Oxford Instruments plc

Press Release

Tubney Woods, Abingdon, Oxon OX13 5QX, UK
Tel: +44 (0) 1865 393200
Email:info.plc@oxinst.com
www.oxford-instruments.com

Release date: 7am 12 June 2012
Oxford Instruments plc
Announcement of Preliminary Results for the year to 31 March 2012
Oxford Instruments plc, a leading provider of high technology tools and systems for industry and research,
today announces its Preliminary Results for the year to 31 March 2012.
Highlights:•

Excellent progress in the first year of our 14 Cubed growth plan, in line to reach our objectives•

Revenue up 28.6% to £337.3 million (2011: £262.3 million)•

Adjusted profit before tax* up 60.3% to £42.0 million (2011: £26.2 million)•

Adjusted EPS* up 48.4% to 61.6 pence (2011: 41.5 pence)•

Order intake up 23.5% to £337.8 million (2011: £273.5 million)•

Record performance across all three business sectors, with strong organic growth in all territories•

Three acquisitions made during the year – Omicron Nanotechnology, Omniprobe and Platinum Medical
Imaging – all integrating well•

Strengthening new product pipeline, with 44% of revenue from products launched or acquired in the last
three years (2011: 34%)•

Proposed final dividend increased by 11.6% to 7.23 pence, giving a total dividend for the year of 10.0
pence (2011: 9.0 pence)*Adjusted numbers are stated to give a better understanding of the underlying business. Details of adjusting items can be found in Note 2.

Jonathan Flint, Chief Executive of Oxford Instruments plc, said:“We are now two months into the second year of our 14 Cubed plan. Trading to date has been in line with our
expectations and our markets remain strong despite continued economic uncertainty, particularly in Europe. A healthy
pipeline of new product introductions is in place and we are investing across the business to increase efficiency,
strengthen our market positions and drive further profitable growth. We are well positioned to build on theopportunities presented by emerging markets and to take advantage of new applications and technologies as theyarise. We continue to look for bolt-on acquisitions to complement our existing businesses.
“A changing market presents interesting opportunities as well as challenges and we are confident that we have thestructure, products and talent in place to make further progress in the current year and beyond.”
Enquiries:
Oxford Instruments plc
Jonathan Flint, Chief Executive
Kevin Boyd, Group Finance Director

Tel: 01865 393200

MHP
Rachel Hirst
Ian Payne

Tel: 020 3128 8100

Number of Pages: 27

Oxford Instruments plc

1

Announcement of Preliminary Results for the year to 31 March 2012

Chairman’s Statement
Oxford Instruments delivers shareholder value by providing our customers with the most advanced tools
and services. Our customers use these products to advance the frontiers of science, manufacture
innovatively and ensure the quality of industrial processes. The diversity of our products and markets, ourclear customer focus, our culture of innovation and our commitment to attracting the very best talent in theindustry has continued to drive the growth of the business. The Group is now performing more strongly
than at any time in its history and was admitted into the FTSE250 index in September 2011.
This strong performance in the first year of our 14 Cubed three year plan has been built around organic
growth, efficiency improvements and a successful acquisition programme. Our healthy product pipeline andexposure to growing markets has yielded good organic revenue growth with further improvement in
operating margins. The integration of the three acquisitions we made in the year is proceeding to plan andeach is making a positive contribution to our business.
The Group is recommending a final dividend of 7.23 pence, an increase of 11.6% over the prior year
bringing the total for the year to 10.0 pence.
The success reflected in these results has been fostered by our culture of inclusivity and our ability to bring
together skills and ideas from across the business to drive innovation and the delivery of new products.
These results are a credit to all our people. I thank them on behalf of the Board for their hard work andcommitment.
We are aware that we are operating in uncertain times. We have the right people in place to maximise theopportunities and tackle the challenges of the coming years. As we enter the second year of our 14 Cubed
plan, it is our intention to continue to deliver value for all our stakeholders with the wholehearted care,passion and commitment for which Oxford Instruments is renowned.
Nigel Keen
Chairman
12 June 2012

Oxford Instruments plc

2Announcement of Preliminary Results for the year to 31 March 2012

Chief Executive’s Statement
It is now a year since we announced our 14 Cubed plan to achieve compound annual growth of 14% and a
return on sales of 14% by 2014. Achievement of our strategic objective is driven by three elements; organic
growth through innovation, continuous efficiency improvements and targeted acquisitions, all of which havecontributed to our growth and margin improvement during the year.
Our order intake was £337.8 million (2011: £273.5 million) and the order book for future delivery now stands
at £136.8 million (2011: £115.3 million). Our two principal end market areas, research and industrial, both
remain robust. Revenues rose to £337.3 million, an increase of 28.6% of which 15.1% was organic growth.
Adjusted profit before tax grew to £42.0 million (2011: £26.2 million) which equates to an adjusted operating
profit return on sales of 12.5% (2011: 10.7%). Adjusted earnings per share rose to 61.6 pence (2011: 41.5
pence) and the Group ended the year with a net positive cash balance of £35.1 million (2011: £13.1 million).
The three acquisitions we made in the year are all performing to expectations. Omicron Nanotechnology,
acquired in June, has enabled us to extend our offering in the Nanotechnology Tools sector and good
progress has been made integrating it into the Group. Omniprobe, also acquired in June, has contributed
to the good performance of the NanoAnalysis business and has a strong pipeline of new products due forlaunch this year. The Platinum Medical Imaging business, acquired in November, has been able to exploit
the value of the Oxford Instruments brand to win new customers and improve its business performance.
We continued to benefit from growth across our major geographies with Europe up 37.4%, North America
up 30.6% and Asia up 14.5%. Our performance in developed markets benefited from sales of products andservices from our new acquisitions which were primarily exposed to these regions. Going forward, we
expect further opportunities to emerge in Asia as we expand the reach of these products and services. We
anticipate that Asia will be our fastest growing region over the medium to longer term.
Innovation remains at the core of the Group’s culture. Our strong performance is underpinned by continued
investment in R&D, which increased this year by 29% to £25.8 million (2011: £20.0 million). The percentageof revenue that is made up of products launched or acquired in the last three years is a key indicator of thevitality of our new product development and has increased from 34% in 2011 to 44% in 2012.
Our People
A high technology business relies on the skills and expertise of its people. We therefore recognise theimportance of ensuring a sustainable business going forward through an inclusive strategy of managing,developing and recruiting people who support our company values and contribute to our growth. I am
proud to lead such a talented and committed workforce and I thank them for their continued contribution to
our success.
Outlook
We are now two months into the second year of our 14 Cubed plan. Trading to date has been in line with
our expectations and our markets remain strong despite continued economic uncertainty, particularly inEurope. A healthy pipeline of new product introductions is in place and we are investing across thebusiness to increase efficiency, strengthen our market positions and drive further profitable growth. We are
well positioned to build on the opportunities presented by emerging markets and to take advantage of new
applications and technologies as they arise. We continue to look for bolt-on acquisitions to complement ourexisting businesses.
Oxford Instruments plc

3Announcement of Preliminary Results for the year to 31 March 2012

A changing market presents interesting opportunities as well as challenges and we are confident that wehave the structure, products and talent in place to make further progress in the current year and beyond.
Jonathan Flint
Chief Executive
12 June 2012

Oxford Instruments plc

4Announcement of Preliminary Results for the year to 31 March 2012

Operational Review
We operate in three sectors: Nanotechnology Tools, Industrial Products, and Service.
Nanotechnology Tools£m
Revenue
Operating profit

2012
153.9
17.3

2011
121.8
14.6

The Nanotechnology Tools sector comprises our NanoAnalysis, NanoScience, Plasma Technology andOmicron NanoTechnology businesses. This sector produces our highest technology products and serves
research and industrial customers in both the public and private sectors.
Our NanoAnalysis business produces leading-edge tools that enable materials characterisation andsample manipulation at the nanometre scale. Its products are used on electron microscopes and ion-beamsystems across academic and industrial applications including semiconductors, renewable energy, mining,
metallurgy and forensics. This business has produced a strong performance across all regions, driven by
the launch of AZtec, a revolutionary materials characterisation system. The integration of Omniprobe Inc,
acquired in June 2011, has enhanced our product range with innovative nano-manipulation tools for sample
preparation.
Our NanoScience business is the world’s leading supplier of cryogenic systems for nano-characterisationand measurement at low temperatures and high magnetic fields. Its technologies are used in applications
such as characterisation of new materials and devices at the nanoscale, data protection and storage, fusionenergy and high temperature superconductor materials. This business has performed well in the year andis now the world’s leading supplier of cryogen-free products. The Triton cryogen-free dilution refrigerator,
with an integrated high-field superconducting magnet, has performed strongly, particularly in the Quantum
Computing segment. The launch in the year of Mercury, a new electronics system, further strengthened ourmarket position offering intelligent control of cryogenic and magnetic environments.
Our Plasma Technology business provides leading-edge tools and processes for the fabrication ofnanostructures. Our systems provide process solutions for nanometre layer growth of compound
semiconductor material, etching of nanometre sized features and the controlled growth of nanostructures inmarkets ranging from semiconductor electronics, Micro Electro Mechanical Systems (MEMS), High
Brightness LEDs (HBLED) and photovoltaic devices. Order intake levels were maintained and the orderbook is healthy, despite the anticipated weakening in HBLED capital equipment demand. As previously
reported, sales of equipment to make HBLEDs declined due to over capacity in the market but are forecast
to pick up towards the end of the current financial year as devices for commercial and domestic lighting
become more affordable.
In March 2012 we transferred ownership of TDI, a wholly owned subsidiary which develops hydride vapour
phase epitaxy (HVPE) technology for use in the production of High Brightness LEDs, to Ostendo, aprivately owned company based in California. This will maximise the value from our technology investment
in HVPE.
Our Omicron NanoTechnology business supplies analytical solutions for nanotechnology R&D, providing
innovative, high performance tools that offer unique multi-technique systems. We are investing in additional
R&D, sales and service. There has been a trend in the market towards much larger integrated systems fromwhich Omicron is well placed to benefit. For example, the recent launch of Argus, an innovative electron
Oxford Instruments plc

5Announcement of Preliminary Results for the year to 31 March 2012

spectrometer, has enabled our research customers to undertake experiments that were not previously
possible with standard detector technology.
Following the acquisitions of Omicron and Omniprobe, good progress has been made with their integration
into the Group, growing our Nanotechnology Tools offering and leveraging sales and brand synergies. Thishas significantly improved our competitive position when bidding for multi-million dollar systems that containproducts from more than one of the Nanotechnology Tools businesses, and we have enjoyed particularsuccess in the fast growing BRIC territories where brand plays an important role in the selling process. We
monitor the market's perception of our performance through solicitation of regular feedback from ourcustomers. We quantify this in our Net Promoter Score metric which has improved in the year.
Industrial Products£m
Revenue
Operating profit

2012
129.1
13.8

2011
100.5
6.1

The Industrial Products sector contains our Industrial Analysis, Superconducting Wire, Austin and Magnetic
Resonance businesses. This sector supplies analytical systems for quality control, environmental andcompliance testing, and components for industry and research.
Our Industrial Analysis business supplies high quality instruments for materials identification andthickness gauging analysis essential for quality control. Our customers span global industries from metals,
alloy manufacturing, steel foundries and scrap recycling through to automotive, solar, petrochemicals,
cement, recycling, and precious metals. Performance for this business was very strong across all sectors.
Our Optical Emission Spectroscopy division performed particularly well in Asia and saw orders rise on theback of its recently launched FoundryMaster Xpert tool, specifically designed for the steel industry. We also
launched the XMET7500, a hand held analyser, delivering high performance and flexibility for the rapid
analysis of the widest variety of materials from metals to soils. Sales have exceeded expectations in all
territories. In addition, process improvement in our x-ray tube facility in California has led to significant gains
in productivity. In October 2011, we rationalised the industrial product offering by disposing of a non-coreproduct line that we produced for a single customer, to that customer.
Our Superconducting Wire business is the world leader in the provision of high performancesuperconducting wire for industry and research, spanning markets that include MRI healthcare, physics
research, life sciences, fusion energy and particle accelerators. The core business providing wire for MRI
machines benefited from robust demand from our major OEM customers. Following the major order
received in 2010, a further small order for wire for ITER, the multinational carbon free energy programme,
was received in 2011 and shipments remain on track.
Our Austin business specialises in high vacuum products, helium gas coolers and services for thesemiconductor, research, life science and energy industries. It had a good year driven by demand for its
products from the solar industry and backed up by its core products and services. A programme ofefficiency initiatives has reduced lead-times. The strong performance of this business has driven a moveto new premises, planned for 2012.
Our Magnetic Resonance business produces bench top Nuclear Magnetic Resonance analysers for abroad range of industries for quality assurance, production optimisation and research applications. They
are used for applications in agriculture, food and beverage, textiles, polymers, petrochemicals and oil andgas exploration. This business showed a good performance and has a secure order book going forward. It
has good profit margins and sales of the recently launched AffirmoEX, the world’s smallest benchtop
Oxford Instruments plc

6

Announcement of Preliminary Results for the year to 31 March 2012

Electron Magnetic Resonance spectrometer for industrial, scientific and educational applications, haveexceeded expectations.
Service£m
Revenue
Operating profit

2012
56.3
11.0

2011
42.5
7.4

This sector comprises our service, support, training, refurbishment, consumables and accessories elementsof our business. It consists of our CT and MRI Service business in North America and Asia, and the service
elements of Nanotechnology Tools and Industrial Products sectors. The business performed well across all
territories, particularly Asia where the adoption of a service contract model is gaining greater acceptanceacross a growing installed base.
The acquisition of Platinum Medical Imaging in November 2011 has also made a positive contribution to this
sector. Platinum offers third party servicing and support to operators of MRI and CT scanners in North
America. Structural changes in the US health care market continue to benefit this business. Recognition of
the Oxford Instruments brand has increased customer confidence in the Platinum offering and helped tofurther grow market share in North America.

Oxford Instruments plc

7

Announcement of Preliminary Results for the year to 31 March 2012

Financial Review
Trading Performance
The Group uses adjusted figures as key performance measures in addition to those reported under adopted
IFRS. Unless otherwise stated, all profit, earnings and operating cash flow figures referred to below areadjusted measures. A reconciliation is given below.
Orders of £337.8 million were £64.3 million ahead of the same period last year, an increase of 23.5%. At
the end of the year the order book for future deliveries stood at £136.8 million up from £115.3 million at theend of the previous year.
Revenues in the year grew by 28.6% (£75.0 million) to £337.3 million. Revenues from the acquisitions lessdisposals in the period were £35.4 million, adverse foreign currency exchange rate movements reduced
sales by £0.9 million while increasing copper prices increased sales by £0.8 million (there was no impact on
profits as movements in the price of copper are passed on to our customers). As a result, organic revenue
growth was 15.1%.
In the Nanotechnology Tools division, sales grew by 26.4% helped by the Omicron and Omniprobe
acquisitions that took place in June. Organic growth at 2.1% was impacted by the expected decline in salesof systems to manufacture HBLEDs; excluding these sales, underlying organic growth was 11.0%. Sales ofequipment to make HBLEDs declined due to over capacity in the market but it is anticipated that demand
will pick up towards the end of the current year.
Sales in the Industrial Products sector grew by 28.5% helped by a full year of ITER shipments, partially
offset by the disposal of a product line in October 2011. Excluding these two factors, sales grew by 23.3%
as a result of a number of product launches including the XMET7000 series handheld analyser in Industrial
Analysis, as well as increased MRI sales and a large new contract for the Austin business.
Service revenues increased by 32.5%, helped by the acquisition of Platinum Medical Imaging in November
2011. Excluding this, organic growth was 16.9% reflecting the focus on selling and marketing service
contracts.
Gross margins increased from 42.7% to 44.2% despite the disproportionate growth of the lower margin
superconducting wire business. These improved margins were predominantly due to new productintroductions and increased efficiencies with our Value Add Index Key Performance Indicator increasingfrom 1.42 to 1.49. This measure is a reflection of the operating profit generated from each unit of
employment costs.
Operating expenses rose by £23.1 million of which £12.5 million related to the acquisitions and £0.7 million
to foreign exchange rate movements. Underlying constant currency growth in operating expenses was
11.8%.
Adjusted operating profit increased by £14.0 million to £42.1 million. The majority of this increase was a
result of the higher sales volume, with a £2.8 million contribution from the acquisitions.

Oxford Instruments plc

8

Announcement of Preliminary Results for the year to 31 March 2012

Adjusting Items
The Directors believe that adjusted profit before tax gives a clearer indication of the underlying performanceof the business. A reconciliation of reported profit before tax to adjusted profit before tax is given below:

Profit before income tax
Pension scheme curtailment gain
Shareholder earnout no longer required
Reversal of acquisition related fair value adjustments toinventory
Gain on disposal of product line
Acquisition related costs
Impairment
Amortisation of acquired intangibles
Mark to market gain in respect of derivative financial instruments
Adjusted profit before income tax
Share of taxation
Adjusted profit

2012
£m
36.1
-

2011
£m
26.7
(4.1)
(0.6)

1.7
(7.0)
1.5
11.2
(1.5)
42.0
(8.8)
33.2

0.6
4.7
(1.1)
26.2
(5.7)
20.5

Amortisation of acquired intangibles has increased by £6.5 million as a result of the acquisitions made in
the year.
Financial income and expenditureWithin financial income and expenditure, net interest on debt reduced by £0.4 million to £0.8 million as cash
levels rose, the majority of the remainder reflects fees related to our revolving credit facility. The expected
return on pension scheme assets exceeded the interest charge on pension scheme liabilities by £0.7
million, a swing of £1.4 million over the prior year. Due to the increased pension liabilities and the very low
gilt yields at 31 March 2012, net pension interest will be a charge to the Income Statement in the current
year.
Currency hedging
The Group uses derivative products to hedge its exposure to fluctuations in foreign exchange rates. It is
Group policy to have in place at the beginning of a financial year hedging instruments to cover 80% of its
forecast transactional exposure for that period.
In common with a number of other companies, the Group has decided that the additional costs of meetingthe extensive documentation requirements of IAS 39 to apply hedge accounting to the foreign exchange
hedges cannot be justified. Accordingly the Group does not use hedge accounting for these derivatives. Net
movements on marking to market such derivatives at the balance sheet date are disclosed in the income
statement as Financial Expenditure and excluded from our calculation of adjusted profit before tax (note 2).
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 number of contracts involved, weapply hedge accounting for these transactions and consequently the results of marking to market are
excluded from the Income Statement.

Oxford Instruments plc

9Announcement of Preliminary Results for the year to 31 March 2012

Taxation
The underlying tax rate on the profit before tax for the Group before adjusting items was broadly unchanged
at 21% (2011: 22%).
The Group has significant tax losses in the UK available to offset against future taxable profits. In the year
ended March 2011, due to the improved performance of the Group’s UK business units, we recognised adeferred tax asset of £11.3 million and a corresponding credit to the Income Statement. We believe that
this was exceptional both in nature and quantum and therefore excluded it from our calculation of adjusted
earnings per share. Of this asset value, £4.6 million reversed in the year ended March 2012 and forconsistency we have excluded it from the calculation of adjusted earnings per share (see note 2).
Earnings
After a tax charge of £11.3 million, a swing of £16.8 million from the prior year primarily due to the deferred
tax discussed above, the reported net profit for the financial year was £24.8 million (2011: £32.2 million).
With a weighted average number of shares of 54.0 million (2011: 49.3 million), the basic earnings per share
were 46.0 pence (2011: 65.3 pence).
Adjusted profit before tax (note 2), which we believe gives a better indication of the underlying performanceof the business, grew by £15.8 million to £42.0 million which equates to an adjusted earnings per share of
61.6 pence (2011: 41.5 pence), an increase of 48.4%.
Dividends
In the prior year the Group moved to a progressive dividend policy, whereby we would seek to raise
dividends as adjusted earnings per share rise, although not necessarily by the same proportion, dependingon the directors’ perceived need for cash to expand the business both organically and through acquisition.
For the year just ended the proposed final dividend of 7.23 pence per share (2011: 6.48 pence), payable on
25 October 2012 to shareholders who are on the register on 28 September 2012, gives a total dividend forthe year of 10.0 pence per share (2011: 9.0 pence). Dividend cover for the underlying business before
adjusting items was 6.2 times (2011: 4.6 times).
Investment in research and development (R&D)
The amount charged to the Income Statement in relation to R&D was £25.8 million or 7.6% of sales (2011:£20.0 million, 7.6%).
During the year we changed our income statement classification in respect of custom engineering specials.
A custom engineering special is a product designed to a specific customer order. We now report the design
costs of such products within research and development which we consider to be more comparable.

Oxford Instruments plc

10Announcement of Preliminary Results for the year to 31 March 2012

A reconciliation between the amounts charged to the Income Statement and the cash spent is given below:

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

2012
£ million
25.8

2011
£ million
20.0

(1.6)
1.3
(5.2)

(0.6)
2.3
(5.4)

2.4
22.7

3.0
19.3

The net book value of capitalised R&D at the end of the financial year was £11.7 million (2011: £15.0
million).
Balance sheet
Net assets rose from £93.5 million to £127.1 million primarily as a result of the equity issue made in theyear and the increase in the retained profit.
Net working capital (excluding derivative financial instruments and tax payable/receivable) reduced by £1.0
million in the year to £14.9 million, despite £2.8 million of the £10.2 million deposit that was received in2009 for the ITER contract unwinding.
Inventory turns remained constant at 3.2 while debtor days increased from 48 days to 53 days.
Acquisitions and Disposals
On 13 June 2011 the Group made two acquisitions: Omicron NanoTechnology GmbH for £28.3 million andOmniprobe Inc. for £12.3 million. These were funded using the Group’s resources. On 17 June, the Group
raised £37.5 million through an equity issue to ensure that there were sufficient internal resources tocomplete the 14 Cubed plan.
On 20 October 2011 the Group disposed of a product line for consideration of £8.1 million, £7.1 million ofwhich was paid on completion, with a further £1.0 million receivable on the first anniversary of completion.
On 3 November 2011 the Group acquired Platinum Medical Imaging LLC for an initial consideration of
US$18 million with a contingent element of up to US$37 million payable over three years dependent on
performance over that period.
On 22 March 2012 the Group transferred its ownership of TDI, a wholly owned subsidiary which develops
Hydride Vapour Phase Epitaxy (HVPE) technology for use in the production of HBLEDs, to Ostendo, aprivately owned company based in California. The Group received 0.65 million shares of Ostendo common
stock plus $0.65 million in cash of which $0.15 million will be paid in September 2012. The Group will also
receive a royalty if certain HVPE reactor sales are realised.

Oxford Instruments plc

11Announcement of Preliminary Results for the year to 31 March 2012

Pensions
The Group has defined benefit pension schemes in the UK and the US. Both have been closed to newentrants since 2001 and closed to future accrual from July 2010. The total IAS19 deficit, before tax, on
these pension schemes rose in the year by £23.5 million to £35.2 million with a corresponding deferred tax
asset of £8.7 million.
Assets of the schemes at 31 March 2012 were £180.2 million (2011: £173.1 million), while liabilities
increased from £184.8 million to £215.4 million principally as a result of the fall in the corporate bond yieldused to discount future cash flows from 5.6% to 4.9%.
The latest triennial actuarial valuation of the UK scheme was carried out as at 31 March 2009 and resulted
in an actuarial deficit of £39.5 million. A long-term plan for recovering the deficit over 14 years was agreed
between the Company and the Pension Trustee, which involved a payment of £3.1 million for the year to
March 2010, £5.3 million for the year to March 2011, £4.5 million for the year to March 2012 and willcomprise a payment of £4.9 million for the year to March 2013. For the subsequent 10 years the 2013
payment of £4.9 million will be inflated by 2.85% per annum. Work is currently underway to produce anactuarial valuation as at 31 March 2012. The results of this valuation may alter the future payments to thescheme.
CashEarnings before interest, tax, depreciation and amortisation (EBITDA) increased by 39% to £52.1 million.
The working capital movement in the year reduced by £2.4 million, building on the reductions in theprevious two years. Trading working capital, which we define as inventory plus trade debtors less tradecreditors and advances received as a percentage of sales, was 15.4% (2011: 16.3%).
Cash generated from operations was £50.5 million, an increase of £11.3 million on the prior year. The ratioof operating cash to operating profit was 110.5% (2011: 126.7%).
Net cash at the year-end was £35.1 million (2011: £13.1 million). The Group maintains a committed
Revolving Credit Facility with a club of three banks. The facility, which extends to December 2014, is for£50 million and is extendable to £70 million by mutual consent. In addition, the Group has overdraft andother facilities totalling £14.5 million.
Employees
The average number of people employed during the year was 1,834, an increase of 336 over the prior year.
Of this increase, 262 were employees who joined the Group from acquired companies. Average sales per
employee increased by 5% to £183,900.
Share price
The closing mid-market price of the ordinary shares at the end of the financial year was £12.15, comparedwith £7.03 at the beginning of the year. The highest and lowest prices recorded in the financial year were
£12.62 and £7.03 respectively.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performanceand position, are set out in the Chief Executive’s Statement. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are described in this Financial Review.

Oxford Instruments plc

12Announcement of Preliminary Results for the year to 31 March 2012

The diverse nature of the Group combined with its current financial strength provides a solid foundation fora sustainable business. The Directors have reviewed the Group’s forecasts and considered a number ofpotential scenarios relating to changes in trading performance. The Directors believe that the Group will beable to operate within its existing debt facility which expires in December 2014. This review also consideredhedging arrangements in place. As a consequence, the Directors believe that the Group is well placed to
manage its business risks successfully.
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.
Kevin Boyd
Group Finance Director
12 June 2012

Oxford Instruments plc

13

Announcement of Preliminary Results for the year to 31 March 2012
Consolidated Statement of Income year ended 31 March 2012

Beforeadjustingitems*

Revenue
Cost of sales
Gross profit
Research anddevelopment
Selling and marketing
Administration andshared services
Other operating income
Foreign exchange
Operating profit

£m

337.3
(188.3)
149.0

(1.7)
(1.7)

337.3
(190.0)147.3(25.8)(48.7)-(32.1)
(0.3)
42.1

262.3
(150.4)
111.9

-

262.3
(150.4)111.9(25.8)(48.7)(20.0)(39.9)-(20.0)(39.9)(12.7)
7.0(7.4)(44.8)
7.0
(0.3)
34.7

(23.3)
(0.6)
28.1

(5.3)
4.7
(0.6)

(28.6)
4.7
(0.6)
27.5

10.9

-

10.9

9.9

-

9.9

0.2
11.1

1.5
1.5

1.7
12.6

9.9

1.1
1.1

1.1
11.0

(10.2)-(10.2)(10.6)-(10.6)

(1.0)

-

(1.0)

(1.2)

-

(1.2)

(11.2)-(11.2)(11.8)-(11.8)

42.0

(5.9)

36.1

26.2

0.5

26.7

(8.8)

(2.5)

(11.3)

(5.7)

11.2

5.5

33.2

(8.4)

24.8

20.5

11.7

32.2

Pence

pence

pence

Pence

7

61.6

46.0

41.5

65.3

7

60.3

45.0

40.4

63.6

4

Profit before income
tax

Dividends per share
Dividends paid
Dividends proposed£mYear to 31 March 2011
AdjustingTotal
items*
as restated**£mInterest charge on
pension scheme
liabilities
Other financial
expenditure
Financialexpenditure

Earnings per share
Basic earnings per
share
Diluted earnings per
share

£m

Beforeadjustingitems*
as restated **
£m

£m

Notes
3

Expected return on
pension scheme
assetsOther financial
incomeFinancial income

Income tax(expense)/credit
Profit for the period
attributable to equity
shareholders of theparentYear to 31 March 2012
AdjustingTotal
items*

6

8
8

9.0
10.0

8.4
9.0

*Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items can be found in Note 2.
**See note 1 for details of restatement of comparative information.

Oxford Instruments plc

14

Announcement of Preliminary Results for the year to 31 March 2012
Condensed Consolidated Statement of Comprehensive Income year ended 31 March
2012
2012

2011

£m

As restated*
£m

24.8

32.2

Foreign exchange translation differences

(2.6)

(0.9)

Actuarial (loss)/gain in respect of post retirement benefits(28.6)

14.4(Loss)/gain on effective portion of changes in fair value of cash flow
hedges, net of amounts recycled

(0.4)

0.3

7.2

(4.6)

(24.4)

9.2

0.4

41.4

Notes
Profit for the year
Other comprehensive (expense)/income

Tax on items recognised directly in other comprehensive income
Total other comprehensive (expense)/income
Total comprehensive income for the year attributable to equity
shareholders of the parent

6*See note 1 for details of restatement of comparative information.

Oxford Instruments plc

15

Announcement of Preliminary Results for the year to 31 March 2012
Condensed Consolidated Statement of Changes in Equity year ended 31 March 2012

Balance at 1 April 2011
Total comprehensive income/(expense)
attributable to equity shareholders of theparent- Profit- Other comprehensive income
Transactions recorded directly in equity:- Credit in respect of employee service
costs settled by award of share options- Tax charge in respect of share options- Proceeds from shares issued- Dividends paid
Total contributions by and distributions toequity shareholders
Balance at 31 March 2012

Balance at 1 April 2010
Total comprehensive income/(expense)
attributable to equity shareholders of theparent- Profit- Other comprehensive income (as restated*)Transactions recorded directly in equity:- Credit in respect of employee service costs
settled by award of share options- Tax credit recognised in respect of shareoptions (as restated*)- Proceeds from shares issued- Dividends paid
Total contributions by and distributions toequity shareholders
Balance at 31 March 2011

Sharecapital
£m
2.5

Share
premium
account
£m
22.5

Other
reserves£m
0.4

Foreignexchangetranslation
reserve£m
3.2

Retainedearnings
£m
64.9

Total
£m
93.5

-

-

-

-

24.8

24.8

-

-

(0.3)
(0.3)

(2.6)
(2.6)

(21.5)
3.3(24.4)
0.4

0.3
-

37.7
-

-

-

1.0
(1.0)
(4.8)

1.0
(1.0)
38.0
(4.8)

0.3
2.8

37.7
60.2

0.1

0.6

(4.8)
63.4

33.2
127.1

2.5

21.6

0.2

4.1

23.8

52.2

-

-

-

-

32.2

32.2

-

-

0.2
0.2

(0.9)
(0.9)

9.9
42.1

9.2
41.4

-

-

-

-

0.4

0.4

-

0.9
-

-

-

2.7
(4.1)

2.7
0.9
(4.1)

2.5

0.9
22.5

0.4

3.2

(1.0)
64.9

(0.1)
93.5

Other reserves comprise the capital redemption reserve which represents the nominal value of shares
repurchased and then cancelled during the year ended 31 March 1999, and the hedging reserve in respectof the effective portion of changes in value of commodity contracts.
The foreign exchange translation reserve comprises all foreign exchange differences arising since 1 April
2004 from the translation of the Group’s net investments in foreign subsidiaries into Sterling.
The Group holds 173,794 (2011: 433,794) of its own shares in an employee benefit trust. The cost of theseshares is included within retained earnings.
*See note 1 for details of restatement of comparative information.

Oxford Instruments plc

16

Announcement of Preliminary Results for the year to 31 March 2012
Condensed Consolidated Statement of Financial Position year ended 31 March 2012
2012
£m

2011
£m

28.2
78.1
19.3
125.6

23.6
41.6
17.4
82.6

59.3
61.0
1.3
2.4
35.1
159.1

46.6
52.5
1.3
1.0
24.5
125.9

284.7

208.5

2.8
60.2
0.1
0.6
63.4
127.1

2.5
22.5
0.4
3.2
64.9
93.5

2.8
35.2
7.0
45.0

10.5
0.1
11.7
4.1
26.4

96.4
6.0
1.2
9.0
112.6

0.1
0.8
76.5
3.4
1.1
6.7
88.6

Total liabilities

157.6

115.0

Total liabilities and equity

284.7

208.5

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

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

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

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

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

The financial statements were approved by the Board of Directors on 12 June 2012 and signed on its behalfby:Jonathan Flint
Director

Oxford Instruments plc

Kevin Boyd
Director

17

Announcement of Preliminary Results for the year to 31 March 2012
Condensed Consolidated Statement of Cash Flows year ended 31 March 2012
2012
£m
24.8

2011
£m
32.2

Profit for the year
Adjustments for:
Income tax expense/(credit)
Net financial (income)/expense
Other operating income
Impairment
Acquisition related fair value adjustments to inventory
Acquisition related costs
Amortisation of acquired intangibles
Depreciation of property, plant and equipment
Amortisation and impairment of capitalised development costs
Adjusted earnings before interest, tax, depreciation and amortisation
Loss on disposal of plant, property and equipment
Cost of equity settled employee share schemes
Acquisition related costs paid
Cash payments to the pension scheme more than the charge to operating profit
Operating cash flows before movements in working capital
Increase in inventories(Increase)/Decrease in receivables
Increase in payables and provisions
Decrease in customer deposits
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 product line and subsidiary
Acquisition of subsidiaries, net of cash acquired
Acquisition of property, plant and equipment
Capitalised development expenditure
Net cash used in investing activities

11.3
(1.4)
(7.0)
1.7
1.5
11.2
4.8
5.2
52.1
0.5
1.0
(1.0)
(4.5)
48.1
(0.2)
(1.7)
5.7
(1.4)
50.5
(1.1)
(7.8)
41.6

(5.5)
0.8
(4.7)
0.6
4.7
4.0
5.4
37.5
0.4
(5.6)
32.3
(8.2)
7.4
8.8
(1.1)
39.2
(0.8)
(3.1)
35.3

0.1
7.3
(51.6)(5.6)(2.4)(52.2)

0.1
(0.1)
(5.8)
(3.0)
(8.8)

Cash flows from financing activities
Proceeds from issue of share capital
Repayment of borrowings
Increase in borrowings
Dividends paid
Net cash from financing activities

38.0(13.1)
2.5
(4.8)
22.6

0.9
(19.1)
10.0(4.1)(12.3)Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year

12.0
23.7
(0.6)
35.1

14.2
9.3
0.2
23.7

Increase in cash and cash equivalents

12.0

14.2

Effect of foreign exchange rate changes on cash and cash
equivalents

(0.6)

0.2

11.4

14.4

Cash outflow from decrease in debt

13.1

19.1

Cash inflow from increase in debt

(2.5)

(10.0)

Movement in net cash in the year

22.0

23.5

Net cash/(borrowing) at start of the year

13.1

(10.4)Net cash at the end of the year

35.1

13.1

Reconciliation of changes in cash and cash equivalents to movement in net cash

Oxford Instruments plc

18

Announcement of Preliminary Results for the year to 31 March 2012
1

BASIS OF PRESENTATION OF ACCOUNTSThis preliminary statement has been prepared under the same accounting policies as those used to prepare
the 2011 Annual Report and Accounts except as noted below.
The Group has made three restatements in the period. Firstly, the tax credit of £2.7m arising in respect ofshare options in the prior year was, in error, reported in the Consolidated Statement of Comprehensive
Income. This has been corrected and the credit has now been reported in the Consolidated Statement of
Changes in Equity. Secondly, the Group has reclassified certain engineering costs incurred in relation to
one-off special customer orders. Such costs are now treated as research and development costs rather thanas costs of sales and is considered to be a treatment consistent with the Group’s industry peers. The effecton the Consolidated Income Statement for the prior year was to reduce cost of sales by £2.4 million andincrease research and development costs by the same amount. The effect on the Consolidated Statement of
Income for the current year has been to reduce cost of sales by £3.1 million and increase research anddevelopment costs by £3.1 million. Thirdly, due to strong growth in its physical product sales, the Directors
decided during the period that it was no longer appropriate to regard the Austin Scientific business as aservice business. Consequently, it is now included within the Industrial Products segment and thecomparatives have been restated accordingly. In line with the other businesses, its service revenues willcontinue to be reported in the Service segment. The effect of the restatement in the prior year was toincrease the revenue and profit of the Industrial Products segment by £2.9m and £0.2m respectively withcorresponding reductions in the Service segment. The amounts of the revenue and profit in the current year
are £11.0m and £2.4m respectively. No adjustment has any effect on earnings per share or on any balance
sheet previously presented. Accordingly, a revised opening balance sheet at 1 April 2010 is not disclosed.

The principal exchange rates used to translate the Group’s overseas results were as follows:Year end rates
2012
1.60
1.20
131

2011
1.60
1.13
133

US Dollar
1.63
1.60
1.57
1.58

Euro
1.13
1.14
1.17
1.19

Yen
132
125
121
125

US Dollar
1.50
1.55
1.57
1.58

Euro
1.17
1.20
1.17
1.16

Yen
138
133
130
131

US Dollar
Euro
Yen

Average translation rates 2012
Quarter 1 2012
Quarter 2 2012
Quarter 3 2012
Quarter 4 2012

Average translation rates 2011
Quarter 1 2011
Quarter 2 2011
Quarter 3 2011
Quarter 4 2011

Oxford Instruments plc

19Announcement of Preliminary Results for the year to 31 March 2012
2

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

Profit before income tax
Pension scheme curtailment gain
Shareholder earnout no longer required
Reversal of acquisition related fair value adjustments to inventory
Gain on disposal of product line
Acquisition related costs
Impairment
Amortisation of acquired intangibles
Mark to market gain in respect of derivative financial instruments
Adjusted profit before income tax
Share of taxation
Adjusted profit

Year to31 March
2012
£m
36.1
1.7
(7.0)
1.5
11.2
(1.5)
42.0
(8.8)
33.2

Year to31 March
2011
£m
26.7
(4.1)
(0.6)
0.6
4.7
(1.1)
26.2
(5.7)
20.5

Further to the acquisitions of Omicron Nanotechnology and Omniprobe announced in June 2011 (see Note 5), the Board
decided to modify the definition of adjusted profit before tax to exclude the reversal of acquisition related fair value
adjustments to inventory to provide an adjusted profit measure that will include results from acquired businesses on aconsistent basis over time to assist comparison of performance. Acquisition related costs comprise professional fees
incurred in relation to mergers and acquisitions activity and any consideration which, under IFRS3 (revised), falls to betreated as a post acquisition employment expense.
On 20 October 2011 the Group disposed of a product line for a consideration of £8.1m. £1.0m of the consideration wasdeferred for one year. The product line was part of the Industrial Products segment. The profit on disposal was £7.0m.
On 21 March 2012 the Group transferred its ownership of Technologies and Devices Inc (TDI) to Ostendo, a privately
owned company based in California. The Group has received 650,000 shares of Ostendo common stock plus $0.7m incash of which $0.2m will be paid six months after the closing date. The Group considers the fair value of the shares tobe nil. The profit on disposal was nil. During the prior year, the Group recognised other operating income of £0.6m in
relation to a shareholder earnout provided at the time of the acquisition of TDI and which was no longer required.
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, areconsidered by the Board not to bring any significant economic benefit. Accordingly, the Group accounts for thesederivative financial instruments at fair value through profit or loss. To the extent that instruments are hedges of futuretransactions, adjusted profit for the year is stated before changes in the valuation of these instruments so that theunderlying performance of the Group can more clearly be seen.
In calculating the share of tax attributable to adjusted profit before tax in the prior year a one-off recognition of deferred
tax assets relating to the Group’s UK businesses of £11.3m was excluded. At that time the Group announced its
intention to exclude the reversal of this deferred tax from the calculation of the share of tax attributable to adjusted profit
before tax in the years in which it reverses. In the current period deferred tax of £4.6m has reversed and consequently
been excluded from the tax attributable to adjusted profit before tax.
During the prior year, the Group’s defined benefit pension schemes in the UK and US were closed to future accrual. This
gave rise to a curtailment gain under IAS 19 as the majority of active members’ accrued benefits are no longer linked tofuture salary growth.
During the prior year, the Group recognised an impairment charge of £0.6m against costs capitalised in relation to theplanned site move of the Plasma Technology business in the UK. This move will now not take place in the form originallyplanned.

Oxford Instruments plc

20

Announcement of Preliminary Results for the year to 31 March 2012
3

SEGMENT INFORMATIONThe Group has nine operating segments. These operating segments have been combined into threeaggregated operating segments to the extent that they have similar economic characteristics, with relevanceto products and services, type and class of customer, methods of sale and distribution and the regulatoryenvironment in which they operate. Each of these three aggregated operating segments is a reportablesegment.
The Group’s internal management structure and financial reporting systems differentiate the threeaggregated operating segments on the basis of the economic characteristics discussed below.
- The Nanotechnology Tools segment contains a group of businesses supplying similar products,
characterised by a high degree of customisation and high unit prices. These are the Group’s highest
technology products serving research customers in both the public and private sectors.
- The Industrial Products segment contains a group of businesses supplying high technology products
and components manufactured in medium volume for industrial customers.
- The Service segment contains the Group’s service business as well as service revenues from otherparts of the Group.
Reportable segment results include items directly attributable to a segment as well as those which can beallocated on a reasonable basis. Inter-segment pricing is determined on an arm’s length basis. The
operating results of each are regularly reviewed by the Chief Operating Decision Maker, which is deemed tobe the Board of Directors. Discrete financial information is available for each segment and used by the Boardof Directors for decisions on resource allocation and to assess performance. No asset information ispresented below as this information is not allocated to operating segments in reporting to the Group’s Boardof Directors.
Year to 31 March 2012

External revenue
Inter-segment revenue
Total segment revenue

Nanotechnology
Tools
£m
153.3
0.6
153.9

Industrial
Products
£m
128.0
1.1
129.1

Service
£m
56.0
0.3
56.3

Total
£m
337.3

17.3

13.8

11.0

42.1

Nanotechnology
Tools
£m
121.4
0.4
121.8

Industrial
Products
£m
98.5
2.0
100.5

Service
£m
42.4
0.1
42.5

Total
£m
262.3

14.6

6.1

7.4

28.1

2012
£m
42.1
7.0
(1.5)
(1.7)
(11.2)
12.6(11.2)

2011
£m
28.1
4.7
(0.6)
(4.7)
11.0
(11.8)

Segment operating profit
Year to 31 March 2011 (as restated*)

External revenue
Inter-segment revenue
Total segment revenue
Segment operating profit*See note 1 for details of restatement of comparative information.

Reconciliation of reportable segment profit

Profit for reportable segments
Other operating income
Reorganisation costs and impairment
Acquisition related costs
Reversal of acquisition related fair value adjustments to inventory
Amortisation of acquired intangibles
Financial income
Financial expenditure
Oxford Instruments plc

21

Announcement of Preliminary Results for the year to 31 March 2012
Profit before income tax
4
RESEARCH AND DEVELOPMENT

36.1

26.7

The total research and development spend by the Group is as follows:
2012

Research and development expensecharged to the consolidated statement ofincomeLess: depreciation of R&D related fixed
assetsAdd: amounts capitalised as fixed assets
Less: amortisation of R&D costs
previously capitalised as intangibles
Add: amounts capitalised as intangible
assetsTotal cash spent on research anddevelopment during the year

Nanotechnology
Tools
£m

Industrial
Products
£m

Total
£m

16.8

9.0

25.8

(0.6)
0.6

(1.0)
0.7

(1.6)
1.3

(2.8)

(2.4)

(5.2)

1.7

0.7

2.4

15.7

7.0

22.7

2011
As restated *Research and development expensecharged to the consolidated statement ofincomeLess: depreciation of R&D related fixed
assetsAdd: amounts capitalised as fixed assets
Less: amortisation of R&D costs
previously capitalised as intangibles
Add: amounts capitalised as intangible
assetsTotal cash spent on research anddevelopment during the year

Nanotechnology
Tools
£m

Industrial
Products
£m

Total
£m

12.1

7.9

20.0

(0.5)
2.2

(0.1)
0.1

(0.6)
2.3

(2.6)

(2.8)

(5.4)

1.9

1.1

3.0

13.1

6.2

19.3

*See note 1 for details of restatement of comparative information.

Oxford Instruments plc

22Announcement of Preliminary Results for the year to 31 March 2012
5

ACQUISITIONS

Omicron NanoTechnology GmbHOn 13 June 2011 the Group acquired 100% of the share capital of Omicron NanoTechnology GmbH for cash
consideration totalling £29.7m. Omicron NanoTechnology GmbH specialises in the manufacture of very
high-end microscopes for nanotechnology research and is headquartered in Taunusstein, Germany. It has amanufacturing facility in East Grinstead, UK and sales offices in the US, France and Japan. The book andfair value of the assets and liabilities acquired is given in the table below. The business has been acquired
for the purpose of integrating into the Nanotechnology Tools segment.

Intangible fixed assets
Tangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Customer deposits
Deferred tax liabilities
Cash
Net assets acquired
Goodwill
Total consideration
Cash acquired
Net cash outflow relating to the acquisition

Book value
£m
6.2
14.1
5.1
(4.7)
(10.5)
1.4
11.6

Adjustments
£m
27.8
(1.7)
(1.3)
(0.2)
(0.1)
(6.8)
17.7

Fair value
£m
27.8
4.5
12.8
5.1
(4.9)
(10.6)
(6.8)
1.4
29.3
0.4
29.7
(1.4)
28.3

The goodwill arising is not tax deductible and is considered to represent the value of the acquired workforce.
Omniprobe, Inc.
On 13 June 2011 the Group acquired 100% of the share capital of Omniprobe, Inc. for cash consideration
totalling £13.1m of which £0.5m is deferred for 2 years. Omniprobe, Inc. designs and manufactures nanomanipulators for use within scanning electron microscopes and is headquartered in Dallas, USA. The bookand fair value of the assets and liabilities acquired is given in the table below. The business has beenacquired for the purpose of integrating into the Nanotechnology Tools segment.

Intangible fixed assets
Tangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Cash
Net assets acquired
Goodwill
Total consideration
Cash acquired
Deferred consideration
Net cash outflow relating to the acquisition

Book value
£m
0.2
0.6
0.5
0.6
(0.3)
0.3
1.9

Adjustments
£m
11.3
(0.5)
(0.3)
10.5

Fair value
£m
11.5
0.1
0.5
0.6
(0.6)
0.3
12.4
0.7
13.1
(0.3)
(0.5)
12.3

The goodwill arising is tax deductible in full and is considered to represent the value of the acquired
workforce and the value of patents which it has not been possible to separately identify.

Oxford Instruments plc

23

Announcement of Preliminary Results for the year to 31 March 2012
Platinum Medical Imaging LLC
On 3 November 2011 the Group acquired 100% of the share capital of Platinum Medical Imaging LLC for an
initial cash consideration of £10.8m.
Further contingent consideration is payable each year up until the third anniversary of the acquisition
dependent on post acquisition earnings. The amount of this consideration could be between zero and£19.4m. The fair value of the amount likely to be paid is £2.6m and is based on management forecasts offuture profitability.
Platinum Medical Imaging LLC is an established US company providing high quality parts and services for
MRI (Magnetic Resonance Imaging) and CT (Computed Tomography) medical imaging instruments. It
operates from sites in Florida and California from which the business sells parts, carries out service andmaintenance and performs system rebuilds.
The book and provisional fair value of the assets and liabilities acquired is given in the table below.
Provisional values have been used to allow a new accounting team time to review and finalise the fair value
adjustments. The business has been acquired for the purpose of integrating into the Service segment.

Book value

Intangible fixed assets
Tangible fixed assets
Inventories
Trade and other receivables
Trade and other payables
Customer deposits
Deferred tax
Overdraft
Net assets acquired
Goodwill
Total consideration
Overdraft acquired
Deferred consideration
Net cash outflow relating to the acquisition

£m
0.5
0.9
0.6
(0.4)
(0.4)
(0.1)
1.1

Provisional
adjustments
£m
12.5
(0.2)
0.8
(0.3)
(0.4)
(0.3)
(0.2)
11.9

Provisional
fair value
£m
12.5
0.3
1.7
0.3
(0.8)
(0.7)
(0.2)
(0.1)
13.0
0.4
13.4
0.1
(2.6)
10.9

The goodwill arising is tax deductible in full and is considered to represent the value of the acquired workforce and expected synergies arising from the integration with the Group’s existing service business.
The book value of receivables given in the tables above represents the gross contractual amounts
receivable. The fair value adjustment to receivables represents the best estimate at the acquisition date of
the cash flows not expected to be collected.
These acquisitions contributed revenue of £27.8m, £4.5m and £3.8m respectively and operating losses of£4.6m, £0.8m and £0.7m to the Group’s result for the period. Had the acquisitions taken place on 1 April
2011 the equivalent Group numbers would have been revenue of £351.2m and operating profit of £33.6m.

Oxford Instruments plc

24

Announcement of Preliminary Results for the year to 31 March 2012
6

INCOME TAX EXPENSE

Recognised in the Consolidated Statement of Income
2012
£m

2011
£m

10.4
10.4

6.1
(0.5)
5.6

1.4
(0.2)
(0.3)
0.9

0.9
(11.9)(0.1)(11.1)

11.3

(5.5)

Profit before income tax

36.1

26.7

Income tax using the UK corporation tax rate of 26% (2011:28%)
Effect of:Tax rates other than the UK standard rate
Change in rate at which deferred tax recognised
Non-taxable income and expenses
Tax incentives not recognised in the Consolidated Statement of Income
Recognition of deferred tax not previously recognised
Effect of previous tax losses now utilised
Adjustment in respect of prior years
Total tax expense/(credit)

9.4

7.5

2.4
0.3
0.2
(0.5)
(0.2)
(0.3)
11.3

0.4
(0.2)
0.2
(0.7)
(11.9)
(0.2)
(0.6)
(5.5)

(7.1)
(0.1)
(7.2)

(1.5)
6.0
0.1
4.6

1.0

(2.7)

Current tax expense
Current year
Adjustment in respect of prior years

Deferred tax expense
Origination and reversal of temporary differences
Recognition of deferred tax not previously recognised
Adjustment in respect of prior years

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

Taxation expense/(credit) recognised in other comprehensive
incomeCurrent tax – relating to employee benefits
Deferred tax - relating to employee benefits
Deferred tax – relating to cash flow hedges

Taxation expense/(credit) recognised directly in equity
Deferred tax – relating to share options

The 2012 Budget on 21 March 2012 announced that the UK corporation tax rate will reduce to 22% by 2014.
A reduction in the rate from 26% to 25% (effective from 1 April 2012) was substantively enacted on 5 July
2011, and a further reduction to 24% (effective from 1 April 2012) was substantively enacted on 26 March
2012. This will reduce the Group’s future current tax charge accordingly. The deferred tax asset at 31 March2012 has been calculated based on the rate of 24% substantively enacted at the balance sheet date. It has
not yet been possible to quantify the full anticipated effect of the announced further 2% rate reduction,although this will further reduce the Group’s future current tax charge and reduce the Group’s deferred tax
asset accordingly.

Oxford Instruments plc

25

Announcement of Preliminary Results for the year to 31 March 2012
7

EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit for the period as shown in the Consolidated
Statement of Income divided by the weighted average number of ordinary shares outstanding during theyear, excluding shares held by the Employee Share Ownership Trust, as follows:
2012
2011
SharesSharesMillionMillion54.2
Weighted average number of shares outstanding
49.7
(0.2)
Less shares held by Employee Share Ownership Trust(0.4)
Weighted average number of shares used in calculation of earnings
per share
54.0
49.3

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
share calculations
Effect of shares under option
Weighted average number of ordinary shares per diluted earnings
per share calculations
8

2012
Sharesmillion2011
Sharesmillion

54.0
1.1

49.3
1.4

55.1

50.7

2012
pence
2.52
6.48
9.00

2011
pence
2.40
6.00
8.40

DIVIDENDS PER SHARE

The following dividends per share were paid by the Group:

Previous year interim dividend
Previous year final dividend

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

Interim dividend
Final dividend

2012
Pence
2.772
7.228
10.000

2011
pence
2.52
6.48
9.00

The interim dividend was not provided for at the year end and was paid on 10 April 2012. The final proposed
dividend of 7.228 pence per share (2011: 6.48 pence) was not provided at the year end and will be paid on
25 October 2012 subject to authorisation by the shareholders at the forthcoming Annual General Meeting.
9

REPORT AND ACCOUNTS

The financial information set out above does not constitute the company's statutory accounts for the years
ended 31 March 2012 or 2011. Statutory accounts for 2011 have been delivered to the registrar ofcompanies, and those for 2012 will be delivered in due course. The auditor has reported on those accounts;
their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drewattention by way of emphasis without qualifying their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The Company is registered in England Number 775598.

Oxford Instruments plc

26

Announcement of Preliminary Results for the year to 31 March 201210

THE ANNUAL GENERAL MEETING

The Annual General Meeting will be held on Tuesday, 11 September 2012 at 2.30 pm at Group Head Office,Tubney Woods, Abingdon, Oxfordshire, OX13 5QX.

Oxford Instruments plc

27