Oxford Instruments plc
Tubney Woods, Abingdon, Oxon OX13 5QX, UK
Tel: +44 (0) 1865 393200

Press Release

Email:info.plc@oxinst.com
www.oxford-instruments.com

Release Date: 7am Wednesday 15 June 2016
Oxford Instruments plc
Announcement of Preliminary Results for the year to 31 March 2016
Oxford Instruments plc, a leading provider of high technology tools and systems for industry and research,
today announces its Preliminary Results for the year to 31 March 2016.

Revenue
Adjusted* operating profit
Adjusted* profit before tax
Profit/(loss) before tax
Adjusted* basic earnings per share - continuing
Dividend per share (full year)
Operating cash flow
Net debt

Year ended
31 March 2016

Year ended
31 March 2015

£361.6m£44.6m
£37.0m£13.1m49.2p
13.0p£49.6m£128.2m£380.1m£42.8m£35.7m
(£9.6m)48.4p
13.0p£38.9m£118.9m% change
-4.9%
+4.2%
+3.6%
+1.7%
+27.5%

Financial Highlights:

•
•
•
•
•
•

Adjusted profit before tax up 3.6%, in line with expectations
Adjusted operating profit margin up 100 basis points to 12.3%, reflecting delivery of cost saving
programme
Reported revenue down 4.9%, and 5.7% at organic constant currency*, driven by structural changes
within the superconducting wire market and completion of a service contract
Strong cash performance with operating cash flow up 27.5%; leverage maintained at 2.3 times
Dividend maintained at 13.0p for the full year
Improved group order book at year end, 12.1% above prior year

Operating Highlights:

•
•
•
•
•

Improved profit performance in NanoTechnology Tools and Service sectors; decline in Industrial
Products due to market softness
Reported revenue broadly flat in North America, assisted by acquisition of Medical Imaging Resources(‘MIR’); declined in Europe due to sale of Omicron and marginal decline in Asia due to currency effects
Early action on cost reduction delivered operational benefits of £9.4 million
Active management of portfolio to deliver long-term shareholder value: acquisition of MIR; joint venture
to combine Oxford Instruments’ Omicron business with Scienta Scientific AB
Appointment of Ian Barkshire as Chief Executive in line with succession plan and Gavin Hill as Group
Finance Director. Alan Thomson to assume Chairman role in September

Outlook:••

Revenue for first two months of trading in line with last year; profits marginally ahead
Our focus on product innovation, customer service and cost optimisation gives us confidence that weare on track to make progress in the year ahead

Announcement of Preliminary Results for the year to 31 March 2016

Ian Barkshire, Chief Executive of Oxford Instruments plc, said:“I am excited about the opportunity to capture the long term structural growth in demand for highperformance nanotechnology tools. Our focus on new product development, customer service and cost
optimisation gives us confidence that we are on track to make progress in the year ahead.
“We will continue to invest in growing the business in our core markets of physical and material science,and exploiting convergence to expand into life sciences.”
Enquiries:
Oxford Instruments plc

Tel: 01865 393200

Ian Barkshire, Chief Executive
Gavin Hill, Group Finance Director

MHP Communications

Tel: 020 3128 8100

Rachel Hirst / Jamie Ricketts

Number of pages: 32*NOTE: Throughout this preliminary announcement we make reference to adjusted numbers. These are presented
as, in the opinion of the Directors, they present a clearer picture of the business performance. A full definition ofadjusted numbers can be found in note 1. Where we make reference to organic numbers these exclude the effect ofacquisitions and disposals. Where we make reference to constant currency numbers these are prepared using theexchange rates which prevailed in the previous year rather than the actual exchange rates which prevailed in the year.

Oxford Instruments plc

2Announcement of Preliminary Results for the year to 31 March 2016
Chairman’s Statement
The Group delivered a profit performance in line with expectations. Against a difficult macroeconomic backdrop we
achieved profit growth on lower revenue. Reported Group revenue was £361.6 million (2015: £380.1 million) withadjusted profit before tax rising to £37.0 million (2015: £35.7 million). Profit before tax increased to £13.1 million(2015: loss of £9.6 million).
Our NanoTechnology Tools and Service sectors delivered a steady performance, whilst Industrial Products continued
to face pressure from weaknesses in their end markets. Good control of working capital led to strong cash conversion
in the year.
At the beginning of 2015, recognising the difficult trading environment, we instigated a wide ranging cost reduction
programme across the Group to bring our cost base in line with trading and secure efficiencies that enhance our
performance. This cost reduction programme has delivered the expected savings and enabled us to improve
profitability despite the constrained market backdrop.
We continued to actively manage the Group’s portfolio. In May 2015, we acquired Medical Imaging Resources, Inc(‘MIR’), a US company specialising in the build, lease, sale and service of mobile medical imaging laboratories. In thesame month, we entered into a joint venture with GD Intressenter AB of Sweden (‘GDI’) to create the world’s largest
player in the highly specialised Ultra High Vacuum Surface Science field. The joint venture comprises Oxford
Instruments’ Omicron NanoTechnology GmbH (‘Omicron’) and GDI’s Scienta Scientific AB (‘Scienta’). It is making
good progress towards profitability.
Given the modest growth in adjusted continuing earnings per share of 1.7%, the Directors are proposing to maintainthe final dividend at last year’s level. This would result in a final dividend of 9.3p (2015: 9.3p), bringing the total
dividend for the year to 13.0p (2015: 13.0p).
Since the financial year end, we have announced Ian Barkshire’s appointment as Chief Executive following Jonathan
Flint’s decision to step down after eleven years in the role. This followed our earlier announcement of Gavin Hill’s
appointment as Group Finance Director to succeed Kevin Boyd, who left the Group in April 2016. Ian and Gavinassumed their respective new roles in May 2016.
I would like to thank Jonathan for his immense contribution. Under his leadership, Oxford Instruments has grown tobecome a global leader in the provision of nanotechnology tools, high technology industrial products and services tothe research and commercial sectors. In that period the Group has significantly improved profitability and more thandoubled sales. Jonathan will remain on the Board until July 2016 to close out the 2016 year end and ensure a smoothtransition to Ian’s leadership.
I am delighted that Ian is succeeding Jonathan and that our succession planning has seen a colleague with such
experience and quality take the helm. Ian joined Oxford Instruments in 1997 and has held a number of seniorleadership roles including NanoCharacterisation Divisional Head and Group Technical Director, before his
appointment as Chief Operating Officer in 2015. His proven track record of delivering results in technology
businesses makes him particularly well placed to lead our Group.
We have previously announced a number of other changes to the Board. I would like to thank Jennifer Allerton andJock Lennox, who will be standing down from the Board at the AGM this September. Jennifer has been a Board
member since June 2013; Jock has been a Board member since April 2009, and is Chair of the Audit and Risk
Committee, and Senior Independent Director.
Mary Waldner will take over from Jock as Chairman of the Audit and Risk Committee when Jock steps down from thisrole on 16 June 2016. Mary is CFO at Lloyd’s Register, a privately-owned global engineering, technical and businessservices organisation. She has a broad range of experience across a variety of sectors having held senior financial
positions with a number of major public and private companies including Ultra Electronics Holdings PLC and QinetiQ.
Mary graduated from Oxford University with an MA in Physics and is a fellow of the Chartered Institute of Management
Accountants.
I have also decided that the time is right for me to step down after 17 years. It has been a great privilege to serve as
Chairman of Oxford Instruments and I take enormous satisfaction in what has been achieved in changing the Group to
one that has become increasingly customer-led, while retaining its leading edge technical solutions. I am delighted
that we have found such an able and experienced successor in Alan Thomson, who joined the Board in June and will
step up to Chairman at our AGM in September.

Oxford Instruments plc

3Announcement of Preliminary Results for the year to 31 March 2016
It has been an exciting journey and I look forward to seeing Oxford Instruments build on its great strengths and leadthe way in the advancement of technological and commercial innovation.
Chief Executive’s Review
I am delighted to have been given the opportunity to take over from Jonathan Flint as Chief Executive of Oxford
Instruments. In my time with the Group, I have worked in many parts of the company and now look forward to leading
the organisation.
Oxford Instruments is a leading provider of high technology capital goods to support industry and academia indeveloping, understanding and commercialising the applications of nanotechnology. Our focus is on areas where we
can offer significant competitive advantage through our expertise, skill and intellectual property in areas that can beapplied to nanotechnology such as high performance scientific imaging, cryogenics, superconductivity, x-ray
fluorescence and spectroscopy. We add value to our customers though superior performance and improved ease ofuse for better productivity in both research and manufacturing. Added value is obtained through intuitive userinterfaces and innovative applications which allow complex science to be undertaken by a wider range of users.
We continue to build on our strategy to grow our business in our core markets of physical and material science, while
exploiting scientific convergence to expand into life sciences. The use of techniques previously associated with thephysical sciences, where the Group has great strength, in the biological sciences produces an important opportunity
for growth.
Our NanoTechnology Tools sector produces the very best scientific instruments, which are matched to our customers’
needs. The businesses in this sector offer the opportunity for good organic growth in the medium term as
nanotechnology applications are adopted by a broader range of research users and increasingly within commercial
end markets.
Our Industrial Products sector develops technologies which are predominantly deployed in industrial applications,where our customers are interested in optimising quality and productivity. These products provide an opportunity for
scalability in a broad range of addressable markets. We recognise that this is a competitive arena and we therefore
concentrate on products where we have a clear advantage.
Our Service sector addresses the aftermarket for our own and third party equipment. The technical complexity of ourown products means our customers highly value our aftermarket support and the increasing level of service contracts
provide the opportunity for growth. Our ability to grow in the third party arena is enhanced by the Group’s strong brandand technical capabilities.
Looking back over the previous financial year, our NanoTechnology Tools and Service sectors have both delivered
improved profit performances against an uncertain macroeconomic background. In our Industrial Products sector,
Industrial Analysis has shown improved performance as a result of management actions, despite challenging industrial
end markets. However, our Superconducting Wire business has suffered from a structural change in the market, which
has reduced demand from our MRI customers.
Orders in the year were £380.8 million (2015: £382.4 million). NanoTechnology Tools grew by 4% (after the removal of
Omicron) offsetting a decline of 3% in Industrial Products. The acquisition of MIR contributed to good growth in theService sector. At the end of the year the Group order book for future deliveries stood at £140.4 million (2015: £125.2
million), growth of 12.1%.
Revenue in the period was £361.6 million (2015: £380.1 million) a decline of 4.9%. Organic constant currency revenue
declined by 5.7%. This performance reflects the material impact of structural changes within the superconducting wire
market and the previously reported completion of a Siemens MRI service contract. In Europe revenue declined by
12.8% (0.3% on an organic constant currency basis), while in Asia, a reported decline of 2.9% translated into organic
constant currency growth of 2.2%. The loss of the MRI contract contributed to a decline of 0.6% (16.9% at organic
constant currency) in North America.
Adjusted profit before tax at Group level was £37.0 million (2015: £35.7 million). Our early action on cost reduction
implemented in 2015, has contributed to operational benefits of £9.4 million and has enabled us to deliver improved
profits this year. Adjusted return on sales rose to 12.3% (2015: 11.3%). Adjusted operating margins in our
NanoTechnology Tools sector improved from 9.8% to 11.4% reflecting the removal of the Omicron business and abetter performance from Plasma Technology, Andor Technology, Asylum Research and NanoAnalysis. Adjusted
operating margins in Industrial Products fell from 6.1% to 4.7% due to the decline in the superconducting wire market.
This was partially offset by improved margins in our Industrial Analysis business. Adjusted Operating Margins in theService sector have increased to 24.0% (2015: 23.7%).
Oxford Instruments plc

4Announcement of Preliminary Results for the year to 31 March 2016
The Group spent £29.3 million on Research and Development in the period (2015: £35.2 million), reflecting improved
efficiency brought about by the consolidation of sites and the fact that the ongoing R&D programme in our Omicron
joint venture is no longer included in these figures. Some of our new and innovative products are outlined in the
Operations section. We monitor the fraction of our revenues which originate from products developed in the last three
years (our Vitality Index). Our Vitality Index stands at 31% down from 44% in 2015, reflecting the continued successof the RRP Wire and the AZtec and X-Max platforms, whose introduction now falls outside the three year window. The
Index remains in the range where we believe a high technology business should be. We continue to have a healthy
pipeline of new products in development that will push the boundaries of technical performance and scientificunderstanding. These developments are aligned to our strategic roadmaps and plans for growth across the Group.

PeopleI would like to thank our 2,000 staff around the world for their excellent contributions this year. It is their hard work,
diligence and understanding of many technological disciplines that make Oxford Instruments the unique business that
it is.
Kevin Boyd, our long standing Finance Director, stood down on 8 April 2016. Kevin has been an important part of theemergence of Oxford Instruments as a key player in the high technology field and I would like to thank him for hisenormous contribution.
I would like to welcome Gavin Hill, Kevin’s successor, who joined us on 9 May. Gavin was Group Finance Director of
Synergy Health plc from April 2010 until the combination with STERIS Corporation on 3 November 2015. Prior to that
he was Corporate Finance Director of Serco Group plc where he held a number of senior finance and commercial
positions. Prior to joining Serco, Gavin worked in a variety of finance and corporate treasury roles with Syngenta AG
and AstraZeneca plc. Gavin is a Chartered Accountant and an associate member of the Institute of Corporate
Treasurers. I look forward to working with Gavin in the next stage of the evolution of Oxford Instruments.

Current Trading and Outlook
In continuing uncertain market conditions we remain focussed on new product development, customer service andcost optimisation and expect to make progress in the year. Revenue for the first two months of trading in the current
year is in line with last year with profits marginally ahead.
The increasing role of nanotechnology in both the physical and life sciences will continue to yield long term structural
growth in demand for high technology tools for use in research. We will continue to invest in growing the business inour core markets of physical and materials science, and exploiting convergence to expand into life sciences.

Operations Review
Our Group reports in three sectors: NanoTechnology Tools, Industrial Products and Service.

NanoTechnology Tools

Revenue
Adjusted2 Operating
ProfitAdjusted2 Operating
Margin
1
2

2016
£m

2015
£m

Growth

187.4
21.3

211.2
20.7

-11.3%

11.4%

9.8%

Organic
Constant
Currency
Growth1-2.5%

Excludes foreign exchange and disposals
Details of adjusting items can be found in Note 1 of these Financial Statements

The NanoTechnology Tools sector produces our highest technology products, primarily to research customers; 83% of
its revenues come from research and academia with over a quarter of this coming from Biological Sciences. Our
customers in this sector provide a unique insight into emerging trends in public and privately funded research, thus
Oxford Instruments plc

5Announcement of Preliminary Results for the year to 31 March 2016
informing our approach to innovation and product application. In the physical and life science research fields, our tools
are used to advance the frontiers of science. We count many Nobel laureates amongst our customers.
The NanoTechnology Tools sector comprises two divisions: NanoCharacterisation, which includes NanoAnalysis,
Andor Technology and Asylum Research; and NanoSolutions, which includes NanoScience and Plasma Technology.
Omicron was previously reported in this division but its revenues and profits are now excluded as it is now part of aminority owned investment in Scienta Scientific Ab. Our organic performance reflects the effect of the change intreatment. Our increase in margins reflects the strong performance in our NanoAnalysis, Andor and Asylum
businesses, an improvement in Plasma Technology and the transition of Omicron into the joint venture.
Our NanoAnalysis business delivers leading-edge solutions and services that enable materials characterisation andsample manipulation at the nano scale. Our products are used on electron microscopes and ion-beam systems inacademic institutions and industrial applications including semi-conductors, renewable energy, mining, metallurgy andforensics. We continue to be very strong in our end markets and continue to deliver good commercial and technicalresults. This year we launched AZtecOne, which is the ideal solution for carrying out complex tasks as quickly andeasily as possible, without the need for substantial training or advanced knowledge of the underlying technique.
AZtecOne can be used to analyse the composition of a wide range of materials in the Scanning Electron Microscopeand has been well received in the market. We also launched our X-Max Extreme detector, which is able to achievepreviously unattainable analysis of features at the very small scale. The X-Max Extreme is the most sensitive x-ray
detector on the market for lithium characterisation at the nanoscale. This is important for those working to make lithium
ion batteries last longer while being both lighter and more powerful. We continue to develop software and hardwarethat enable our customers to obtain their results easily while instilling confidence that results are both accurate anddependable. By focusing on ease of use we are also allowing a broader range of users to exploit the range oftechniques we offer.
Andor Technology is a global leader in the design and manufacture of high performance scientific imaging cameras,
spectroscopy solutions and microscopy systems for research and industrial markets. Andor continues to show growthand is delivering a good performance ahead of our expectations. The integration of the Andor international sites into
our federal offices is complete, providing market and operational synergies. We have announced the relocation of our
microscopy systems production from our Canadian site to our main manufacturing site in Belfast to further improve
operational efficiency. We have received strong interest in our iKon XL camera within the Astronomy community where
the camer’s large area high sensitivity and ability to operate without the requirement for liquid cryogens, provides
significant advantages over the previous technology. This has generated particularly strong sales in China. Our
superior performance cameras, microscopy systems and visualisation software have been used recently to observe
how cancer drugs and other therapies are operating at a molecular and cellular level. This will help researchers comeup with more effective cancer therapies and develop a better understanding of autoimmune diseases such as Multiple
Sclerosis and Arthritis.
Asylum Research is the technology leader in Atomic Force Microscopy (AFM) for both materials and bioscience
applications. Asylum Research has the opportunity for long term growth as our products continue to take market
share. We have seen growth in demand for our new AFM products from a broad range of applications and end
markets; including facilitating advancements in energy storage and generation. Our microscopes are being used tohelp understand the physical properties of organic solar cells that are more efficient, cheaper and simpler to make.
This will lead to the creation of more cost efficient means of powering many consumer devices. The MFP-3D-BIO is
being used to help researchers understand more about how the stiffness of scar tissue and healthy heart tissue canreduce heart function in heart attack survivors.
Plasma Technology provides processes and solutions to semi-conductor research laboratories and advanced
specialised production facilities, developing devices and materials for novel applications of nanotechnology. Whilst
Plasma is making a good recovery and has maintained its position in the academic and coporate research market,
there is still some way to go to reach an acceptable level of performance. We launched an enhanced PlasmaPro100
range of etch and deposition tools to offer our customers working in areas such as high brightness LEDs (HBLED) andphotovoltaic development a more flexible and compact platform. We also introduced the Astrea product line designed
to enable improved uniformity and larger area processing. We have built on our expertise gained through our work in
HBLEDs to help our customers develop more efficient power devices, which reduce the associated production andrunning costs of electronic devices. In addition, these capabilities are helping customers fabricate UltraViolet LEDs
that will be used in the manufacture of water purification systems. LED sources are attractive as they can be more
effective with a lower cost of ownership than historical UltraViolet purification methods.
NanoScience designs, manufactures and supports market-leading research tools that enable quantum technologies,
new materials and device development in the physical sciences. We continue to see strong demand for our Ultra Low
Temperature systems in line with the growing interest in understanding the fundamentals of quantum science and theassociated industrial applications. Our next generation Triton refrigeration system launched this year has been well
Oxford Instruments plc

6

Announcement of Preliminary Results for the year to 31 March 2016
received, providing customers with improved throughput and access for larger samples and experiments. Quantum
sensors are receiving increased amounts of funding and have the potential to offer unparalleled speed and sensitivity
to the measurement of electrical current, magnetic field, and even time. This can enable the development of platforms
that can be applied in a wide range of situations from environmental sensing to medical imaging, such as sensitive
brain scanning. Our cryomagnetic system is at the heart of the GE SPINlab product, which is used to significantly
enhance the sensitivity of a clinical MRI scan and revolutionise applications such as monitoring the effectiveness ofcancer treatment. This can identify the effectiveness of a treatment for individual patients within days rather thanmonths. While this is still in the research phase, early results are proving extremely positive.
The Omicron Scienta joint venture created the largest player in the Ultra High Vacuum surface science field. Its
restructuring programme and the integration of the two businesses is going well. The financial performance has
improved and, whilst there is still more to be done, it is making good progress toward profitability. The Group has a
47% share in the joint venture.

Industrial Products

Revenue
Adjusted2 Operating
ProfitAdjusted2 Operating
Margin
1
2

2016
£m

2015
£m

Growth

96.6
4.5

104.1
6.4

-7.2%

4.7%

6.1%

Organic
Constant
Currency
Growth1-11.4%

Excludes foreign exchange and disposals
Details of adjusting items can be found in Note 1 of these Financial Statements

Our Industrial Products sector sells more mature, though still technically advanced, products primarily to industrial
customers; 57% of its revenues come from industrial customers working in areas such as the environment,
construction and energy. The tools and systems produced by this sector enable us to benefit from the economies ofscale offered by trading in the larger industrial markets, thereby maximising the returns from our R&D programmes. In
the industrial field, our tools are used to improve production efficiency, ensure high standards of quality control anddemonstrate compliance with environmental legislation.
This sector saw a decline in revenues, due to a drop in sales in the Superconducting Wire business and this,alongside continued difficulties in the metals and construction markets served by Industrial Analysis and X-ray
Technology, resulted in a decline in margins and orders.
Industrial Analysis designs and sells a range of spectrometers for industrial markets. Our customers span global
industries from metals, steel foundries and scrap recycling through to automotive, solar, petrochemicals, cement,
recycling, and food and agriculture. We have improved our trading position and profitability despite the challenging
macroeconomic conditions where many of our end industrial markets remain depressed. Through our focused efforts
we continue to take market share from competitors with our handheld analysers and have made a number of changes
in our global distribution channels to further improve our position. We launched the Foundry-Master Smart earlier inthe year. This analyser is smaller and more mobile than existing systems and is used to analyse the majority of metals
and their alloys. This has been well received and orders are ahead of expectation. Archaeologists in Italy have usedboth the mPulse and the XMET8000 to undertake analysis of metallic pieces while investigating an air crash that
happened in April 1945. Our analysers allowed them to rapidly and reliably identify the wreckage as that of a
Messerschmitt aircraft shot down towards the end of World War II. Our Pulsar is the highest resolution benchtop
nuclear magnetic resonance spectrometer on the market and is currently generating increased interest from a broad
range of industrial and academic markets. The Pulsar is currently being used to identify potentially dangerous levels of
restricted pharmaceuticals in herbal remedies and dietary supplements.
Industrial Components comprises our Superconducting Wire and X-ray Technology businesses. As previously
announced, we have disposed of our non-core Austin Scientific business. Our Superconducting Wire businesssupplies wire for the MRI scanner market and here we continue to be affected by the pricing pressures exerted on us
by the MRI system manufacturers and the reduced demand for wire from our OEM customers. The effect of thisreduced MRI pricing will be somewhat offset by signed contracts to supply leading edge technology niobium tin
conductor for the High Luminosity upgrade to the Large Hadron Collider project at CERN. Our X-ray Technology
business supplies x-ray sources for industry, research and medical applications including material composition
analysis, real time medical imaging and analysis of multi-layer printed circuit boards. Our X-ray Technology business
Oxford Instruments plc

7

Announcement of Preliminary Results for the year to 31 March 2016has been impacted by softening in our industrial customers’ end markets, however we continue to see a good level ofinterest in our latest integrated x-ray source, especially from electronic equipment OEM customers.

Service Sector

Revenue
Adjusted2 Operating
ProfitAdjusted2 Operating
Margin
1
2

2016
£m

2015
£m

Growth

78.4
18.8

66.2
15.7

18.4%

24.0%

23.7%

Organic
Constant
Currency
Growth1-6.5%

Excludes foreign exchange and acquisitions and disposals
Details of adjusting items can be found in Note 1 of these Financial Statements

The Service sector comprises the Group’s maintenance service contracts, billable repairs and spare part sales for
Oxford Instruments’ own products; and the service, sale and rental of refurbished third party MRI and CT machines
under the OI Healthcare brand.

Our strength and reputation for customer service and support is a key element of our brand and market position, andoffers further opportunities for growth. The trend in servicing is for increased uptime across both the academic andindustrial sectors and this has led to a demand for value added service, such as predictive servicing and remotediagnostics and we continue to build our capabilities in these areas. Group Service revenue increased year on year
due to a strong result in billable business offsetting a decline in spare parts and a slight reduction in contract revenue.
Our NanoTechnology Tools sector performed well showing growth in revenue and margin.
Service performed well in the year. We acquired Medical Imaging Resources, Inc (‘MIR’) to complement our range ofservice offerings for our customers. The integration has progressed according to plan and has made a considerable
contribution to the increase in revenues, orders and profit we had this year in Service. This has helped offset the
expected decline in revenue as a result of the completion of the Siemens MRI service contract in the United States.
Japan had a strong year with record revenues and a large increase in billable repairs and spare parts. We also
experienced a slight recovery in Korea; this was after the MERS outbreak that had impacted our revenues at the halfyear.

Finance Review
Reported revenue declined by 4.9% to £361.6 million (2015: £380.1 million), with adjusted operating profit increasing
by 4.2% to £44.6 million (2015: £42.8 million). Revenue on a constant currency basis declined by 7.7%, with the
movement in average currency exchange rates over the last year positively impacting reported revenue by £10.9
million. Organic constant currency revenue excluding the impact of acquisitions and disposals, declined by 5.7%.
Orders during the period were broadly flat at £380.8 million (2015: £382.4 million). At the end of the year the Grouporder book for future deliveries stood at £140.4 million (2015: 125.2 million), growth of 12.1%.
Adjusted operating profit, excluding currency effects, grew by 6.1%. Adjusted operating margin increased by 100 basis
points to 12.3% (2015: 11.3%), largely driven by cost savings following a restructuring programme implemented at theend of the last financial year. Operating profit increased to £24.2 million (2015: £3.4 million).
Non-recurring and acquisition related items were £4.5 million and the mark-to-market valuation of currency hedges inplace was a loss of £2.7 million. An analysis of non-recurring and aquisition related items is set out in note 1.
Adjusted profit before tax of £37.0 million (2015: £35.7 million) represents a margin of 10.2% (2015: 9.4%). Profit
before tax of £13.1 million (2015: loss of £9.6 million) represents a margin of 3.6%.
Continuing adjusted basic earnings per share grew by 1.7% to 49.2 pence. Earnings per share was 16.1 pence (2015:
loss of 10.9 pence).
Cash generated from operations increased by 27.5% to £49.6 million, primarily due to strong working capital inflow.
This reflected a conversion of adjusted operating profit into operating cash (defined as adjusted EBITDA, less, working
capital, research and development and capital expenditure) of 115.2% (2015: 80.6%). The acquisition of Medical
Oxford Instruments plc

8

Announcement of Preliminary Results for the year to 31 March 2016
Imaging Resources, Inc (‘MIR’) and deferred consideration paid for Platinum Medical Imaging, Inc (‘PMI’) and Asylum
Research Corporation (‘Asylum’) contributed to an increase in net debt to £128.2 million from £118.9 million at theyear end, representing a net debt to EBITDA ratio (for banking covenant purposes) of 2.3 times, comfortably within ourbanking covenant of 3.5 times.
During the year the Group disposed of its Austin Scientific business and this has been treated as a discontinued
operation in the financial statements. Accordingly, the numbers detailed in the Finance Review exclude the results ofAustin Scientific in both the current and prior periods.
Adjusted operating profit is stated before amortisation of acquired intangibles, non-recurring items, acquisition-related
costs, and the mark-to market valuation of unexpired currency hedges, as set out in note 1 to the financial statements.
1.
Income statement
The Group’s income statement is summarised below.
Table 1: Income statement
Year ended
31 March 2016
£m
361.6
161.9
(117.3)
44.6
(7.6)
37.0
(16.7)(4.5)

Year ended
31 March 2015
£m
380.1
169.8
(127.0)
42.8
(7.1)
35.7
(21.7)(18.8)

(2.7)
13.1
(3.9)
9.2

(4.8)
(9.6)
3.4
(6.2)

Effective tax rate1

24.1%

22.7%

Continuing adj. earnings per share – basic
Earnings per share – basic

49.2p
16.1p

48.4p
(10.9)p+1.7%

Continuing adj. earnings per share – diluted
Earnings per share – diluted

49.1p
16.1p

48.2p
(10.9)p+1.9%

Dividend per share

13.0p

13.0p

Revenue
Adjusted gross profit
Administrative expenses
Adjusted operating profit
Net finance costs
Adjusted profit before tax
Amortisation of acquired intangibles
Non-recurring items and acquisition-relatedcostsMark-to-market of currency hedges
Profit before tax
Tax
Profit for the period

Change
-4.9%
-4.7%
+4.2%
+3.6%

1

The effective tax rate is calculated excluding amortisation on acquired intangibles, non-recurring and acquisition related items andthe mark-to-market of financial derivatives

1.1

Revenue

Reported revenue of £361.6 million (2015: £380.1 million) declined by 4.9%. The movement in average currency
exchange rates over the last year (notably a strengthening of the US Dollar against Sterling), has increased reported
revenue by £10.9 million. Revenue, excluding currency effects, showed a decline of 7.7%. Organic constant currency
revenue, which excludes the impact of acquisitions and disposals (the disposal of Omicron to a joint venture and theacquisition of MIR), declined by 5.7%.
Organic constant currency revenue by sector showed a marginal reduction of 2.5% in NanoTechnology Tools, 11.4%
in Industrial Products and 6.5% in Service.
1.2

Gross profit

Adjusted gross profit fell by 4.7% to £161.9 million (2015: £169.8 million), representing an adjusted gross profit marginof 44.8%, a 10 basis point increase over the previous year. Gross profit fell by 5.1% to £160.9 million (2015: £169.6
million).

Oxford Instruments plc

9Announcement of Preliminary Results for the year to 31 March 2016
1.3

Operating profit

Adjusted operating profit increased by 4.2% to £44.6 million (2015: £42.8 million), representing an adjusted operating
profit margin of 12.3%, an increase of 100 basis points against last year. Margins (expressed after the allocation of
corporate overhead) have risen across NanoTechnology Tools and Service. The cost reduction programme initiated by
the Group has led to an improvement in margin of 160 basis points to 11.4% for NanoTechnology Tools and a rise of
30 basis points to 24.0% for the Service sector. Continuing challenging market conditions for Industrial Products led toa fall in margin of 140 basis points to 4.7%.
Removing the impact of Omicron and MIR, adjusted operating profit on an organic constant currency basis grew by
0.2%. Currency effects (including the impact of transactional currency hedging) have reduced reported adjusted
operating profit by £0.8 million. Blended hedged rates for the Euro and Japanese Yen resulted in a currency headwind
against last year that more than offset a small gain on the US Dollar.
1.4

Non-recurring and acquisition related items

Net non-recurring and acquisition related items during the period were £4.5 million. Acquisition related costs were £2.5
million comprising professional fees relating to the acquisition of MIR, deferred consideration relating to PMI andfinancial commitments made by Andor Technology (‘Andor’) prior to its acquisition by Oxford Instruments. Nonrecurring items totalled £2.0 million representing restructuring costs across the Group of £4.2 million, (of which £1.3
million relates to the ScientaOmicron associate), £1.0 million of acquisition fair value adjustments, a £0.9 million loss
on the disposal of the Omicron business and a credit balance of £4.1 million reflecting contingent consideration nolonger deemed payable.
The Group uses derivative products to hedge its exposure to fluctuations in foreign exchange rates. It is Group policy
to have in place at the beginning of the financial year hedging instruments to cover 80% of its forecast transactional
exposure for that year. The Group has decided that the additional costs of meeting the extensive documentation
requirements of IAS 39 to apply hedge accounting to these foreign exchange hedges cannot be justified. Accordingly,
the Group does not use hedge accounting for these derivatives.
Net movements on marking to market such derivatives at the balance sheet date are disclosed in the Income
Statement as financial expenditure and excluded from our calculation of adjusted profit before tax.
The mark to market loss in respect of derivative financial instruments was £2.7 million (2015: £4.8 million loss). This
reflects the fair value on currency derivatives that are hedging future transactional currency exposures for the Group.
The un-crystallised loss is attributable to a fall in the value of Sterling at the balance sheet date against the US Dollar,
Euro and Japanese Yen, against a blended rate achieved on hedging transactions expected to arise in the 2016/17
financial year.
1.5

Net finance costs

The Group’s net finance costs, before mark to market movements as described in the previous parapgraph, rose by£0.5 million to £7.6 million (2015: £7.1 million) with finance charges rising by £0.6 million to £5.9 million, pension costs
falling by £0.2 million to £1.7 million and financial income falling by £0.1 million. The rise in finance charges was due
to an increase in financing costs following the move into a higher interest ratchet band as the Group’s net debt to
EBITDA leverage rose above 2.0 times at the end of September 2015, combined with a rise in average net debt overthe period.
1.6

Profit before tax

Adjusted profit before tax increased by 3.6% to £37.0 million (2015: £35.7 million). The adjusted profit before tax
margin increased by 80 basis points to 10.2% (2015: 9.4%).
Profit before tax increased to £13.1 million (2015: loss of £9.6 million). The profit before tax margin was 3.6%.
1.7

Amortisation of acquired intangibles

Amortisation of acquired intangibles of £16.7 million relates to intangible assets identified on acquisitions, being thevalue of customer relationships and brands, the largest component of which relates to amortisation of £7.2 million on
intangibles recognised on the acquisition of Andor.

Oxford Instruments plc

10Announcement of Preliminary Results for the year to 31 March 2016
1.8

Tax

The adjusted tax charge of £8.9 million (2015: £8.1 million) represents an effective tax rate of 24.1% (2015: 22.7%).
The increase is due to a change in the proportional mix of territories where profits are generated.
1.9

Earnings per share (EPS)

Adjusted basic earnings per share and adjusted diluted earnings per share, after adjusting for amortisation of
intangibles and non-recurring items, increased by 1.7% and 1.9% respectively. Basic and diluted earnings per share
increased from a negative position last year to 16.1 pence.
Undiluted weighted average shares have stayed flat at 57.1 million.

2.

Dividend

The Board has proposed to hold the dividend at last year’s level. This results in a final dividend of 9.3 pence, bringing
the total dividend for the year to 13.0 pence. The final dividend will be paid, subject to shareholder approval, on 20
October 2016 to shareholders on the register as at 23 September 2016.

3.

Cash flow

The Group cash flow is summarised below.
Table 2: Cash flow

Adjusted operating profit
Non-cash items
Adjusted EBITDA
Working capital movement
Acquisition related costs
Restructuring costs
Pension scheme payments above charge to op. profit
Equity settled share schemes
Loss on disposal of plant and equipment
Cash generated from operations
Interest
Tax
Capitalised development expenditure
Expenditure on tangible and intangible assets
Acquisition of subsidiaries, net of cash acquired
Proceeds from sale of subsidiary undertaking
Proceeds from issue of share capital
Increase in long term receivables
Dividends paid
Increase/(decrease) in borrowings
Net increase in cash and cash equivalents from continuing
operations

Year ended
31 March 2016
£m
44.6
10.4
55.0
7.3
(1.8)
(4.7)
(6.7)
0.4
0.1
49.6
(5.6)
(3.5)
(8.2)
(2.7)
(27.1)
0.6
(3.0)
(7.6)
4.6
(2.9)

Year ended
31 March 2015
£m
42.8
10.2
53.0
(5.1)
(1.9)
(1.2)
(5.9)
(0.2)
0.2
38.9
(5.0)
(9.1)
(8.0)
(5.4)
(0.8)
0.2
(7.1)
(12.9)(9.2)

Note: Adjusted EBITDA is earnings before interest, tax, depreciation, intangible amortisation, mark-to-market of financial derivatives
and other non-cash items

3.1

Cash generated from operations

Cash generated from operations in the year increased by 28% to £49.6 million (2015: £38.9 million), reflecting a
conversion of adjusted operating profit into operating cash (defined as adjusted EBITDA, less, working capital,
research and development and capital expenditure) of 115.2% (2015: 80.6%), primarily due to a large inflow ofworking capital over the period.

Oxford Instruments plc

11Announcement of Preliminary Results for the year to 31 March 2016
Included in working capital is £3.0 million of expenditure on MRI related assets for the US Healthcare business. These
are refurbished and subsequently rented, after which these assets may be sold. During the year, revenue andadjusted operating profit of £13.8 million and £1.7 million respectively was booked to the income statement against thesale of refurbished assets.
3.2

Interest

Net interest paid was £5.6 million (2015: £5.0 million). The difference from last year is primarily due to higher financing
costs arising from a higher level of average net debt compared to the comparative period.
3.3

Tax

Tax paid was £3.5 million (2015: £9.1 million), the large reduction reflecting the high level of tax deductible
restructuring costs in the prior period.
3.4

Investment in research and development (R&D)

Total cash spend on R&D in the year was £29.3 million, equivalent to 8.1% of sales, (2015: £35.2 million, 9.3% ofsales). A reconciliation between the amounts charged to the Income Statement and the cash spent is given below:
Table 3: Investment in research and development (R&D)

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

4

Year ended
31 March 2016£mYear ended
31 March 2015
£m

24.6
(0.8)
1.2
(3.9)
8.2
29.3

30.5
(0.8)
2.2
(4.7)
8.0
35.2

Acquisitions

On 1 May 2015, the Group acquired Medical Imaging Resources, Inc (‘MIR’), a US company specialising in the build,lease, sale and service of mobile medical imaging laboratories. Consideration comprised an initial $9.4 million (circa£6.1 million) with an additional $10.1 million (circa £6.6 million) paid as deferred consideration in May 2016. MIR had$4.0 million (circa £2.6 million) of debt on completion.
On 28 May 2015 the Group entered into a joint venture with GD Intressenter AB of Sweden (‘GDI’) to create theworld’s largest player in the highly specialised Ultra High Vacuum Surface Science field. The joint venture comprises
Oxford Instruments’ Omicron Nanotechnology GmbH (‘Omicron’) and GDI’s Scienta Scientific AB (‘Scienta’). In
consideration for new shares in Scienta, Oxford Instruments holds a 47% interest in the share capital of Scienta, with
GDI holding the remaining 53%. The transaction resulted in loss on disposal of £0.9 million. The Group’s share of thepost tax profit or loss of the joint venture is reported in the Income Statement as a share of income from associate.

5

Net debt and funding

5.1

Net debt

Net debt increased in the period from £118.9 million to £128.2 million. Operating cash flow of £49.6 million was utilised
by interest, tax, acquisition payments, investment in capital and research and development, and dividend payments.
Expenditure of £30.1 million relates to the acquisition of MIR and deferred consideration paid for the acquisitions of
PMI and Asylum, acquired in 2011 and 2012 respectively, as well as a small loan to the new associate. In addition, theGroup invested in tangible and intangible assets of £2.7 million and capitalised research and development of £8.2
million.

Oxford Instruments plc

12Announcement of Preliminary Results for the year to 31 March 2016
Table 4: Movement in net debt£m
Net debt as at 31 March 2015
Operating cash flow
Interest
Tax
Capital expenditure on tangible and intangible assets
Capitalised development expenditure
Acquisitions, net of cash acquired and loan to associate
Proceeds from sale of subsidiary undertaking
Dividends paid
Other items
Net debts as at 31 March 2016
5.2

118.9
(49.6)
5.6
3.5
2.7
8.2
30.1
(0.6)
7.6
1.8
128.2

Funding

The Group has in place an unsecured multi-currency revolving facility agreement which is committed until February
2020. The facility has been entered into with a group of 3 banks and comprises a Sterling denominated multi-currency
facility of £100 million and a US Dollar denominated multi-currency facility of $37.0 million.
The Group has also issued a bilateral private placement note of £44.5 million, which matures in 2021 and a £25.0
million amortising fixed rate loan from the European Investment Bank that matures in 2020. In addition, the Group has
uncommitted facilities of £20.0 million.
Debt covenants are net debt to EBITDA less than 3.5 times (until and including 30 September 2016), reducing to 3.0
times thereafter, and EBITDA to interest greater than 4.0 times. As at 31 March 2016 net debt to EBITDA was at 2.3
times and EBITDA to interest was 9.6 times, both comfortably within our banking covenants.

6

Pensions

The Group has defined benefit pension schemes in the UK and USA. Both have been closed to new entrants since2001 and closed to future accrual from July 2010.
At 31 March 2016, the net liability arising from our defined benefit scheme obligations was £35.0 million (2015: £53.5
million), a fall of £18.5 million. The reduction in the deficit was due to lower inflation than expected, a small increase in
the discount rate and a favourable change in experience assumptions since the last triennial review. Total scheme
assets at 31 March 2016 were £239.5 million (2015: £238.6 million) while liabilities were £274.5 million (2015: £292.1
million).
The annual deficit recovery payment to the UK scheme was £6.8 million for the financial year, payable through to andincluding 2021. For the years up to and including 2018, the payment will rise by the higher of inflation and growth individend per share; thereafter, the payment will increase in line with inflation.

7

Employees

The average number of people employed during the year was 2,077, a reduction of 343 over the prior year, due
primarily to the disposal of Omicron and the restructuring commenced in January 2015.

8

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 and Strategy and Operations sections. The financial position of the Group, its
cash flows, liquidity position and borrowing facilities are described in the Financial 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

Oxford Instruments plc

13

Announcement of Preliminary Results for the year to 31 March 2016
within its existing debt facilities. This review also considered hedging arrangements in place. The Directors believethat the Group is well placed to manage its business risks successfully.
The Financial Statements have been prepared on a going concern basis, based on the Directors’ opinion, after
making reasonable enquires, that the Group has adequate resources to continue in operational existence for theforeseeable future.

9

Viability

The directors have considered the longer term viability of the Group in the Viability Statement found on page [ ] andhave concluded that it is appropriate for the Financial Statements to be prepared on a going concern basis.

10

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 theCompany.

Gavin Hill
Group Finance Director
15 June 2016

Oxford Instruments plc

14

Announcement of Preliminary Results for the year to 31 March 2016

Consolidated Statement of Income
year ended 31 March 2016

Notes

Adjusted*£m

Adjustingitems*
£m

[3]

361.6

—

361.6

Cost of sales(199.7)(1.0)(200.7)Gross profit

161.9

(1.0)

160.9

(24.6)—(24.6)

Revenue

Research and development

[4]

Total
£m

Selling and marketing(59.8)—(59.8)

Administration and shared services(33.4)(23.0)(56.4)

(0.2)

(1.3)

(1.5)

Other operating income

—

4.9

4.9

Foreign exchange

0.7

—

0.7

Operating profit/(loss)

44.6(20.4)

24.2

Other financial income

—

—

—

Financial income

—

—

—

Interest charge on pension scheme net liabilities

(1.7)

—

(1.7)

Other financial expenditure

(5.9)

(3.5)

(9.4)

Financial expenditure

(7.6)

(3.5)

(11.1)

Profit/(loss) before income tax

37.0(23.9)

13.1

(8.9)

5.0

(3.9)

28.1

(18.9)

9.2

(0.3)

(1.9)

(2.2)

27.8

(20.8)

7.0

Share of loss of associate, net of tax

Income tax (expense)/credit

[6]

[8]

Profit/(loss) for the year from continuing operations
Loss from discontinued operations after tax[7]

Profit/(loss) for the year attributable to equity Shareholders of the parent

pence

pence

Earnings per share
Basic earnings per share[2]

From continuing operations

49.2

16.1

From discontinued operations

(0.5)

(3.9)

From profit for the year

48.7

12.2

Diluted earnings per share[2]

From continuing operations

49.1

16.1

From discontinued operations

(0.5)

(3.8)

From profit for the year

48.6

12.3

Dividends per share
Dividends paid

[9]

13.0

Dividends proposed

[9]

13.0

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

The attached notes form part of the Financial Statements.

Oxford Instruments plc

15

Announcement of Preliminary Results for the year to 31 March 2016

Consolidated Statement of Income
year ended 31 March 2015

Notes

Adjusted*£m

Adjustingitems*
£m

Total
£m

[3]

380.1

—

380.1

Cost of sales(210.3)(0.2)(210.5)Gross profit

169.8

(0.2)

169.6

(30.5)—(30.5)

Revenue

Research and development[4]

Selling and marketing(64.9)—(64.9)

Administration and shared services(34.3)(40.6)(74.9)———

Other operating income

—

1.4

1.4

Foreign exchange

2.7

—

2.7

Operating profit/(loss)

42.8(39.4)

3.4

Other financial income

0.1

—

0.1

Financial income

0.1

—

0.1

Interest charge on pension scheme net liabilities

(1.9)

—

(1.9)

Other financial expenditure

(5.3)

(5.9)

(11.2)

Financial expenditure

(7.2)

(5.9)

(13.1)

Profit/(loss) before income tax

35.7(45.3)

(9.6)

(8.1)

11.5

3.4

27.6

(33.8)

(6.2)

(0.1)

—

(0.1)

27.5

(33.8)(6.3)

Share of loss of associate, net of tax

Income tax (expense)/credit

[6]

[8]

Profit/(loss) for the year from continuing operations
Loss from discontinued operations after tax[7]

Profit/(loss) for the year attributable to equity Shareholders of the parent

pence

pence

From continuing operations

48.4(10.9)

From discontinued operations

(0.2)

(0.2)

From profit/(loss) for the year

48.2

(11.1)

From discontinued operations

48.2(10.9)

From profit/(loss) for the year

(0.2)

(0.2)

48.0

(11.1)

Earnings per share
Basic earnings per share

Diluted earnings per share

[2]

[2]

From continuing operations

Dividends per share
Dividends paid

[9]

12.4

Dividends proposed

[9]

13.0

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

Oxford Instruments plc

16

Announcement of Preliminary Results for the year to 31 March 2016

Consolidated Statement of Comprehensive Income
year ended 31 March 2016

2016
£m

2015
£m

7.0

(6.3)

Items that may be reclassified subsequently to profit or loss
(Loss)/ gain on effective portion of changes in fair value of cash flow hedges, net of amounts
recycled

(0.1)

0.1

Foreign exchange translation differences

5.6

7.3

Net foreign exchange loss on disposal of subsidiaries taken to the income statement

1.2—

Tax on items that may be reclassified to profit or loss

—

—

13.6

(10.8)

(2.6)

2.3

17.7

(1.1)

24.7

(7.4)

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

Items that will not be reclassified subsequently to profit or loss
Remeasurement gain/(loss) in respect of post-retirement benefits
Tax on items that will not be reclassified to profit or loss
Total other comprehensive income/(expense)
Total comprehensive income/(expense) for the year attributable to equity
Shareholders of the parent

Oxford Instruments plc

[8]

17

Announcement of Preliminary Results for the year to 31 March 2016

Consolidated Statement of Financial Position
as at 31 March 2016

AssetsNon-current assets
Property, plant and equipment
Intangible assets
Investment in associateLong-term receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current income tax recoverable
Derivative financial instruments
Cash and cash equivalents
Total assets
EquityCapital and reserves attributable to the Company’s equity Shareholders
Share capital
Share premium
Other reserves
Translation reserve
Retained earnings
Liabilities
Non-current liabilities
Bank loans and overdrafts
Other payables
Retirement benefit obligations
Deferred tax liabilities
Current liabilities
Bank loans and overdrafts
Trade and other payables
Current income tax payables
Derivative financial instruments
Provisions
Total liabilities
Total liabilities and equity

2016
£m

2015
£m

35.2
220.8
13.1
3.4
19.0
291.5

33.1
231.3
—
—
20.1
284.5

61.1
77.5
2.7
1.5
21.8
164.6
456.1

70.8
87.3
3.3
3.4
25.1
189.9
474.4

2.9
61.5
0.1
9.7
68.8
143.0

2.9
61.5
0.2
2.9
58.0
125.5

147.0
—
35.0
5.7
187.7

144.0
0.8
53.5
6.2
204.5

3.0
102.4
2.1
5.8
12.1
125.4
313.1
456.1

—
121.6
2.6
4.1
16.1
144.4
348.9
474.4

The Financial Statements were approved by the Board of Directors on 15 June 2016 and signed on its behalf by:

Ian Barkshire
Gavin Hill
Director
Director
Company Number: 775598
Oxford Instruments plc

18

Announcement of Preliminary Results for the year to 31 March 2016

Consolidated Statement of Changes in Equity
year ended 31 March 2016

Balance at 1 April 2015
Total comprehensive income:
Profit for the year
Other comprehensive income:– Foreign exchange translation differences– Net foreign exchange loss on disposal ofsubsidiaries taken to the income statement– Loss on effective portion of changes in fair value ofcash flow hedges, net of amounts recycled– Remeasurement gain in respect of post-retirement
benefits– Tax on items recognised directly in othercomprehensive income
Total comprehensive income/(expense)
attributable to equity Shareholders of the parent
Transactions with owners recorded directly inequity:– Charge in respect of employee service costs
settled by award of share options– Dividends paid
Total transactions with owners recorded directly inequityBalance at 31 March 2016

Other
reserves£m
0.2

Foreignexchangetranslation
reserve£m
2.9

Retainedearnings
£m
58.0

Total
£m
125.5

—

—

—

7.0

7.0

—

—

—

5.6

—

5.6

—

—

—

1.2

—

1.2

—

—

(0.1)

—

—

(0.1)

—

—

—

—

13.6

13.6

—

—

—

—

(2.6)

(2.6)

—

—

(0.1)

6.8

18.0

24.7

—
—

—
—

—
—

—
—

0.4
(7.6)

0.4
(7.6)

—
2.9

—
61.5

—
0.1

—
9.7

(7.2)
68.8

(7.2)
143.0

Share
capital
£m
2.9

Share
premium
account£m
61.5—

Other reserves comprise the capital redemption reserve, which represents the nominal value of shares repurchased and thencancelled during the year ended 31 March 1999, and the hedging reserve in respect of the effective portion of changes in value ofcommodity contracts.
The foreign exchange translation reserve comprises all foreign exchange differences arising since 1 April 2004 from the translationof the Group’s net investments in foreign subsidiaries into Sterling.
The Group holds 183,145 (2015: 183,145) of its own shares in an employee benefit trust. The cost of these shares is included
within retained earnings. There was no movement in the shares held by the trust during the year.

Oxford Instruments plc

19Announcement of Preliminary Results for the year to 31 March 2016

Consolidated Statement of Changes in Equity
year ended 31 March 2016

Balance at 1 April 2014
Total comprehensive income:Loss for the year
Other comprehensive income:– Foreign exchange translation differences– Gain on effective portion of changes in fair value ofcash flow hedges, net of amounts recycled– Remeasurement loss in respect of post-retirement
benefits– Tax on items recognised directly in othercomprehensive income
Total comprehensive income/(expense)
attributable to equity Shareholders of the parent
Transactions with owners recorded directly inequity:– Credit in respect of employee service costs settled
by award of share options– Tax charge in respect of share options– Proceeds from shares issued– Dividends paid
Total transactions with owners recorded directly inequityBalance at 31 March 2015

Oxford Instruments plc

Otherreserves£m
0.1

Foreignexchangetranslation
reserve£m(4.4)

Retainedearnings
£m
80.3

Total
£m
140.2

—

—

—

(6.3)

(6.3)

—

—

—

7.3

—

7.3

—

—

0.1

—

—

0.1

—

—

—

—

(10.8)(10.8)

—

—

—

—

2.3

2.3

—

—

0.1

7.3

(14.8)

(7.4)

—
—
—
—

—
—
0.2
—

—
—
—
—

—
—
—
—

(0.2)
(0.2)
—
(7.1)

(0.2)
(0.2)
0.2
(7.1)

—
2.9

0.2
61.5

—
0.2

—
2.9

(7.5)
58.0

(7.3)
125.5

Share
capital
£m
2.9

Share
premium
account
£m
61.3

—

20

Announcement of Preliminary Results for the year to 31 March 2016

Consolidated Statement of Cash Flows
year ended 31 March 2016
2016
£m

2015
£m

9.2

(6.2)

3.9
11.1
0.2
0.8
2.5
2.9
1.3
0.9
—
(4.9)
0.2
16.7
6.3
3.9

(3.4)
13.0
0.2
—
2.2
9.9
—
—
6.8
(1.4)
—
21.7
5.5
4.7

55.0
0.1
0.4
(1.8)
(4.7)
(6.7)
42.3
2.7
9.3
(1.2)
(0.5)
(3.0)
49.6
(5.6)
(3.5)
40.5

53.0
0.2
(0.2)
(1.9)
(1.2)
(5.9)
44.0
(3.3)
(5.3)
1.6
1.9
—
38.9
(5.0)
(9.1)
24.8

(27.1)
(2.5)
(0.2)
0.6
(8.2)
(37.4)

(0.8)
(4.4)
(1.0)
—
(8.0)
(14.2)

—
(3.0)
4.6
(7.6)
(6.0)
(2.9)
(0.9)
25.1
(0.9)
20.4

0.2
—
(12.9)(7.1)(19.8)
(9.2)
(0.1)
32.6
1.8
25.1

(3.8)
(0.9)

(9.3)
1.8

(4.7)
(4.6)

(7.5)
12.9

Movement in net debt in the year
Net debt at start of the year

(9.3)
(118.9)5.4(124.3)Net debt at the end of the year

(128.2)(118.9)Profit/(loss) for the year from continuing operations
Adjustments for:
Income tax expense
Net financial expense
Acquisition related fair value adjustments to inventory
Acquisition related fair value adjustments to property, plant and equipment
Acquisition related costs
Restructuring costs
Restructuring costs – relating to associate
Loss on disposal of subsidiary
Contingent consideration - further amount deemed payable
Contingent consideration deemed no longer payable
Share of loss from associate
Amortisation and impairment of acquired intangibles
Depreciation of property, plant and equipment
Amortisation and impairment of capitalised development costs
Adjusted earnings before interest, tax, depreciation and amortisation
Loss on disposal of property, plant and equipment
Cost of equity settled employee share schemes
Acquisition related costs paid
Restructuring costs paid
Cash payments to the pension scheme more than the charge to operating profit
Operating cash flows before movements in working capital
Decrease/(increase) in inventories
Decrease/(increase) in receivables
Increase in payables and provisions
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
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
Acquisition of property, plant and equipment
Acquisition of intangible assets
Proceeds from sale of subsidiary undertaking
Capitalised development expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Increase in long-term receivables
Increase/(decrease) in borrowings
Dividends paid
Net cash from financing activities
Net decrease in cash and cash equivalents from continuing operations
Decrease in cash from discontinued operations
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year
Reconciliation of changes in cash and cash equivalents to movement in net debt
Decrease in cash and cash equivalents
Effect of foreign exchange rate changes on cash and cash equivalents
Cash (inflow)/outflow from increase/decrease in debt

Oxford Instruments plc

21

Announcement of Preliminary Results for the year to 31 March 2016

Notes to the Financial Statements
year ended 31 March 2016
1 Non-GAAP measures
The Directors present the following non-GAAP measures as they consider that they give a better indication of the underlying
performance of the business.
Reconciliation between profit before income tax and adjusted profit from continuing operations
2016
£m

2015
£m

Profit/(loss) before income tax from continuing operations

13.1

(9.6)

Reversal of acquisition related fair value adjustments to inventory
Reversal of acquisition related fair value adjustments to property, plant and equipment
Acquisition related costs
Restructuring costs
Restructuring costs – relating to associate
Loss on disposal of subsidiary
Contingent consideration - further amount deemed payable
Contingent consideration deemed no longer payable
Unwind of discount in respect of contingent consideration and acquisition related accruals
Non-recurring and acquisition related items
Amortisation and impairment of acquired intangibles
Mark to market loss in respect of derivative financial instruments
Adjusted profit before income tax from continuing operations
Share of taxation
Adjusted profit for the year from continuing operations

0.2
0.8
2.5
2.9
1.3
0.9
—
(4.9)
0.8
4.5
16.7
2.7
37.0
(8.9)
28.1

0.2
—
2.2
9.9
—
—
6.8
(1.4)
1.1
18.8
21.7
4.8
35.7
(8.1)
27.6

The reversal of acquisition related fair value adjustments to inventory and property, plant and equipment are excluded fromadjusted profit to provide a measure that includes results from acquired businesses on a consistent basis over time to assist
comparison of performance.
Acquisition related costs comprise professional fees incurred in relation to mergers and acquisitions activity and any consideration
which, under IFRS 3 (revised), falls to be treated as a post acquisition employment expense.
Restructuring costs comprise one-off costs in respect of the ongoing cost reduction programme begun in the prior year, including
an impairment of inventory and capitalised development costs in the Plasma Technology business in relation to the exit from the
HBLED market. Restructuring costs relating to the Group’s associate relate to exceptional costs incurred by the associate arisingfrom the merger of the Scienta and Omicron businesses.
In common with a number of other companies adjusted profit excludes the non-cash amortisation and impairment of acquired
intangible assets and goodwill and the unwind of discounts in respect of contingent consideration relating to businesscombinations.
In the prior year, a further £6.8m was provided in respect of additional contingent consideration expected to be due in respect of theacquisition of Platinum Medical Imaging in November 2011.
In the current year, £4.9m has been released relating to contingent consideration on the acquisition of Asylum Research
Corporation following the end of the earnout period. In the prior year, £1.4m was released in respect of contingent consideration
relating to the acquisition of RMG Technology Limited.
The group made a loss on disposal of its Omicron business of £0.9m in the current year. Further details of the transaction can befound in Note [6].
Under IAS 39, all derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, they are alsomeasured at fair value. In respect of instruments used to hedge foreign exchange risk and interest rate risk the Group does not takeadvantage of the hedge accounting rules provided for in IAS 39 since that standard requires certain stringent criteria to be met inorder to hedge account, which, in the particular circumstances of the Group, are considered by the Board not to bring any
significant economic benefit. Accordingly, the Group accounts for these derivative financial instruments 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 thevaluation of these instruments so that the underlying performance of the Group can be more clearly seen.
In calculating the share of tax attributable to adjusted profit before tax in 2011 a one-off recognition of deferred tax assets relating
to the Group’s UK businesses of £11.3m was excluded. At that time the Group announced its intention to exclude the reversal ofthis deferred tax from the calculation of the share of tax attributable to adjusted profit before tax in the years in which it reverses. In
the current and prior period tax losses arose in the UK and consequently no deferred tax reversed.
See Note [7] for details of adjusting items from discontinued operations.

Oxford Instruments plc

22Announcement of Preliminary Results for the year to 31 March 2016

2 Earnings per share
The calculation of basic and adjusted earnings per share is based on the profit for the year as shown in the Consolidated
Statement of Income and the adjusted profit for the year as shown in Note [1] respectively. Basic and adjusted earnings are divided
by the weighted average number of ordinary shares outstanding during the year, excluding shares held by the Employee ShareOwnership Trust.
2016
£m

2015
£m

Basic earnings
Adjusted earnings (Note [1])

7.0
27.8

(6.3)
27.5

Weighted average number of shares

57.1

57.1

Basic earnings per share from continuing operations
Adjusted earnings per share from continuing operations

pence

pence

16.1
49.2

(11.1)
48.2

The weighted average number of shares used in the calculation excludes shares held by the Employee Share Ownership Trust, as
follows:

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

2016
Sharesmillion2015
Sharesmillion

57.3
(0.2)
57.1

57.3
(0.2)
57.1

2016
Sharesmillion2015
Sharesmillion

57.1
0.1
57.2

57.1
0.2
57.3

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

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

In the prior year the Group reported a loss, and as such basic earnings per share was equal to reported diluted earnings per share.
This is due to the fact that the shares under option above would have an anti-dilutive effect. Adjusted diluted earnings per sharehas been calculated in a manner consistent with previous periods.
3 Segment information
The Group has eight 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 ofcustomer, methods of sale and distribution and the regulatory environment in which they operate. Each of these three aggregatedoperating segments is a reportable segment.
The Group’s internal management structure and financial reporting systems differentiate the three aggregated operating segmentson the basis of the economic characteristics discussed below:
the Nanotechnology Tools segment contains a group of businesses, supplying similar products, characterised by a high•degree of customisation and high unit prices. These are the Group’s highest technology products serving research customers
in both the public and private sectors;
the Industrial Products segment contains a group of businesses supplying high technology products and components•
manufactured in medium volume for industrial customers; andthe Service segment contains the Group’s service, rental and refurbished asset sales business as well as service revenues•
from other parts of the Group.
Reportable segment results include items directly attributable to a segment as well as those which can be allocated on areasonable basis. Inter-segment pricing is determined on an arm’s length basis. The operating results of each are regularly
reviewed by the Chief Operating Decision Maker, which is deemed to be the Board of Directors. Discrete financial information isavailable 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 not presented in reporting to the Group’s Board of Directors.

Oxford Instruments plc

23

Announcement of Preliminary Results for the year to 31 March 2016a) Analysis by businessYear to 31 March 2016

Nanotechnology
Tools
£m

Industrial
Products£m

Service
£m

Total
£m

187.3
0.1
187.4
21.3

95.9
0.7
96.6
4.5

78.4
—
78.4
18.8

361.6

Nanotechnology
Tools
£m

Industrial
Products£m

Service
£m

Total
£m

210.9
0.3
211.2
20.7

103.0
1.1
104.1
6.4

66.2
—
66.2
15.7

380.1

External revenue
Inter-segment revenue
Total segment revenue
Segment adjusted operating profit from continuing operations

Year to 31 March 2015

External revenue
Inter-segment revenue
Total segment revenue
Segment adjusted operating profit from continuing operations

44.6

42.8

The loss after tax of £0.2m from the Group’s associate is reported within the Nanotechnology Tools segment.
Included in the Service sector is revenue from equipment sales of £13.8m (2015: £7.7m) and from equipment leasing of £8.1m(2015: £0.3m) . These two business lines contributed £1.7 m (2015 £0.7m) and £1.5m (2015: £0.2m) respectively to the Group’s
operating profit.
Reconciliation of reportable segment profit

Adjusted profit for reportable segments from continuing operations
Reversal of acquisition related fair value adjustments to inventory
Reversal of acquisition related fair value adjustments to property, plant and equipment
Acquisition related costs
Restructuring costs
Restructuring costs – relating to associate
Loss on disposal of subsidiary
Contingent consideration - further amount deemed payable
Contingent consideration deemed no longer payable
Amortisation and impairment of acquired intangibles
Financial income
Financial expenditure
Profit/(loss) before income tax on continuing operations

2016
£m

2015
£m

44.6
(0.2)
(0.8)
(2.5)
(2.9)
(1.3)
(0.9)
—
4.9
(16.7)—(11.1)
13.1

42.8
(0.2)
—
(2.2)
(9.9)
—
—
(6.8)
1.4
(21.7)
0.1(13.1)(9.6)

2015
Industrial
Products
£m

Total
£m

4 Research and development (R&D)
The total R&D 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

Nanotechnology
Tools
£m

2016
Industrial
Products
£m

Total
£m

Nanotechnology
Tools
£m

17.6
—
0.1

7.0
(0.8)
1.1

24.6
(0.8)
1.2

22.5
(0.2)
0.9

8.0
(0.6)
1.3

30.5
(0.8)
2.2

(2.8)
5.8
20.7

(1.1)
2.4
8.6

(3.9)
8.2
29.3

(3.2)
6.1
26.1

(1.5)
1.9
9.1

(4.7)
8.0
35.2

In the current year an additional £0.6m (2015: £0.7m) impairment of capitalised development was included within administrationand shared services in the Consolidated Statement of Income relating to the refocusing of the Plasma Technology business.

Oxford Instruments plc

24

Announcement of Preliminary Results for the year to 31 March 2016
5 Acquisitions
Medical Imaging Resources, Inc.
On 1 May 2015 the Group acquired 100% of the issued share capital of Medical Imaging Resources, Inc. (MIR) for a net cash
consideration of £8.7m. MIR specialises in the build, lease, service and sale of mobile medical imaging labs.
The book and fair values of the assets and liabilities acquired are given in the table below. Fair value adjustments have been madeto better align the accounting policies of the acquired business with the Group accounting policies and to reflect the fair value of
assets and liabilities acquired. The business has been acquired for the purpose of integrating into the Oxford Instruments
Healthcare business where it is believed that a number of synergies can be obtained.
Book value£m

Adjustments£m

Fair value£mIntangible fixed assets

—

5.7

5.7

Tangible fixed assets

3.8

0.5

4.3

Inventories

1.4

0.1

1.5

Trade and other receivables

0.9

—

0.9

Trade and other payables

(1.7)

—

(1.7)

Deferred tax

0.2

(0.4)

(0.2)

Net debt

(2.6)

—

(2.6)

Net assets acquired

2.0

5.9

7.9

Goodwill

4.5

Total consideration

12.4

Net debt acquired

2.6

Contingent consideration at acquisition(6.3)

Net cash outflow relating to the acquisition

8.7

The goodwill arising is not tax deductible and is considered to represent the value of the acquired workforce and synergistic
benefits expected to arise from the acquisition.No deferred tax liability has been recognised relating to the fair value of acquired
intangibles due to the company making a 3338 election in the United States of America to treat this acquisition as a trade andassets purchase for tax purposes. Further contingent consideration of up to £6.7m is payable based on the performance of the
Oxford Instruments Healthcare business in the year to 31 March 2016.
The book value of receivables in the tables above represents the gross contractual amounts receivable.
The acquisition above contributed revenue of £16.0m and a reported operating profit of £6.3m to the Group’s result for the period.
Had the acquisition taken place on 1 April 2015 the equivalent Group numbers would have been revenue of £363.1m and areported operating profit of £45.2m.
Cash outflow from the acquisition of subsidiaries (net of cash acquired) includes £18.4m of deferred consideration paid for theacquisition of Platinum Medical Imaging and Asylum Research Corporation in 2011 and 2012 respectively.

Oxford Instruments plc

25

Announcement of Preliminary Results for the year to 31 March 2016
6 Investment in associate
On 27 May 2015 the Group entered into a strategic alliance with GD Intressenter AB of Sweden (GDI) to create the world’s largest
company in the highly specialised Ultra High Vacuum Surface Science field. The alliance comprises Oxford Instruments’ Omicron
Nanotechnology GmbH (“Omicron”) and associated subsidiaries and GDI’s Scienta Scientific AB (“Scienta”) and associatedsubsidiaries. Scienta Scientific AB is registered and has its principal place of business in Sweden.
In consideration for new shares in Scienta, Oxford Instruments transferred all of its shares in the capital of Omicron to Scienta.
Oxford Instruments holds a 47% interest in the ordinary share capital of Scienta and GDI holds 53%. The investment has beenaccounted for as an associate taking into account the following factors:-

The Group holds substantial, but minority, voting rights (47%). All other rights are controlled by a single shareholder;
The Group has a minority number of non-executive board seats (two of five), with the remaining seats held byrepresentatives of GDI;
Whilst the Group has certain veto rights in respect of key decisions, it cannot unilaterally direct the activities of the Scienta
Group.

The book value of the net assets disposed of was £14.9m. The value of the shareholding acquired in Scienta was considered to be£14.6m and as a result a £0.3m loss on disposal arose on the transaction. In addition, a further £0.6m has been provided in respectof certain liabilities arising from the transaction.
The Group’s share of loss in its equity accounted associate for the year was £1.5m. The Group did not receive any dividends fromthe associate.
£m

Carrying value at 1 April 2015
Addition
Share of loss of associate (net of tax)
Dividends received
Carrying value at 31 March 2016

—
14.6
(1.5)
—
13.1

Summary financial information for the equity accounted associate is as follows:2016£m

Non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets

3.2
27.0
30.2
(21.4)(4.0)(25.4)
4.8

IncomeExpenses
Loss for the year

34.0
(37.2)(3.2)

Group’s share of net assets
Group’s share of loss

2.3
(1.5)

According to the terms of the transaction, no dividend can be paid by the associate until 27 May 2017. Following that date, any
dividend paid must be agreed by both Oxford Instruments plc and GD Intressenter AB, up to a maximum of 50% of the previous
year’s profit after tax.

Oxford Instruments plc

26

Announcement of Preliminary Results for the year to 31 March 2016
7 Disposal of subsidiary and discontinued operations
On 23 November 2015 the Group disposed of its Austin Scientific business for a final consideration of £0.6m.
Effect of disposal on the financial position of the Group

2016

Other intangible assets(1.7)

Property, plant and equipment(0.2)

Inventory(1.4)

Trade and other receivables(0.5)

Trade and other payables

0.3

Net assets divested(3.5)

Consideration received, satisfied in cash

0.6

£m

Cash disposed of—Transaction expenses(0.1)

Net cash inflow

0.5

Carrying value of net assets disposed of(3.5)

Impairment of net assets to fair value less costs to sell

2.8

Currency translation differences transferred from translation reserve

0.7

Gain on disposal before impairment

0.5

Less impairment loss

(2.8)

Loss on disposal(2.3)

Tax on loss on disposal

0.4

Loss on disposal net of tax(1.9)

Discontinued operations
At 31 March 2016 the Group’s Austin Scientific business was classified as a discontinued operation. It was considered a majorclass of business on the basis that it was previously an operating segment referred to in the Group Strategic Report.
Results of discontinued operations

2016
£m

2015
£m

Revenue
Expenses
Adjusted loss from operating activities before income tax
Income tax credit
Adjusted loss from operating activities after tax
Loss on disposal
Tax on loss on disposal
Loss from discontinued operations after tax

2.3
(2.8)
(0.5)
0.2
(0.3)
(2.3)
0.4
(2.2)

5.5
(5.6)
(0.1)
—
(0.1)
—
—
(0.1)

Earnings per share from discontinued operations
2016

2015

Adjusted basic loss per share (pence)
Adjusted diluted loss per share (pence)

(0.5)
(0.5)

(0.2)
(0.2)

Total basic loss per share (pence)
Total diluted loss per share (pence)

(3.9)
(3.8)

(0.2)
(0.2)

Cash flows from discontinued operations

2016

2015

£m

£m

(0.9)
—
—
(0.9)

(0.1)
—
—
(0.1)

Net cash used in operating activities
Net cash from investing activities
Net cash from financing activities
Net cash flows

Oxford Instruments plc

27

Announcement of Preliminary Results for the year to 31 March 2016
8 Income tax expense
Recognised in the Consolidated Statement of Income

Current tax expense
Current year
Adjustment in respect of prior years
Deferred tax expense
Origination and reversal of temporary differences
Recognition of deferred tax not previously recognised
Adjustment in respect of prior years
Total tax expense/(credit)
Reconciliation of effective tax rate
Profit/(loss) before income tax
Income tax using the UK corporation tax rate of 20% (2015: 21%)
Effect of:Tax rates other than the UK standard rate
Change in rate at which deferred tax recognised
Loss on disposal of held for sale assets
Non-taxable income and expenses
Tax incentives not recognised in the Consolidated Statement of Income
Recognition of deferred tax not previously recognised
Movement in unrecognised deferred tax
Adjustment in respect of prior years
Total tax expense/(credit)
Taxation charge/(credit) recognised in other comprehensive income
Deferred tax – relating to employee benefits

2016
£m

2015
£m

4.8
(0.2)
4.6

6.5
(0.3)
6.2

(1.3)
—
0.6
(0.7)
3.9

(9.0)
—
(0.6)
(9.6)
(3.4)

13.1
2.6

(9.6)
(2.0)

2.2
(0.4)
0.3
(0.4)
(0.8)
(0.1)
0.3
0.2
3.9

1.2
—
—
(1.5)
—
—
(0.2)
(0.9)
(3.4)

2.6
2.6

(2.3)
(2.3)

—

0.2

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

Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were
substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020)
were substantively enacted on 26 October 2015. The UK deferred tax balances at 31 March 2016 have been calculated based onthese rates which were substantively enacted at the balance sheet date. The Group carries tax provisions in relation to uncertain
tax provisions arising from the possible outcome of negotiations with tax authorities. Such provisions are a reflection of thegeographical spread of the Group’s operations and the variety of jurisdictions in which it carries out its activities.
9 Dividends per share
The following dividends per share were paid by the Group:

Previous year interim dividend
Previous year final dividend

2016
pence

2015
pence

3.70
9.30
13.00

3.36
9.04
12.40

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

Interim dividend
Final dividend

2016
pence

2015
pence

3.70
9.30
13.00

3.70
9.30
13.00

The interim dividend was not provided for at the year end and was paid on 8 April 2016. The final proposed dividend of 13.0 pence
per share (2015: 9.3 pence) was not provided at the year end and will be paid on 20 October 2016 subject to authorisation by the
Shareholders at the forthcoming Annual General Meeting.
Oxford Instruments plc

28

Announcement of Preliminary Results for the year to 31 March 2016
10 Basis of preparation
This preliminary announcement does not constitute the company’s statutory accounts for the years ended 31 March 2016 or 2015.
Statutory accounts for 2015 have been delivered to the registrar of companies, and those for 2016 will be delivered in due course.
The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters towhich the auditor 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.
The financial information presented in this preliminary announcement for the year ended 31 March 2016 is based on, and isconsistent with, that in the Group’s audited Financial Statements for the year ended 31 March 2016. No revisions to adopted IFRS
that became applicable in 2016 had a significant impact on the Group’s Financial Statements for the year ended 31 March 2016.
The Company is registered in England, Registration Number 775598.
The principal exchange rates to Sterling used were:Year end rates

2016

2015

US Dollar
Euro
Yen

1.44
1.26
162

1.48
1.38
178

Average translation rates 2016

April 2015
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary 2016
February
March
Average translation rates 2015

April 2014
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary 2015
FebruaryMarch

US Dollar

Euro

Yen

1.50
1.52
1.55
1.57
1.55
1.53
1.53
1.53
1.49
1.45
1.40
1.41

1.37
1.37
1.40
1.41
1.39
1.36
1.38
1.41
1.39
1.33
1.29
1.27

180
186
192
194
190
184
184
186
181
175
165
160

US Dollar

Euro

Yen

1.68
1.68
1.69
1.69
1.67
1.64
1.61
1.58
1.56
1.53
1.52
1.51

1.21
1.22
1.24
1.25
1.26
1.27
1.28
1.27
1.27
1.31
1.35
1.38

172
172
172
173
173
175
179
183
186
182
181
181

11 The Annual General Meeting
The Annual General Meeting will be held on Tuesday, 13 September 2015 at 2.00pm at the Group Head Office, Tubney Woods,
Abingdon, Oxfordshire, OX13 5QX.

Oxford Instruments plc

29

Announcement of Preliminary Results for the year to 31 March 2016
Principal Risks
Specific Risk

Technical Risk

Economic
Environment

Acquisitions

Foreign exchange
volatility

Oxford Instruments plc

Context

Risk

Possible Impact

The Group provides
high technology
equipment andsystems to its
customers.

Failure of theadvanced
technologies
applied by theGroup to produce
commercial
products, capableof being
manufactured andsold profitably.

Lower profitability
and financial
returns.
Negative impact
on the Group’s
reputation.

Demand for theGroup’s products
may be lower than
anticipated.

Lower profitability
and financial
returns.

Government spend on
R&D has been
constrained.

Part of the growth of
Oxford Instruments isplanned to come fromacquisitions which
provide the Group
with complementary
technologies.

The Group’s sterling
cost basis is higher
than its sterling
revenue sources
meaning that asignificant proportionof the Group’s profit ismade in foreign
currencies.

Appropriateacquisition targets
may fail to provide
the planned value.

The Group’s profit
levels are
exposed tofluctuations in
exchange rates.

Lower profitability
and financial
returns.
Management
focus taken awayfrom the corebusiness in orderto manage
integration
issues.

Lower profitability
and financial
returns

Associatedstrategic
priorities‘Realising theBrand’ - Using‘Voice of the
Customer’ to drive
rapid new productdevelopment.

Mitigation

The Group has moved awayfrom large scale, single
customer development
programmes towards morecommercially orientatedproducts.

‘Liberate Cash’ Support anddevelop our
employees tomaximise theirvalue add.

The New Product Introduction
programme that any new R&D
projects must pass throughprovides a framework within
which the commercial viabilityof projects are scrutinised andassessed.

‘Realising theBrand’ Developing astrong brand in
existing anddeveloping
markets.

The Group has a broad spreadof customers, applications andgeographical markets.

‘Delivering
Shareholder
Value’ - Focus onbalanced andattractive global
markets.
‘Realising theBrand’ Developing astrong brand in
existing anddeveloping
markets.
‘Inventing the
Future’ - Using“Voice of the
Customer” todrive rapid new
product
development.
‘Adding Personal
Value’ –Supporting anddeveloping our
employees.
‘Delivering
Shareholder
Value’ - Focus onbalanced andattractive global
markets.
‘Liberating Cash’–Developing acompetitive global
supply base that
supports our
growth.

Extensive financial, technicaland commercial due diligenceis undertaken by the Groupduring any acquisition
programmes.
Each transaction has acomprehensive postacquisition integration plan
which is monitored at thehighest level.

The Group seeks to mitigate
the exposure to transactionalrisk by the use of natural
hedges wherever possible.
The remaining transactional
foreign exchange risk in any
year is mitigated through theuse of forward and nonpremium based option
exchange contracts.

30

Announcement of Preliminary Results for the year to 31 March 2016
Political risk

CustomerConcentration

Outsourcing

Pensions

PeopleRoutes to market
Oxford Instruments plc

The Group operates in
global markets andcan be required tosecure export licencesfrom governments.

The Group’s
Superconducting Wirebusiness is reliant ona small number of
MRI manufacturers as
customers.

Changes inpolitical relations
may affect the
granting oflicences.

These customers
can exert
significant
customer power interms of price andvolume.

The Group’s strategicplan includes theoutsourcing of asignificantly higher
proportion of the costsof its products tobenefit from
economies of scaleand natural currency
hedges.

Failures in the
supply chain
impacting sales.

The Group’s
calculated pension
deficit is sensitive tochanges in theactuarial assumptions.

Movements in theactuarialassumptions may
have anappreciable effecton the reported
pension deficit.

A number of theGroup’s employees
are business critical.

In some instances theGroup’s products are

An inability to sellcertain products
to certain
countries.

Lost sales anddecreased
margins.

Disruption tocustomers.
Negative impact
on the Group’s
reputation.

‘Delivering
Shareholder
Value’ - Focus onbalanced andattractive global
markets.
‘Liberating Cash’–Developing acompetitive global
supply base that
supports our
growth.
‘Delivering
Shareholder
Value’ - Focus onbalanced andattractive global
markets.
‘Liberating Cash’–Developing acompetitive global
supply base that
supports our
growth.
‘Liberating Cash’– Developing acompetitive global
supply base that
supports our
growth.
‘Realising theBrand’ Developing astrong brand in
existing anddeveloping
markets.

The employee
leaves the Group.

The systems
integrator

Additional cash
required by theGroup to fund the
deficit.
Reduction in net
assets.

Lower profitability
and financial
returns.

Lower profitability
and financial‘Delivering
Shareholder
Value’ - Focus onbalanced andattractive global
markets.
‘Liberating Cash’– Developing acompetitive global
supply base that
supports our
growth.
‘Adding Personal
Value’ –Supporting anddeveloping our
employees.

Maintaining a diversified
geographical customer base.
Ensure low commitment toinventory before attaining
export licences.

Attempt to broaden customer
base to include all OEMS.
Explore alternative applications
for superconducting wire.

Relationships with outsourcing
businesses are monitored
closely and any potential
issues are acted upon swiftly
to avoid disruption.
Where practical dual sources
are used for key components
and services.

The Group has closed its
defined benefit pension
schemes in the UK and US tofuture accrual.
The Group has a funding planin place to reduce the pension
deficit over the short tomedium term.

The Group undertakes aregular employee survey andimplements and reviews
resulting action plans.

‘Inventing the
Future’ –Providing anenvironment for
inventing andinnovation.

A comprehensive succession
planning process is in place,
together with a talent network
which identifies and manages
contacts with people who could
provide external succession for
critical current and future roles.

‘Inventing the
Future’ –A management development
programme provides exposure
to key skills needed for growth.
Regular individual performance
reviews take place.
Use of the stage gate processand ‘Voice of the Customer’ to31

Announcement of Preliminary Results for the year to 31 March 2016
components of higher
level systems andthus the Group does
not control its route tomarket.

switches supplierdenying theGroup’s route tomarket.

returns.

Developing
products that offer
the best technicalsolution.
‘Realising theBrand’ – Ensuringthat end
customers
appreciate thebenefits of Oxford
Instruments
technology.

Oxford Instruments plc

make sure that the Group’s
products are the best in themarket.
Co-marketing with system
integrators to promote themerits of the Group’s products
to end customers.
Seeking to increase thenumber of integrators suppliedby the Group.

32