The Business of Science®

Oxford Instruments
Preliminary Results Presentation
To 31st March 2017

Ian Barkshire – Chief Executive
Gavin Hill – Group Finance Director© Oxford Instruments 2017

Page 1

AgendaThe Business of Science®

• Highlights• Horizon Strategy• Financial Review• Operational Review• Summary and Outlook© Oxford Instruments 2017

Page 2

Highlights
The Business of Science®

• Horizon strategy launched - a year of structural, operationaland strategic transition• Significant actions to manage portfolio• Stable performance in line with expectations• Continued strength and improved profitability acrossNanoTechnology Tools• Strong growth in servicing own products offset by weakerperformance in OI Healthcare• Review of balance sheet – non-cash impairments• Improved net debt supported by focus on cash conversion© Oxford Instruments 2017

Page 3

The Business of Science®

Horizon Strategy
A Transformational Programme

Two Key Anchors:© Oxford Instruments 2017

long-term growthmargin improvement

Page 4

Key Elements of Horizon
The Business of Science®

• Focus on segments where nanotechnology drives long termgrowth• Transform into a focused, market-driven Group• Drive delivery of synergies across Group• Move up the value chain by providing our customers withenhanced solutions, information and support• Renowned for unprecedented performance, ease of useand customer support• Embed a new operating model© Oxford Instruments 2017

Page 5

A New Phase for Nanotechnology
The Business of Science®

Increased commercial exploitation of Nanotechnology© Oxford Instruments 2017

Page 6

Focusing on Growth Markets
The Business of Science®

Key areas identified where nanotechnology will provide
sustainable growth potential
End MarketGrowth Drivers

Healthcare

Demand for improvements in disease detection andunderstanding fundamental mechanisms

EnergyDemand for improved efficiencies and sustainability

IT & Communications Speed, security, capacity
Advanced Materials

Developing lighter, stronger, more versatile and more
affordable materials

Quantum Technology

Researching and developing the latest advances inquantum science© Oxford Instruments 2017

Page 7

Evolved Business Model
The Business of Science®

Fundamental
Research
Providing solutions
to those wishing to
explore new frontiers
at the nanoscale

Innovation
approach

Product
application
insight

CommercialMarkets

Applied R&D
Providing products toenable those wishing
to exploit theopportunities offeredby nanotechnology todevelop moreadvanced products

Customerbase

Providing tools to
support thecommercialisation ofnanotechnology into
every day products

Leading provider of high technology solutions, information and support toresearch and commercial markets.
Enabling commercial exploitation and fundamental discovery of nanotechnology.
© Oxford Instruments 2017

Page 8

New Operating Model
The Business of Science®

Application focusedsales

Market Intimacy

Customer
SupportCustomer

Broader range of services andsupport

Insight and alignment tocustomer roadmaps

Innovation &ProductDevelopment

Enhanced outcomes
Application focus
Leveraging synergiesOperational Excellence
Operational efficiencies & productivity
gains© Oxford Instruments 2017

Page 9

Horizon Progress to Date
The Business of Science®

• Next stage in the evolution and commercialisation of OxfordInstruments• Progress in establishing a more synergistic portfolio• Disposal of superconducting wire
• Exchange of contracts for sale of Industrial Analysis• Magnetic Resonance and X-ray Technology businesses
remain within Group• Progress in building management and leadershipcapabilities across Group© Oxford Instruments 2017

Page 10

The Business of Science®

Financial Review
Gavin Hill

© Oxford Instruments 2017

Page 11Income Statement
The Business of Science®

£mRevenue
Adjusted operating profit
Net finance costs
Adjusted profit before tax
Amortisation of acquired intangibles
Impairment of non-current assets
Non-recurring items and acquisition relatedcostsMark-to-market of currency hedges

Reported
2016/17 2015/16 Change
348.5
319.7
+9.0%
42.5
41.2
+3.2%
(6.5)
(7.6)
36.0
33.6
+7.1%

(13.8)(45.8)(16.7)-(3.1)

(4.5)

1.2

(2.7)

(Loss)/profit before tax from continuing
operations(25.5)

9.7

Continuing adjusted basic earnings per share
Dividend per share

47.8p
13.0p

45.3p
13.0p

© Oxford Instruments 2017

ConstantCurrency
Change(3.7%)(5.8%)(3.9%)+5.5%

Page 12

Revenue by Sector
The Business of Science®

£m

NanoTechnology
Tools

Industrial
Products

Service

Total*

187.4
(2.3)
23.6
208.7

54.0
(3.8)
6.5
56.7

78.4
(5.7)
10.5
83.2

319.7
(11.8)
40.6
348.5+11.4%(1.2%)+5.0%(7.0%)+6.1%(7.1%)+9.0%(3.7%)

2015/16
Underlying
FX
2016/17GrowthReported
Constant currency* Excluding inter-segment revenues© Oxford Instruments 2017

Page 13

Revenue by Territory
The Business of Science®

GroupRevenue %Europe24.4%

North America
31.9%

Asia
42.1%

ROW
1.6%

146.6

119.9
110.4

81.6

111.2

85.0

7.8

5.7

2016 20172016 20172016 20172016 2017

Reported Growth

+4.2%

+0.7%

+22.3%(26.9%)

Constant
Currency Growth(5.9%)(12.0%)+ 7.2%(28.2%)

Constant currency growth excludes currency effects; £ in millions© Oxford Instruments 2017

Page 14Order Book
The Business of Science®

160
Growth (reported): +9.3%
150
Growth (constant currency): +0.5%£m140144.5

132.2

130120110100

Year End 2016
© Oxford Instruments 2017

Year End 2017
Page 15

Adjusted Operating Profit by Sector
The Business of Science®

NanoTechnology

Industrial£mTools

ProductsServiceTotal

2015/16

21.3

1.1

18.8

41.2

Underlying

4.4

(0.3)

(6.5)

(2.4)

FX

(0.1)

0.9

2.9

3.7

2016/17

25.6

1.7

15.2

42.5

2015/16

11.4%

2.0%

24.0%

12.9%

2016/17

12.3%

3.0%

18.3%

12.2%

EBIT Margin© Oxford Instruments 2017

Page 16

Cash Flow
The Business of Science®

(10)

(30)

Effective tax rate
24.1% (2015/16:22.9%)(50)

Cash/(Debt): £m

Pensions:
Deficit: £25.1m (2015/16:£35.0m)Annual contribution: £6.9m

Working Capital
Outflow: £4.4m

Acquisitions (deferredconsideration):
MIR, Spectral, Asylum: £9.8m(70)Working
CapitalCapitalised
Capex
Development(90)

Disposal:Superconducting Wire: £12.2m

InterestTax(110)

Pensions
Dividend
Acquisitions Disposal(130)
Debt b/f
FY16(150)

EBITDA

Other/FX(net)
Debt c/f
FY17

Adjusted operating cash: £36.6m (2015/16: £45.5m)
Cash conversion: 86.1% (2015/16: 110.4%)© Oxford Instruments 2017

Page 17Currency Exposure
The Business of Science®

£m equivalent

188.6

180120

63.2
60

65.7

42.8
20.6

32.7
13.6

0(60)

(55.6)
SterlingUS DollarSales© Oxford Instruments 2017

EuroJapanese Yen

18.7
0.7

Other

Adjusted operating profit
Page 18

Impairments
The Business of Science®

• Total non-cash impairment of non-current assets of £45.8 million• OI Healthcare - £11.2 million• Lower level of sales of refurbished systems, high level of activity incomparative period, change in licensing policy• New strategy to focus on improving sustainable profitability and operational
efficiency. New organisational structure and key hires• Asylum Research - £23.3 million• Slowdown in academic funding resulting, delays in new product launches• Actions include prioritising key new products, driving operational efficiencies
and improving regional sales capabilities• ScientaOmicron - £8.0 million• Financial performance behind investment case
• Complete restructuring plans and factory consolidation• Actions include key new product launches and regional organisation changes• Other - £3.3 million© Oxford Instruments 2017

Page 19

Summary and Sale of Industrial Analysis
The Business of Science®

• Summary• Stable year with strong profit growth in NanoTechnology Tools
and currency effects offsetting OI Healthcare decline• Good cash flow conversion and reduction in net debt

• Sale of Industrial Analysis• Sale of Industrial Analysis Business announced on 26 April
2017 for £80 million• Expect completion in the second quarter of the financial year
• Annualised reduction in operating profit of £4.2 million (acrossIndustrial Products and Service) and profit before tax of £2.7million• Net debt to EBITDA leverage after completion expected to fall
to below 1 times on a pro-forma basis© Oxford Instruments 2017

Page 20

The Business of Science®

Operational Review
Ian Barkshire© Oxford Instruments 2017

Page 21

NanoTechnology Tools

NanoAnalysis
Andor Technology
Asylum Research

Plasma Technology
NanoScience
ScientaOmicron
The Business of Science®

Continued strength and improved
profitability• Strong technical and financial
performance from NanoAnalysis• Andor continue to perform well
supported by new product launches• Difficult year at Asylum leading togoodwill impairment. Good
opportunities for future growth© Oxford Instruments 2017

Page 22

NanoTechnology Tools

NanoAnalysis
Andor Technology
Asylum ResearchPlasma Technology
NanoScience
ScientaOmicron
The Business of Science®

Continued strength and improved
profitability• Significant improvement at Plasma
Technology• NanoScience performance driven
by increased funding into quantum
related technologies• Slow progress at ScientaOmicron© Oxford Instruments 2017

Page 23

Industrial Products

X-ray Technology
Magnetic ResonanceIndustrial Analysis
The Business of Science®

Stable performance despite challenging
end markets• Progress at X-ray Technology throughdiversification and increased demandin e.g. medical imaging applications• Magnetic Resonance: strong interestin Pulsar from across broad range ofapplications• Industrial Analysis reinforced its
market positions through key productlaunches© Oxford Instruments 2017

Page 24

ServiceOiService
OI Healthcare
The Business of Science®

• Strong revenues and profit growth fromour own products within OiService• Overall performance impacted by market
changes within US OI Healthcare• Necessary steps in train to improvesustainable profitability© Oxford Instruments 2017

Page 25

Summary and Outlook
The Business of Science®

• In a year of transition, the Group delivered a stableperformance, supported by currency tailwinds.

• Whilst academic and R&D funding levels remain uncertain,
we believe that progress with our strategic initiatives andfavourable currency effects will deliver an outcome for theyear in line with expectations.

• Fundamental improvements to our structure, operations andstrategy are underway and give us a solid platform to returnto sustainable growth, at improved margins, over themedium term.

© Oxford Instruments 2017

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The Business of Science®

Questions?

© Oxford Instruments 2017

Page 27