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 Tuesday 12 November 2019
Oxford Instruments plc
Announcement of Half Year Results for the six months to 30 September 2019
Oxford Instruments plc, a leading provider of high technology products and systems for industry and research, today
announces its Half Year Results for the six months to 30 September 2019.

Revenue1
Adjusted* operating profit1
Adjusted* profit before tax1
Profit before tax1
Adjusted* basic earnings per share1
Dividend per share (interim)
Cash generated from operations1
Net cash/(debt)

Half year to
30 September
2019£mHalf year to
30 September
2018£m% change
reported% change
constant
currency

166.3
25.8
25.4
18.0
35.5p
4.1p
16.4
14.2

147.0
21.0
19.8
11.6
27.3p
3.8p
21.4
(12.5)+13.1%+22.9%+28.3%+55.2%+30.0%+7.9%(23.4)%+9.1%+12.4%

1Continuing operations

Financial Highlights:
•
•
•
•
•
•
•
•

Orders up 6.4% to £173.3 million (2018: £162.9 million), an increase of 2.8% at constant currency; book-to-bill ratioof 1.04
Order book of £186.8 million (31 March 2019: £171.6 million), up 8.9% (+6.0% at constant currency)
Reported revenue increased by 13.1% to £166.3 million (+9.1% at constant currency)
Adjusted operating profit from continuing operations up 22.9% at £25.8 million (+12.4% at constant currency)
Adjusted operating margin of 15.5% (2018: 14.3%), 14.7% at constant currency
Reported profit before tax up 55.2% to £18.0 million after mark-to-mark movement on currency derivatives and otheradjusting items
Net cash of £14.2 million following cash conversion of 65% and one-off US pension termination payment
Interim dividend increased by 7.9% to 4.10 pence

Operational Highlights:
•
•
•
•
•
•
•
•
•

Good progress with Horizon, delivering continued growth and improved operating margin
Market intimacy enabled new growth opportunities from academic and commercial customers, which more thanoffset softening in silicon semiconductor, electronics and automotive production markets
Materials & Characterisation delivered a strong performance underpinned by increased sales across
Semiconductor & Communications, Advanced Materials and Energy & Environment segments
Research & Discovery saw growth across Healthcare & Lifescience, Quantum Technology and Fundamental
Research segments
Increased focus on customer support services related to our own products delivered an improved performance inService & Healthcare
Improved commercial practices and gains from our operational excellence programme contributed to increased
profitability in the period
Focus on customer applications driving success of recently launched products and the development of richer future
product roadmaps and IP portfolio; total cash spend on R&D equivalent to 7.8% of sales
Underlying order growth impacted by some softer end markets and the phasing of OEM orders
Our access to all phases of the technology cycle – from academic research through to commercial production –provided resilience against uncertain macroeconomic backdrop

Half Year Results Announcement for the six months ended 30 September 2019

Summary and Outlook:
Ian Barkshire, Chief Executive of Oxford Instruments plc, said:
The Group has delivered a strong first half performance, with revenue, profit and order growth against a backdrop of
uncertain macroeconomic conditions. Our customer centric approach has delivered growth within existing markets andexpansion into new adjacent markets.
The breadth of our product portfolio and the diversity of our end-markets, together with our focus on understanding
customer needs and responding to market changes, underpin our ability to deliver further growth and margin
improvement. We expect the second half of the financial year to benefit from the normal seasonal bias, with expectations
for the current financial year remaining unchanged on a constant currency basis.

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

Tel: 01865 393200

MHP Communications
Rachel Hirst / Alice McLaren

Tel: 020 3128 8100

Number of pages: 34*NOTE: Throughout this half-year announcement we make reference to adjusted numbers. A full definition of adjusted
numbers can be found in Note 2. Where we make reference to constant currency numbers, these are prepared on amonth-by-month basis using the translational and transactional exchange rates which prevailed in the previous year
rather than the actual exchange rates which prevailed in the year. Transactional exchange rates include the effect of ourhedging programme.
NOTE: Oxford Instruments plc compiled analyst forecast range for adjusted operating profit (year to 31 March 2020):£51.5 million to £53.0 million, with an average consensus of £52.4 million.

Oxford Instruments plc

2

Half Year Results Announcement for the six months ended 30 September 2019
Chief Executive’s Review
Introduction
Oxford Instruments provides high technology products and services to the world’s leading industrial companies andscientific research communities, exploiting our world-class ability to image, analyse and manipulate materials down tothe atomic and molecular level. Our core purpose is to support our customers in addressing some of the world’s mostpressing challenges, enabling a greener economy, increased connectivity, improved health, and leaps in scientificunderstanding.
We continue to make good progress with the implementation of our Horizon strategy whilst maintaining a focus on thenear-term delivery of improved performance. Our customer-centric approach provides valuable market insights thatdeliver growth within existing markets and allow us to identify opportunities in new adjacent markets. These insights
are driving increased success for recently launched products and the development of a richer future product roadmap.
The implementation of improved commercial practices, combined with gains from our operational excellence
programme, contributed to improved profitability in the period, and provide the foundation for further growth. We remain
focused on addressing a broad and diverse range of attractive end markets with long-term growth drivers. By addressing
the academic, applied R&D and high technology manufacturing segments, we are engaged throughout the technology
cycle and are well positioned to benefit from each wave of commercialisation and market disruption.
Overview
The Group has delivered a strong first half performance, with revenue, profit and order growth against a backdrop of
uncertain macroeconomic conditions. Reported revenue increased 13.1% (9.1% at constant currency) to £166.3 million(2018: £147.0 million), with good growth across each of our sectors – Materials & Characterisation, Research &Discovery and Service & Healthcare. We had strong constant currency revenue growth from both academic andcommercial customers, increasing by 8% and 10% respectively. The proportion of revenue from commercial customers
remained broadly unchanged at 51%.
From an end market perspective, we saw constant currency growth across each of our target customer segments, with
Healthcare & Lifescience up 6% (27% of Group revenue), Semiconductor & Communications up 8% (22% of revenue),
Quantum Technology up 6% (8% of revenue), Energy & Environment up 16% (10% of revenue), Advanced Materials
up 9% (23% of revenue) and Research & Fundamental Science up 14% (10% of revenue) resulting in a relatively
unchanged end market distribution from 31 March 2019. While we saw further softening in specific markets such as
silicon semiconductor, electronics and automotive production, our focus on customer outcomes has enabled us to findgrowth opportunities elsewhere.
From a geographical perspective, constant currency revenue grew in Europe, North America and Asia by 18%, 8% and
4% respectively. In Asia we continue to make good progress in China, with revenue up 14% relative to the comparative
period. Asia represented 40% of Group revenue at constant currency, Europe 27%, North America 32% and Rest ofWorld 1%. Within Asia, China represented an unchanged proportion of Group revenue at 21%.
Increased volumes and the benefit from our improved business processes and commercial practices, combined withgains from our operational excellence programme, drove reported adjusted operating profit up 22.9% to £25.8 million(2018: £21.0 million), an increase of 12.4% at constant currency. The Materials & Characterisation and Research &Discovery sectors both delivered double-digit constant currency growth. In our Service & Healthcare sector, strong profit
growth from the increased demand for the services related to our own products was partially offset by reduced
contribution from OI Healthcare in the period due to the phasing of system sales. Reported operating margin increased
to 15.5% (2018: 14.3%) representing margin of 14.7% at constant currency.
Continuing adjusted basic earnings per share increased by 30.0% to 35.5 pence (2018: 27.3 pence).
Reported orders for the Group increased to £173.3 million (2018: £162.9 million) up 6.4% (2.8% at constant currency).
We saw growth from academic and commercial customers being partially offset by reduced activity within the silicon
semiconductor, electronics and automotive markets. The Materials & Characterisation and Service & Healthcare sectors
increased orders on a constant currency basis, with Research & Discovery marginally down in the period due primarily
to the phasing of larger customer orders within our X-ray Technology business. Continued order growth resulted in a
book-to-bill ratio for the period of 1.04.

Oxford Instruments plc

3

Half Year Results Announcement for the six months ended 30 September 2019
The order book, representing orders for future delivery, as at 30 September 2019 increased 8.9% on a reported basis(6.0% at constant currency) since the year end, driven predominately by growth in Materials & Characterisation and theservicing of our own products.
Good cash collection in the period resulted in an improved Group net cash position of £14.2 million, up from £6.7 million
at the year end.
Horizon strategy progress
We have maintained a sharp focus on our Horizon strategy to deliver sustainable revenue growth and improved margins.
In the period we have continued to increase our commercial focus and build capabilities across the Group. We continue
to see opportunities for further revenue and margin improvement delivered through the Horizon strategy. With good
progress across our Market Intimacy, Innovation and Product Development, and Operational Excellence programmes,
we have now started the transformation of our Customer Service approach, representing the fourth point of the Oxford
Instruments operating model. As part of this programme we will be reviewing the way in which we provide support toour customers as well as expanding the breadth of service offerings and capabilities, including services to support
performance enhancements and yield management packages.
Sector performance
Turning to the performance of our individual sectors:
Materials & Characterisation provides products and solutions that enable the fabrication and characterisation ofmaterials down to the atomic scale, predominantly supporting customers across applied R&D as well as the production
and manufacture of high technology products. The sector delivered a strong and enhanced first half performance
underpinned by growth from both commercial and academic customers across the Semiconductor & Communications,
Advanced Materials, and Energy & Environment customer segments. Revenue of £69.8 million (2018: £60.1 million)
represented an increase of 12.3% at constant currency, with adjusted operating profit increasing to £12.2 million (2018:£9.7 million), growth of 16.5% at constant currency. Orders grew to £74.5 million (2018: £69.5 million), up 3.9% atconstant currency, contributing to positive order book growth for future deliveries. Reported operational margin for thesector increased by 140 basis points (+60 basis points at constant currency) to 17.5% (2018: 16.1%).
Research & Discovery provides advanced solutions that create unique environments and enable imaging andanalytical measurements down to the molecular and atomic level, used predominantly in scientific research and applied
R&D. Revenue increased to £61.2 million, up 8.7% at constant currency (2018: £54.3 million) supported by growth fromacademic and commercial customers across the Healthcare & Lifescience, Quantum Technology, and Research &Fundamental Science segments. Adjusted operating profit increased to £6.4 million (2018: £4.8 million), up 16.7% atconstant currency, supported by improved operational efficiencies within the sector and manufacturing yield
improvements of our scientific X-ray tubes. Orders of £61.9 million (2018: £60.0 million) were broadly flat at constantcurrency, partially held back in the period by the phasing of large OEM customer orders in our X-ray Technology
business. Operational margin for the sector grew 170 basis points (+70 basis points at constant currency) to 10.5%(2018: 8.8%) on a reported basis.
Service & Healthcare provides customer service and support for our own products and the service, sale and rental of
third-party healthcare imaging systems. Revenue of £35.3 million (2018: £32.6 million) grew by 4.0% at constantcurrency, driven predominantly by increased sales of services and support related to our own products. Adjusted
operating profit increased to £7.2 million (2018: £6.5 million), up 3.1% at constant currency. Strong growth in orders
related to our own products were partially offset by the timing of system orders in our US OI Healthcare business resulting
in reported orders of £36.9 million (2018: £33.4 million), an increase of 6.3% at constant currency. Operational margin
for the sector grew 50 basis points (-10 basis points at constant currency) to 20.4% (2018: 19.9%) on a reported basis.

Oxford Instruments plc

4Half Year Results Announcement for the six months ended 30 September 2019
R&D
The development and delivery of highly innovative and market-leading technology that delivers ongoing, sustainablevalue for our customers remains a central theme within our Horizon strategy. Our enhanced customer-centric, marketfocused approach is identifying increasingly attractive development opportunities, enriching our IP portfolio and driving
our investment decisions across the Group. Through Horizon we are exploiting our technical capabilities andsynergiesboth within the Group and with external partners to deliver key products faster. R&D spend in the period roseto £13.0 million (2018: £12.0 million), representing 7.8% of sales, reflecting both the increased opportunities available
and our commitment to delivering sustainable growth.
PeopleOur employees are fundamental to our business progress and I remain delighted by their continued engagement with
our Horizon strategy. We continue to invest in the development of our teams and the processes and tools to help thembe successful. I would like to thank all our employees for their continued commitment to offering our customers a worldclass experience and their part in helping to address some of the world’s most pressing challenges.
Dividends
The Board has declared an interim dividend increase of 7.9% to 4.1 pence (2018: 3.8 pence), reflecting improvement inunderlying earnings per share.
Current trading and outlook
The Group has delivered a strong first half performance, with revenue, profit and order growth against a backdrop of
uncertain macroeconomic conditions. Our customer-centric approach has delivered growth within existing markets andexpansion into new adjacent markets.
The breadth of our product portfolio and the diversity of our end markets, together with our focus on understanding
customer needs and responding to market changes, underpin our ability to deliver further growth and margin
improvement. We expect the second half of the financial year to benefit from the normal seasonal bias, with expectations
for the current financial year remaining unchanged on a constant currency basis.
Ian Barkshire
Chief Executive
12 November 2019

Oxford Instruments plc

5Half Year Results Announcement for the six months ended 30 September 2019
Operations Review
Our Group reports in the following three sectors: Materials & Characterisation, Research & Discovery, and Service &Healthcare.
Materials & Characterisation

Revenue
Adjusted2 operating profit
Adjusted2 operating margin
Profit before tax after adjusting items

2019
£m

2018
£m

Growth

69.8
12.2
17.5%
11.0

60.1
9.7
16.1%
8.6

+16.1%+25.8%

Constant
Currency
Growth1+12.3%+16.5%For definition refer to note on page 2 of highlights.
Details of adjusting items can be found in Note 2 to the condensed Financial Statements.

1
2

The Materials & Characterisation sector comprises Asylum Research, NanoAnalysis and Plasma Technology. This
sector has a broad customer base across a wide range of applications for the imaging and analysis of materials down
to the atomic level as well as the fabrication of semiconductor devices and structures through our range of advanced
semiconductor etch and deposition process systems. Our portfolio of imaging systems include our range of marketleading X-ray and electron analysis systems used in conjunction with electron and ion microscopes as well as our
performance-leading atomic force microscopes. The sector has a strong focus on supporting and accelerating ourcustomers’ applied R&D, enabling the development of new devices and next generation higher performance materials
as well as enhanced productivity in advanced manufacturing, quality assurance (“QA”) and quality control (“QC”). Our
products provide market-leading performance, ease of use and data analytics.
Materials & Characterisation delivered strong growth in both revenue and operating profit with good order growth. A corestrength of the sector is the market diversification and reach across academic and corporate R&D, and commercial
production customers. Improved performance in the period was supported by the success of new and recently launched
products, and our increased focus on tailoring our product offerings to specific end-customer applications, raising the
product value and expanding our addressable markets. This led to strong revenue growth from both academic andcommercial customers in the period, with the latter accounting for 55% of revenue. Increased volumes, applicationtailored products and operational efficiencies all contributed to reported adjusted operating margin increasing 140 basis
points to 17.5% (2018: 16.1%).
Looking at end markets, increased revenue was driven by growth in each of the three main application segments ofAdvanced Materials, Semiconductor & Communications, and Energy & Environment. Advanced Materials represented
38% of sales in the sector, Semiconductor & Communications 40%, with Energy & Environment 15%, and Healthcare &Lifescience 6%. Geographically, we saw strong growth in Europe and good growth in North America and Asia.
We had double-digit revenue growth in Advanced Materials due to positive end markets, despite the ongoing weakness
in orders from automotive manufacturing customers. This growth was driven by the continued demand for lighter,stronger and higher functioning materials, combined with our leading market performance. Our measurement solutions
are used to aid the development of next generation products and components as well as in the quality control and quality
assurance of current manufactured products. Applications include the development of safer cars and planes withimproved fuel consumption, and advanced new materials for wind turbine blades and medical implants. We continue to
see growth in more routine applications including the optimisation of razor blade coatings, the quality control of ceramics
used in mobile phone applications and increasing the strength of thinner aluminium drink cans to reduce their raw
material consumption. These applications have led to strong growth across our range of Symmetry™ material structural
analysers, X-ray detectors and atomic force microscopes (“AFM”).
We continue to develop new products and tailored applications to target specific end-customer applications and growour addressable market. In the period we launched Jupiter™, our first large sample AFM which can accept objects thesize of a semiconductor wafer or tablet computer. This builds on our market-leading AFM product performance andreputation in the research market. Jupiter™ provides high resolution, faster results and simpler user experience to multiuser sites and industrial manufacturers, significantly expanding our addressable customer base. This has already driven
significant growth to customers needing to characterise thin films and coatings. We have seen continued growth in sales
into additive manufacturing through the launch of AZtecAM™, a dedicated analysis package for this market segment.

Oxford Instruments plc

6

Half Year Results Announcement for the six months ended 30 September 2019
Semiconductor & Communications delivered strong revenue growth and remains a significant market segment. Here we
provide imaging and analysis products, as well as etch and deposition process solutions used across a range ofadvanced compound semiconductor and silicon device applications. Whilst we have seen continued weakness andassociated reduced sales of our imaging and analysis solutions into silicon semiconductor and electronics customers,
we have had continued strong growth and demand across our portfolio of etch and deposition solutions underpinned byour leading performance and expertise in compound semiconductors.
The compound semiconductor market remains buoyant with strong, long-term market drivers, due to the ability ofcompound semiconductor devices to dramatically transform the performance of power electronics, connectivity andcommunications. In the period we have seen growth in a number of key areas; our gallium arsenide and indium
phosphide solutions support the increased speed and infrastructure capacity required to deliver the desiredtransformation and connectivity, for example telecommunication data centres and the rise in the data economy. Siliconcarbide and gallium nitride solutions are being used to develop more efficient and faster power devices, enabling greater
electric vehicle range and faster charging times. Demand for increased communications is driving growth across sensors
and optoelectronic devices such as 3D sensors for facial recognition and heads up displays.
Our growth has been further supported by our ability to tailor our product offerings to specifically meet the needs ofacademic, corporate R&D and production customers. For example, we are now offering dedicated production-readysystems with key enabling processes, market-leading wafer throughput and reduced time to service.
We have seen growth in the Energy & Environment segment driven by the increased activities related to battery researchand quality control, and in the development of improved efficiency and performance photovoltaic materials. This has
included increased sales of our AFM products, and our advanced high resolution ultra-sensitive Extreme™ X-ray
analyser remains the market leader in imaging the internal chemistry and active interfaces of batteries at the nanoscale.
In the period we launched AZtecMineral™, a tailored solution building on the benefits of our existing products to optimise
mining and ore processing. In combination with the high sensitivity provided by Extreme™, this is supporting the more
efficient mining and recovery of lithium-based materials.

Research & Discovery

Revenue
Adjusted2 operating profit
Adjusted2 operating margin
Profit before tax after adjusting items

2019
£m

2018
£m

Growth

61.2
6.4
10.5%
3.2

54.3
4.8
8.8%
1.9

+12.7%+33.3%

Constant
Currency
Growth1+8.7%+16.7%For definition refer to note on page 2 of highlights.
Details of adjusting items can be found in Note 2 to the condensed Financial Statements.

1
2

The Research & Discovery sector includes Andor Technology, Magnetic Resonance, NanoScience, X-ray Technology
and our minority share in Scienta Omicron. This sector provides advanced solutions that create unique environments
and enable imaging and analytical measurements down to the molecular and atomic level, used predominantly infundamental and applied research. We build on our relationships with customers working on breakthrough applications
in research to gain insights and support future commercial applications. We have strong brand recognition and leading
product performance in our chosen market segments. Our increased applications focus has supported strong growth tocommercial customers in addition to good growth from academic and Government-funded research. Revenue fromindustrial and commercial customers increased to 35%, with 65% of sales from the academic and Government-funded
research community.
Strong revenue and double-digit profit growth were driven from across our product portfolio with continued growth fromthe main target application segments of Healthcare & Lifescience (representing 41% of revenue), Quantum Technology(19% of revenue), and Research & Fundamental Science (24% of revenue). Revenue growth was supported by anincreased demand and improved operational performance in NanoScience, with profit growth supported bymanufacturing yield improvements of our scientific X-ray tubes and an improved contribution from the Scienta Omicron
joint venture. Order growth was offset by the phasing of framework OEM orders for our X-ray Technology business andof higher value rock core analysis systems.

Oxford Instruments plc

7

Half Year Results Announcement for the six months ended 30 September 2019
Within Healthcare & Lifescience, demand continued to be driven by researchers seeking to uncover more about thepathology of disease states, helping to reveal more accurate cellular details at better resolution and higher speeds. Thishas driven increased revenue across our portfolio of microscopy systems, analysis and visualisation software andscientific research cameras. A significant proportion of sales are being used to understand the origins and progressionof cancers and neurological disorders, such as Alzheimer’s and Parkinson’s, and to contribute to the development of
new treatment approaches. The attractive advanced microscopy market has led to increased competitor activity which
has moderated order growth in the period. We continue to focus on adding value to our products, building on our marketleading capabilities. For instance, the latest release of Imaris™ utilises sophisticated management of large data sets toenable the practical and efficient analysis and interpretation over multiple length scales from the big picture down to themolecular detail. Improved rendering and machine learning algorithms lead to automation and statistically meaningful
analysis of biological structures and systems.
Our high sensitivity cameras, which offer enhanced performance at low light levels, are being used to measure andobserve the interaction with individual biomolecules in real time. This continues to drive growth with our strategic OEM
partners for a range of applications including gene sequencing and clinical screening solutions, which are used for drug
feasibility studies and in the development of personalised medicines.
Quantum Technology continues to attract funding from both Governments and private industry, with increased long-term
investment being announced within Europe, China and Japan, targeting quantum computing, cryptography and sensors.
We continue to see increased demand for our cryogenic platforms, which are used for both fundamental research intoquantum effects and in the development towards practical quantum computers. We have had increased sales of ourTeslatron™ system, which provides low temperatures and high magnetic fields for the development and characterisationof quantum materials and sensors. We are also seeing increased demand for our high sensitivity and high-speed
cameras in the growing area of quantum optics for applications across fundamental science through to securecommunications and quantum computing.
Within Research & Fundamental Science, we continued to see growth in sales of our high field magnets and research
instruments. In addition, astronomy remains an attractive market for us, with demand for higher performance cameras
in order to meet the increasing requirements of modern astronomy. Through the successful collaboration with end
customers within the astronomy market, we have launched Balor™, our new large area camera, whose unique features,
including large field of view, enable it to capture a much larger area of the sky with improved resolution and stability. This
enables the practical tracking of significantly smaller space junk, easier tracking of near-earth asteroids and enhanced
solar studies, which are important due to the dramatic impact these can have on satellite and earth-based
communications.
Service & Healthcare Sector

Revenue
Adjusted2 operating profit
Adjusted2 operating margin
Profit before tax after adjusting items

2019
£m

2018
£m

Growth

35.3
7.2
20.4%
6.8

32.6
6.5
19.9%
6.1

+8.3%
+10.8%

Constant
Currency
Growth1
+4.0%
+3.1%

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

1
2

The Service & Healthcare sector comprises the Group’s maintenance service contracts, billable repairs, training andsupport services, and spare part sales related to Oxford Instruments’ own products under the OiService brand; and thesale, service and rental of refurbished third-party MRI and CT machines under the OI Healthcare brand.
Good order, revenue and profit growth at constant currency in the period through the increased demand for services
and support related to our own products was partially offset by the timing of system orders within our US OI Healthcare
business.

Oxford Instruments plc

8

Half Year Results Announcement for the six months ended 30 September 2019
Revenue from our OI Healthcare businesses was broadly flat with adjusted operating profit slightly down on last year
owing to the phasing of system orders. Utilisation of our mobile MRI fleet remains strong and we continue our focus onbuilding a healthy service orderbook.
The Service & Healthcare sector is now a focal point within the evolution of our Horizon strategy. We have initiated thetransformation of our customer service approach by reviewing the way in which we provide support to our customers aswell as expanding the breadth of service product offerings and capabilities. This includes the tailoring of service products
to end market applications and customer segments. For example, for industrial customers, we are introducing services
to support performance enhancements and yield management packages. Our launch of Plasmaview™ process control
software supports this transition for our semiconductor customers, allowing us to provide a broader range of diagnostic
and process optimisation services both online and remotely. Whilst still at the early stages, we have already built apipeline of opportunities and have seen an uplift in service-related revenue and profitability.

Oxford Instruments plc

9Half Year Results Announcement for the six months ended 30 September 2019
Finance Review
Reported orders increased by 6.4% to £173.3 million (2018: £162.9 million), an increase of 2.8% at constant currency.
At the end of the period the Group’s order book for future deliveries stood at £186.8 million (31 March 2019: £171.6
million). The order book grew 8.9% on a reported basis and 6.0% at constant currency.
Reported revenue increased by 13.1% to £166.3 million (2018: £147.0 million). Revenue, excluding currency effects,
increased by 9.1%, with the movement in average currency exchange rates against the comparative period increasing
reported revenue by £5.9 million.
Adjusted operating profit increased by 22.9% to £25.8 million (2018: £21.0 million) with the movement in exchange rates
against the comparative period increasing adjusted operating profit by £2.2 million. Adjusted operating profit, excluding
currency effects, increased by 12.4%. Adjusted operating margin increased by 120 basis points to 15.5% (2018: 14.3%),
supported by a currency tailwind. Excluding currency effects, adjusted operating margin increased by 40 basis points to
14.7%.
Adjusted profit before tax grew by 28.3% to £25.4 million (2018: £19.8 million), representing a margin of 15.3% (2018:
13.5%).
Adjusting items consist of amortisation of acquired intangibles of £4.8 million and a charge of £2.6 million relating to the
movement in the mark-to-market valuation of uncrystallised currency hedges for future years.
After adjusting items, the Group recorded an operating profit of £18.4 million (2018: £13.7 million) and profit before taxof £18.0 million (2018: £11.6 million).
Adjusted basic earnings per share grew by 30.0% to 35.5 pence (2018: 27.3 pence). Basic earnings per share grew by
59.0% to 24.8 pence (2018: 15.6 pence).
Cash generated from operations of £16.4 million (2018: £21.4 million), represents 65% (2018: 91%) cash conversion.
Net cash increased from £6.7 million on 31 March 2019 to £14.2 million.
Adjusted operating profit is stated before impairment and amortisation of goodwill and acquired intangibles, the markto-market valuation of unexpired currency hedges, and other adjusting items, as set out in Note 2 to the Half-year
Financial Statements.
Under the rules for audit tendering and rotation implemented in 2016, the Group is required to replace our current
auditors, KPMG LLP, no later than 31 March 2021, effective for the 31 March 2022 year end. The Audit Committee has
decided to undertake a comprehensive and thorough competitive tender process for the audit in the first quarter of 2020.
The Committee expects to invite at least one challenger firm to participate in this process. Depending on the outcomeof the tender, we expect to make an appointment prior to our 31 March 2020 year end, effective for the 31 March 2021
year end. This appointment will be subject to Shareholder approval at the next AGM to be held in September 2020.

Oxford Instruments plc

10Half Year Results Announcement for the six months ended 30 September 2019
Income Statement
The Group’s Income Statement is summarised below.
Half year
to 30
September
2018
£m
147.0
73.9
(52.0)
(0.6)
(0.3)
21.0
(1.2)
19.8
(4.7)
(0.6)
(2.9)
11.6
(2.7)
8.9
21.2%

ChangeRevenue
Gross profit
Administrative expenses
Share of profit of associate
Foreign exchange
Adjusted operating profit
Net finance costs
Adjusted profit before tax
Amortisation of acquired intangibles
Non-recurring items
Mark-to-market of currency hedges
Profit before tax
Tax from continuing operations
Profit for the period from continuing operations
Adjusted effective tax rate1

Half year
to 30
September
2019
£m
166.3
82.2
(55.3)
(1.1)
25.8
(0.4)
25.4
(4.8)
(2.6)
18.0
(3.8)
14.2
20.1%

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

35.5p
24.8p

27.3p
15.6p

30.0%
59.0%

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

35.1p
24.6p

27.0p
15.4p

30.0%
59.7%

Dividend per share

4.10p

3.80p

7.9%

1.

13.1%
11.2%

22.9%
28.3%

55.2%

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

Orders and revenue
Total reported orders grew by 6.4% (2.8% at constant currency) to £173.3 million. Orders, at constant currency, increasedby 3.9% for Materials & Characterisation, declined by 0.5% for Research & Discovery and increased by 6.3% for Service& Healthcare. The decline in Research & Discovery was principally due to the phasing of OEM orders within X-Ray
Technology.
Reported revenue of £166.3 million (2018: £147.0 million) increased by 13.1% (9.1% at constant currency). Reported
revenue increased by 16.1% for Materials & Characterisation, 12.7% for Research & Discovery and 8.3% for Service &Healthcare.
The book-to-bill ratio (orders received to goods and services billed in the period) for the half year was 1.04.
Revenue, at constant currency, increased by 12.3% for Materials & Characterisation, with a particularly strong
performance from all constituent businesses. Constant currency growth was 8.7% in Research & Discovery, with good
progress from Andor Technology and an improvement in NanoScience and X-Ray Technology. Service & Healthcare
constant currency revenue grew by 4.0%, with good growth from the service of our own products.
On a geographical basis, at constant currency, revenue grew by 18.4% in Europe, 7.8% in North America, 4.3% in Asia
and 15.0% in Rest of World.
The total reported order book grew by 8.9% (6.0% at constant currency) to £186.8 million compared to 31 March 2019.
The order book, at constant currency, increased by 10.4% for Materials & Characterisation, 0.7% for Research &Discovery and 13.6% in Service & Healthcare. All constituent businesses grew their order book over the half year, withthe exception of X-Ray Technology as previously explained.

Oxford Instruments plc

11Half Year Results Announcement for the six months ended 30 September 2019£m
Revenue: Half year 2018/19
Underlying movement
Foreign exchange
Revenue: Half year 2019/20

Materials &Characterisation
60.1
7.4
2.3
69.8

Research &Discovery
54.3
4.7
2.2
61.2

Service &Healthcare
32.6
1.3
1.4
35.3

Total

Revenue growth: reported
Revenue growth: constant currency

16.1%
12.3%

12.7%
8.7%

8.3%
4.0%

13.1%
9.1%

147.0
13.4
5.9
166.3

Reclassification of costs
During the year we have reviewed the classification of costs within the Income Statement, with a focus on whether items
are reported within cost of sales or operating expenses. As a result, certain reclassifications were made, the mostsignificant being that outward freight costs and sales commissions paid to employees and external agents are reported
within cost of sales rather than within selling and marketing expenses. This is considered to be a better presentation
since gross margin is now a clearer indicator of commercial performance and overheads a clearer indicator of cost
control.
Gross profit
Gross profit increased by 11.2% to £82.2 million (2018: £73.9 million), representing a gross profit margin of 49.4%.
Adjusted operating profit
Adjusted operating profit increased by 22.9% to £25.8 million (2018: £21.0 million), representing an adjusted operating
profit margin of 15.5%, an increase of 120 basis points against last year. At constant currency, the adjusted operating
profit margin was 14.7%, an increase of 40 basis points.
Materials & Characterisation’s margin increased by 140 basis points to 17.5% (2018: 16.1%). At constant currency, themargin was 16.7%, an increase of 60 basis points.
Research & Discovery’s adjusted operating margin increased to 10.5% (2018: 8.8%), an increase of 170 basis points.
At constant currency, the margin was 9.5%, an increase of 70 basis points.
Service & Healthcare’s margin increased by 50 basis points to 20.4% (2018: 19.9%). At constant currency, the margin
was 19.8%, a reduction of 10 basis points.
Our share of the Scienta Omicron joint venture showed an adjusted result after tax of zero for the period, against an
adjusted loss of £0.6 million for the comparative period.

£mAdjusted operating profit: Half year 2018/19
Underlying movement
Foreign exchange
Adjusted operating profit: Half year 2019/20

Materials &Characterisation
9.7
1.6
0.9
12.2

Research &Discovery
4.8
0.8
0.8
6.4

Service &Healthcare
6.5
0.2
0.5
7.2

Total

Margin: 2018/19
Margin: 2019/20

16.1%
17.5%

8.8%
10.5%

19.9%
20.4%

14.3%
15.5%

21.0
2.6
2.2
25.8

Adjusting items
Amortisation of acquired intangibles of £4.8 million relates to intangible assets recognised on acquisitions, being thevalue of technology, customer relationships and brands.
The Group uses derivative products to hedge its short-term exposure to fluctuations in foreign exchange rates. It is
Group policy to have in place at the beginning of the financial year hedging instruments to cover approximately 80% of
its forecast transactional exposure for that year. The Group has decided that the additional costs of meeting the extensive
documentation requirements of IFRS 9 to apply hedge accounting to these foreign exchange hedges cannot be justified.
Accordingly, the Group does not use hedge accounting for these derivatives.

Oxford Instruments plc

12Half Year Results Announcement for the six months ended 30 September 2019
Net movements on marking-to-market derivatives in respect of future periods are disclosed in the Income Statement asforeign exchange and excluded from our calculation of adjusted profit before tax.
The mark-to-market loss in respect of derivative financial instruments was £2.6 million (2018: £2.9 million loss).
This reflects the movement on currency derivatives that are hedging future transactional currency exposures for theGroup. The half-year position reflects an uncrystallised loss arising from a fall in the value of Sterling at the balance
sheet date against a blended rate achieved on the US Dollar, Euro and Japanese Yen forward contracts that will mature
over the next 18 months.
Net finance costs
The Group’s adjusted net finance costs fell by £0.8 million to £0.4 million (2018: £1.2 million) with net finance charges
falling by £0.6 million to £0.4 million, supported by a refund of overpaid interest for previous years of £0.2 million, andpension financing charges falling by £0.2 million to zero, reflecting the movement from a net pension deficit as at 31
March 2019 to a small net pension asset as at 30 September 2019.
Profit before tax
Adjusted profit before tax increased by 28.3% to £25.4 million (2018: £19.8 million). The adjusted profit before tax marginrose to 15.3% (2018: 13.5%).
Profit before tax of £18.0 million (2018: £11.6 million) is after the mark-to-market movement on derivative financial
instruments and amortisation of acquired intangibles.
Tax
The adjusted tax charge of £5.1 million (2018: £4.2 million) represents an effective tax rate of 20.1% (2018: 21.2%). The
reduction reflects a change in the geographical mix of profits.
Earnings per share
Adjusted basic earnings per share increased by 30.0% to 35.5 pence (2018: 27.3 pence); adjusted diluted earnings per
share grew by 30.0% to 35.1 pence (2018: 27.0 pence). Basic earnings per share increased by 59.0% to 24.8 pence(2018: 15.6 pence); diluted earnings per share grew by 59.7% to 24.6 pence (2018: 15.4 pence).
The number of undiluted weighted average shares remained constant at 57.2 million.
Foreign exchange
The Group faces transactional and translational currency exposure, most notably against the US Dollar, Euro andJapanese Yen. For the year, approximately 13% of Group revenue was denominated in Sterling, 57% in US Dollars,
19% in Euros, 10% in Japanese Yen and 1% in other currencies. Our adjusted operating profit currency exposure forthe half year in Sterling equivalent is short Sterling £35.2 million, long US Dollar £38.1 million, long Euro £19.3 million,
long Japanese Yen £9.4 million, short Chinese Renminbi £4.5 million and short other currencies £1.3 million.
Translational exposures arise on the consolidation of overseas company results into Sterling. Transactional exposuresarise where the currency of sale or purchase transactions differs from the functional currency in which each company
prepares its local accounts.
The Group maintains a hedging programme against its net transactional exposure using internal projections of expectedcurrency trading transactions expected to arise over a period extending from 12 to 24 months. As at 30 September 2019
the Group had currency hedges in place extending up to eighteen months forward.
Currency effects (including the impact of transactional currency hedging) have increased half year reported adjusted
operating profit by £2.2 million, when compared to blended hedged exchange rates for the comparative period. We
estimate that the full-year currency effect, based on currency rates prevailing at the end of October 2019, will beapproximately a benefit of £3.0 million to adjusted operating profit.
For the full year 2020/21, our assessment of the currency impact is, based on hedges currently in place and spot rates
prevailing as at 31 October 2019, a benefit to adjusted operating profit of £1.0 million. As an example sensitivity, if we
assume a 5% appreciation of Sterling against our major trading currencies, then the impact is a reduction in adjusted
operating profit of £2.7 million.
The actual currency impact will be dependent on currency rates at the time of shipments and customer acceptances, aswell as the currency mix, and is thus subject to a high degree of uncertainty.

Oxford Instruments plc

13

Half Year Results Announcement for the six months ended 30 September 2019
Dividend
The Group’s policy is to increase the dividend each year in line with the increase in underlying earnings, considering
movements in currency. The Board has proposed to increase the interim dividend by 7.9% to 4.10 pence (2018: 3.80
pence). The interim dividend will be paid on 14 April 2020 to Shareholders on the register as at 6 March 2020.
Cash flow
The Group’s cash flow is summarised below.

Adjusted operating profit
Depreciation and amortisation
Adjusted EBITDA
Working capital movement
Purchase of rental assets held for subsequent sale
Equity settled share schemes
Share of loss from associate
Business reorganisation items
Pension scheme payments above charge to operating profit
Cash generated from operations
Interest
Tax
Capitalised development expenditure
Expenditure on tangible and intangible assets
Decrease in long-term receivables
Dividends paid
Proceeds from issue of share capital and exercise of share options
Payments made in respect of lease liabilities
Decrease in borrowings
Net increase/(decrease) in cash and cash equivalents from continuing
operations

Half year
to 30
September
2019
£m
25.8
5.2
31.0
(10.4)
(0.1)
2.0
(6.1)
16.4
(1.1)
(3.5)
(2.2)
(2.0)
0.5
(2.2)
0.2
(1.6)
4.5

Half year
to 30
September
2018
£m
21.0
5.4
26.4
(1.2)
(0.6)
0.4
0.6
(0.7)
(3.5)
21.4
(2.3)
(4.7)
(1.5)
(3.4)
0.6
(2.1)
(1.6)
(8.6)
(2.2)

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

Cash generated from operations
Cash generated from operations of £16.4 million (2018: £21.4 million), represents 65% (2018: 91%) cash conversion.
Cash conversion is defined as cash generated from operations before pension scheme payments, less capitalised
development expenditure, capital expenditure and payments made in respect of finance leases/adjusted operating profit.
Payments made in respect of finance leases are now included within our definition of cash conversion to retain a likefor-like comparison following the introduction of IFRS 16.
Working capital rose by £10.4 million, reflecting an increase in inventories of £3.8 million, a decrease in receivables of£3.6 million and a reduction in payables and customer deposits of £10.2 million. The increase in inventories is primarily
to support shipments in the second half of the year. Receivables fell by less than expected owing to a higher number of
shipments occurring closer to the half year end compared to the previous year, with the effect that issued invoices are
not due by the half year end and are thus not payable. The reduction in payables and customer deposits is primarily due
to a reduction in deferred revenue due to a change in timing of invoicing of service contracts, a fall in customer deposits
due to revenue recognised on acceptance close to the half year end, and the timing of payments made on the operational
excellence consultancy support. We expect the cash conversion ratio to improve for the full year.
The increase in the cost of equity settled share schemes is due to a catch-up charge relating to a correction in thevaluation of management share option incentive schemes.
PensionPension costs included a payment of $2.9 million (£2.3 million) to the US pension scheme as part settlement oftermination liabilities. We expect a second and final payment of approximately $1.6 million will be made prior to the year
end.

Oxford Instruments plc

14

Half Year Results Announcement for the six months ended 30 September 2019
Interest
Net interest paid was £1.1 million (2018: £2.3 million). Cash interest is higher than the charge in the Income Statement
due to timing differences on the payment of interest on private placement loan notes.
Tax
Tax paid was £3.5 million (2018: £4.7 million); the current period includes a cash settlement to HMRC of £4.0 million in
April 2019, partially offset by a tax refund in the US following the closure of prior period submissions.
Investment in Research and Development (“R&D”)
Total cash spend on R&D in the half year was £13.0 million, equivalent to 7.8% of sales (2018: £12.0 million, 8.2% ofsales). During the half year we have invested in additional systems to support projects and sample production for new
processes within our semiconductor solutions business. Development costs for a new analyser for electron microscopy
have been capitalised in the first half of the year. A reconciliation between the amounts charged to the Income Statement
and the cash spent is given below:

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

Half year
to 30
September
2019
£m
11.9
0.1
(1.2)
2.2
13.0

Half year
to 30
September
2018
£m
12.0
(1.5)
1.5
12.0

Net cash and funding
Net cashCash generation in the half year increased the Group’s net cash from £6.7 million at the start of the year to £14.2 million
on 30 September 2019. Cash generated from operations was £16.4 million. The Group invested £2.2 million incapitalised development costs and £2.0 million in tangible and intangible assets.
Movement in net cash
Net cash as at 31 March 2019
Cash generated from operations
Interest
Tax
Capitalised development expenditure
Capital expenditure on tangible and intangible assets
Dividends paid
Foreign exchange and other items
Net cash as at 30 September 2019

£m
6.7
16.4
(1.1)
(3.5)
(2.2)
(2.0)
(2.2)
2.1
14.2

Funding
On 2 July 2018 the Group entered into an unsecured multi-currency revolving facility agreement, which is committed
until June 2023 with one-year extension options at the end of the first and second years. The facility has been enteredinto with two banks and comprises a Euro denominated multi-currency facility of €50.0 million and a US Dollar
denominated multi-currency facility of $80.0 million.
Debt covenants are net debt to EBITDA less than 3.0 times and EBITDA to interest greater than 4.0 times. As at 30
September 2019, the business had net cash.
Pensions
The Group has defined benefit pension schemes in the UK and USA. Both have been closed to new entrants since 2001
and closed to future accrual from 2010.

Oxford Instruments plc

15

Half Year Results Announcement for the six months ended 30 September 2019
At 30 September 2019, we recorded a net asset of £2.6 million from defined benefit scheme obligations (31 March 2019:net liability of £6.5 million). The movement of £9.1 million from a net liability to net asset position was primarily due tothe contributions paid in the period. Total scheme assets at 30 September 2019 were £353.1 million (31 March 2019:£311.4 million) while liabilities were £350.5 million (31 March 2019: £317.9 million).
We are progressing with the process to terminate the US defined benefit pension scheme. This will extinguish all
liabilities of the scheme. We expect to complete the project by the end of the financial year.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance andposition, are set out in the Performance, Strategy and Operations sections of the 2019 Annual Report. The financial
position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Finance Review.
The diverse nature of the Group, combined with its financial strength, provides a solid foundation for a sustainablebusiness. The Directors have reviewed the Group’s forecasts and flexed them to incorporate a number of potential
scenarios relating to changes in trading performance. The Directors believe that the Group will be able to operate within
its existing debt facilities. This review also considered hedging arrangements in place. The Directors believe that theGroup 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.
Forward-looking statements
This document contains certain forward-looking statements. The forward-looking statements reflect the knowledge andinformation available to the Company during the preparation and up to the publication of this document. By their very
nature, these statements depend upon circumstances and relate to events that may occur in the future thereby involving
a degree of uncertainty. Therefore, nothing in this document should be construed as a profit forecast by the Company.
Gavin Hill
Group Finance Director
12 November 2019

Oxford Instruments plc

16

Half Year Results Announcement for the six months ended 30 September 2019

Responsibility Statement of the Directors in respect of the Half-year Financial
Statements
We confirm that to the best of our knowledge:• the condensed set of Financial Statements has been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU; and• the interim management report includes a fair review of the information required by:(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that haveoccurred during the first six months of the financial year and their impact on the condensed set of Financial
Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have takenplace in the first six months of the current financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related party transactions described in the last
Annual Report that could do so.

Ian Barkshire
Chief Executive

Gavin Hill
Group Finance Director

12 November 2019

Oxford Instruments plc

17

Half Year Results Announcement for the six months ended 30 September 2019

Condensed Consolidated Income Statement
Half year ended 30 September 2019 - unaudited

Half year to 30 September 2019
Adjusted
Note
Revenue4
Cost of sales
Gross profit
Research and development
5
Selling and marketing
Administration and shared services
Share of (loss)/profit of associate, net oftax
Foreign exchange loss
Operating profit
Financial income
Interest charge on pension scheme net
liabilities
Other financial expenditure
Financial expenditure
Profit/(loss) before income tax
4
Income tax (expense)/credit
Profit/(loss) for the period fromcontinuing operations
Profit from discontinued operations after 7
tax
Profit/(loss) for the period attributable
to equity holders of the parent
Earnings per share
Basic earnings per share
From continuing operations
From discontinued operations
From profit for the period

3

Diluted earnings per share
From continuing operations
From discontinued operations
From profit for the period

3

Dividends per share
Dividends paid
Dividends proposed

9

Total

Half year to 30 September 2018 asrestated *2
Adjusted Adjusting
Total
items *1
£m
£m
£m
147.0
147.0
(73.1)(73.1)
73.9
73.9(12.0)(12.0)(24.6)(24.6)(15.4)(4.7)(20.1)
(0.6)
0.3
(0.3)

£m
166.3
(84.1)
82.2(11.9)(25.1)(18.3)-

Adjustingitems *1
£m
(4.8)
-

£m
166.3
(84.1)
82.2(11.9)(25.1)(23.1)
-

(1.1)
25.8

(2.6)
(7.4)

(3.7)
18.4

(0.3)
21.0

(2.9)
(7.3)

(3.2)
13.7

0.5

-

0.5

0.1

-

0.1

-

-

-

(0.2)

-

(0.2)

(0.9)
(0.9)

-

(0.9)
(0.9)

(1.1)
(1.3)

(0.9)
(0.9)

(2.0)
(2.2)

25.4
(5.1)
20.3

(7.4)
1.3
(6.1)

18.0
(3.8)
14.2

19.8
(4.2)
15.6

(8.2)
1.5
(6.7)

11.6
(2.7)
8.9

-

-

-

-

-

-

20.3

(6.1)

14.2

15.6

(6.7)

8.9

pence

pence

pence

pence

35.5
35.5

24.8
24.8

27.3
27.3

15.6
15.6

35.1
35.1

24.6
24.6

27.0
27.0

15.4
15.4

3.8
4.1

3.7
3.8

*1 Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items can be found in Note 2.
*2 Details of restatement of prior period numbers can be found in Note 1.

Oxford Instruments plc

18

Half Year Results Announcement for the six months ended 30 September 2019

Condensed Consolidated Income Statement - Continued
Half year ended 30 September 2019 - unaudited

Revenue
Cost of sales
Gross profit
Research and development
Selling and marketing
Administration and shared services
Share of profit of associate, net of tax
Foreign exchange loss
Operating profit

Note
4
5

Year to 31 March 2019 as restated *2
Adjusted
AdjustingTotal
items *1
£m
£m
£m
333.6
333.6
(166.6)(166.6)167.0
167.0(24.8)(24.8)(52.1)(52.1)(39.4)(9.9)(49.3)
0.2
0.3
0.5
(1.2)
(1.5)
(2.7)
49.7
(11.1)
38.6

Financial income

0.3

-

0.3

Interest charge on pension scheme net liabilities
Other financial expenditure
Financial expenditure

(0.3)
(2.2)
(2.5)

(0.9)
(0.9)

(0.3)
(3.1)
(3.4)

47.5
(10.4)
37.1
37.1(12.0)
3.6
(8.4)
1.3
(7.1)

35.5
(6.8)
28.7
1.3
30.0

Profit/(loss) before income tax
Income tax (expense)/credit
Profit/(loss) for the period from continuing operations
Profit from discontinued operations after tax
Profit/(loss) for the period attributable to equity holders of the parent
Earnings per share
Basic earnings per share
From continuing operations
From discontinued operations
From profit for the period

473

Diluted earnings per share
From continuing operations
From discontinued operations
From profit for the period

3

Dividends per share
Dividends paid
Dividends proposed

9

pence

pence

64.9
64.9

50.1
2.3
52.4

64.3
64.3

49.7
2.3
52.0
13.3
14.4

*1 Adjusted numbers are stated to give a better understanding of the underlying business performance. Details of adjusting items can be found in Note 2.
*2 Details of restatement of prior period numbers can be found in Note 1.

Oxford Instruments plc

19Half Year Results Announcement for the six months ended 30 September 2019

Condensed Consolidated Statement of Comprehensive Income
Half year ended 30 September 2019 - unaudited

Profit for the period

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
£m
£m
£m
14.2
8.9
30.0

Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation differences

2.7

4.6

4.2

Items that will not be reclassified to profit or loss
Remeasurement gain in respect of post-retirement benefits
Tax charge on items that will not be reclassified to profit or loss
Total other comprehensive income

3.3
(0.6)
5.4

2.1
(0.4)
6.3

2.5
(0.5)
6.2

19.6

15.2

36.2

Total comprehensive income for the period attributable to equity Shareholders of
the parent

Oxford Instruments plc

20

Half Year Results Announcement for the six months ended 30 September 2019

Condensed Consolidated Statement of Changes in Equity
Half year ended 30 September 2019 - unaudited

Retainedearnings

Total

£m
124.0

£m
202.2

-

14.2

14.2

-

2.7
-

3.3

2.7
3.3

-

-

-

(0.6)

(0.6)

-

-

-

2.7

16.9

19.6

-

-

-

-

0.2
2.0

0.2
2.0

-

-

-

-

(8.3)
(6.1)

(8.3)
(6.1)

As at 30 September 2019

2.9

61.7

0.2

16.1

134.8

215.7

As at 1 April 2018
Impact of adoption of IFRS 15

2.9
2.9

61.7
61.7

0.2
0.2

9.2
9.2

105.6
(7.0)
98.6

179.6
(7.0)
172.6

-

-

-

-

8.9

8.9

-

-

-

4.6
-

2.1

4.6
2.1

-

-

-

-

(0.4)

(0.4)

-

-

-

4.6

10.6

15.2

-

-

-

-

0.4

0.4

-

-

-

-

(7.6)
(7.2)

(7.6)
(7.2)

2.9

61.7

0.2

13.8

102.0

180.6

As at 1 April 2019
Total comprehensive income/(expense):
Profit for the period
Other comprehensive income/(expense):- Foreign exchange translation differences- Remeasurement gain in respect of postretirement benefits- Tax on items recognised directly in othercomprehensive income
Total comprehensive income attributable toequity Shareholders of the parent
Transactions with owners recorded directly inequity:- Proceeds from exercise of share options- Credit in respect of employee service costs
settled by award of share options- Tax credit in respect of share options- Dividends paid or accrued
Total transactions with owners recorded
directly in equity:

Total comprehensive income/(expense):
Profit for the period
Other comprehensive income/(expense):- Foreign exchange translation differences- Remeasurement gain in respect of postretirement benefits- Tax on items recognised directly in othercomprehensive income
Total comprehensive income attributable toequity Shareholders of the parent
Transactions with owners recorded directly inequity:- Proceeds from exercise of share options- Credit in respect of employee service costs
settled by award of share options- Tax credit in respect of share options- Dividends paid or accrued
Total transactions with owners recorded
directly in equity:
As at 30 September 2018

Oxford Instruments plc

SharecapitalSharepremium
account

Other
reserves

Foreignexchangetranslation
reserve
£m
£m
0.2
13.4

£m
2.9

£m
61.7

-

-

-

-

-

-

21

Half Year Results Announcement for the six months ended 30 September 2019

Condensed Consolidated Statement of Changes in Equity - Continued
Half year ended 30 September 2019 - unaudited

As at 1 April 2018
Impact of adoption of IFRS 15
Total comprehensive income/(expense):
Profit for the period
Other comprehensive income/(expense):- Foreign exchange translation differences- Remeasurement gain in respect of postretirement benefits- Tax on items recognised directly in othercomprehensive income
Total comprehensive income attributable toequity Shareholders of the parent
Transactions with owners recorded directly inequity:- Proceeds from exercise of share options- Credit in respect of employee service costs
settled by award of share options- Tax credit in respect of share options- Dividends paid or accrued
Total transactions with owners recorded
directly in equity:
As at 31 March 2019

Oxford Instruments plc

SharecapitalSharepremium
account

Other
reserves

Retainedearnings

Total

£m
0.2
0.2

Foreignexchangetranslation
reserve
£m
9.2
9.2

£m
2.9
2.9

£m
61.7
61.7

£m
105.6
(7.2)
98.4

£m
179.6
(7.2)
172.4

-

-

-

-

30.0

30.0

-

-

-

4.2
-

2.5

4.2
2.5

-

-

-

-

(0.5)

(0.5)

-

-

-

4.2

32.0

36.2

-

-

-

-

0.2
0.8

0.2
0.8

-

-

-

-

0.2
(7.6)
(6.4)

0.2
(7.6)
(6.4)

2.9

61.7

0.2

13.4

124.0

202.2

22

Half Year Results Announcement for the six months ended 30 September 2019

Condensed Consolidated Statement of Financial Position
As at 30 September 2019 - unaudited

Note

AssetsNon-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Investment in associateLong-term receivables
Retirement benefit asset
Deferred tax assets

As at 30
As at 30
As at 31
September September March 2019
2019
2018
£m
£m
£m
24.5
8.8
149.8
4.6
3.4
16.0
207.1

23.9
9.7
156.8
3.8
0.9
15.4
210.5

24.2
8.8
152.5
4.6
0.3
15.3
205.7

65.5
75.1
0.8
0.9
42.1
184.4

64.6
61.9
2.1
1.0
18.9
148.5

60.8
78.3
2.4
1.1
35.2
177.8

391.5

359.0

383.5

2.9
61.7
0.2
16.1
134.8
215.7

2.9
61.7
0.2
13.8
102.0
180.6

2.9
61.7
0.2
13.4
124.0
202.2

27.9
5.8
1.0
6.6
41.3

27.3
7.5
9.9
1.3
5.2
51.2

27.9
6.0
6.5
1.1
6.3
47.8

109.1
3.4
0.8
3.5
6.1
4.2
7.4
134.5

4.1
99.9
2.3
4.7
5.5
1.6
9.1
127.2

0.6
116.9
3.0
4.3
1.1
7.6
133.5

Total liabilities

175.8

178.4

181.3

Total liabilities and equity

391.5

359.0

383.5

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

6

10

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

Oxford Instruments plc

1023

Half Year Results Announcement for the six months ended 30 September 2019

Condensed Consolidated Statement of Cash Flows
Half year ended 30 September 2019 - unaudited

Profit for the period from continuing operations
Profit for the period from discontinued operations
Profit for the period from continuing operations
Adjustments for:
Income tax expense
Net financial expense
Fair value movement on financial derivatives
Restructuring costs - relating to associate
Past service cost on defined benefit pension scheme
Share of impairment recognised by associate
Amortisation of acquired intangibles
Depreciation of right of use assets
Depreciation of property, plant and equipment
Amortisation and impairment of capitalised development costs
Amortisation and impairment of capitalised software costs
Adjusted earnings before interest, tax, depreciation and amortisation
Loss on disposal of plant, property and equipment
Charge in respect of equity settled employee share schemes
Share of loss/(profit) of associate
Restructuring 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
Decrease/(increase) in receivables(Decrease)/increase in payables and provisions(Decrease)/increase in customer deposits
Purchase of rental assets held for subsequent sale
Cash generated from operations
Interest paid
Income taxes paid
Net cash from operating activities - continuing operations
Net cash from operating activities - discontinued operations
Net cash from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Capitalised development expenditure
Decrease in long-term receivables
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from exercise of share options
Payments made in respect of lease liabilities
Repayment of borrowings
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the period

Oxford Instruments plc

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
Note
£m
£m
£m
14.2
8.9
30.0
7
(1.3)
14.2
8.9
28.7
3.8
0.4
2.6
4.8
1.8
2.2
1.2
31.0
2.0
(6.1)
26.9
(3.8)
3.6
(9.7)
(0.5)
(0.1)
16.4
(1.6)
(3.5)
11.3
1.6
12.9

2.7
2.1
2.9
0.3
(0.6)
4.7
1.7
2.2
1.5
26.4
0.4
0.6
(0.7)
(3.5)
23.2
(7.9)
12.6
(7.7)
1.8
(0.6)
21.4
(2.3)
(4.7)
14.4
14.4

6.8
3.1
1.5
0.3
0.3
(0.6)
9.6
3.3
3.9
3.5
0.3
60.7
0.2
0.8
(0.2)
(0.7)
(7.1)
53.7
(4.0)
(3.5)
4.1
7.1
(1.1)
56.3
(3.5)
(8.7)
44.1
44.1

(2.0)
(2.2)
0.5
0.5
(3.2)

(2.4)
(1.0)
(1.5)
0.6
(4.3)

(4.1)
(2.2)
(3.5)
1.1
0.3
(8.4)

0.2
(1.6)
(2.2)
(3.6)
6.1
35.2
0.8
42.1

(1.6)
(8.6)
(2.1)
(12.3)
(2.2)
20.7
0.4
18.9

0.2
(3.2)
(11.5)(7.6)(22.1)
13.6
20.7
0.9
35.2

24

Half Year Results Announcement for the six months ended 30 September 2019

Notes to the Half-year Financial Statements
Half-year ended 30 September 2019 - unaudited
1 Basis of preparation

Reporting entity
Oxford Instruments plc is a company incorporated in England and Wales. The condensed consolidated half-year “Financial Statements” consolidate
the results of the Company and its subsidiaries (together referred to as the “Group”.) They have been prepared and approved by the Directors inaccordance with International Financial Reporting Standard (“IFRS”) IAS 34 Interim Financial Reporting as adopted by the EU. They do not include
all of the information required for full annual financial statements, and should be read in conjunction with the consolidated Financial Statements of
the Group for the year ended 31 March 2019.
The financial information contained herein is unaudited and does not constitute statutory accounts as defined by Section 435 of the Companies Act
2006. The comparative figures for the financial year ended 31 March 2019 are not the Company’s statutory accounts for that financial year. Those
accounts have been reported on by the Company’s auditors and delivered to the registrar of companies. The report of the auditors was (i)unqualified, (ii) did not include a reference to any matters to which the auditors drew attention 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.
Significant accounting policies
As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set of Financial Statements has been
prepared applying the accounting policies and presentation that were applied in the preparation of the Company’s published consolidated Financial
Ftatements for the year ended 31 March 2019 except as note below.
Prior period adjustment
During the year, the Directors reviewed the classification of costs in the Income Statement with a particular focus on whether items are reported
within cost of sales or operating expenses. As a result of this review a number of reclassifications were made the most significant being that outward
freight costs and commissions paid to employees and external agents are better presented within cost of sales rather than within selling andmarketing expenses. The Directors consider this to be a better presentation since gross margin is now a clearer indicator of commercial
performance and overheads a clearer indicator of cost control. Consequently, the previously published figures for the half year to 30 September
2018 and the year to 31 March 2019 have been restated. The effect on the half year to 30 September 2018 has been to increase cost of sales by£4.8m and reduce research and development costs by £0.3m, selling and marketing costs by £4.3m and administration and shared services by£0.2m. The effect on the year to 31 March 2019 has been to increase cost of sales by £10.0m and reduce research and development costs by£0.6m, selling and marketing costs by £9.2m and administration and shared services by £0.2m. There is no impact on any other primary statement
at any reporting date.
Estimates
The preparation of half-year Financial Statements requires management to make judgements, estimates and assumptions that affect the applicationof accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these half-year Financial Statements, the significant judgements made by management in applying the Group’s accounting policies andkey sources of estimation uncertainty were the same as those that applied to the Consolidated Financial Statements as at and for the year ended 31
March 2019.
Going concern
The condensed consolidated half-year Financial Statements have been prepared on a going concern basis, based on the Directors’ opinion, after
making reasonable enquiries, that the Group has adequate resources to continue in operational existence for the foreseeable future.
Exchange rates
The principal exchange rates used to translate the Group’s overseas results were as follows:
Period-end rates

US Dollar
Euro
Japanese Yen

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
1.23
1.30
1.30
1.13
1.12
1.16
133
148
144

Average translation rates

US Dollar

Euro

Japanese
Yen

1.30
1.28
1.27
1.26
1.23
1.23

1.16
1.15
1.13
1.12
1.11
1.12

144
142
138
136
132
132

Half year to 30 September 2019
April
May
June
July
AugustSeptember

Oxford Instruments plc

25

Half Year Results Announcement for the six months ended 30 September 2019
Average translation rates
Year to 31 March 2019
April
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary
FebruaryMarch

US Dollar

Euro

Japanese
Yen

1.39
1.36
1.33
1.32
1.30
1.29
1.29
1.28
1.28
1.30
1.31
1.30

1.14
1.14
1.14
1.13
1.12
1.11
1.13
1.13
1.12
1.13
1.15
1.16

150
148
146
146
144
146
145
144
142
142
145
144

2 Non-GAAP measures

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

Statutory measure from continuing operations
Restructuring costs - relating to associate
Business reorganisation items
Past service cost on defined benefit pension
schemeShare of impairment recognised by associate
Amortisation and impairment of acquired
intangibles
Mark-to-market loss in respect of derivative
financial instruments
Loan note make-whole payable
Total non-GAAP adjustments
Adjusted measure from continuing operations
Share of taxation
Adjusted profit for the year from continuing
operations
Adjusted effective tax rates

Half year to 30
September 2019
Operating
Profitprofitbeforeincome tax
£m
£m
18.4
18.0

Half year to 30
Year to 31 March 2019
September 2018
Operating
Profit Operating
Profitprofitbeforeprofitbeforeincome tax
income tax
£m
£m
£m
£m
13.7
11.6
38.6
35.5

-

-

0.3
0.3
-

0.3
0.3
-

0.3
0.3
0.3

0.3
0.3
0.3

4.8

4.8

(0.6)
4.7

(0.6)
4.7

(0.6)
9.6

(0.6)
9.6

2.6

2.6

2.9

2.9

1.5

1.5

7.4

7.4

7.3

0.9
8.2

11.1

0.9
12.0

25.8
25.8

25.4
(5.1)
20.3
20.1%

21.0
21.0

19.8
(4.2)
15.6

49.7
49.7

21.2%

47.5
(10.4)
37.1
21.9%

Restructuring costs - relating to associate
These represent the Group’s share of mergers and acquisition costs and other one-off items incurred by the associate.
Past service cost on defined benefit pension scheme
As at 31 March 2019, the IAS 19 defined benefit pension balance sheet liability includes an allowance of £0.3m for the expected cost of equalising
Guaranteed Minimum Pension (“GMP”) between males and females.
GMP is a portion of pension that was accrued by individuals who were contracted out of the UK State Second Pension prior to 6 April 1997.
Historically, there was an inequality of benefits between male and female members who have GMP. A High Court case concluded on 26 October
2018 and confirmed that GMPs need to be equalised.
Share of impairment recognised by associate
During the year to 31 March 2018 the Group’s equity accounted associate recognised an impairment relating to the disposal of its Vacgensubsidiary. The Group’s share of this impairment was £2.0m. Following the completion and finalisation of the transaction, £0.6m of the impairment
was been reversed in the year to 31 March 2019.

Oxford Instruments plc

26

Half Year Results Announcement for the six months ended 30 September 2019
Amortisation and impairment of acquired intangibles
Adjusted profit excludes the non-cash amortisation and impairment of acquired intangible assets and goodwill.
Mark-to-market loss in respect of derivative financial instruments
Under IFRS 9, all derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, they are also measured atfair 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 IFRS 9 since that standard requires certain stringent criteria to be met in order to hedge account, which, in theparticular circumstances of the Group, are considered by the Board not to bring any significant economic benefit. Accordingly, the Group accounts
for these derivative financial instruments at fair value through profit or loss. To the extent that instruments are hedges of future transactions,adjusted profit for the year is stated before changes in the valuation of these instruments so that the underlying performance of the Group can be
more clearly seen.
Loan note make-whole payable
During the year to 31 March 2019 the Group repaid £11.6m of the principal outstanding on its loan notes. This payment was necessary due tomaterial changes to the Group’s structure following the disposal of its Industrial Analysis business during July 2017. The costs of £0.9m relate to the
make-whole balance payable upon settlement of the £11.6m principal.
Share of taxation
Adjusting items include the income tax on each of the items described above.
Reconciliation of changes in cash and cash equivalents to movement in net cash

Net increase/(decrease) in cash and cash equivalents
Effect of foreign exchange rate changes on cash and cash equivalents
Repayment of borrowings
Movement in accrued interest
Movement in net cash in the period
Net cash/(debt) at start of the period
Net cash/(debt) at the end of the period

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
£m
£m
£m
6.1
(2.2)
13.6
0.8
0.4
0.9
6.9
(1.8)
14.5
8.6
11.5
0.6
0.4
0.4
7.5
7.2
26.4
6.7
(19.7)(19.7)
14.2(12.5)
6.7

Reconciliation of net cash/(debt) to Statement of Financial Position

Loan notes - unsecured
Bank loans - unsecured
Cash and cash equivalents (per Balance Sheet)
Net cash/(debt) at the end of the period

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
£m
£m
£m
(27.9)(28.5)(28.5)
(2.9)
42.1
18.9
35.2
14.2
(12.5)
6.7

3 Earnings per share

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

Profit for the year attributable to equity Shareholders of the parent
Discontinued operations
Adjusting items:
Business reorganisation items
Past service cost on defined benefit pension scheme
Share of impairment recognised by associate
Amortisation and impairment of acquired intangibles
Mark-to-market gain in respect of derivative financial instruments
Loan note make-whole payable
Income tax credit
Adjusted profit for the year from continuing operations

Oxford Instruments plc

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
£m
£m
£m
14.2
8.9
30.0
(1.3)
4.8
2.6
(1.3)
20.3

0.3
(0.6)
4.7
2.9
0.9
(1.5)
15.6

0.3
0.3
(0.6)
9.6
1.5
0.9
(3.6)
37.1

27

Half Year Results Announcement for the six months ended 30 September 2019
The weighted average number of shares used in the calculation excludes shares held by the Employee Share Ownership Trust, and is as follows:

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

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
SharesSharesSharesmillionmillionmillion
57.4
57.4
57.4
(0.2)
(0.2)
(0.2)
57.2
57.2
57.2

The following table shows the effect of share options on the calculation of diluted earnings per share:
Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
SharesSharesSharesmillionmillionmillion
57.2
57.2
57.2
0.6
0.5
0.5
57.8
57.7
57.7

Number of ordinary shares per basic earnings per share calculations
Effect of shares under option
Number of ordinary shares per diluted earnings per share calculations

4 Segment information

The Group has ten operating segments. These operating segments have been combined into three aggregated operating segments to the extent
that they have similar economic characteristics, with relevance to products and services, type and class of customer, methods of sale anddistribution and the regulatory environment in which they operate. Each of these three aggregated operating segments is a reportable segment. The
aggregated operating segments are as follows:- the Materials & Characterisation segment comprises a group of businesses focusing on applied R&D and commercial customers, enabling the
fabrication and characterisation of materials and devices down to the atomic scale;- the Research & Discovery segment comprises a group of businesses providing advanced solutions that create unique environments and enablemeasurements down to the molecular and atomic level which are used in fundamental research; and- the Service & Healthcare segment provides customer service and support for the Group’s products and the service, sale and rental of third-party
healthcare imaging systems.
The Group’s internal management structure and financial reporting systems have been amended to differentiate the three aggregated operating
segments on the basis of the economic characteristics discussed above.
Reportable segment results include items directly attributable to a segment as well as those which can be allocated on a reasonable basis. Intersegment pricing is determined on an arm’s length basis. The operating results of each are regularly reviewed by the Chief Operating Decision
Maker, which is deemed to be the Board of Directors. Discrete financial information is available for each segment and used by the Board of
Directors for decisions on resource allocation and to assess performance. No asset information is presented below as this information is notpresented in reporting to the Group’s Board of Directors.
Results from continuing operations
Half year to 30 September 2019
External revenue
Inter-segment revenue
Total segment revenue
Segment adjusted operating profit from continuing
operations
Half year to 30 September 2018
External revenue
Inter-segment revenue
Total segment revenue
Segment adjusted operating profit from continuing operations

Oxford Instruments plc

Materials &Characterisation
£m
69.8
69.8

Research &Discovery
£m
61.2
61.2

Service &Healthcare
£m
35.3
35.3

Total
£m
166.3

12.2

6.4

7.2

25.8

Materials &Characterisation
£m
60.1
60.1

Research &Discovery
£m
54.3
54.3

Service &Healthcare
£m
32.6
32.6

Total
£m
147.0

9.7

4.8

6.5

21.0

28

Half Year Results Announcement for the six months ended 30 September 2019Year to 31 March 2019
External revenue
Inter-segment revenue
Total segment revenue

Materials &Characterisation
£m
137.9
137.9

Research &Discovery
£m
125.2
125.2

Service &Healthcare
£m
70.5
70.5

£m
333.6

22.1

12.7

14.9

49.7

Service & UnallocatedHealthcare Group items
£m
£m
7.2
-

Total

Segment adjusted operating profit from continuing operations

Total

Reconciliation of reportable segment profit from continuing operations
Half year to 30 September 2019
Segment adjusted operating profit fromcontinuing operations
Amortisation and impairment of acquired
intangibles
Fair value movement on financial derivatives
Financial income
Financial expenditure
Profit/(loss) before income tax from continuing
operations
Half year to 30 September 2018
Segment adjusted operating profit fromcontinuing operations
Restructuring costs - relating to associates
Share of impairment recognised by associate
Amortisation and impairment of acquired
intangibles
Fair value movement on financial derivatives
Financial income
Financial expenditure
Profit/(loss) before income tax from continuing
operations
Year to 31 March 2019
Segment adjusted operating profit fromcontinuing operations
Restructuring costs - relating to associates
Past service cost on defined benefit pension
schemeShare of impairment recognised by associate
Amortisation and impairment of acquired
intangibles
Fair value movement on financial derivatives
Financial income
Financial expenditure
Profit/(loss) before income tax from continuing
operations

Oxford Instruments plc

Materials &Characterisation£m
12.2

Research &Discovery
£m
6.4

(1.2)

(3.2)

(0.4)

-

(4.8)

11.0

3.2

6.8

(2.6)
0.5
(0.9)
(3.0)

(2.6)
0.5
(0.9)
18.0

Materials &Characterisation£m
9.7

Research &Discovery£m
4.8Service &Healthcare£m
6.5

UnallocatedGroup items
£m
-

Total

(1.1)

(0.3)
0.6
(3.2)

(0.4)

-

(0.3)
0.6
(4.7)

8.6

1.9

6.1

(2.9)
0.1
(2.2)
(5.0)

(2.9)
0.1
(2.2)
11.6

Materials &Characterisation£m
22.1

Research &Discovery£m
12.7

Service &Healthcare£m
14.9

UnallocatedGroup items
£m
-

Total

-

(0.3)
-

-

(0.3)

(0.3)
(0.3)

(2.4)

0.6
(6.4)

(0.8)

-

0.6
(9.6)

19.7

6.6

14.1

(1.5)
0.3
(3.4)
(4.9)

(1.5)
0.3
(3.4)
35.5

£m
25.8

£m
21.0

£m
49.7

29

Half Year Results Announcement for the six months ended 30 September 2019
5 Research and development (“R&D”)

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

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

Half year Half year to Year to 31
to 30
30 March 2019
September September as restated*20192018 asrestated*
£m
£m
£m
11.9
12.0
24.8
(0.1)
0.1
0.1
(1.2)
(1.5)
(3.5)
2.2
1.5
3.5
13.0
12.0
24.8

* Details of restatement of prior period numbers can be found in Note 1.

6 Investment in associate

The Group’s share of profit in its equity accounted associate, Scienta Scientific AB (“Scienta”), for the period was £nil (prior half year: £0.3m loss;
prior full year: £0.5m profit). The Group did not receive any dividends from the associate in the current or prior periods.

7 Discontinued operations

During the period the Group received £1.6m being a receipt of additional proceeds in respect of the sale of the Industrial Analysis business in July
2017.
During the prior year the Group recognised £1.6m, of income representing additional proceeds due in respect of the sale of the Industrial Analysis
business in July 2017 and an associated tax charge of £0.3m.

8 Taxation

The total effective tax rate on profits for the half year is 21.1% (prior half year: 23.3%). The weighted average tax rate in respect of adjusted profit
before tax (see Note 2) for the half year is 20.1% (prior half year: 21.2%).
For the full year the Group expects the tax rate in respect of adjusted profit before tax to be 20.0%.

9 Dividends per share

The following dividends per share were paid by the Group:

Interim dividend
Final dividend

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
pence
pence
pence
3.8
3.7
3.7
9.6
3.8
3.7
13.3

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

Previous period interim dividend
Previous period final dividend

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
pence
pence
pence
4.1
3.8
3.8
10.6
4.1
3.8
14.4

The final dividend for the year to 31 March 2019 was approved by Shareholders at the Annual General Meeting held on 10 September 2019.
Accordingly, it is no longer at the discretion of the Company and has been included as a liability as at 30 September 2019. It was paid on 18 October
2019.
The interim dividend for the year to 31 March 2020 of 4.1 pence was approved by the Board on 12 November 2019 and has not been included as aliability as at 30 September 2019. The interim dividend will be paid on 14 April 2020 to Shareholders on the register at the close of business on 6
March 2020.

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Half Year Results Announcement for the six months ended 30 September 2019
10 Financial instruments

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

Fair value
hierachy
Assets carried at amortised cost
Long-term receivables
Trade receivables
Other receivables
Cash and cash equivalents
Assets carried at fair value
Derivative financial instruments:- Foreign currency contracts
Liabilities carried at fair value
Derivative financial instruments:- Foreign currency contracts
Liabilities carried at amortised
cost
Trade and other payables
Borrowings
Lease payables

Half year to 30
September 2019
Carrying Fair value
amount£m£m

Half year to 30
Year to 31 March 2019
September 2018
Carrying Fair value
Carrying Fair value
amountamount
£m
£m
£m
£m

63.4
7.0
42.1

0.9
49.9
8.3
18.9

0.3
64.7
10.0
35.2

2

0.9

0.9

1.0

1.0

1.1

1.1

2

(4.2)

(4.2)

(1.6)

(1.6)

(1.1)

(1.1)

(56.6)(27.9)(9.2)(58.6)(31.4)(9.8)(65.7)(28.5)(9.0)

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the abovetable.
Derivative financial instruments
Derivative financial instruments are marked-to-market using market prices.
Fixed and floating rate borrowings
The fair value of fixed and floating rate borrowings is estimated by discounting the future contracted principal and interest cash flows using themarket rate of interest at the reporting date.
Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the carrying amount is deemed to reflect the fair value. All otherreceivables/payables are discounted to determine their fair value. Advances received are excluded from other payables above as these are notconsidered to be financial liabilities.
Lease payables
The lease liability is measured at amortised cost using the effective interest method.
Fair value hierachy
The table above gives details of the valuation method used in arriving at the fair value of financial instruments. The different levels have been
identified as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly(i.e. derived from prices); andLevel 3: inputs for the asset or liability that are not based on observable market data.
There have been no transfers between levels during the year.

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Half Year Results Announcement for the six months ended 30 September 2019
11 Related parties

All transactions with related parties are conducted on an arm’s length basis and in accordance with normal business terms. Transactions between
the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
During the period, the Group supplied services and materials to, and purchased services and materials from, a subsidiary of its associate on anarm’s length basis. It had the following transactions during the period:
Transactions with ScientaOmicron GmbH

Purchases
Receivables at period end

Half year Half year to Year to 31
to 30
30 March 2019
September September
2019
2018
£m
£m
£m
0.7
0.7
2.1
1.4

Included on the Balance Sheet is a long-term loan receivable of £nil (September 2018: £0.9m, March 2019: £0.3m) and a current loan receivable of£0.8m (September 2018: £1.1m, March 2019: £1.1m) due from Scienta Scientific AB. The loan is repayable by the end of May 2020. During theperiod the Group received interest charged on the loan of £0.1m (six months to September 2018: £0.1m, year to March 2019: £0.2m).

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Half Year Results Announcement for the six months ended 30 September 2019

Independent review report to Oxford Instruments plc
Conclusion
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months
ended 30 September 2019 which comprises the Condensed Consolidated Statement of Income, the Condensed Consolidated Statement ofComprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity,
Condensed Consolidated Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 30 September 2019 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK
FCA”).
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial
information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and otherreview procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.
The impact of uncertainties due to the UK exiting the European Union on our review
Uncertainties related to the effects of Brexit are relevant to understanding our review of the condensed financial statements. Brexit is one of themost significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes,
with the full range of possible effects unknown. An interim review cannot be expected to predict the unknowable factors or all possible future
implications for a company and this is particularly the case in relation to Brexit.
Directors responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the halfyearly financial report in accordance with the DTR of the UK FCA.
The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU.
The Directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with
IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report basedon our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of
the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in thisreport and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we have reached.

Mike Barradellfor and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
12 November 2019

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Half Year Results Announcement for the six months ended 30 September 2019

Principal Risks and Uncertainties
Information regarding the risk management process in place at the Group is set out on page 43 of the 2019 Annual Report. The principal risks anduncertainties identified through that process are set out on pages 44 to 47 of the 2019 Annual Report and can be found on the Group’s website atwww.oxinst.com.
In keeping with the risk management process, the Group has performed a quarterly update of its risk register as at 30 September 2019. It has
evaluated the disclosures made on pages 44 to 47 of the 2019 Annual Report and has concluded that the risks identified remain relevant for theremainder of the year-ending 31 March 2020 and that there are no other significant risks to be disclosed. A summary of the risks identified is set out
below:• routes to market;• technical risk;• economic environment;• political risk;• legal/compliance risk;• Brexit-related risks;• adverse movements in long-term foreign currency rates;• supply chain risk;• people;• IT risk;• operational risk; and• pensions.
The continuing lack of clarity relating to Brexit means that uncertainty over the potential impact of Brexit remains. The Group has assessed the key
risks arising from Brexit and concluded that the most significant short-term risks arise from a possible no-deal Brexit, due to the potential disruption
to the supply chain that could arise as a result.

Oxford Instruments plc

34