
22

2.5
21.3
(0.3)
7.9
30.5
61.9

2.5
21.2
0.1
2.3
36.4
62.5

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

24
26
25
16

31.8
1.0
14.4
7.6
54.8

24.9
2.4
21.2
6.1
54.6

24
21
26

0.1
9.7
53.3
1.8
12.4
7.3
84.6

0.1
0.7
46.2
2.7
3.3
4.1
57.1

Total liabilities

139.4

111.7

Total liabilities and equity

201.3

174.2

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

20
27

The ﬁnancial statements were approved by the Board of Directors on 9 June 2009 and signed on its behalf by:

Jonathan Flint
Director48

Kevin Boyd
Director

Oxford Instruments plc

Group Statement of Cash Flows year ended 31 March 2009
2009
£m
(6.7)

2008
£m
2.7

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

2.3
3.4
(0.7)
2.9
4.1
1.9
16.6
0.2
-

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

(1.9)
16.2
(0.2)
3.6
(2.0)
17.6
(1.5)
(1.7)
14.4

(2.1)
14.7
(6.9)
(6.9)
2.6
3.5
(1.7)
(1.9)
(0.1)

0.2
3.1
0.3
0.2
(4.4)
(3.6)
(6.4)
(10.6)

7.7
0.3(12.7)(3.8)(6.6)(15.1)Cash flows from financing activities
Proceeds from issue of share capital
Repayment of borrowings
Increase in borrowings
Dividends paid
Net cash from financing activities

0.1
(2.6)
(4.1)
(6.6)

0.3
(1.0)
24.2
(4.1)
19.4

Net (decrease)/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 year

(2.8)
7.2
(0.8)
3.6

4.2
2.8
0.2
7.2

Oxford Instruments plc

49

Notes to the Financial Statements
1

RECONCILIATION BETWEEN PROFIT AND ADJUSTED PROFIT(Loss)/proﬁt before income tax
Reorganisation costs and impairment
Amortisation of acquired intangibles
Mark to market loss in respect of derivative ﬁnancial instruments
Adjusted proﬁt before income tax
Share of taxation
Adjusted proﬁt

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

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

Adjusted earnings per share
Basic
Diluted

pence
14.8
14.8

pence
11.7
11.7

Adjusted ﬁgures are stated before other operating income, amortisation of acquired intangibles, reorganisation costs andimpairment and unrealised changes in the fair value of ﬁnancial instruments.
Under IAS 39, all derivative ﬁnancial instruments are recognised initially at fair value. Subsequent to initial recognition, they
are also measured at fair value. In respect of instruments used to hedge foreign exchange risk and interest rate risk the Group
does not take advantage of the hedge accounting rules provided for in IAS 39 since that standard requires certain stringent
criteria to be met in order to hedge account, which, in the particular circumstances of the Group, are considered by the Board
not to bring any signiﬁcant economic beneﬁt. Accordingly, the Group accounts for these derivative ﬁnancial instruments atfair value through proﬁt or loss. Adjusted proﬁt for the year is stated before changes in the valuation of these instruments sothat the underlying performance of the Group can more clearly be seen.
See note 10 for details of the calculation of earnings per share.

2

SEGMENT INFORMATION

Information is presented in the consolidated ﬁnancial statements in respect of the Group’s two business segments being the
primary basis of the Group’s segmental reporting. The Analytical business provides measurement and fabrication instruments
for industrial and commercial customers. The Superconductivity business provides materials, tools and systems for industrial
and government customers working at the frontiers of science.
Segment results include items directly attributable to a segment as well as those which can be allocated on a reasonablebasis.

50

Oxford Instruments plc

Notes to the Financial Statements Continued
2

SEGMENT INFORMATION CONTINUED

a)

Analysis by Business
Analytical

2009
Total

Analytical

£m
206.5

£m
115.7

Superconductivity
£m
60.8

13.1
13.1

11.0

2.0

2008
Total

£m
134.7

Superconductivity£m
71.8

Trading proﬁt before costs of OII
Costs of OII
Trading profit
Reorganisation costs andimpairment
Amortisation of acquired
intangibles
Operating proﬁt
Net ﬁnancial expense
Income tax credit/(expense)(Loss)/proﬁt for the year

11.1

2.0

Segment assets
Unallocated assets
Total assets

112.8

63.3

176.1
25.2
201.3

99.7

55.7

155.4
18.8
174.2

Segment liabilities
Unallocated liabilities
Total liabilities

47.5

26.8

74.3
65.1
139.4

38.7

18.3

57.0
54.7
111.7

Depreciation charge
Amortisation charge
Capital expenditure, including
capitalised research anddevelopment

2.5
6.0

1.3
1.7

3.8
7.7

2.6
3.9

1.5
0.9

4.1
4.8

7.7

2.3

10.0

8.0

2.4

10.4

Revenue

£m
176.5
13.0
(2.4)
10.6

(6.8)

0.7

(4.3)
2.0
(11.3)
2.6
(6.7)

(2.9)
8.4
(3.4)
(2.3)
2.7

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

Year to 31 March 2009
UK

Revenue from externalcustomers
Segment assets
Unallocated assets
Total
Capital expenditure,including capitalised
research and development

Oxford Instruments plc

North
America
£m

Japan

£m

Continental
Europe£mRest of
World
£m

Total

£m

Rest of
Asia
£m

24.5

55.3

55.2

20.0

40.7

10.8

206.5

66.0

53.2

44.2

10.1

2.6

-

176.1
25.2
201.3

7.6

1.4

0.9

-

0.1

-

10.0

£m

51

Notes to the Financial Statements Continued
2

SEGMENT INFORMATION CONTINUED

Year to 31 March 2008
UK

Revenue from externalcustomers
Segment assets
Unallocated assets
Total

North
America
£m

Japan

£m

Continental
Europe
£m

20.4

44.2

58.6

7.3

Capital expenditure,including capitalised
research and development

3

Rest of
World
£m

Total

£m

Rest of
Asia
£m

54.2

20.1

32.4

5.2

176.5

51.2

36.4

7.8

1.4

-

155.4
18.8
174.2

1.1

1.9

-

0.1

-

10.4

£m

TRADING EXPENSES EXCLUDING COST OF SALES
2009

2008
As restated
£m
32.2
18.8
11.5
0.1
62.6

£m
36.4
19.6
13.3
8.3
77.6

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

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

4

£’000
104

£’000
96

196
16
27
343

179
18
293

RESEARCH AND DEVELOPMENT

The total research and development spend by the Group is as follows:
Analytical

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

52

2009
Total

Analytical£m£mSuperconductivity
£m

2008
Total

£m

Superconductivity
£m

11.7
(5.1)

4.6
(1.3)

16.3
(6.4)

10.7
(5.5)

5.5
(1.1)

16.2
(6.6)

3.2

0.2

3.4

1.8

0.1

1.9

9.8

3.5

13.3

7.0

4.5

11.5

£m

Oxford Instruments plc

Notes to the Financial Statements Continued
5

REORGANISATION COSTS AND IMPAIRMENT

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

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

2008
£m
0.7
0.7
0.7

The proﬁt on disposal of held for sale assets in the prior year arose on the disposal of previously held for sale freeholdproperties in Abingdon and Eynsham, UK.
The Group disposed of its 22% holding in Oxford Diffraction Ltd on 4 April 2008. Consideration after professional costs was£3.7m of which £0.6m is held as a receivable as at 31 March 2009. The carrying value at the time of disposal was £0.3m resulting
in a proﬁt of £3.4m.
On 22 September 2008 the Group disposed of the Molecular Beam Epitaxy (MBE) product line to Riber SA for a cash considerationof £0.3m. The carrying value of the MBE assets at that time was £1.2m which comprised goodwill of £0.6m and inventories of£0.6m; after accounting for £0.1m of additional costs, the resulting loss on disposal was £1.0m.
Restructuring costs comprise rationalisation of activities at sites in Oxfordshire and High Wycombe UK, Chicago US, Espoo
Finland, Uedem and Ismaning Germany and Hobro Denmark. Costs comprise redundancy and related charges of £5.5m,
inventory impairments of £1.8m, capitalised research and development impairments of £1.0m and ﬁxed asset impairments of£0.4m.
During the period the Group recognised an impairment charge of £0.5m against the cost of its investment in and loans to
ARKeX Ltd.

6PERSONNEL COSTS

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

2009
£m
55.7
5.4
2.9
1.8
0.3
66.1

2008
£m
45.5
4.2
2.9
1.5
0.2
54.3

Directors’ emoluments are disclosed in the Directors’ Remuneration Report on pages 34 to 39 of this Annual Report.

7

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

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

Oxford Instruments plc

2009
Number
676
377
252
226
1,531

2008
Number
677
362
242
220
1,501

53

Notes to the Financial Statements Continued
8

SHARE OPTION SCHEMESThe Group operates four share option schemes.
All employee Save As You Earn Scheme
Options awarded under the Save As You Earn scheme have a vesting period of either 3 or 5 years. The exercise prices are
determined according to the mid-market closing share price on the day before the date of grant. Options must be exercised
within 6 months of vesting. There are no performance conditions associated with this scheme. The ﬁnal grant under thisscheme was made in December 2006 and at the current time the Directors do not intend to grant any further options under
this scheme.
Executive Share Option Scheme (ESO)
Options awarded under the Executive Share Option scheme are made annually to certain senior executives. The exercise prices
are determined according to the mid-market closing share price on the day before the date of grant. Options have a life of
10 years and a vesting period of 3 years.
Senior Executive Long Term Incentive Scheme (SELTIS)
Options awarded under the Senior Executive Long Term Incentive scheme are made annually to certain senior executives. The
exercise prices are nil. Options have a life of 7 years and a vesting period of 3 years.
Both the Executive Share Option scheme and Senior Executive Long Term Incentive Scheme are subject to performance
conditions which can be found in the Directors’ Remuneration Report on pages 34 to 39.
All employee Share Incentive Plan (SIP)All UK employees are eligible to participate in the Group’s HM Revenue and Customs approved SIP. Participating employees
make a cash contribution to the plan each month. The Group contributes a further amount equal to 20% of the employee’s
contribution. Independent trustees then purchase shares in the market on behalf of the employees. The matching shares veston the completion by the participating employee of a further three years service and can be withdrawn from the plan tax-free
after 5 years service.
Administrative expenses include a charge of £0.3m (2008: £0.2m) in respect of the cost of providing share options. The cost is
calculated by estimating the fair value of the option at grant date and spreading that amount over the vesting period.
Fair values are determined using an internal calculation based on Monte-Carlo stochastic and modiﬁed Black-Scholes models.
Expected volatility has been based on historical volatility over a period of time of the same length as the expected option lifeand ending on the grant date. The ESO options issued before 2009 and all SELTIS options use Total Shareholder Return (TSR)
as a performance condition. As TSR is a market based performance condition, the accounting treatment differs from that forshares subject to internal performance conditions. This means that the TSR performance conditions have been incorporated
into the calculation of the fair value as a discount in calculating the fair value.
For options granted in 2008 and 2009, the fair value per option granted and the assumptions used in the calculation are as
follows:

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

54

Senior Executive Long Term
Incentive Scheme
2009
2008
48.1p
£1.86
£1.33
£2.71
£nil
£nil
36.6%
22.8%

Executive Share Option Scheme
2009
23.8p
£1.33
£1.35
34.4%

2008
38.0-51.3p£1.86-£2.30£1.92½-£2.32
29.8%-30.2%

3 years
6.3%
2.3%

3 years
3.1%
5.5%

6 years
6.3%
3.0%

6 years
4.5%-3.7%
5.5%-5.8%

66.3%

48.8%

n/a

24.9%-33.7%

Oxford Instruments plc

Notes to the Financial Statements Continued
The options existing at the year end were as follows:

Options subsisting at the year end on unissued
ordinary shares
Executive Share Option Schemes
July 2000
December 2002
July 2003
July 2004
July 2005
December 2005
July 2006
September 2006
September 2007
December 2007
December 2008
Save As You Earn
December 2002
December 2003
December 2004
December 2004
December 2005
December 2005
December 2006
December 2006
Total options subsisting on unissued ordinary
sharesPercentage of issued share capital
Options subsisting at the year end on existing
ordinary shares held in trust
Senior Executive Long Term Incentive Scheme
July 2005
December 2005
July 2006
September 2006
July 2007
December 2008
Executive Share Option Scheme
December 1998
December 1999
Save As You Earn
December 2003
December 2004
Total options subsisting on existing ordinary
shares held in trust

Oxford Instruments plc

2009
Numberof shares

Exercise
price

Periodwhen
exercisable

2008
Numberof shares

2,625
30,000141,250
146,500
234,4371,470
382,450
66,667459,500
2,000
878,000£1.83£1.87½£1.875£2.18£2.42½£2.425£2.03¾£2.038£1.92½£1.925£1.35

01/04/09 – 21/12/10
01/04/09 – 13/12/12
01/04/09 – 15/07/13
01/04/09 – 15/07/14
01/04/09 – 15/07/15
01/04/09 – 15/12/15
01/07/09 – 15/07/16
01/09/09 – 04/09/16
01/09/10 – 28/09/17
01/12/10 – 18/12/17
01/12/11 – 16/12/18

14,62530,000153,000
160,793493,975
6,000
421,500
66,667507,000
2,000-

39,512
86,11240,79275,21776,780131,739

£1.27
£1.64
£1.75
£1.65
£2.14
£2.02
£1.83
£1.73

01/02/08 – 31/07/08
01/04/09 – 31/07/09
01/02/08 – 31/07/08
01/02/10 – 31/07/10
01/04/09 – 31/07/09
01/02/11 – 31/07/11
01/02/10 – 31/07/10
01/02/12 – 31/07/12

9,512
42,9892,293
93,71843,937
83,822
84,623
142,716

2,795,051
5.7%

2,359,170
4.8%

24,50019,60075,00012,50087,500260,000

Nil
Nil
Nil
Nil
Nil
Nil

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

50,00040,00075,00012,50087,500
-

5,500

£1.96
£1.94501/04/09 – 23/12/08
01/04/09 – 23/12/09

43,3505,500

34,469
-

£1.64
£1.75

01/04/09 – 31/07/09
01/02/08 – 31/07/08

42,582
26,307519,069

382,73955

Notes to the Financial Statements Continued
8

SHARE OPTION SCHEMES CONTINUEDThe number and weighted average exercise prices of those options are as follows:
Weighted
average
exercise price
2009
£1.87
£1.04
£1.91
£1.76
£1.93

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

Weighted
average
exercise price
2008
£1.93
£1.98
£2.74
£1.78
£1.52

Numberofoptions
2008
2,826,523
604,000(202,582)(189,824)(296,208)

Outstanding at the year end£1.58

3,314,120£1.87

2,741,909

Exercisable at the year end£1.54

2,829,499£1.97

406,768

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

9

INCOME TAX EXPENSE

Recognised in the income statement
2009
£m

2008
£m

1.0
(0.3)
0.7

2.9
0.2
3.1

(4.4)
0.8
0.3
(3.3)

(0.8)
(0.8)

(2.6)

2.3

(Loss)/proﬁt before income tax

(9.3)

5.0

Income tax using the UK corporation tax rate of 28% (2008: 30%)
Effect of:Tax rates in foreign jurisdictions
Non-tax deductible expenses
Proﬁt on disposal of held for sale assets
Tax incentives not recognised in the income statement
Temporary differences not recognised for deferred tax
Effect of current tax losses not utilised
Effect of previous tax losses now utilised
Write off of deferred tax previously recognised
Under provided in prior years
Total tax (income)/expense

(2.6)

1.5

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

0.2
0.2
(0.2)
(0.1)
0.2
0.7
(0.4)
0.2
2.3

(1.8)
0.2
(1.6)

0.6
(3.2)
(2.6)

Current tax expense
Current year
Adjustment in respect of prior years

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

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

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

On 1 April 2008 the current tax rate in the UK changed from 30% to 28%.

56

Oxford Instruments plc

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

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

2009
Sharesmillion
49.4
(0.6)

2008
Sharesmillion
49.3
(0.6)

48.8

48.7

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

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

2009
Sharesmillion2008
Sharesmillion

48.8
0.2

48.7
0.3

49.0

49.0

In the current year in respect of unadjusted earnings per share the effect of shares under option was antidilutive and so has
been excluded from the calculation.

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

Previous year interim dividend
Previous year ﬁnal dividend

2009
pence
2.4
6.0
8.4

2008
pence
2.4
6.0
8.4

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

Interim dividend
Final dividend

2009
pence
2.4
6.0
8.4

2008
pence
2.4
6.0
8.4

The ﬁnal proposed dividend of 6.0 pence per share (2008: 6.0 pence) will not be provided for until authorised by shareholders
at the forthcoming Annual General Meeting.

12 ACQUISITIONSTechnologies and Devices International Inc
On 9 April 2008 the Group acquired 100% of the voting rights in Technologies and Devices International Inc based in Silver
Spring, Maryland, USA for a net cash consideration of £1.2m. In addition, deferred consideration of £0.5m was paid on 1
October 2008. Further contingent consideration of up to £3.5m ($5.0m) is payable based on post acquisition revenue growth.
The Group’s best estimate of this contingent consideration at the current time is £0.6m. The company is a manufacturer anddeveloper of Hydride Vapour Phase Epitaxy templates.
In the period subsequent to acquisition the company contributed revenue of £1.0m and a loss before tax of £1.5m (including
amortisation of acquired intangibles of £0.8m) to the Group. As the acquisition occurred close to the start of the year it isestimated that these amounts approximate to those which would be reported had the acquisition taken place on the ﬁrst dayof the year.

Oxford Instruments plc

57

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

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

Fair value
adjustments
£m
3.4
0.1
(1.2)
2.3

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

* Includes costs associated with the acquisition of £0.1m.
The book value of the assets acquired is based on the management accounts at the date of acquisition. The fair value adjustment
relates to the recognition of technology related intangible assets and associated deferred tax.
Oxford Instruments Nordiska AB
On 28 May 2008 the Group acquired 100% of the voting rights in Oxford Instruments Nordiska AB from Link Nordiska AB basedin Lidingo, Sweden for a net cash consideration of £0.6m. Further contingent consideration of up to £0.6m is payable basedon post acquisition revenue growth. The Group’s best estimate of this contingent consideration at the current time is £0.4m.
The company is a distributor of Oxford Instruments NanoAnalysis equipment in Scandinavia.
In the period subsequent to acquisition the company contributed revenue of £1.5m and no proﬁt or loss before tax to theGroup. Amortisation of acquired intangibles of £0.1m was charged in arriving at this ﬁgure. Had the acquisition taken placeon the ﬁrst day of the ﬁnancial year, additional revenue of £0.3m would have been earned by the Group. The result before tax
would have been unchanged.
The following table gives an analysis of the assets acquired and the goodwill arising:

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

Book value
£m
0.3
0.4
(0.5)
0.2

Fair value
adjustments
£m
0.9
(0.3)
0.6

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

The book value of the assets is based on the ﬁnancial accounting records at the date of acquisition. The fair value adjustments
relate to the recognition of customer related intangible assets and associated deferred tax. The goodwill comprises the value
attributable to the employee workforce as well as expected revenue and cost synergies that will arise following the integrationof the business into the Group.
VeriCold Technologies GmbH
During the year the contingent consideration arising on the acquisition of VeriCold Technologies GmbH was ﬁnalised. As aresult goodwill has increased by £1.8m.

58

Oxford Instruments plc

Notes to the Financial Statements Continued
13 PROPERTY, PLANT AND EQUIPMENT
Land andbuildings£mPlant andequipment£mFixtures andﬁttings
£m

Total
£m

Cost
Balance at 1 April 2007
Acquisitions – business combinations
Acquisitions - other
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2008

13.9
0.8
0.2
(0.1)
0.2
15.0

31.3
0.1
3.6
(1.2)
0.2
34.0

7.9
0.1
(0.1)
7.9

53.1
1.0
3.8
(1.4)
0.4
56.9

Balance at 1 April 2008
Acquisitions
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2009

15.0
0.1
1.2
16.3

34.0
3.4
5.1
42.5

7.9
0.1
(0.7)
0.2
7.5

56.9
3.6
(0.7)
6.5
66.3

Depreciation and impairment losses
Balance at 1 April 2007
Depreciation charge for the year
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2008

2.9
0.3
(0.1)
3.1

22.8
3.6
(0.9)
(0.2)
25.3

5.9
0.2
6.1

31.6
4.1
(1.0)
(0.2)
34.5

Balance at 1 April 2008
Depreciation charge for the year
Impairment charge
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2009

3.1
0.3
0.6
4.0

25.3
3.2
0.4
3.8
32.7

6.1
0.3
(0.5)
0.2
6.1

34.5
3.8
0.4
(0.5)
4.6
42.8

Carrying amounts
At 1 April 2007

11.0

8.5

2.0

21.5

At 31 March 2008 and 1 April 2008

11.9

8.7

1.8

22.4

At 31 March 2009

12.3

9.8

1.4

23.5

Oxford Instruments plc

59

Notes to the Financial Statements Continued
14 INTANGIBLE ASSETS

Goodwill£m

Customer
relatedacquiredintangibles£mTechnology
relatedacquiredintangibles£m

Development
costs
£m

Total
£m

Cost
Balance at 1 April 2007
Acquisitions - internally developed
Acquisitions – business combinations
Effect of movements in foreign exchange
Balance at 31 March 2008

9.3
1.4
0.8
11.5

0.9
1.7
0.5
3.1

1.1
17.0
2.9
21.0

13.2
6.6
0.4
20.2

24.5
6.6
20.1
4.6
55.8

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

11.5
2.1
(0.6)
2.2
15.2

3.1
0.9
4.0

21.0
3.6
5.0
29.6

20.2
6.4
(1.4)
1.9
27.1

55.8
6.4
6.6
(2.0)
9.1
75.9

Amortisation and impairment losses
Balance at 1 April 2007
Amortisation charge for the year
Effect of movements in foreign exchange
Balance at 31 March 2008

1.1
1.1

0.9
1.2
0.3
2.4

0.6
1.7
0.2
2.5

3.8
1.9
0.1
5.8

6.4
4.8
0.6
11.8

Balance at 1 April 2008
Amortisation charge for the year
Impairment charge
Disposals
Effect of movements in foreign exchange
Balance at 31 March 2009

1.1
0.2
1.3

2.4
0.1
2.5

2.5
4.2
1.1
7.8

5.8
3.4
1.0
(1.3)
0.5
9.4

11.8
7.7
1.0
(1.3)
1.8
21.0

Carrying amounts
At 1 April 2007

8.2

-

0.5

9.4

18.1

At 31 March 2008 and 1 April 2008

10.4

0.7

18.5

14.4

44.0

At 31 March 2009

13.9

1.5

21.8

17.7

54.9

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

Analytical
Superconductivity

2009
£m
7.2
6.7
13.9

2008
£m
6.4
4.0
10.4

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be
impaired.
The impairment test operates by determining recoverable amounts of the relevant cash generating units, which are calculated
as the higher of the fair value less costs to sell or their value in use. The recoverable amount of the Group’s goodwill is basedon value in use calculations. Board approved three year cash ﬂow forecasts, prepared by the management of each CGU, areused as a basis for the value in-use calculations together with 5% growth for the subsequent ﬁve years.

60

Oxford Instruments plc

Notes to the Financial Statements Continued
Key assumptions
The key assumptions are those regarding discount rates, growth rates, expected selling prices and direct costs during theperiod.
The growth rates are based on industry growth factors. Changes in selling prices and direct costs are based on past practices
and expectations of future changes in the market.
Management have estimated the discount rate by reference to the Group’s cost of capital as adjusted for appropriate risk
factors reﬂecting current economic circumstances and the risk proﬁle of CGUs. A post tax weighted average cost of capital of
6% (2008: 8%) has been used for impairment testing (pre-tax 8% (2008: 10%)).
Sensitivity analysis
The Group’s estimate of impairments are most sensitive to increases in the discount rate and forecast cash ﬂows. Sensitivity
analysis has been carried out by reference to both of these assumptions which demonstrate that an impairment would only berequired where there was an increase in the discount rate to 19% or a 35% reduction in forecast cash ﬂows.
It is not considered possible, other than as disclosed above that any reasonable change to the key assumptions would generatea different impairment test outcome to the one included in these Financial Statements.

15 AVAILABLE FOR SALE EQUITY SECURITIES

Available for sale equity securities

2009
£m
-

2008
£m
0.6

Percentage ofcompany
owned
9.3%

Carrying
value
£m
-

Available for sale equity securities at 31 March 2009 comprise:
Security

Principal activity

ARKeX Limited

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

The Group considers that ARKeX Limited is not an associate because the Group is unable to exert signiﬁcant inﬂuence over its
ﬁnancial and operating policies due to the dominant inﬂuence exerted by other investors.
ARKeX Limited is an unlisted entity which is engaged in the development of new high technology products. Due to the inherent
uncertainties this creates, the Group considers that it is not possible to reliably estimate the fair value of this investment.
During the year the Group recognised an impairment charge of £0.5m against the cost of its investment (£0.3m) in and loans(£0.2m) to ARKeX Limited.
Of the available for sale equity securities held at 31 March 2008, the Group’s holding in Oxford Diffraction Limited amounting
to £0.3m was sold during the year (see note 5 for details).

Oxford Instruments plc

61

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

Balance 1 April 2007
Recognised in income
Recognised in equity
Acquisitions
Foreign exchange
Balance 31 March 2008
Recognised in income
Recognised in equity
Acquisitions
Foreign exchange
Balance 31 March 2009

Property,plant andequipment
2.4
0.8
3.2
0.1
0.2
3.5

Inventory

Employee
beneﬁts

Intangible
assetsTax losses

Other

Total

1.2
0.1
0.1
1.4
(0.3)
0.1
1.2

9.7
0.4
(3.2)
6.9
0.5
(1.8)
(1.0)
4.6

(2.5)
(0.6)
(5.7)
(0.5)
(9.3)
(1.8)
(1.5)
0.3
(12.3)

0.2
(0.1)
0.1
1.9
0.1
2.1

0.6
0.2
0.4
1.2
2.9
0.2
0.3
4.6

11.6
0.8
(3.2)
(5.2)
(0.5)
3.5
3.3
(1.6)
(1.5)
3.7

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

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

2009
£m
16.0
(4.7)
11.3

Assets
2008
£m
13.4
(3.8)
9.6

2009
£m
(12.3)
4.7(7.6)

Liabilities
2008
£m
(9.9)
3.8
(6.1)

2009
£m
3.7
3.7

Net
2008
£m
3.5
3.5

Deferred tax assets totalling £2.1m (2008: £ 0.1m) have been recognised relating to territories where tax losses have been
incurred in the year. It is anticipated that future proﬁtability arising from restructuring and other actions will result in theirrealisation.
Deferred tax assets have not been recognised in respect of the following items:

Deductible temporary differences
Tax losses

2009
£m
2.7
11.6
14.3

2008
£m
2.8
9.2
12.0

The losses do not expire under current tax legislation. The deductible temporary differences do not expire under current tax
legislation. Deferred tax assets have not been recognised in respect of these items as it is not probable that future taxable
proﬁts will be available in the subsidiaries concerned against which the Group can utilise the beneﬁts there from.
No deferred tax liability has been recognised in respect of £52.7m (2008: £56.4m) of undistributed earnings of overseas
subsidiaries as the Group is able to control the timing of remittances so that any tax is not expected to arise in the foreseeable
future.

17 INVENTORIES

Raw materials and consumables
Work in progress
Finished goods

2009
£m
11.9
13.4
14.6
39.9

2008
£m
10.9
11.0
13.0
34.9

The amount of inventory recognised as an expense comprises cost of sales and £1.8m (2008: £nil) included within reorganisation
costs.

62

Oxford Instruments plc

Notes to the Financial Statements Continued
18 TRADE AND OTHER RECEIVABLES

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

2009
£m
50.6
(0.5)
50.1
2.2
5.3
57.6

2008
£m
48.2
(0.6)
47.6
2.3
3.6
53.5

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

2009
£m
17.6
11.3
13.1
8.3
0.3
50.6

2008
£m
14.2
12.0
15.3
6.6
0.1
48.2

2009
£m
33.1
7.9
3.5
6.1
50.6

2008
£m
29.4
9.8
4.4
4.6
48.2

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

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

Balance at start of year
(Decrease)/increase in allowance
Balance at end of year

2009
£m
0.6
(0.1)
0.5

2008
£m
0.4
0.2
0.6

19 FINANCIAL RISK MANAGEMENTThe Group’s multinational operations and debt ﬁnancing expose it to a variety of ﬁnancial risks. In the course of its business,
the Group is exposed to foreign currency risk, interest rate risk, liquidity risk, commodity risk and credit risk. Financial risk
management is an integral part of the way the Group is managed. Financial risk management policies are set by the Boardof Directors. These policies are implemented by a central treasury department that has formal procedures to manage foreignexchange risk, interest rate risk, and liquidity risk, including, where appropriate, the use of derivative ﬁnancial instruments.
Commodity risk is managed locally by the operating businesses. The Group has clearly deﬁned authority and approval limits.
In accordance with its treasury policy, the Group does not hold or use derivative ﬁnancial instruments for trading or speculative
purposes. Such instruments are only used to manage the risks arising from operating or ﬁnancial assets or liabilities or highly
probable future transactions.
The Group uses derivative ﬁnancial instruments to hedge its exposure to ﬂuctuations in foreign exchange rates, interest rates
and commodity prices.

Oxford Instruments plc

63Notes to the Financial Statements Continued
19 FINANCIAL RISK MANAGEMENT CONTINUEDThe Group has adopted hedge accounting for a limited number of related commodity contracts as outlined below. However,in common with a number of other companies, the Group has decided that the additional costs of meeting the extensive
documentation requirements of IAS 39 to apply hedge accounting to derivative ﬁnancial instruments used for hedging exposure
to foreign currency and interest rate volatility cannot be justiﬁed. Accordingly the Group does not use hedge accounting forsuch derivatives.
Foreign Currency Risk
Foreign currency risk arises both where sale or purchase transactions are undertaken in currencies other than the respectivefunctional currencies of Group companies (transactional exposures) and where the results of overseas companies areconsolidated into the Group’s reporting currency of sterling (translational exposures). The Group has operations around theworld which record their results in a variety of different local functional currencies. In countries where the Group does nothave operations, it invariably has some customers or suppliers that transact in a foreign currency. The Group is therefore
exposed to the changes in foreign currency exchange rates between a number of different currencies but the Group’s primary
exposures relate to the US dollar, the Euro, and the Japanese Yen. To reduce uncertainty the Group maintains a rolling hedge
equivalent to 80% of the exposure expected to arise over the next 12 months. The hedge comprises a mixture of ﬁxed forward
contracts and option based products. The remaining 20% is sold on the spot market as it arises. The fair value of outstanding
currency contracts recognised as a liability as at 31 March 2009 amount to £11.4m (2008: £3.3m) and those recognised as an
asset amount to £0.2m (2008: £0.6m).
Changes in the fair value of derivative ﬁnancial instruments are recognised in the income statement immediately. However,in order to facilitate a more meaningful comparison of the Group’s performance year on year such changes are treated as an
adjusting item in the calculation of adjusted earnings (see note 1).
The Group’s translational exposures to foreign currency risks can relate both to the income statement and net assets ofoverseas subsidiaries. The Group’s policy is not to hedge the translational exposure that arises on consolidation of the income
statements of overseas subsidiaries.
Interest Rate Risk
Interest rate risk comprises both the interest rate price risk that results from borrowing at ﬁxed rates of interest and also theinterest cash ﬂow risk that results from borrowing at variable rates. At this time, the majority of the Group’s borrowings
attract ﬂoating rates of interest and therefore the Group’s principal interest rate risk is a cash ﬂow risk. During the year theGroup entered into an interest rate swap in order to manage its exposure to interest rate movements. Under the terms of theswap, the Group pays ﬁxed interest of 3.5% on the notional amount of £14.8m and receives one month Sterling LIBOR.
The fair value of swaps entered into as at 31 March 2009 is estimated as a liability of £0.9m. These amounts are based onmarket estimates of equivalent instruments at the balance sheet date. These interest rate swaps are not designated as cash
ﬂow hedges and they are accounted for at fair value through proﬁt or loss. An amount of £0.9m has been charged to theincome statement in the period.
Liquidity Risk
Liquidity risk represents the risk that the Group will not be able to meet its ﬁnancial obligations as they fall due. The Group’s
approach to managing this risk is to ensure, as far as possible, that it will always have sufﬁcient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation. The Group manages this risk by maintaining adequate committed lines of funding from high quality lenders. In
January and February 2009, the Group converted its borrowings to sterling in order to protect against the impact that further
weakening of sterling might have on its available funding. As at 31 March 2009, all borrowings made under the revolving
credit facility were denominated in sterling. The facilities committed to the Group as at 31 March 2009 are set out in note 24.
Credit Risk
Credit risk arises because a counterparty may fail to perform its obligations. The Group is exposed to credit risk on ﬁnancial
assets such as cash balances, derivative ﬁnancial instruments, trade and other receivables. The Group’s credit risk is primarily
attributable to its trade receivables. The amounts recognised in the balance sheet are net of appropriate allowances for
doubtful receivables, estimated by the Group’s management based on prior experience and their assessment of the current
economic environment. Trade receivables are subject to credit limits, and control and approval procedures in the operatingcompanies.
Due to its large geographic base and number of customers, the Group is not exposed to material concentrations of credit
risk on its trade receivables. Credit risk associated with cash balances and derivative ﬁnancial instruments is managed bytransacting with ﬁnancial institutions with high quality credit ratings. Accordingly the Group’s associated credit risk is limited.
The Group has no signiﬁcant concentration of credit risk. The Group’s maximum exposure to credit risk is represented by the
carrying amount of each ﬁnancial asset, including derivative ﬁnancial instruments, in the Group balance sheet.

64

Oxford Instruments plc

Notes to the Financial Statements Continued
Exposure to credit risk
The carrying amount of ﬁnancial assets represent the maximum credit exposure. The maximum exposure to credit risk at 31
March 2009 was £68.9m (2008: £60.3m).

Available for sale equity securities
Trade receivables
Other receivables
Cash and cash equivalents
Forward exchange contracts

2009
£m
50.1
5.3
13.3
0.2
68.9

2008
£m
0.6
47.6
3.6
7.9
0.6
60.3

The maximum exposure to credit risk for trade receivables is discussed in note 18.
Other receivables include £2.4m (2008: £1.9m) in respect of VAT and similar taxes which are not past due.
Commodity risk
The Group is exposed to changes in commodity prices, particularly in respect of copper used as a major component in theGroup’s US operations. It manages this exposure using derivative commodity hedging instruments.
At 31 March 2009, the Group had outstanding commodity hedge contracts with a fair value of £0.7m ($1.1m) that were
designated and effective as cash ﬂow hedges of committed and highly probable forecast transactions. Fair value movementsof these contracts have been deferred in equity until the hedged transaction takes place. These contracts all mature within
one year of the balance sheet date.
A £0.7m loss (2008: £nil) has been deferred in equity as at 31 March 2009 in respect of these contracts. A loss of £0.8m (2008:£nil) has been recycled to current assets (inventory) in respect of contracts designated as cash ﬂow hedges that have matured
during the year to 31 March 2009.
At 31 March 2009 the Group had provided a margin call to the provider of the hedge contracts amounting to £0.6m.
Capital Management
Ordinary shares are classiﬁed as equity. Incremental costs directly attributable to the issue of ordinary shares and share options
are recognised as a deduction from equity, net of any tax effects. The Board’s policy is to maintain a strong capital base so as
to maintain investor, creditor and market conﬁdence and to sustain future development of the business. The Board of Directors
monitors both the demographic spread of shareholders and the level of dividends to ordinary shareholders.
The Board encourages employees to hold shares in the Company. As well as various share option plans (full details of which are
given in note 8), from April 2008 all UK employees were offered the opportunity to take part in a Share Incentive Plan (SIP).
Under this plan, employees are able to invest up to £1,500 each tax year in shares in the Company. The Company awards one
additional free share (a matching share) for every ﬁve shares bought by each employee. It is envisaged that no further options
will be offered under the Save as You Earn (SAYE) option scheme.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings
and the advantages and security afforded by a sound capital position. Group maintains the right to purchase its own sharesin the market; the timing of these purchases would depend on market prices. Buy and sell decisions are made on a speciﬁctransaction basis by the Board. There were no changes to the Group’s approach to capital management during the year.
Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements. To assist the Board incapital management earnings per share is regularly reported to them.

Oxford Instruments plc

65Notes to the Financial Statements Continued
20 FINANCIAL INSTRUMENTS
Fair values of ﬁnancial assets and liabilities
The fair values of ﬁnancial assets and liabilities together with the carrying amounts shown in the balance sheet are as
follows:

Available for sale equity securities
Trade receivables
Other receivables
Cash and cash equivalents
Derivative ﬁnancial instruments:
AssetsForeign currency contracts
Liabilities
Foreign currency contracts
Interest rate swaps
Copper hedging contracts (net of cash
guarantee)

Secured bank borrowing (note 24)
Trade and other payables
Bank overdraft

Carrying
amount
2009
£m
50.1
5.3
13.3

Fair
value
2009
£m
50.1
5.3
13.3

Carrying
amount
2008
£m
0.6
47.6
3.6
7.9

Fair
value
2008
£m
0.6
47.6
3.6
7.9

0.2

0.2

0.6

0.6

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

(3.3)
-

(3.3)
-

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

(3.3)

(3.3)

(31.9)(54.3)(9.7)(29.1)(54.3)(9.7)(25.0)(48.6)(0.7)(25.0)(48.6)(0.7)

The following summarises the major methods and assumptions used in estimating the fair values of ﬁnancial instruments
reﬂected in the above table.
Available for sale equity securities
See note 15.
Derivative ﬁnancial instruments
Derivative ﬁnancial instruments are either marked to market using listed market prices or by discounting the contractual
forward price and deducting the current spot rate.
Fixed and ﬂoating rate borrowings
The fair value of ﬁxed and ﬂoating rate borrowings is estimated by discounting the future contracted cash ﬂow using
appropriate interest rates to net present value.
Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the carrying amount is deemed to reﬂect the fair value. Allother receivables/payables are discounted to determine the fair value.

66

Oxford Instruments plc

Notes to the Financial Statements Continued
Maturity of ﬁnancial liabilities
31 March 2009

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

Carrying
amount
£m
9.7
31.9
54.3
11.5
0.9
108.3

Contractual
cash flows
£m
9.7
34.4
54.3
8.3
1.1
107.8

Due
withinone year
£m
9.7
0.7
53.3
6.5
0.4
70.6

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

Due
more than
5 years£m
0.6
0.6

Carrying
amount
£m
0.7
25.0
48.6
3.3
77.6

Contractual
cash ﬂows
£m
0.7
29.6
48.6
2.9
81.8

Due
withinone year
£m
0.7
1.1
48.6
2.9
53.3

Due
1 – 5 years
£m
28.0
28.0

Due
more than
5 years£m
0.5
0.5

31 March 2008

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

At the reporting date the interest rate proﬁle of the Group’s interest – bearing ﬁnancial instruments was:Carrying
amount2009£m

Carrying
amount2008£m

Variable rate instruments
Financial assets
Financial liabilities

13.3(40.7)

7.9(25.0)

Fixed rate instruments
Financial liabilities

(0.9)

(0.8)

Bank overdraft
The bank overdrafts are repayable on demand. Bank overdrafts carry interest rates of either 2.75% or 3.45% in the UK andEurope, and 4.04% in Japan.
Sensitivity analysis
The Group has estimated the impact of the change to the fair value of its ﬁnancial instruments and the translation of currency
proﬁts and assets on the Income Statement and on equity for the following:

UÊ one percentage point increase in interest rates
UÊ one percentage point weakening in the value of sterling against all currencies
UÊ one percentage point strengthening in the value of sterling against all currencies
UÊ ﬁve percentage point increase in the cost of copperUÊ ﬁve percentage point decrease in the cost of copper

Oxford Instruments plc

67

Notes to the Financial Statements Continued
The outputs from the sensitivity analysis are estimates of the impact of market risk assuming that the speciﬁed changes occur
net of any hedging in place at the year end. Actual results in the future may differ materially from these estimates due tocommercial actions taken to mitigate any potential losses from such rate movements, to the interaction of more than one
sensitivity occurring and to further developments in global ﬁnancial markets. As such this table should not be considered as aprojection of likely future gains and losses.

1% increase
in interest
rates
£m

1%
weakeningin sterling£m1%
strengthening
in sterling£m

5% increasein copper
prices£m

5% decreasein copper
prices£m

At 31 March 2009
Impact on Income Statement
Impact on equity

(0.2)
(0.2)

0.2
0.2

(0.2)
(0.2)

(0.2)
(0.1)

0.2
0.1

At 31 March 2008
Impact on Income Statement
Impact on equity

(0.2)
(0.2)

0.1
0.1

(0.1)
(0.1)

(0.1)
(0.1)

0.1
0.1

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

2009
£m
(2.8)
(0.8)
(3.6)
2.6
(9.5)
(10.5)(17.8)(28.3)

2008
£m
4.2
0.2
4.4
1.0
(24.2)(0.8)(19.6)
1.8(17.8)

Analysed as:
Cash and cash equivalents (per Balance Sheet)
Bank overdrafts
Cash and cash equivalents (per Statement of cash ﬂows)
Borrowings
Net borrowing at the end of the year

13.3
(9.7)
3.6
(31.9)(28.3)

7.9
(0.7)
7.2
(25.0)(17.8)

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

68

Oxford Instruments plc

Notes to the Financial Statements Continued
22 RECONCILATION OF MOVEMENT IN CAPITAL AND RESERVES

Total recognised income for the year
Credit in respect of employee service
costs settled by award of share options
Proceeds from shares issued
Dividends paid
Opening equity shareholders’ funds at
1st April 2007
Closing equity shareholders’ funds at
31st March 2008

Total recognised income for the year
Credit in respect of employee service
costs settled by award of share options
Proceeds from shares issued
Dividends paid
Opening equity shareholders’ funds at
1st April 2008
Closing equity shareholders’ funds at
31st March 2009

Share
capital£m-Sharepremium
account£m-

Otherreserves£m-

Foreignexchangetranslation
reserve£m
3.1

Retainedearnings
£m
7.2

Total
£m
10.3

-

0.3
-

-

-

0.2
(4.1)

0.2
0.3
(4.1)

2.5

20.9

0.1

(0.8)

33.1

55.8

2.5

21.2

0.1

2.3

36.4

62.5

£m
-

£m
-

£m
(0.4)

£m
5.6

£m
(2.1)

£m
3.1

-

0.1
-

-

-

0.3
(4.1)

0.3
0.1
(4.1)

2.5

21.2

0.1

2.3

36.4

62.5

2.5

21.3

(0.3)

7.9

30.5

61.9

Other reserves comprise the capital redemption reserve which represents the nominal value of shares repurchased and thencancelled during the year ended 31 March 1999, and the hedging reserve in respect of the effective portion of changes in valueof commodity contracts.
The foreign exchange translation reserve comprises all foreign exchange differences arising since 1 April 2004 from thetranslation of the Group’s net investments in foreign subsidiaries into Sterling.
The Group holds 569,394 (2008: 585,265) of its own shares in an employee beneﬁt trust. The cost of these shares is included
within retained earnings.

Oxford Instruments plc

69Notes to the Financial Statements Continued
23 CALLED UP SHARE CAPITAL
Issued and fully paid ordinary shares:
2009

2008

Number of shares

Number of shares

49,377,236

49,197,896

32,115

179,340

49,409,351

49,377,236

At the beginning of the year
Issued for cash
At the end of the year

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

2009
Number ofshares

2009

2008

£m

2008
Number ofshares

58,000,000

2.9

58,000,000

2.9

49,409,351

2.5

49,377,236

2.5

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

Numberof shares

Aggregate
nominal value

Consideration
per share

14,915
17,200£746£860£1.27 - £1.75£1.83 - £2.19

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

24 BORROWINGS
Borrowings with a book and fair value of £31.0m (2008: £24.2m) are supported by a £50m (2008: £50.0m) revolving credit
facility made available to Oxford Instruments plc. It is repayable in July 2012 and carries a ﬂoating interest rate of LIBOR plus
0.65% on the ﬁrst £14m and LIBOR plus 0.90% on the remainder. It is secured on certain of the Group’s freehold properties witha carrying value of £10.7m (2008: £10.6m) and certain intellectual property of the Group. All necessary conditions precedentand covenants were met at 31 March 2009. It reprices on 27 April 2009. Thereafter repricing occurs after 1, 3 or 6 months at theGroup’s option. The undrawn amount of the facilities at 31 March 2009 was £19.0m (2008: £25.8m).
Borrowings with a book and fair value of £0.9m (2008: £0.8m) relate to a mortgage made available to WAS Worldwide
Analytical Systems AG in respect of a property in Uedem, Germany of which £0.1m is repayable within one year. The borrowing
is denominated in Euro and carries a ﬁxed rate of 4.6% until 2011. It is repayable in instalments of £0.1m per year until 2011
and in instalments of £50k per year until 2021.

25 RETIREMENT BENEFIT OBLIGATIONSThe Group operates deﬁned beneﬁt plans in the UK and US; both offer pensions in retirement and death in service beneﬁt tomembers. Pension beneﬁts are related to members’ ﬁnal salary at retirement and their length of service. Both schemes havebeen closed to new members since 2001.
The Group has opted to recognise all actuarial gains and losses immediately via the Statement of Recognised Income andExpense (SORIE).
The amounts recognised in the balance sheet are:Present value of funded obligations
Fair value of plan assets
Recognised liability for deﬁned beneﬁt
obligations

70

UK
2009
£m
131.1
(119.8)

USA
2009
£m
8.3
(5.2)

Total
2009
£m
139.4
(125.0)

UK
2008
£m
154.0
(134.8)

USA
2008
£m
7.0
(5.0)

Total
2008
£m
161.0
(139.8)

11.3

3.1

14.4

19.2

2.0

21.2

Oxford Instruments plc

Notes to the Financial Statements Continued
Reconciliation of the opening and closing balances of the present value of the deﬁned beneﬁt obligation

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

UK
2009
£m
154.0
9.8
2.4
0.1
(3.5)
(31.7)
131.1

USA
2009
£m
7.0
0.5
0.5
(0.3)
(1.9)
2.5
8.3

Total
2009
£m
161.0
10.3
2.9
0.1
(3.8)
(33.6)
2.5
139.4

UK
2008
£m
159.4
8.6
2.5
0.5
(2.5)
(14.5)
154.0

USA
2008
£m
6.5
0.4
0.4
(0.3)
0.1
(0.1)
7.0

Total
2008
£m
165.9
9.0
2.9
0.5
(2.8)
(14.4)(0.1)
161.0

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

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

UK
2009
£m

USA
2009
£m

Total
2009
£m

UK
2008
£m

USA
2008
£m

Total
2008
£m

134.8
9.1
4.2
0.1
(3.5)
(24.9)
119.8

5.0
0.5
0.6
(0.3)
(2.3)
1.7
5.2

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

130.7
9.0
4.3
0.5
(2.5)
(7.2)
134.8

4.4
0.3
0.7
(0.3)
(0.1)
5.0

135.1
9.3
5.0
0.5
(2.8)
(7.3)
139.8

Expense recognised in the income statement

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

2009
£m
2.9
10.3
(9.6)
3.6
1.8
5.4

2008
£m
2.9
9.0
(9.3)
2.6
1.5
4.1

The actual loss on plan assets was £17.6m (2008: £2.0m gain).
The Group expects to contribute approximately £4.7m to deﬁned beneﬁt plans in the next ﬁnancial year.
The pension costs are recorded in the following lines of the income statement:

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

Oxford Instruments plc

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

2008
£m
1.6
0.8
0.9
1.1
(9.3)
9.0
4.1

71

Notes to the Financial Statements Continued
25

RETIREMENT BENEFIT OBLIGATIONS CONTINUED

Actuarial gains and losses shown in the Statement of Recognised Income and Expense:
2009
£m
6.4

Actuarial gain

2008
£m
7.1

Cumulative actuarial gains and losses reported in the Group Statement of Recognised Income and Expense since 1 April 2004,
the transition date to IFRS, are £19.2m (2008: £12.8m).
History of experience gains and losses are as follows:

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

2009
£m
139.4
(125.0)
14.4

2008
£m
161.0
(139.8)
21.2

2007
£m
165.9
(135.1)
30.8

2006
£m
180.8
(127.4)
53.4

2005
£m
145.1
(101.8)43.3(27.2)
(22%)

(7.3)
(5%)

(2.0)
(1%)

15.2
12%

1.9
1%

33.6
(24%)

14.4
(9%)

24.1
(15%)

(25.5)
14%

(8.0)
5.5%

Deﬁned beneﬁt scheme - United Kingdom
A full actuarial valuation of the UK plan was carried out as at 31 March 2006. A new valuation will be prepared as at 31 March
2009. For reporting purpose the 2006 valuation has been updated to 31 March 2009 by a qualiﬁed independent actuary. The
major assumptions used by the actuary were (in nominal terms):

Discount rate
Rate of salary increase
Rate of increase to pensions in payment (pre 1997)
Rate of increase to pensions in payment (post 1997)
Rate of inﬂation
Mortality – pre and post-retirement – males and females

As at
31 March
2009
%
6.9
3.4
2.6
2.9
2.9
PA92 – year of birth: medium
cohort

As at
31 March
2008
%
6.4
4.4
2.8
3.4
3.4
PA92 – year of birth: medium
cohort

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

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

2009
22.9
25.7
22.0
24.9

2008
22.9
25.7
22.0
24.9

The assumptions have been chosen by the Directors from a range of possible actuarial assumptions, which due to the timescales
covered, may not be borne out in practice.

72

Oxford Instruments plc

Notes to the Financial Statements Continued
25

RETIREMENT BENEFIT OBLIGATIONS CONTINUED

The assets in the plan and the expected rates of return were:

Equities
Corporate bonds
Gilts
Cash and other assets
Absolute return fundLong-term rateof return
expected at
31 March
2009
%
8.0
6.9
4.2
4.2
7.0

Value at
31 March
2009
£m
43.6
28.4
30.0
12.0
5.8
119.8

Long-term rateof return
expected at
31 March
2008
%
8.0
6.4
4.5
5.3
7.3

Value at
31 March
2008
£m
58.7
26.1
29.2
5.7
15.1
134.8

Defined benefit scheme - United States
A full actuarial valuation of the US plan was carried out as at 1 January 2005 which for reporting purposes has been updated
to 31 December 2008 by a qualiﬁed independent actuary. Results at 31 March 2009 have been taken to be the same as thoseat 31 December 2008. The major assumptions used by the actuary were (in nominal terms):

Discount rate
Rate of salary increase
Rate of increase to pensions inpayment
Rate of inﬂation

Mortality – pre and post-retirement

As at
31 March
2009
%
6.25
3.00

As at
31 March
2008
%
5.50
4.00

0.00
3.00
2008 IRS prescribed mortality –optimal combined table for smallplans, male and female

0.00
3.00
RP-2000 combined mortality table,
male and female projected to 2005
with scale AA

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

Equities
Bonds
Property and otherLong term
rate of return
expected at
31 March
2009
%
9.2
6.1
8.3

Value at
31 March
2009
£m
2.5
2.1
0.6
5.2

Long term
rate of return
expected at
31 March
2008
%
9.2
6.1
8.2

Value at
31 March
2008
£m
2.7
1.9
0.4
5.0

Deﬁned contribution schemes
Since 1 April 2001 all new joiners in the UK have been offered participation in the deﬁned contribution Oxford Instruments
Stakeholder Plan. During the year ended 31 March 2009 the Company paid contributions to the scheme on a variable scale up
to a maximum of 5% for members who contributed at a rate of at least 3%. Employees make contributions at a rate of theirchoice. The Group also operates a 401k deﬁned distribution plan in the USA.

Oxford Instruments plc

73

Notes to the Financial Statements Continued
26 TRADE AND OTHER PAYABLES
2009
£m
28.8
1.0
18.1
6.4
54.3
(1.0)
53.3

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

2008
As restated
£m
24.9
1.7
16.3
5.7
48.6
(2.4)
46.2

Deferred consideration relates to amounts payable in respect of acquisitions made during the current and prior years. In theprior year £5.5m has been reclassiﬁed from accruals to trade payables to reﬂect the way these amounts are reported in thecurrent year.

27 PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Balance at 1 April 2008
Provisions made during the year
Provisions used during the year
Provisions released during the year
Effect of movements in foreign exchange
Balance at 31 March 2009

Warranties
£m
3.2
2.4
(1.5)
(1.2)
0.3
3.2

Restructuring
£m
3.0
(0.1)
0.1
3.0

Other
£m
0.9
0.1
0.1
1.1

Total
£m
4.1
5.5
(1.6)
(1.2)
0.5
7.3

Warranty provisions reﬂect the Group’s standard terms and conditions. In general these apply for a year and, as a result,the majority of the provision is expected to be utilised within a twelve-month period. Restructuring provisions relate to therationalisation of activities across the Group (see note 5) and represent the Directors’ best estimate of the cost to complete therestructuring. These costs are expected to be settled within the next 6 months. Other provisions relate to obligations in respectof onerous leases and obligations to employees in Japan on termination of their employment.

28 OPERATING LEASES
LeasesNon-cancellable future minimum operating lease rentals are payable as follows:

Less than one year
Between one and ﬁve years
More than ﬁve years

2009
£m
0.1
5.7
5.8

2008
£m
1.1
1.6
3.6
6.3

During the year ended 31 March 2009 £2.3m was recognised as an expense in the Consolidated Income Statement in respectof operating leases (2008: £1.7m).
The leases relate to motor vehicles and various properties used mainly as sales ofﬁces.

29 CAPITAL COMMITMENTS
During the year ended 31 March 2009, the Group entered into contracts to purchase property, plant and equipment for £0.1m(2008: £0.1m). These commitments are expected to be settled in the following ﬁnancial year.

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

74

Oxford Instruments plc

Notes to the Financial Statements Continued

31 RELATED PARTIESThe Group has a related party relationship with its Directors and Executive ofﬁcers.
Transactions with key management personnel are disclosed in the Director’s Remuneration Report on pages 34 to 39. There
were no other signiﬁcant transactions with key management personnel in either the current or preceding year other than thefollowing.
During the year the Company made purchases of £0.1m (2008: £0.1m) from Imperialise Limited of which Nigel Keen is a
Director. The liability due to Imperialise Ltd at the year end was nil (2008: nil).

32 GROUP ENTITIESOxford Instruments Analytical Holdings Ltd
Oxford Instruments Holdings Europe Ltd
Oxford Instruments Overseas Holdings Ltd
Oxford Instruments Overseas Holdings 2008 Ltd
Oxford Instruments Superconductivity Holdings Ltd
Oxford Instruments Overseas Marketing Ltd
Oxford Instruments Analytical Ltd
Oxford Instruments Molecular Biotools Ltd
Oxford Instruments Plasma Technology Ltd
Oxford Instruments Superconductivity Ltd (trading as Oxford
Instruments NanoScience)
Oxford Instruments America Inc
Oxford Instruments OST Holdings LLC
Oxford Instruments (Tennessee) Inc
Oxford Instruments Holdings Inc
Oxford Instruments Holdings 2008 Inc
Austin Scientiﬁc Company
Oxford Instruments X-Ray Technology Inc
Oxford Superconducting Technology
Oxford Instruments (Shanghai) Company Ltd
Oxford Instruments HKL Technologies A/S
Oxford Instruments Analytical Oy
Oxford Instruments SAS
Oxford Instruments GmbH
Oxford Instruments Measurement Systems GmbH
Vericold Technologies GmbHWorldwide Analytical Systems AG
Oxford Instruments KK
Oxford Instruments Pte Ltd

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

Country ofincorporation
EnglandEnglandEnglandEnglandEnglandEnglandEnglandEnglandEnglandEnglandPrincipal
activity
Holding
Holding
Holding
Holding
Holding
MarketingTrading
Trading
Trading
Trading

*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100
*100

USA
USA
USA
USA
USA
USA
USA
USA
China
Denmark
FinlandFranceGermany
Germany
Germany
GermanyJapan
Singapore

Distribution
Holding
Holding
Holding
Holding
Trading
Trading
Trading
Trading
Trading
Trading
Distribution
Distribution
Distribution
Manufacturing
Manufacturing
Distribution
MarketingA full list of the Group companies as at 31 March 2009 is available for inspection at the Company’s registered ofﬁce.
With the exception of holding companies, all the above companies are engaged in either advanced instrumentation or the
manufacture of components used in advanced instrumentation. Equity owned by subsidiary companies is indicated by anasterisk (*). All the above companies are included in the Group accounts.

Oxford Instruments plc

75Notes to the Financial Statements Continued
33 SUBSEQUENT EVENTS
The interim dividend of 2.4p per share (total cost £1.1m) was paid after the balance sheet date. In addition on 9 June 2009
the Director’s proposed a ﬁnal dividend of 6.0p per ordinary share (total cost £3.0m). The total amount of £4.1m has not been
provided for and there are no income tax consequences.

34 EXCHANGE RATESThe principal exchange rates to sterling used were:Year end rates
2009
1.43
1.08
142

2008
1.99
1.25
198

US Dollar
1.98
1.89
1.60
1.44

Euro
1.27
1.26
1.20
1.09

Yen
206
203
157
136

US Dollar
2.01

Euro
1.42

Yen
228

US Dollar
Euro
Yen
Average translation rates 2009
Quarter 1 2009
Quarter 2 2009
Quarter 3 2009
Quarter 4 2009
Average translation rates 2008
Quarter 1 to Quarter 4 2008

76

Oxford Instruments plc

Parent Company Balance Sheet as at 31 March 2009
2009
£m

2008
£m

c
d
d

0.9
61.3
62.2

1.2
51.6
0.6
53.4

e

101.7
9.6
111.3

85.4
19.4
104.8

(3.2)
(14.4)(17.6)(1.8)(12.5)(14.3)Net current assets

93.7

90.5

Total assets less current liabilities

155.9

143.9

Notes
Fixed assets
Tangible assets
Investments in subsidiary undertakings
Other investments

Current assets
Debtors
Cash at bank and in hand

Creditors: amounts falling due within one year
Bank loans and overdrafts
Other creditorsfCreditors: amounts falling due after more than one year
Bank loansg(31.0)(24.2)

Provisions for liabilities and charges

h

(0.3)

(0.3)

124.6

119.4

2.5
21.3
7.7
93.1

2.5
21.2
7.7
88.0

124.6

119.4

Net assets

Share capital
Share premium account
Other reserves
Proﬁt and loss account

j
j
j
j

Equity shareholders’ funds

The ﬁnancial statements were approved by the Board of Directors on 9 June 2009 and signed on its behalf by:
Jonathan Flint
Director

Oxford Instruments plc

Kevin Boyd
Director

77

Notes to the Parent Company Financial Statementsa) Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in
relation to the Company’s ﬁnancial statements, except as noted below.
Basis of preparation
The ﬁnancial statements have been prepared in accordance with applicable UK GAAP accounting standards and under thehistorical cost accounting rules. In accordance with S230(4) of the Companies Act 1985, the Company is exempt from therequirement to present its own proﬁt and loss account.
In accordance with FRS 1 the company is exempt from preparing its own cash ﬂow statement.
In accordance with FRS 8: Related Parties, the company is exempt from such disclosure requirements.
Going concern
The Financial Statements have been prepared on a going concern basis, based on the Directors’ opinion, after making reasonableenquiries, that the Company has adequate resources to continue in operational existence for the foreseeable future.
Taxation
The charge for taxation is based on the result for the year and takes into account taxation deferred because of timing
differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised, without
discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes
which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.
LeasesOperating lease rentals are charged to the proﬁt and loss account on a straight-line basis over the life of the lease.
Fixed assets and depreciation.
Depreciation is provided to write off the valuation or the cost less estimated residual value of tangible ﬁxed assets by equal
instalments over their estimated useful economic lives as follows:
Freehold buildings
Machinery and equipment
Computer equipment
Motor vehicles
Furniture and ﬁttings

50 years
5 to 10 years
4 years
4 years
10 years

Leasehold land and buildings, where the period of the lease is less than 50 years, are written off on a straight-line basis over
the remaining period of the lease. Freehold land is not depreciated.
Post retirement beneﬁts
The Company participates in a group wide pension scheme providing beneﬁts based on ﬁnal pensionable pay. The assets ofthe scheme are held separately from those of the Company. The Company is unable to identify its share of the underlying
assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS 17 Retirement
beneﬁts, accounts for the scheme as if it were a deﬁned contribution scheme. As a result, the amount charged to the proﬁt
and loss account represents the contributions payable to the scheme in respect of the accounting period. Refer to note k forthe additional disclosures required by FRS 17.
Foreign currencies
The Company enters into forward exchange contracts to mitigate the currency exposures that arise on sales and purchases
denominated in foreign currencies. Transactions in foreign currencies are converted into Sterling at the rate ruling on the dateof the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at thebalance sheet date or at the appropriate forward contract rates. Exchange proﬁts and losses arising from the above are dealt
with in the proﬁt and loss account.
Classiﬁcation of ﬁnancial instruments issued by the Company
Following the adoption of FRS 25, ﬁnancial instruments issued by the Company are treated as equity (ie forming part ofshareholders’ funds) only to the extent that they meet the following two conditions:i) they include no contractual obligation upon the Company to deliver cash or other ﬁnancial assets or to exchange ﬁnancial
assets or ﬁnancial liabilities with another party under conditions that are potentially unfavourable to the Company; andii) Where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that
includes no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will besettled by the Company’s exchanging a ﬁxed amount of cash or other ﬁnancial assets for a ﬁxed number of its own equity
instruments.

78

Oxford Instruments plc

Notes to the Parent Company Financial Statements Continued
To the extent that this deﬁnition is not met, the proceeds of issue are classiﬁed as a ﬁnancial liability. Where the instrument soclassiﬁed takes the legal form of the Company’s own shares, the amounts presented in these ﬁnancial statements for called up
share capital and share premium account exclude amounts in relation to those shares.
Finance payments associated with ﬁnancial liabilities are dealt with as part of interest payable and similar charges. Financepayments associated with ﬁnancial instruments that are classiﬁed as part of shareholders’ funds (see dividend policy), are dealt
with as appropriations in the reconciliation of movements in shareholders’ funds.
Own shares held by Employee Beneﬁt Trust (EBT)Transactions of the Group-sponsored EBT are included in the Group ﬁnancial statements. In particular, the trust’s purchase ofshares in the company are debited directly to equity.
Share-based payments
The share option programme allows employees to acquire shares of the Company. The fair value of options granted after
7 November 2002 and those not yet vested as at 1 April 2005 is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted is measured using an option pricing model,
taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense
is adjusted to reﬂect the actual number of share options that vest except where forfeiture is only due to share prices notachieving the threshold for vesting.
When options are granted to employees of subsidiaries of the Company, the fair value of options granted is recognised as an
employee expense in the ﬁnancial statements of the subsidiary undertaking together with the capital contribution received.
In the ﬁnancial statements of the Company, the options granted are recognised as an investment in subsidiary undertakings
with a corresponding increase in equity.
Dividends on shares presented within shareholders’ funds
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately
authorised and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed
in the notes to the ﬁnancial statements.
Financial guarantee contracts
Where the Company enters into ﬁnancial guarantee contracts to guarantee the indebtedness of other companies within
its group, the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, theCompany treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will
be required to make a payment under the guarantee.
b) Proﬁt for the year
The Company’s proﬁt for the ﬁnancial year was £8.9m (2008: £4.3m).
The auditor’s remuneration comprised £104,000 (2008: £96,000) for statutory audit.
The average number of people employed by the Company (including Directors) during the year was 44 (2008: 39). All of these
individuals were involved in administration.
The aggregate payroll costs (including Directors) of these people were as follows:

Wages and salaries
Social security costs
Other pension costs

2009
£m
3.0
0.3
0.2
3.5

2008
£m
3.2
0.3
0.2
3.7

The share based payment expense was £nil (2008: £nil).
Full details of the emoluments paid to Directors can be found in the Directors’ Remuneration Report on pages 34 to 39.

Oxford Instruments plc

79

Notes to the Parent Company Financial Statements Continuedc)Tangible ﬁxed assets
Motorvehicles£mComputerequipment
£m

Total

Cost
Balance at 1 April 2008
Additions
Balance at 31 March 2009

0.1
0.1
0.2

3.2
0.1
3.3

3.3
0.2
3.5

Depreciation
Balance at 1 April 2008
Charge for year
Balance at 31 March 2009

0.1
0.1

2.1
0.4
2.5

2.1
0.5
2.6

Net book value
At 31 March 2008

0.1

1.1

1.2

At 31 March 2009

0.1

0.8

0.9

Investments
in subsidiary
undertakings
£m

Other
investments
£m

Total
£m

Cost or valuation
Balance at 1 April 2008
Additions
Disposals
Balance at 31 March 2009

67.3
9.7
77.0

0.6
(0.3)
0.3

67.9
9.7
(0.3)
77.3

Amortisation
Balance at 1 April 2008
Impairment
Balance at 31 March 2009

15.7
15.7

0.3
0.3

15.7
0.3
16.0

Net book value at 31 March 2008

51.6

0.6

52.2

Net book value at 31 March 2009

61.3

-

61.3

d)

£m

Investments

Other investments at 31 March 2009 comprise:
Investment

Principal activity

ARKeX Limited

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

Percentage ofcompany owned
9.3%

The addition to subsidiary investments of £9.7m (2008: £0.2m) relates to the investment in Oxford Instruments Holdings Europe
Limited and to the awarding of share options to employees of subsidiary companies. Details of the subsidiary investments are
given in note 32.
On 4 April 2008 the Company sold its holding in Oxford Diffraction Limited for a gross cash consideration of £3.7m. An
additional cash amount of up to £1.1m may be received over the next three years conditional on the performance of Oxford
Diffraction Limited. The proﬁt on disposal on the initial consideration was £3.4m.
During the year the Company recognised an impairment charge of £0.5m against the cost of its investment in and loans to
ARKeX Limited.

80

Oxford Instruments plc

Notes to the Parent Company Financial Statements Continuede) Debtors

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

Amounts falling due after one year:
Deferred tax

2009
£m

2008
£m

100.6
0.9
0.2
101.7

84.1
0.8
0.1
85.0

101.7

0.4
85.4

2009
£m
0.3
12.4
0.7
0.7
0.3
14.4

2008
£m
0.3
10.5
0.7
0.6
0.4
12.5

f) Creditors: amounts falling due within one year

Trade creditors
Amounts owed to subsidiary undertakings
Tax, social security and sales related taxes
Accruals and deferred income
Other creditorsg) Creditors: amounts falling due after one year
Details of the bank loans are included in note 24.
h)Provisions for liabilities and charges
Vacant leaseprovision£m
0.3

At beginning and end of the yeari)

Deferred Tax
Deferred tax
asset
£m
0.4
(0.4)
-

Balance at 1 April 2008
Movement in the year
Balance at 31 March 2009
The amounts of deferred tax assets, representing the full potential liability, are as follows:

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

2009
£m

Recognised
2008
£m

2009
£m

Unrecognised
2008
£m

-

0.4
0.4

0.8
0.1
0.9

0.2
0.2
0.4

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

Oxford Instruments plc

81Notes to the Parent Company Financial Statements Continuedj)

Reserves
SharecapitalBalance at 1 April 2008
Retained proﬁt for the year
Premium on issued shares
Share options awarded to
employees of subsidiaries
Dividends paid
Balance at 31 March 2009

£m
2.5
-

Share
premium
account
£m
21.2
0.1

Capitalredemption
reserve
£m
0.1
-

Other
reserves£m
7.6-

Proﬁt andloss
account
£m
88.0
8.9
-

Total
£m
119.4
8.9
0.1

2.5

21.3

0.1

7.6

0.3
(4.1)
93.1

0.3
(4.1)
124.6

k) Pension commitments
The Company and its employees contribute to the Oxford Instruments Pension Scheme, a deﬁned beneﬁt scheme. Contributions
are based on pension costs across the Group as a whole. The assets of the Scheme are held in a separate trustee administeredfund.
The Oxford Instruments Pension Scheme was closed to new members from 1 April 2001. Since this date new employees
have been invited to join the Oxford Instruments Stakeholder Plan, a deﬁned contribution scheme. The company makes
contributions to this scheme.
The Directors do not believe it possible to allocate the assets and liabilities of the scheme to individual group members on
a consistent and reasonable basis. Accordingly, under FRS 17 the Company is exempt from recognising its share of the net
pension deﬁcit and accounts for the scheme as though it were a deﬁned contribution scheme. Details of the scheme and mostrecent actuarial valuation can be found in note 25. The contributions paid by the Company to the Oxford Instruments Pension
Scheme were £0.2m (2008: £0.2m)l)Guarantees
The Company has given a guarantee to the pension scheme in respect of the liability of its UK subsidiaries to the pension
scheme.

m) Commitments

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

2009
£m

2008
£m

0.1
0.1

0.1
0.1

There were no capital commitments as at 31 March 2009 (2008: £nil).
n) Subsequent events
See note 33 for details of dividends paid or declared after the balance sheet date.

82

Oxford Instruments plc

Historical Financial Summary

Income statement
Revenue

2005
£m

2006
£m

2007
£m

2008
£m

2009
£m

135.8

147.4

161.6

176.5

206.5

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

7.4
(6.0)
(1.3)
0.1
0.1
(1.7)

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

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

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

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

(1.6)
7.2
5.6

(3.4)
(3.4)

(1.5)
(1.5)

2.7
2.7

(6.7)
(6.7)

Adjusted proﬁt before tax *

7.4

4.0

7.5

9.5

11.1

23.0
12.5
1.6
14.1
23.9
46.5
5.4
(44.3)
82.7
28.6
(2.1)
26.5
(7.9)
(43.3)

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

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

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

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

58.0

46.4

55.8

62.5

61.9

5.9
15.3
(14.7)
6.5

(8.0)
(7.0)
(1.2)
(16.2)

5.2
(9.7)
(5.1)
(9.6)

(0.1)
(15.1)
19.4
4.2

14.4
(10.6)(6.6)(2.8)

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

pence

pence

pence

pence

pence

Per ordinary share
Earnings – continuing
Adjusted earnings *Dividends – excluding special dividend
Dividends – special

(3.0)
13.9
8.4
25.0

(7.2)
3.9
8.4
-

(3.2)
9.6
8.4
-

5.6
11.7
8.4
-

(13.9)
14.8
8.4-

Employees
Average number of employees**

1,325

1,412

1,388

1,501

1,531

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

Oxford Instruments plc

83

Shareholder Information
Financial calendar
4 March 2009
6 March 2009
12 March 2009
31 March 2009
6 April 20099 June 20099 June 2009
Late July
15 September 2009
30 September 2009
2 October 2009
5 October 2009
29 October 2009
March 2010
March 2010
March 2010
March 2010

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

Administrative enquiries concerning shareholdings
Administrative enquiries concerning shareholdings in Oxford
Instruments plc, such as the loss of a share certiﬁcate, dividend
payments, or a change of address should be directed, in theﬁrst instance, to the Registrar, Capita Registrars.
Capita Registrars
Northern House, Woodsome Park, Fenay Bridge,
Huddersﬁeld, West Yorkshire HD8 0GA
Tel 0871 664 0331
Correspondence should refer to Oxford Instruments plc andstate clearly the registered name and address of the shareholder.
Please notify the Registrar promptly of any change of address.
Dividend bank mandates
If you wish dividends to be paid directly into a bank or building
society account and notiﬁcation to be sent to your shareholder
register address, please contact the Company’s Registrar at theaddress given above for a dividend mandate form.
Consolidation of share certiﬁcatesIf your total registered ordinary shareholding is represented
by several share certiﬁcates, you may wish to have these
replaced by one consolidated certiﬁcate. There is no charge
for this service. You should send your share certiﬁcates to theCompany’s Registrar (address as above), together with a letterof instruction.
Shareholder enquiries
Shareholders who have questions relating to the Group’sbusiness or who wish to have additional copies of the Reportand Accounts or Interim Statement should apply to:Company Secretary
Oxford Instruments plc
Tubney Woods, Abingdon, Oxon OX13 5QX
Tel 01865 393200
Fax 01865 393442
E-mail info.oiplc@oxinst.com
Website www.oxford-instruments.com
Company registration
Registered ofﬁce: Tubney Woods
Abingdon Oxon OX13 5QXRegistered number: 775598
Registered in EnglandWebsite – www.oxford-instruments.com
Oxford Instruments has an extensive website which gives
details of all its products and services, contact information,
vacancies and latest news announcements. An interactive
investor relations section gives information on recent trading
reports, share price data and forthcoming events.
Shareholder Communications
Unless you have elected to continue to receive shareholder
communications by post, you will be notiﬁed by post or, where
you have given us an email address for electronic notiﬁcation,by email that shareholder communications are available forviewing on the Company’s website at www.oxford-instruments.
com/investors. The Company reserves the right to distribute
any communication in hard copy if it deems this necessary.
Share Dealing Services
JPMorgan Cazenove
In association with JPMorgan Cazenove Limited a low cost sharedealing service has been introduced providing shareholders
with a simple way of buying and selling Oxford Instruments
plc ordinary shares. Further information is available from theCompany Secretary or:
JPMorgan Cazenove Limited
20 Moorgate, London, EC2R 6DA
Tel 020 7155 5377
Fax 020 7155 9220
Capita Share Dealing Services
A quick and easy share dealing service to either sell or buy
shares in many leading UK companies is provided by Capita
Share Dealing Services. An on-line and telephone facility isavailable providing our shareholders with an easy to access andsimple to use service.
There’s no need to pre-register and there are no complicatedforms to ﬁll in. The online and telephone dealing service allows
you to trade “real time” at a known price which will be given
to you at the time you give your instruction.
To deal on-line or by telephone all you need is your surname,
Investor Code (IVC*) reference number, full postcode and yourdate of birth. Your Investor Code can be found on a recent
share certiﬁcate, statement or tax voucher. Please have theappropriate documents to hand when you log on or call, as thisinformation will be needed before you can buy or sell shares.
For further information on this service, or to buy and sellshares, please contact:www.capitadeal.com (online dealing)
0871 664 0446 (telephone dealing – calls cost 10p per minuteplus network extras)
Full terms, conditions and risks apply and are available on
request or by visiting www.capitadeal.com.
This is not a recommendation to buy or sell shares. Remember
the price of shares can go down as well as up, and you are
not guaranteed to get back the amount that you originallyinvested.
* Should you not be able to locate your IVC number, pleasecontact Capita Registrars on 0871 664 0313 (calls cost 10p per
minute plus network extras)

Analysis of shareholders as at 31 March 2009

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

84

Number ofholders% of total

Total holding% of total

2,574
177
44
45
2,840

90.63
6.23
1.55
1.58
100.001,645,318
2,828,018
4,774,831
40,161,184
49,409,351

3.33
5.72
9.66
81.28
100.00Oxford Instruments plc

Oxford Instruments Directory
Oxford Instruments plc

Plasma Technology

Regional Sales and Service Ofﬁces

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

Plasma etching, deposition
equipment and nanostructure
fabrication
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China
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Industrial Analysis
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NanoScience
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Room2112 Bai Hui Plaza,
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Magnetic Resonance

Czech Republic
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Czech Republic
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Fax +420 224 311 724
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Benchtop NMR analysers, low ﬁeld
MRI and imaging tools
Tubney Woods, Abingdon,
Oxon OX13 5QX, UK
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Oxford Superconducting
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Japan
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Oxford Instruments plc
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