The Business of Science®

Oxford Instruments
Half Year Results Presentation
To 30th September 2017

Ian Barkshire – Chief Executive
Gavin Hill – Group Finance Director© Oxford Instruments 20171

AgendaThe Business of Science®

• Highlights• Horizon Update• Financial Review• Operational Review• Summary and Outlook© Oxford Instruments 20172

Highlights
The Business of Science®

• Good progress in the early implementation of Horizon• New market focused sector structure aligning with ourcustomers’ applications• Reported revenue in line with previous year
• Increased profitability and operating margin reflecting
currency benefits• Growth in orders and increased order book• Significant reduction in net debt
© Oxford Instruments 20173

Horizon Strategy
The Business of Science®

• Sustainable revenue growth and margin improvement• Focus on segments where nanotechnology drives long termgrowth• Creating value for customers through solutions© Oxford Instruments 20174

Horizon Progress
The Business of Science®

• Significant management of portfolio• Industrial Analysis sale completed in July 2017
• Sale of Superconducting Wire completed in Nov 2016

• Building management, leadership and core capabilities todeliver Horizon• Transition from product-technique focus to customer
application and market focus• New sector structure© Oxford Instruments 20175

Horizon Progress – New Sector Structure
The Business of Science®

• Aligning businesses around customer applications and endmarkets• Greater insights into products, markets and growth drivers• Building and exploiting synergies across businesses

Materials &Characterisation

Research &Discovery•Asylum Research•Andor Technology•NanoAnalysis•NanoScience(including Magnetic
Resonance)•Plasma Technology•Scienta Omicron•X-ray Technology© Oxford Instruments 2017

Service &Healthcare• OiService
Support services for Oxford
Instruments' equipment• OI Healthcare
Servicing sale and rental of
third party imaging equipment
in USA & Japan

6

End Market Segments Revenue
The Business of Science®

Group1Materials &Characterisation2%

Research &Discovery
4%

6%
20%
31%

15%

28%
2%

42%

3%

4%
46%

7%

8%

14%

6%
30%

11%

20%
1%

Funding:
Academic:

55%

52%

72%

Commercial:

45%

48%

28%

© Oxford Instruments 2017

1 includes Service & Healthcare

7

The Business of Science®

Financial Review
Gavin Hill

© Oxford Instruments 20178

Income Statement
The Business of Science®

£mRevenue
Adjusted operating profit
Net finance costs
Adjusted profit before tax

2017/18
132.1
18.8
(2.5)
16.3

2016/17
132.4
16.4
(3.3)
13.1

Amortisation of acquired intangibles
Impairment of capitalised development costs
Non-recurring items and acquisition related costs
Mark-to-market of currency hedges

(5.6)
(0.6)
2.6

(6.0)
(0.7)
(0.6)
(6.4)

Profit/(loss) before tax from continuing operations

12.7

(0.6)

Continuing adjusted basic earnings per share
Dividends per share

22.3p
3.7p

18.0p
3.7p

© Oxford Instruments 2017

ReportedChange(0.2%)
14.6%

Constant
Currency
Change(4.5%)(12.2%)

24.4%(9.2%)

23.9%-9

New Sectors
The Business of Science®

Revenue: £mMaterials & Characterisation
Research & Discovery
Service & Healthcare
Total

Half Year to
30 September
2017
50.1
47.9
34.1
132.1

Half Year to
30 September
2016
45.3
55.4
31.7
132.4

Year to31 March
2017
104.1
125.2
70.9
300.2

Adjusted operating profit: £mMaterials & Characterisation
Research & Discovery
Service & Healthcare
Total

Half Year to
30 September
2017
7.2
4.2
7.4
18.8

Half Year to
30 September
2016
4.2
7.0
5.2
16.4Year to31 March2017
10.9
13.8
13.3
38.0

© Oxford Instruments 201710Revenue by Sector
The Business of Science®

£mMaterials &Characterisation

Research &Discovery

Service &Healthcare

Total*

45.3
3.0
1.8
50.1

55.4
(9.7)
2.3
48.0

31.7
0.8
1.6
34.1

132.4
(6.0)
5.7
132.1

+10.6%+6.6%(13.4%)(17.5%)

+7.6%
+2.5%

(0.2%)(4.5%)

2016/17
Underlying
FX
2017/18
GrowthReported
Constant currency* Excluding inter-segment revenues© Oxford Instruments 201711

Revenue by Territory
The Business of Science®

GroupRevenue %Europe25.3%

North America
34.6%

Asia
39.2%
51.3

47.9

ROW
0.9%

51.8

45.7

33.4
30.4

2.82017

2018

2017

2018

2017

2018

1.22017

2018

Reported growth+9.9%(4.6%)+1.0%(57.1%)

Constant
currency growth+4.6%(10.0%)(1.6%)(64.3%)

Orders1: reported growth+11.6%+11.4%+12.1%+311.1%

Orders 1: constantcurrency growth

+5.5%

+5.7%

+9.0%

+333.3%© Oxford Instruments 2017

Constant currency growth excludes currency effects; £ in millions
1Excluding US Healthcare

12Order Book
The Business of Science®

160
155

Growth (reported): +1.3%
Growth (constant currency): +3.3%

150£m145
140

140.0

141.8

135130125120© Oxford Instruments 201730 September 2016

30 September 201713

Adjusted Operating Profit by Sector
The Business of Science®

Materials &Characterisation

Research &Discovery

Service &Healthcare

Total

2016/17

4.2

7.0

5.2

16.4

Underlying

0.9(4.7)

1.8(2.0)

FX

2.1

1.9

0.4

4.4

2017/18

7.2

4.2

7.4

18.8

2016/17

9.3%

12.6%

16.4%

12.4%

2017/18

14.4%

8.8%

21.7%

14.2%

£m

EBIT Margin© Oxford Instruments 201714Cash Flow
The Business of Science®

-Working Capital
Outflow: £15.0m (2016: £14.9m)(20)Effective tax rate
22.1% (2016: 21.4%)

Pensions:
Deficit: £22.5m (2016: £25.1m)
Annual contribution: £7.1m
Disposal (net cash flow):
Industrial Analysis: £73.0m

Cash/(Debt): £m(40)
Inv inDividend Other/FX
Associate
(net)

(60)

(80)

(100)

EBITDA(120)
Debt b/f
FY16(140)© Oxford Instruments 2017

Working Capitalised
Capital Development Capex

InterestTax

Pensions

Disposal
Debt c/f
FY1715Currency Exposure
The Business of Science®

90£m equivalent

73.630

19.0

20.9

22.5

14.9

13.2

7.2

1.9
(3.5)

(30)

(18.8)

Sterling

US DollarSales© Oxford Instruments 2017

EuroJapanese Yen

OtherAdjusted operating profit

16

Summary
The Business of Science®

• Growth in orders and order book at reported and constantcurrency• Adjusted operating margin up 180 basis points to 14.2%,
primarily through expected currency benefits• Continuing adjusted basic earnings per share up 23.9%• Strong balance sheet following receipt of sale proceedsfrom Industrial Analysis• Net debt down to £45.5 million with net debt:EBITDA
leverage at 0.9 times© Oxford Instruments 201717

The Business of Science®

Operational Review
Ian Barkshire© Oxford Instruments 201718

Materials & Characterisation

Plasma Technology
Asylum Research
NanoAnalysis

The Business of Science®

Focuses on applied R&D and commercial customers, enabling thefabrication and characterisation of materials and devices down to theatomic scale(38% of Group revenue)

Strong growth and improved profitability
Plasma Technology –• Strong, improved performance• Growth in academic research and specialised•

production
Increasing demand in optoelectronics andphotonic applications e.g. 5G networks© Oxford Instruments 201719

Materials & Characterisation

Plasma Technology
Asylum Research
NanoAnalysis

The Business of Science®

Asylum Research –• Strong order growth driven by high•demand for new products
Cypher VRS providing new insights indisease mechanisms and drug discovery

NanoAnalysis –• Strong performance driven by new•

Sensitive

Fast

Symmetry

products
Driving capabilities and productivity insemiconductor and advanced material
characterisation© Oxford Instruments 201720

Research & Discovery

Andor Technology
NanoScience (including Magnetic Resonance)
X-ray Technology
ScientaOmicronThe Business of Science®

Advanced solutions that create unique environments and enablemeasurements down to the molecular and atomic level, used infundamental and applied research(36% of Group Revenue)
Revenue and profitability down in the period;
growth in orders and order book
Andor Technology –• Soft financial performance due to optical
microscopy systems• Growth from image analysis software in cellbiology and neuroscience applications• Improved performance from scientific cameras
used in astronomy
Credit: University of Warwick/Mark Garlick© Oxford Instruments 201721

Research & Discovery

Andor Technology
NanoScience (including Magnetic Resonance)
X-ray Technology
ScientaOmicron

The Business of Science®

NanoScience & Magnetic Resonance –• Cryogenic and magnetic environments criticalfor exploitation of quantum technology• Performance depressed by high proportion ofcustomised systems• Strong growth for benchtop magnetic
resonance systems in food and chemicalanalysis
X-ray Technology –• Growth in healthcare applications offset bydecline from industrial segments
ScientaOmicron –• Improvement in performance© Oxford Instruments 201722

Service & Healthcare

OiServiceOI Healthcare
The Business of Science®

Provides customer service and support for our own products and theservice, sale and rental of third party healthcare imaging systems(26% of Group revenue)

Revenue and profit growth
OiService –• Strong demand for services relating to•own products
Enhanced customer support services

OI Healthcare –• Business transition towards recurring
revenue relative to refurbished systems© Oxford Instruments 201723

Summary and Outlook
The Business of Science®

• Good progress from Horizon implementation• Reporting structure enhances our focus on market growth
drivers and evolving demands of our customers• Full year expectations remain unchanged• Confidence in long term growth prospects© Oxford Instruments 201724

The Business of Science®

Questions?
© Oxford Instruments 201725