Oxford Instruments plc
Report and Financial Statements 2021

How dowe makea material
difference?
Contents
Strategic Report

Governance

Financial Statements

Our Purpose

1

Board Leadership and Company Purpose 74

Directors’ Responsibilities

125

Performance Highlights

2

Division of Responsibility

Independent Auditor’s Report

126

Financial Highlights

2

Composition, Succession and Evaluation 82

Consolidated Statement of Income

132

Operational Highlights

3

Audit, Risk and Internal Control

88

At a Glance

4

Remuneration

97

Consolidated Statement ofComprehensive Income

133

Consolidated Statementof Financial Position

134

79

Our Culture and Purpose

8

Relations with Shareholders

120

Making a Material Difference

10

Report of the Directors

122

Chair’s Statement

14

Chief Executive’s Review

16Market Context

22

Business Model

24

Engaging with Stakeholders

26

Our Strategy

30

Key Performance Indicators

32

Operations Review

34

Sustainability

46

Company Information

Finance Review

56

Oxford Instruments Directory

186

Risk Management

66

Historical Financial Summary

188

Viability Statement71

Directors and Advisers

IBC

FTSE 250 constituent

Consolidated Statementof Changes in Equity

135

Consolidated Statement of Cash Flows136

Accounting Policies

138

Notes to the Financial Statements

144

Parent Company Statementof Financial Position

175

Parent Company Statementof Changes in Equity

176

Notes to the Parent Company
Financial Statements

177

Strategic Report

Governance

Financial Statements

Company Information

Our Purpose
Our core purpose is to support ourcustomers in addressing some of theworld’s most pressing challenges, enablinga greener economy, increased connectivity,
improved health, and leaps in scientificunderstanding.
We provide high technology products and services to the world’s
leading industrial companies and scientific research communities,
exploiting our world-class ability to image, analyse and manipulatematerials down to the atomic and molecular level.

We make a material difference by…
... enablinga greener
economy... increasing
connectivity

Find out more on page 10

Find out more on page 11

Our solutions are being used
to develop next generation
batteries.

We enable the developmentof more compact devices,
faster processing andimproved efficiency fordata communications.

Oxford Instruments plc | Report and Financial Statements 2021... improving
healthFind out more on page 12
We play an important rolein advancing knowledge
regarding the covid virus.

... making leaps
in scientificunderstanding

Find out more on page 13
We are at the forefront ofenabling quantum progress.

1Performance Highlights
Revenue(£m)

Adjusted1 profit before
taxation (£m)

Statutory profit before
taxation (£m)

£318.5m £55.9m
+0.3%
275.8

277.5

£52.2m+12.9%

314.0

317.4

318.5
31.3

42.0

45.5

+34.5%

52.2

55.9

49.5

35.7

34.3

38.8

2018

2019

2020

(13.3)
2017

2018

2019

2020

2021

2017

2018

Adjusted (continuing operations)
1

2019

2021

2017

Year ended
31 March 2021

Year ended
31 March 2020% change
reported£318.5m£56.7m17.8%£55.9m78.6p
101%£97.6m£317.4m£50.5m15.9%£49.5m70.2p
124%£67.5m

+0.3%+12.3%+190 bps+12.9%+12.0%

2020

Revenue
Adjusted operating profit
Adjusted operating profit margin
Adjusted profit before taxation
Adjusted basic earnings per share
Cash conversion3
Net cash4

2021% change
constant
currency5+1.7%+13.3%

1.

Adjusted items exclude the amortisation and impairment of acquired intangible assets, acquisition items, profit or loss on disposal of operations, other significant
non‑recurring items, and the mark-to-market movement of financial derivatives. A full definition of adjusted numbers can be found in the Finance Review and Note 1.

2.

Return on sales is defined as adjusted profit before taxation from continuing operations expressed as a percentage of revenue from continuing operations.

3.

Cash conversion measures the percentage of adjusted cash from operations to adjusted operating profit, as set out in the Finance Review.

4.

Net cash includes total borrowings, cash at bank and bank overdrafts but excludes IFRS 16 lease liabilities, as set out in Note 20.

5.

Constant currency numbers are prepared on a month-by-month basis using the translational and transactional exchange rates which prevailed in the previous year
rather than the actual exchange rates which prevailed in the year. Transactional exchange rates include the effect of our hedging programme.

Financial Highlights

2

1.7%

£198.1m

17.8%

Revenue growth of 1.7% atconstant currency against
challenging backdrop.
Strong growth in orders of
5.3% to £353.7m (+6.7% atconstant currency).

Reported order book grewby 13.2% (17.8% at constantcurrency) to £198.1m.

Strong growth in adjusted
operating profit, with
margin rising to 17.8%(2020: 15.9%).

£97.6m17.0p

Cash conversion remains
high, with increase in net
cash to £97.6m.

Dividend for the year of 17.0p per share(comprising interim dividend of 4.1p and proposed
final dividend of 12.9p).

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Return on sales2(%)

Basic adjusted1 earnings
per share (pence)

Dividend per share(full year) (pence)

17.6%

78.6p

17.0p

11.3

15.1

14.5

15.6

17.6
41.1

55.8

62.3

70.2

78.6
13.0

13.3

17.0

14.4

—
2017

2018

2019

2020

2021

2017

2018

Statutory (continuing operations)

2019

2020

2021

2017

2018

2019

2020

2021

Year ended
31 March 2021

Year ended
31 March 2020% change
reported£318.5m£53.0m16.6%£52.2m72.8p
17.0p£317.4m£39.8m12.5%£38.8m
55.9p
—

+0.3%
+33.2%+410 bps+34.5%+30.2%
n/a

Revenue
Operating profit
Operating profit margin
Profit before taxation
Basic earnings per share
Dividend per share for the year

Operational Highlights
Robust performance in the faceof significant covid disruption
reflects resilience of businessmodel and strong position indiverse, attractive end markets.

Strong profit growth and enhanced margin performance
driven by significant gains from Horizon initiatives in a
number of the businesses and the accelerated
transformation of our service offering.

Order growth across academic and commercial customers
driven by buoyant demand across semiconductor, quantum
and advanced materials markets; good growth in North
America and Asia offset by modest decline in Europe.

Underlying long-term
growth drivers in our end
markets remain strong.

Strengthened order bookprovides increased visibility
for the year ahead.

Maintained investment in R&D with increased focus on
strategic product development driven by enhanced market
intimacy, providing a healthy pipeline of future productlaunches.

Considerable progress with
our sustainability agenda,
with significant reduction in
our environmental footprint.

Oxford Instruments plc | Report and Financial Statements 2021

3

At a Glance

What dowe do?
We enable our customers to make new scientific discoveries,
accelerate their R&D, and increase their productivity.

Materials &Characterisation

Research &Discovery

Service &Healthcare

Products and solutions that enable thefabrication and characterisation ofmaterials and devices down to theatomic scale, predominantly
supporting customers across applied
R&D as well as the production andmanufacture of high technology
products and devices.

Provides advanced solutions thatcreate unique environments andenable imaging and analyticalmeasurements down to the molecularand atomic level, predominantly usedin scientific research and applied R&D.

Provides customer service and support
for our own products.
Find out more on pages 44 and 45

Find out more on pages 40 to 43

Find out more on pages 34 to 39

Revenue£148.6m+13.1%

Revenue£113.4m(8.7)%£56.5m+5.0%(2020: £145.8m) +14.4% constant currency(2020: £117.8m)

Adjusted2 operating profit

Adjusted2 operating profit

Adjusted2 operating profit£20.3m£19.5m£16.9m(2020: £21.0m)

4Revenue(2020: £14.5m)(2.0%) constant currency(2020: £53.8m)+5.9% constant currency(2020: £15.0m)

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Who do we
do it for?
We focus on attractive end markets where our technology
and services can create long-term value for our customers
across materials and life science applications.
Materials & Characterisation

Healthcare & Lifescience

End market segment revenue
47% of Group revenue

Increasing and ageing populations are driving the need for more affordable
and effective therapies and treatments, with the more detailed understanding
regarding fundamental disease mechanisms enabling a new paradigm in the
speed and efficacy of drug development.

44%
Academic

56%
Commercial

Semiconductor & Communications
The push for more power-efficient devices, increased connectivity and theincreased demand for semiconductor chips across consumer electronics is
creating opportunities for growth.

Quantum Technology
Research & Discovery
End market segment revenue
35% of Group revenue

Increased national programmes and associated funding as researchers
continue to make significant advances with quantum technology and thepromise of practical commercial quantum technology.

Energy & Environment

74%
Academic

26%
Commercial

Revitalisation and global recognition of dramatic changes to energy
requirements and the global urgency regarding carbon emissions areaccelerating the move to new energy and environmental solutions.

Advanced Materials
Where there is increased investment into new materials to enable higher andoften disruptive performance, as well as demand for more sustainable use ofvaluable and finite natural resources.

Service & Healthcare

Research & Fundamental Science

18% of Group revenue

Where we help customers develop breakthrough applications, gaining
previously unknown insights.

Oxford Instruments plc | Report and Financial Statements 2021

5

At a Glance continued

Where dowe operate?
We are proud to be a globally
recognised premium brand witha reputation for innovation andproduct excellence.

24
offices aroundthe world

1,619
Principal offices and development& manufacturing sites

peopleemployed
worldwide

For a full list of our locations
please visit our website:www.oxinst.com/service-and-support

Revenue from external customers by destination:

6

£9.0m

£14.5mRest ofWorldUK£32.8m£33.8m£39.6m£39.9mGermany

Rest of
Asia

Japan

Rest ofEurope£72.1m£76.8mUSA

China

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Why
invest?
CONFIDENCE IN STRATEGY
Horizon is delivering tangible financial benefits and our continued execution of it has provided the capabilities needed todeliver continued progress in the face of exceptional challenges from the global pandemic. Our strategy has transformed
the Group into a customer-centric, applications focused business, creating value through accelerating our customers'
outcomes and building positive futures for all our stakeholders. We believe that our focus on diverse global niche markets,
each with long-term underlying growth drivers, provides resilience to our business model and positions us well to deliver
sustainable growth and margin expansion.

STRONG FINANCIAL POSITION
Our aim is to generate sustainable revenue growth and improved profitability, underpinned by strong cash conversion.
These aims are supported by continued progress in commercial practices across the Group and gains from our operational
excellence programme. We have a strong balance sheet that will further support business growth and the achievementof our strategy and deliver considerable long-term benefits.

WORLD-CLASS BRAND REPUTATION
We are a globally recognised premium brand with a reputation for innovation, world-class product performance,
unprecedented ease of use and excellence in service and support. Through our market intimacy we have strengthened
our relationships with customers during the pandemic, finding new ways to communicate with them and offering continued
support throughout. We continue to add value to existing customers, as well as creating growth opportunities in newmarket segments, through application-specific solutions with improved workflows, bespoke analytics, data interpretation
and associated support services.

FOCUS ON SUSTAINABILITY
Our sustainability agenda is focused on ensuring that we proactively manage our business risks and the impact on theworld and communities in which we operate. We have aligned with three of the UN’s Sustainability Development Goals
in areas where we have the most potential to influence and shape a sustainable future. Our sustainability strategy goesbeyond the impact of how we operate, with our core purpose being to support our customers in addressing some of theworld's most pressing challenges, enabling a greener economy, increased connectivity, improved health and leaps inscientific understanding.

ACCESS TO ATTRACTIVE MARKETSThe Group continues to focus on attractive markets where our key enabling technologies and services drive long-term
growth for customers and where we can maintain leadership positions. Our access to diverse end markets alongside a
responsive and targeted portfolio that supports all stages of the technology cycle, including academic, commercial R&D
and high-tech manufacturing, allows us to present an integrated offering that has the potential to create significant
barriers to entry for competitors. Our performance in the year reflected the underlying strength and breadth of ourchosen end markets and their fundamental growth drivers.

Oxford Instruments plc | Report and Financial Statements 2021

7

Our Culture and Purpose

How are wemaking amaterial
difference?
For over 60 years we have been making a positive difference toAt Oxford Instruments, we want
the world through our products and services and over this time
we have developed a unique culture.
our employees to feel proud toThrough Horizon, we have put our customers at the centre ofwork for a company that is
everything we do and have been increasing our levels of
We have a shared responsibility in the Group torecognised as a leader in our field. accountability.
earn the trust of each other, of our customers, our Shareholders

st
ai

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ab

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Pe

Operational
Excellenceab

Customer

We have continued to focus on ensuring that everyone whoworks here feels included and valued in the organisation.
We actively seek out different perspectives, helping to createa strong sense of belonging and encouraging everyone tocontribute and feel that they can bring their whole self to work.
Our ability to innovate continues to make this a great place towork and to partner with. Everyone can challenge the status quo
and question why we do something a certain way in order tohelp drive improvements.

Innovation
and ProductDevelopment

Ca
pa
bi
lit
ie
s

Pe
op
le
Customer
SupportMarketIntimacy

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ilit
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pa
Ca

Su
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ai
n

and other partners we work with, taking responsibility for solving
problems and ensuring we do what we say we’ll do.

ainOxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Focusing on our purpose allows us to be mindful of what we do and why we doit, while our culture and values let us focus on how we do business. These are
the guiding principles that drive our success and help make us unique.
Our values are:Inclusive: by seeking out different perspectives and diverse collaboration, we deliver better solutions andlasting success.

Innovative: through our knowledge, expertise and focused curiosity, we create new possibilities for ourselves
and for our customers.

Trusted:
we build successful, long-term relationships based on accountability, integrity and respect.

Purposeful:
we care, and our passion and commitment drive positive change in the world.

Our culture

Being
OxfordInstruments

Employee Pride

Respect

Reputation

in working for us andmaking a difference

being inclusive andvaluing our employees

for positive
contribution to society

Accountability

Health and Safety

Trustfor our actions

ensuring everyone is safe

our people to deliver

Our cultural KPIs

99%

90%

4,701

new starters say we're friendly andwelcoming

employees feel trusted to do a good job

online training courses completed

84%

39%

23%

employees proud to work at Oxford
Instruments

staff work outside UK

female workforce

Oxford Instruments plc | Report and Financial Statements 2021

9

Making a Material Difference...

Enablinga greener
economyMany people believe we are on the cuspof a power revolution. Over recent years,
technology has made huge leaps
forward, whilst the batteries powering
it have remained largely unchanged for
decades. A number of drivers are
creating the demand for new advanced
batteries, with the choice of materials,
structure and composition impacting abattery’s ability to store and output
energy, and how often it can be
charged and discharged.

10

An example we are all familiar with is oursmartphones, with amazing processing
capabilities in the palm of your hand, theirmain let down is just how often they need
to be charged.
Battery researchers are looking foralternative materials to replace finite
and expensive components such aslithium, nickel and cobalt. By finding
more sustainable alternatives, such as
silicon, manufacturers hope to produce
cheaper, lighter and more powerfulbatteries that allow for faster charging,and longer lifetime for the devices andtechnology they support.

Our imaging and analysis solutions arebeing used to develop these next
generation battery materials andstructures as well as to help quality
assurance and control in the
manufacture of existing battery solutions.
Find out more on page 39

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Making a Material Difference...

Increasing
connectivity

With over a 40% increase in global
internet traffic during the pandemic,
the need for fast internet connectivity,
increased data bandwidth and non-stop
operating capacity is higher than everbefore. This growth comes on the top ofrising demand across digital services andan exponential growth in data volumes.
This brings the spotlight on the data
centres and telecommunication networks
such as 5G that facilitate this expanding
level of connectivity and data processing.

These centres and networks are moving
to new devices and components thatcan process data and information more
quickly and with significantly lower
energy consumption to meet thegrowing demands in an efficient andaffordable manner.
Compound semiconductors are being
increasingly deployed across central
processing units, memory, networking
and infrastructure to reduce power
consumption whilst increasing bandwidthand information processing speeds.

Our etch and deposition solutions arebeing used to help produce the enablingcompound semiconductor devices basedon, for example, gallium nitride (GaN)
and indium phosphide (InP). Our leading
expertise in the processing of thesematerials enables our customers todevelop more compact devices, fasterprocessing speeds, increased bandwidthand improved efficiency at the economic
cost of production required to support thegrowing demands being placed oncommunication infrastructure.
Find out more on page 37

Oxford Instruments plc | Report and Financial Statements 2021

11

Making a Material Difference...

ImprovinghealthWhen we first heard about covid,
few could have predicted the impact itwould have. In the first eleven months ofthe pandemic, there were over 71 million
recorded cases, with a higher proportionof cases with severe infection and ahigher mortality than seasonal flu.
To bring such a pandemic to an end, weneed a large share of the world to have
immunity, and the safest way of doing so
is through a vaccination programme.
To enable scientists to develop an
effective vaccine it is essential to develop
a better understanding of the virus you
are trying to stop.

12

Through research it is possible to map thevirus structure, learn more about how it
spreads, the impact it has on the bodyand possible ways of replicating it.
With this knowledge, researchers can findways to induce a response at a molecularlevel, helping to get the immune system
ready to respond quickly to any further
exposure to the virus. Globally, nearly
2 billion people have received at least
one dose of a covid vaccination.

Our AFMs can image the virus andmeasure changes in response topossible treatments, while our laser
sources, cameras and microscopy
solutions are being used in genesequencing to identify the mutation,
as well as in diagnostic analysers andresearch laboratories, helping scientists
develop better and more accurate
treatments and providing a foundation ofknowledge to aid vaccine development.

Our atomic force microscopes (AFMs)
and scientific cameras play an importantrole in advancing the knowledge of thoseworking in this field.

Find out more on page 42

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Making a Material Difference...

Making leaps
in scientificunderstanding

The world continues its journey throughthe second quantum revolution, as
significant scientific and technicalbreakthroughs in the field areaccelerating the timeline for disruptive
quantum computers. Quantum computers
are capable of processing calculations
that are currently considered intractable
by traditional computers, providing
commercial and strategic advantage tothose who can harness their potential.

As a result of being able to makecalculations that can handle uncertainty,
it is predicted quantum computing couldchange the world, transforming
medicine and logistics, helping to create
more efficient products and fighting
climate change.

While not intended to replace regularcomputing, quantum computing’s ability
to address the complex challenges
beyond the scope of current computers
and its potential to benefit all in society
continues to drive government andcommercial funding.

Recently, Google has claimed they
have achieved quantum supremacy,
the first time a quantum computer hasoutperformed a traditional one. While
there has been great progress in recent
years, we are still a number of years fromharnessing the full potential of quantum.

We are at the forefront of enabling
quantum progress through ourcryogenic environments, scientificcameras, characterisation solutions
and state-of-the-art fabrication
capabilities used across fundamental
research through to the development
and scale-up of quantum computers.
Find out more on page 43

Oxford Instruments plc | Report and Financial Statements 2021

13

Chair’s Statement

Oxford Instruments is a providerof high technology products andservices to the world’s leadingindustrial manufacturers andscientific research institutes.
Neil Carson
Non-Executive Chair

Stakeholder engagement
Engaging with our stakeholders is key
to the long-term success of the Group,
alongside taking into account the
impact our business decisions will
have on them.
Read more on pages 26 to 29.

Covid response
Our rapid and agile response to
the pandemic ensured we kept
our employees safe while offeringbusiness continuity for our customers.
Read more on pages 17 and 18.

Sustainability programme
Our role in supporting all our
stakeholders has never been clearer
than during the covid pandemic andthe ongoing battle against global
environmental challenges.
Read more on pages 46 to 55.

Board evaluation
The Board is operating in an open
and transparent way with goodtransparency from the Executive.
Read more on pages 82 and 83.

14

We have a reputation for innovationand product excellence, helping ourcustomers accelerate their R&D,
increase their productivity in high tech
manufacturing and deliver
ground‑breaking scientific advances.
Our technologies enable our customers
to address some of the world’s mostpressing challenges, by facilitating agreener economy, increasing connectivity,
improving health, and empowering leaps
in scientific understanding.
Our deep insight into our markets andcustomers enables us to stay ahead ofdevelopments, with practical solutions
that meet their needs both today andtomorrow.

Strong performance throughexceptional challenges
In response to the covid pandemic, theBoard and executive team made it ourpriority to protect the health andwellbeing of our employees and tocontinue to support our customers andother stakeholders, whilst maintaining ourinvestment in the long-term future of thebusiness. The Group responded withagility to the evolving situation including
the rapid implementation of a hybrid
workplace model, new working practices
and tailored support for those working in
our facilities and remotely. Our approachhas enabled us to maintain business
continuity throughout the year andsupport our customers around the newchallenges covid has brought.

I have been extremely pleased withthe resilience of our strategic approach,the capabilities it has embedded acrossthe Group and the operational
improvements it continues to deliver.
Our focus on diversified, attractive end
markets and our continuous drive toimprove operational performance, hasenabled us to deliver both growth andimproved profitability, despite thesignificant disruption caused by the
pandemic.
Having made several changes overrecent periods, I am encouraged by thestrength of the leadership team now inplace across the Group, the breadth ofskills they offer, and how they arecontinuing to drive sustainable growthand margin improvement through theexecution of our strategy.
We delivered a strong set of results
despite the backdrop of the covid-19
pandemic. Adjusted operating profit
grew by 12.3% to £56.7m (2020: £50.5m)
and statutory operating profit grew by
33.2% to £53.0m (2020: £39.8m).
Alongside a strong order book, which
provides continued confidence, andfurther strengthening in our financial
position, the Board has proposed a final
dividend of 12.9p per share, which is
subject to Shareholder approval at theAnnual General Meeting. Together withthe 4.1p per share interim dividend, thiswould result in a total dividend of 17.0p
per share.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceOur purpose
As a leading technology company, theBoard recognises the role we play increating a better future for all in society,and through our Horizon strategy we havepositioned the Group to support ourcustomers in addressing many of theworld’s most pressing challenges.
I am proud of the part we play in enablinga greener economy, improving health,increasing connectivity, and empowering
leaps in scientific understanding. In theyear, this has included:•

the use of our key enabling
technologies directly in the global fightagainst covid;•

the development and manufactureof semiconductors to support thedramatic increases in digitalcommunication; and•accelerating the development ofadvanced materials and quantum
technologies, which have the potential
to disrupt a broad range of end
markets, from transport andconstruction to drug discovery,
logistics and financial services.

Benefitting fromnew ways of working
The Group has been quick to embrace
the digital evolution over the past year,
demonstrating tremendous agility inadapting to new ways of working andusing these as an opportunity to establish
new and improved approaches to thebusiness.

Financial Statements

We have utilised remote working anddigital connectivity to keep our
employees safe and connected, and tomaintain exceptional support for ourcustomers, including remote installations
and remote access to their systems. With
travel restrictions in place, the Board has
used digital meetings to maintain directcommunication with employees
throughout the year and has used virtual
meetings as an opportunity to engage
with a broader cohort of employees,
providing increased insights and wider
engagement.

Board changes
As a Board, we recognise the importanceof diversity and inclusion as a key
element in delivering business excellence.
In the year we welcomed Alison Woodto the Board, and in January she
assumed the role of Chair of theRemuneration Committee. I have beendelighted by the engagement Alison has
achieved across the Group and thewealth of experience and expertise she
has brought to the Board.
Thomas Geitner, who was appointed in
January 2013, has agreed that given thelength of his tenure, he will stand down at
the forthcoming Annual General Meeting.
Steve Blair has also advised the Board
that he will not be putting himself forward
for re-election. At the AGM, Alison Wood
will assume the role of Senior Independent
Director. We will commence recruitment
for a new Non-Executive Director, taking
this opportunity to increase the diversityof the Board across several areas.

Company Information

Oxford Instruments has always had astrong sustainability agenda, driven by our
purpose, values and culture. In the year weformed a Board sustainability committee,
which I chair, bringing together the various
aspects of our sustainability initiatives.
This will support our commitment as aGroup to increase the positive impact wehave on the world whilst reducing ourenvironmental footprint. You can readmore about this and how we areembedding sustainability across theGroup in the Chief Executive’s Review.

Emerging stronger
I would like to thank the Board for theircontinual support during the year and, on
behalf of the Board, I would like to thankall our people for their commitment andmagnificent response to the challenges
covid has brought. Our agility inresponding to change rapidly, enabling
our teams to work safely and remain
operational, has ensured that we
continued to support our customers, often
finding new and innovative ways to help
them address the challenges the
pandemic has brought them.
Our robust performance this year is
testament to the resilience of Oxford
Instruments’ positioning in its diversified
markets and gives me confidence that wewill emerge from this as an even stronger
Group, with a platform for sustainablegrowth and further margin improvement.

Neil Carson
Non-Executive Chair
7 June 2021

Oxford Instruments plc | Report and Financial Statements 2021

15

Chief Executive’s Review

I have been extremely pleased
with the robust performance andresilience of the Group in the year.
Ian Barkshire
Chief Executive

Introduction

Revenue£318.5m+0.3%(2020: £317.4m)

Adjusted profit before tax£55.9m+12.9%(2020: £49.5m)

Operating margin

17.8%
+190
(2020: 15.9%)

16

basis points

The continued execution of our Horizon
strategy has provided the capabilities todeliver continued progress in the face of
exceptional challenges from theglobal pandemic. This, together with thecommitment and agility of ouremployees, and our diversified end
markets, has enabled us to deliver arobust performance in the year.
We delivered strong order, profit, andmargin growth, with revenue slightly
ahead of the previous year.
The momentum in orders reflected theunderlying strength and breadth of ourchosen end markets and theirfundamental growth drivers. Increased
profit and margins were supported bytangible gains realised as a direct resultof the improved commercial processes
and operational efficiencies that we have
implemented through Horizon. Whilst
revenue was ahead of last year, growth
was subdued due to the impact of covid,
which has included reduced access tocustomer sites, protracted administrative
processes and travel restrictions.

The pandemic has impacted all aspectsof our business throughout the year. From
the onset, we prioritised the health andwellbeing of our employees whilst
maintaining business continuity andsupporting our customers’ changing needs
wherever possible. To support this, we
implemented and continued to develop
our hybrid workplace model to adapt tothe evolving situation.
The Group’s H1 performance was
impacted by changes at our customer
sites, as well as reduced manufacturing
capacity at our own sites, as we
implemented covid-safe working
practices, particularly in the first quarter.
Through our actions and revised working
practices, we delivered sustained order
growth and revenue momentum withquarter-on-quarter growth.
Our sustainability agenda is focused on
ensuring that we proactively manage
our business risks and the impact on
the world and communities in which we
operate. We have clear goals withrespect to our environmental impact,
the effect on our employees, thecommunities and societies we operatein; and governance practices that ensure
we operate to our own high standards
and within the relevant legislativerequirements.
Within the year we have continued tomake significant progress in our drive
to reduce our environmental footprint,
with a reduction in emissions from ourown facilities and reducing our waste
to landfill levels.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Throughout the year we have prioritised the healthand wellbeing of our employees, and the support forour customers with their own evolving needs.
However, our sustainability strategy goesbeyond the impact of how we operate,with our core purpose being to support
our customers in addressing some of theworld’s most pressing challenges:•

Enabling a greener economy, leading
to enhanced energy efficiency,
increased productivity, and reduced
resource consumption.

•

Increasing connectivity, supporting
current and future technologies tomeet the exponentially growing
demand for digital data andcommunications.

••Improving health, providing theinsights and understanding offundamental disease mechanisms
leading to new paradigms for the
rapid and cost-effective developmentof medicines and immunotherapies,
such as vaccines.
Making leaps in scientificunderstanding, providing the pathway
to new technologies that create
opportunities for dramatically
improving the quality of life for all
in society.

Our actions during the year have beenaligned with our purpose and values,
helping us contribute to a positive future
for all our stakeholders. I have beenencouraged by how our teams havecome together to support each other,and our customers. I am proud of the role
Oxford Instruments has played in the fightagainst covid, both in helping researchers
understand more about the virus and insupporting those essential services thatkeep people safe and connected.

Adapting to covid and building
a better-connected businessAt the start of the pandemic, I establisheda dedicated covid leadership team todirect and co-ordinate our rapid and agile
response to the evolving businesssituation. Throughout the year we haveprioritised the health and wellbeing of ouremployees, and the support for ourcustomers with their own evolving needs,
as well as maintaining investment in thebusiness for the long term. Through ourphased approach we took swift action to
help keep employees safe, provide
continuity of service for our customers
globally and control our discretionary
costs. The implementation of social
distancing guidelines within our facilities,
revised working practices, shift working,the enablement of our teams to work
efficiently and securely from home andembracing a digital marketing andOxford Instruments plc | Report and Financial Statements 2021

sales approach allowed us to maintainbusiness continuity and progress our
strategic product developments evenat the peaks of the pandemic.
In the early stages of the pandemic,
we undertook several measures toprotect the business, including a freeze
on non-critical recruitment and capex
spend, a deferral in the payment of
performance‑related bonus schemes
related to the 2019/20 year and areduction in non-executive Board feesand salary for myself and the FinanceDirector by 20% for a three-month period.
In the first quarter we prudently utilised
the Government’s Job Retention Scheme(JRS) as we established safe working
practices across our sites and as we
chose to retain our employees on full pay.
As business conditions and market
uncertainty improved through Q2,
we reversed the cash conservation
measures, moving our focus to future
growth. This included investment in a
new purpose‑built, state-of-the-art
manufacturing, development andresearch facility for our Plasma
Technology business, providing thecapacity for further growth. Furthermore,in line with our values, we chose to repay
the UK Government JRS support to allow
it to be used for those in need across ourcommunities.

17Chief Executive’s Review continued
Adapting to covid and building
a better-connected business
continued
In line with our customer-centric
approach, we extended our engagementwith customers to help them address new
and urgent requirements resulting fromthe pandemic. This included enhancing
our digital connectivity with customers
to maintain their productivity, as well as
using our expertise and systems to
support them to connect securely into
their equipment and local digital
infrastructure, allowing effective data
sharing and remote working. Throughthis approach, we have been able tocreate additional value for our customers,
as well as valuable insights into the futureneeds across our diverse customer base,which we are incorporating into our digitaland customer services transformation
programmes. We are creating new value
through our customer relationships byhelping them to find ways to adapt to andplan for their new working environments
and challenges. In support of this, weenhanced our market intimacy
programmes and accelerated thedelivery of our customer services
transformation.
The processes and procedures that had
been put in place through Horizon haveprovided us with the capabilities anddigital infrastructure needed to ensure
continuity in our operations, with thestrategic work to streamline our supplierbase enabling us to build closer, mutually
beneficial relationships, which helped
ensure continuity in supply throughout
the year.
By further developing and embracingthese changes and through continuing
to evolve our business practices, wehave become more connected with our
employees globally and have created amore effective and efficient means ofreaching and supporting customers.
We continue to enhance our support forcustomers, through increased remote andlocal service delivery, as we embrace thisnew way of working. I have been pleased
at how these changes have helped tobuild stronger links between ourbusinesses and functions, delivering
further synergies across the Group.

18

Moving forward, we will build on theapproaches we developed during the
pandemic, retaining a flexible but
structured hybrid working model, creating
an attractive working environment for our
employees and higher quality customer
relationships.

Results
Orders of £353.7m grew by 5.3% (2020:£336.0m), representing an increase of
6.7% at constant currency, with ourcustomer-centric approach supportingstrong growth from both commercial
and academic customers. Revenue was
impacted by covid-related disruptions,
resulting in subdued growth relative toorders of 0.3% to £318.5m (2020: £317.4m).
Growth in adjusted operating profit of
12.3% to £56.7m (2020: £50.5m) and anincrease in operating margin of 190 basis
points to 17.8% (2020: 15.9%) was driven
by continued execution of our Horizon
strategy. Statutory operating profits grew
33.2% to £53.0m (2020: £39.8m) andstatutory operating margins increased
410 basis points to 16.6% (2020: 12.5%).
Adjusted profit before tax grew by 12.9%
to £55.9m (2020: £49.5m). Statutory profit
before tax increased by 34.5% to £52.2m(2020: £38.8m).
Whilst the underlying growth drivers
for our end markets remain robust,
covid‑related issues such as temporary
end customer site closures and restricted
access, combined with protracted
administrative processes, impacted
individual application segments andcustomers across different regions byvarying amounts throughout the year.
From an end market perspective, we saw
strong, reported order growth across
Semiconductor & Communications (up17%), Quantum Technology (up 16%) and
Advanced Materials (up 8%) segments,
with growth in Healthcare & Lifescience(up 2%). Overall order growth waspartially offset by a slightly lower
contribution from the Energy &Environment (down 4%) segment and asignificant reduction from Research &Fundamental Science (down 24%), where
end customers were more significantly
impacted by covid-related disruptions.

Positive market conditions and ourmarket-leading product portfolio led to
14.4% constant currency order growth in
the Materials & Characterisation sector,
despite covid-related reductions withinsome end applications. Customers andend markets in the Research & Discovery
sector were more impacted by covid,
particularly in the first quarter of the year,
but with positive momentum building
through the year in line with the easing ofcustomer-related restrictions resulting ina net decline in reported orders of 5.1% atconstant currency. The initial phase of thetransformation of our customer services
approach and broader portfolio of
support products was well aligned withthe changing needs of our customers,
resulting in 11.8% constant currency order
growth in the Service & Healthcare sector.
At a regional level, continued strong order
growth across Asia and North America
was partially offset by a modest decline
in Europe where customer activity, local
restrictions and reduced access havebeen more pronounced. Within Asia,
reported orders in China grew 14%,supported by strong growth within the
Semiconductor and Advanced Materials
end markets.
Revenue for the Group was impacted
throughout the year due to covid-related
disruption to the fulfilment of orders anddelays in obtaining export licenceapprovals. The former was mostpronounced in the first quarter of the year
due to access restrictions at customer
sites and as we implemented covid-safe
working practices at our manufacturing
sites, which reduced capacity. With
restrictions easing at customer sites
and a ramping to normal capacity at our
manufacturing sites, revenue momentum
built strongly throughout the second halfof the year, more than offsetting thefirst‑half decline.
Revenue for Materials & Characterisation
was slightly ahead of the previous year,
up 1.9%, representing 3.2% at constantcurrency. Research & Discovery revenue
was down 3.7%, 2.0% at constantcurrency, representing a strong second
half. The Service & Healthcare sector
delivered good revenue growth, up 5.0%
and 5.9% on a reported and constantcurrency basis, supported by increased
demand for services related to ourown products.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceThe disruption to fulfilling orders wasmore pronounced to commercial
customers, resulting in the proportionof revenue from academic customers
increasing slightly to 54.8% (2020: 52.0%).
From an end market perspective, we hadstrong constant currency revenue growth
for the Semiconductor & Communications
and Quantum Technology customer
segments, representing 27.6% and 11.4%
of Group revenue, respectively.
Healthcare & Lifescience (21.6% ofrevenue) and Advanced Materials (27.6%
of revenue) built momentum through thesecond half of the year as customer site
access improved, ending marginallybehind the previous year despite strong
order growth. Revenue for Research &Fundamental Science (8.2% of revenue)
was down in line with orders, due in partto delays in the release of grant funding
and deferred tendering processes.
From a geographic perspective, regional
government and customer responses tothe pandemic dominated revenue profiles
in the first half of the year, particularly
impacting North America and Europe.
Customer site access improved throughthe second half of the year, resulting inrevenue in Europe being broadly in linewith the previous year with North America
down 15.2%, representing a fall of 11.9% atconstant currency. Customer site accessand government restrictions eased earlier
across Asia, supporting strong revenue
growth across the region, up 13.1% on aconstant currency basis.
Growth in adjusted operating profit andoperating margin were supported bytangible improvements in theperformance across several business
units as well growth and improved
efficiencies within our service sector.
This resulted in an increase in adjusted
operating profit of 34.5% within Research& Discovery to £19.5m (2020: £14.5m) andan adjusted operating margin of 17.2%(2020: 12.3%), an increase of 490 basis
points. Statutory operating profit of £13.1m(2020: £13.3m) was down 1.5% owing to
the profit on disposal of our shareholdingin Scienta in the comparative period.
Within Materials & Characterisation, thedisproportionate delay in the shipment ofhigher-margin products and increased
investment within the sector for future
growth held back adjusted operating
profit at £20.3m (2020: £21.0m).

Financial Statements

This also impacted adjusted operating
margin in the year to 13.7% (2020: 14.4%).
Statutory operating profit grew by 35% to£16.6m (2020: £12.3m). Revenue growthand improved efficiencies related to ourown products within the Service &Healthcare sector increased adjusted
operating profit by 12.7% to £16.9m (2020:£15.0m) with adjusted operating margin
up 200 basis points to 29.9% (2020:
27.9%). Statutory operating profit was£16.9m (2020: £15.0m), up 12.7%.
The combination of strong end customer
demand for our products and thecovid-related impact on the fulfilment oforders in the period resulted in a positive
book-to-bill ratio of 1.11, with the order
book, representing orders for futuredeliveries, up 13.2% to £198.1m (2020:£175.0m), 17.8% growth at constantcurrency. Order book growth was
predominantly within the Materials& Characterisation sector, up 40% in
the year, supported by 9% growth forService & Healthcare, with Research& Discovery's order book in line with theprevious year.
Continued focus on operational andcommercial improvements within theyear supported strong cash conversion,
which after an additional payment to thepension fund, resulted in an improved net
cash after borrowings position of £97.6m(2020: £67.5m) at year end.

Strategy: well positioned indiverse, attractive end markets
with clear drivers only
accentuated by covid
We have continued to focus on
attractive end markets where ourtechnology and services can create
long-term value for our customers acrossmaterials and life science applications.
By proactively engaging with customers
across the full technology cycle, including
academic, commercial R&D andhigh‑tech manufacturing, we are well
positioned to benefit from each wave
of commercialisation and technology
disruption.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

Realising the benefits of the
Horizon programme
In the year we have seen tangible
financial gains due to the realisation of
ongoing improvements in the commercial
processes and operational efficiencies ina number of our business units.
Throughout the year, we continued toinvest in and further develop thecapabilities across the Group to drive
growth and progress our business
improvement journey. This included theinvestment in the development of ouremployees as well as selective
recruitment to further enhance essential
skills.
Our agile and flexible approachthroughout the pandemic has enabled us
to maintain our focus on improved market
intimacy, enhanced delivery of R&D
programmes, operational excellence andour customer services transformation.

Market intimacy
We have used the cessation of traditional
face-to-face meetings during the year
to develop effective new ways ofcommunicating with our customers forsales and marketing activities, whichenabled us to reach a wider audienceand to gain valuable market insights.
Our approach included running ourown online conferences, increasing ourportfolio of digital content and establishing
new ways to reach our customers,
including webinars and virtual productdemonstrations, which proved invaluable
in the launch of new products and theongoing promotion of our portfolio.
By changing our approach, we havestrengthened our relationships with manyof our existing customers, improved ourlead generation efficiency and gained
valuable market insights to better inform
our product and service roadmaps.
Whilst we look forward to being able toengage in face-to-face meetings andattend conferences in the near future, wewill deploy a hybrid model building on our
experiences and successful deployment
of enhanced digital approaches in thepast year.

19Chief Executive’s Review continued
Strategy: well positioned indiverse, attractive end markets
with clear drivers only
accentuated by covid continued
Realising the benefits of the
Horizon programme continued
Innovation and productdevelopment
Providing highly innovative products andkey enabling technologies withdifferentiated technical and performanceleadership that are driven by customer
insight, remains a central theme within our
strategy. Throughout the year, we haveremained focused on our strategic R&D
programme maintaining our progress andinvestment, providing a healthy pipeline of
future products. Our experience with, andutilisation of, secure remote working
practices and collaboration tools inprevious years, which has aided the
exploitation of technical synergies acrossthe Group, helped us to maintainprogress across our strategic productdevelopment programme through the
pandemic.
We continued to develop our long-term
product roadmaps in line with our usualbusiness timetable, refining priorities
according to the changing demands within
our markets, including the acceleration offurther digital connectivity across ourportfolio. We continue to develop andprotect our portfolio through theidentification and generation of valuable
IP, which allows us to create barriers toentry and support the sustainabledifferentiation of our products.

Customer support
We have made excellent progress withthe early phase of our customer services
transformation, with changes in themarket and to customers’ perceptions
having allowed us to accelerate thedevelopment and deployment of ourdigital and remote service capabilities.
Our ability to deliver remote support
has been an essential part of our portfolio
during the pandemic and we will continue
to grow this part of our portfolio as we
look to create ongoing value forcustomers through the lifetime utilisationof our products.
We have driven synergies across ourglobal customer support teams,
enhancing our local support capabilities
and response times, whilst reducing ourown travel requirements. We also
invested in additional resources to help
drive our thinking, appointing regional
leaders across our service teams toaugment our existing capabilities and todrive efficiencies and synergies.

End markets
Whilst the pandemic has affectedindividual applications and regions to agreater or lesser extent, our end markets
have overall remained robust withlong-term underlying fundamental
growth drivers. In many cases, thepandemic has strengthened or enhanced
the drivers; this includes increased
recognition around the world and acrossfunding bodies of:•the capabilities of new technologies
to improve healthcare and accelerate
drug development as highlighted by
the rapid development of covid
vaccines;•

the surge in demand for improved
connectivity and bandwidth, which willcontinue to grow with the further
development of the Internet of Things,
increases in remote communications
and the migration towards
autonomous vehicles and factories;•

the imperative to address global
warming and the re-energisedcommitments, initiatives and directives
to deliver a greener economy; and•the significant breakthroughs in thedevelopment of quantum
technologies, increasing the level ofglobal investment and accelerating
practical commercial exploitation ofthis technology.

Operational excellence
The continued execution of ouroperational improvement programme has
contributed to tangible financial gains inyear. Our ongoing procurement strategy
focuses on developing our supply chain
to build long-term strategic partnerships
with fewer suppliers. This helps to reduce
lead times and allows us to better
leverage our scale.
The strengthened relationships cultivatedwith our suppliers has strongly supported
our performance during the year and, by
working closely with our suppliers,
including being sensitive to their covid
challenges and offering our support
where appropriate, we have ensured our
supply chain has remained robust
throughout the year.

20

As part of our strategy, we haverepositioned the Group to focus onmarkets with long-term growth drivers
where we can maintain leading positions
within global niches. The markets include
Healthcare & Lifescience; Semiconductor& Communications; Quantum Technology;
Energy & Environment; Advanced
Materials; and Research &Fundamental Science.
In the semiconductor market the push formore power-efficient devices, increased
connectivity and the increased demand
for semiconductor chips across consumer
electronics are increasingly relevant.
With advanced materials being thebuilding blocks of modern society,enabling higher and often disruptive
performance is driving increased
investment into new materials as wellas the need for manufacturers to consider
more sustainable use of valuable andfinite natural resources.
For energy and environmental markets,the recognition of dramatic changes toour energy requirements and the global
urgency regarding carbon emissions areaccelerating the move to new energy
and environmental solutions.
As a result of an increasing and ageing
population, healthcare markets arelooking to develop more affordable
and effective therapies and treatments,
through gathering more detailed
understanding of the fundamental
disease mechanisms as well as enablinga new paradigm in the speed, cost, andefficacy of drug development. The rapid
delivery of covid vaccines is an exampleof how researchers are working together
to accelerate medical advances.
The progress that researchers have madewith quantum technology has led tosignificant advances and has brought
forward the promise of practicalcommercial quantum computers, with thepotential to disrupt industries andmarkets such as drug discovery, logistics,
and financial services. This has led to anincrease in national programmes andadditional funding from commercialorganisations.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceWith the rate of change in technology
and the potential to disrupt entire
markets, Governments are increasing
their investment in fundamental
research to equip themselves and theirworkforces, and provide the technicalleadership required to support
sustainable economic growth.

Significant progress with oursustainability agenda
We have continued to execute ourinitiatives around sustainability despite
the covid disruption. As an organisation,
we recognise the role we play and theimpact we have on the environment,
society and the world around us. As partof our purpose, we are driving positive
outcomes for all our stakeholders, witha focus on how we do business and bylooking after our employees, customers,
external partners, and the environment.
We have aligned with three of the UN’s
Sustainability Development Goals inareas where we have the most potential
to influence and shape a sustainable
future. The three we have chosen are:
3.	Ensure healthy lives and promote
wellbeing for all at all ages.
7.	Ensure access to affordable, reliable,
sustainable and modern energy for all.
9.	Build resilient infrastructure, promote
inclusive and sustainableindustrialisation and foster innovation.
Within the year we have continued tomake significant progress in our drive to
reduce our environmental footprint.
Building on the progress over the past
five years, this included a further 90%
reduction in CO2 emissions from our own
facilities in the year with all consumed
electricity at our manufacturing sites now
being sourced from certified renewables,
and with continued progress with ouractions to reduce our waste to landfill
levels. We are committed to ensuring new
facilities are environmentally sensitive,
including our new site in Bristol which will
incorporate a range of energy-saving
technologies to reduce environmental
impact.

Financial Statements

Whilst the impact our facilities have on
the environment is relatively small, thepositive impact we make through ourcustomers is considerable and we aim
to support our customers to deliver theirsustainability objectives. We continue toexplore opportunities to further embedsustainability into our products and ourincreasing portfolio of digital support
offerings reflects our commitment to this.
In the year we restructured the leadershipof our sustainability programme, creatinga Board sub-committee and executiveled sub-groups with a focus on theenvironmental, social and governanceactivities across the Group. This has
provided increased visibility of oursustainability initiatives across all levelsof the organisation from the Board toeach of our operating sites and increased
engagement with employees.
We recognise the importance of diversity
and inclusion as a key element indelivering business excellence. Our
objective is to ensure that we have a highcapability, diverse workforce that enables
us to better understand our customers
and markets. Building an organisation
with a broad range of perspectives andexperiences increases our ability toinnovate, make the right decisions andexceed customers’ expectations. In orderto retain, attract and enable the best
people to perform, we worked hard tocreate an inclusive environment andculture, where difference is valued andeveryone can contribute to their fullpotential.
In response to the unprecedented
challenges in the year we put in place anumber of additional measures tosupport our employees. We increased theconnectivity between our teams, building
a structure to ensure each employee had
regular contact with colleagues, weenhanced our focus on and range ofmental health support, offering it to ouremployees and members of their family.
When several of our employees in
California were impacted by flooding andforest fires, we ensured that they were
well supported by providing temporary
shelter and food.
We are committed to making further
progress with our sustainability agenda,
setting meaningful targets that reflect ourcommitment to having a positive impact
on those around us, making the world abetter place now and for future
generations.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

R&D
Our enhanced customer-centric, marketdriven approach is identifying increasingly
attractive development opportunities,
enriching our IP portfolio and driving ourinvestment decisions across the Group.
In the year we invested £28.9m in R&D(2020: £26.8m), representing 9.1% of sales.
We monitor the proportion of revenue
which originates from products launchedin the last three years (our vitality index).
In the period, our vitality index was 39%(2020: 39%) representing a continued
healthy pipeline and performance of
newly launched products.

PeopleI have been extremely proud of how ouremployees and leadership teams haveembraced the changes we have had tomake and for their professionalism andfortitude during these challenging times.
They have worked tirelessly to help meetthe changing needs of all our
stakeholders. We have built a culture,
where our employees are trusted todeliver and are held accountable for theiractions; this has helped us to deliver thestrong financial results and maintainbusiness continuity during the year.
I would like to thank all our employees fortheir commitment and resilience during
the year. It is through their efforts that wehave been able to ensure our customers,
and each other, have felt supported
despite the challenges we have all faced.

Summary and outlook
We have made good progress during theyear as our people have demonstrated
outstanding agility to adapt to new ways
of working to protect each other and ourcustomers, whilst driving forward with ourstrategy for increased end market focus
and operational effectiveness.
Our robust performance, strong orderbook and breadth of diversified end
markets demonstrate the resilience ofour business model, positioning us wellfor good progress in the year despite
anticipated currency headwinds andthe ongoing uncertainties as global
economies look to recover from covid.

Ian Barkshire
Chief Executive
7 June 2021

21

Market Context
We are well positioned to address a broad and diverse
range of attractive markets and industrial sectors.

Semiconductors

Advanced
Materials

Energy &Environment

With the rise of the data economy, theproliferation of semiconductor chips within
consumer electronics and higher emphasison environmental impacts, there is a need formore semiconductor chips and devices but
also with an increasing emphasis on higher
performing and more energy efficientdevices. This is driving demand for morecompact devices, better energy efficiency,
faster access to ever increasing data
volumes and improved connectivity. These
are all essential to meet the needs of IOT, AI,
autonomous vehicles and high speed 5G
networks. It is also vital for those that are
producing these new and demanding
solutions that they can do so repeatedly
and to the required volumes and quality.

As the building blocks of society, thedemand for lighter, stronger, higher
functioning materials is present in a wide
range of markets, from those designingsafer cars, developing more efficientbattery storage to those creating newmaterials for medical implants. Being
able to accurately measure the compositionand structure of materials down to thenanoscale is helping develop the next
generation of materials and in quality
control for high volume manufacturing.

Ever increasing environmental demands
are being placed on energy generation,
which is leading to diversification of energy
sources towards building a low carbon
economy. With the growing population
there is more focus on sustainable foodproduction, increasing requirements forfood safety and the characterisation offood composition. Another key area inthis market is the need for accurate
and traceable testing within forensic
investigations.

Market drivers:

Market drivers:

Market drivers:•

Increased demand for more efficientand faster power devices to support agreen economy, e.g. enabling greater
electric vehicle range, faster charging
times and reduced energy wastage.

•

Increased investment supporting thedrive for improved connectivity, with theneed to develop capacity and bandwidth.
The pandemic helped illustrate theimportance of connectivity and theresulting increase in data requirements.

•

Buoyant compound semiconductor
market and strong ramp up in demand
for mainstream silicon semiconductor
chips and devices.

•

Need to develop, control and repeatedly
manufacture new materials such as
superalloys, whilst continuing with the
QC and QA of existing products.

•

Increasing awareness of environmental
impact, driving need for improved fuelconsumption in cars and reduction inraw material usage and wastage inmanufacturing.

••

Our etch and deposition process solutions
are used across a range of semiconductor,
device and materials applications.

•

Our leading expertise in the processingof compound semiconductors is helping
deliver the speed, capacity and energy
efficiencies demanded.

•22

We have further optimised our image
and analysis solutions to enable thedevelopment of next generation devices
with ever decreasing dimensions andthe quality control and yield
management supporting the efficient
production of current devices.

Drive for improved battery technology
with less reliance on finite and expensive
components, and more efficient andeffective alternative energy sources,
such as wind and solar.

•

Increasing importance being placed on
accurate and rapid forensic testing,however this market was subdued
during the pandemic due in part to
reduced levels of travel.

Our response:•

Our imaging and analysis solutions are
helping improve the performance andstorage capability of batteries and solar
cells by helping researchers understandtheir structure at the nanoscale.

•Our benchtop analysers are playing an
increasing role in the quality control andassurance undertaken within the foodindustry, helping establish nutritional
values and the oil and fat content.

•

Our specialist GSR software is used in
the leading forensic laboratories aroundthe world as it offers accurate andvalidated results.

Our response:

Our response:•

Reduction in global demand inconstruction, automotive and aerospacemarkets as well as move towards higher
performing materials and super alloys.

••

Our advanced solutions are enabling themechanical properties, performanceand reliability of advanced materials tobe determined through the design andprecise control of the composition
micro‑structure and thin films coatings,
faster and more accurately.
Our ability to measure a range of criticalproperties is helping manufacturers
assess the performance and quality of
their processes; for example, bydetecting nanoscale impurities which
can degrade performance, they are able
to avoid catastrophic failures.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

We are focusing on those areas where our key enabling
technologies are driving long-term success for our customers
and where we can achieve and maintain leadership positions.

Healthcare &Lifescience

Quantum
Technology

Research &Fundamental Science

Increasing and ageing populations and thecontinued drive to improve the health andwellbeing of society is resulting in a needfor further understanding of how the bodyworks, how it fights diseases, how these
diseases spread and how they respondto treatment. To do this, more accurate
and sensitive solutions are needed in orderto develop that vital understanding ofhealth at a cellular and molecular level.

The market is in a state of transition,with significant scientific and technicalbreakthroughs accelerating the timeline
for practical quantum computers andsensor-based systems. Quantum
computing could revolutionise end markets
from drug discovery, climate change,
logistics and financial services by helping
solve complex problems beyond thecapability of current computers.

The fundamental shifts in technology andcapability are driving increased research
and applied development as we continue
to understand the world around us. This is
helping make advances in new material
and device development as well as
fundamental research in the physicalsciences, including astrophysics.

Market drivers:

Market drivers:

Market drivers:••

The quest to find a cure forlife‑threatening illnesses is driving
further research into the pathology of
disease states to aid understanding
about their origins and progression.
This is creating a demand for advanced
and personalised treatment plans.

•

Current drive to understand the covid
virus in order to create more effective
treatments and vaccines.

•

Our response:•••

Our advanced imaging and analysis
solutions, including our scientificcameras, microscopy systems andAFMs, are helping to reveal sub-cellulardetail, while allowing observation ofreal-time interactions to help
understand our immune response toforeign organisms.
Our cameras are being used in genesequencing, helping researchers learn
more about the genetic makeup of
covid. They are also being used inanalysers testing for the virus.
Through our MRI service team in Japan,
we continue to ensure these vital
systems are running efficiently andeffectively.

Quantum is making progress fromfundamental science to appliedresearch, targeting commercial
applications with end market drivers
including quantum computing, securecommunications, advanced sensors
and imaging.
Significant breakthroughs inthe development of quantum
technologies are increasing the levelof global investment and accelerating
practical commercial exploitation of
the technology.

•

Increasing academic interest is driving
international funding for research into
superconductivity and magnetism.

•

Continued interest in astronomy driven
by the exploration of the universe, thetracking of space debris and themonitoring of solar activity.

•

Market activity subdued by covid-19.

Our response:•

Our scientific platforms create extreme
and controlled environments that allow
researchers to make ground-breaking
discoveries of new materials and novel
phenomena, furthering ourunderstanding of the structure,properties and performance of thesematerials.

•

Our dedicated scientific cameras are
helping astronomers see more detailthan ever before, allowing them todiscover new exoplanets, safely
operate satellites around space debris
and help predict interruptions causedby solar flares.

Our response:••

Our cryogenics, advanced fabrication,
imaging and characterisation solutions
are all critical to the advancement of thisfield and provide the fundamental
capabilities and platforms to enableboth the research and development of
viable commercial applications.
Our single photon sensitive cameras are
helping researchers investigate anddevelop quantum optics, which arerequired for communication systems
and imaging solutions.

Oxford Instruments plc | Report and Financial Statements 2021

23

Business Model
We recognise our responsibility and role in the advancementof society, helping to create a more sustainable future.

Driven by

Impacted by

How we add value

Our purpose

Our people

Our core activities

Our core purpose is to support ourcustomers in addressing some of theworld’s most pressing challenges,
enabling a greener economy,increased connectivity, improved
health and leaps in scientificunderstanding.

Empowering our employees to own
the challenge and solution.

Our strategy enables us to provide
more value to our existing customers
and expand into new attractive
markets and applications areas,
focusing on those segments where
we can achieve and maintainleadership positions.
Our solutions are being used bycustomers to find cures for cancer,
advance space exploration anddevelop the next generation ofelectronics, advanced materials andquantum technologies.

Read more on page 26 and 27.

Our customers
Aligning our business with our chosencustomer segments and applications.

Our Shareholders
Delivering business growth andmaximum shareholder returns overthe long term.
Read more on page 26 and 27.

Read more on page 22 and 23.

Applied R&D
Our key enabling technologies andsolutions facilitate the developmentof more advanced products.
Read more on page 22 and 23.

Our suppliers
Building lasting relationships on trust
and respect.

Our communities
Being mindful of our potential impact
on the world around us.
Read more on page 26 and 27.

Underpinned by our purpose, values and culture
We have refreshed our values and what they represent.
Our values are:Innovative

Providing solutions to those exploring
new frontiers down to the nano andmolecular level.

Read more on page 28 and 29.

Read more on page 28 and 29.

Inclusive

Fundamental
research

High tech
manufacturing
Providing products to support today’s
manufacturing challenges andincrease productivity.
Read more on page 22 and 23.

Distinctively
Oxford Instruments
By addressing academic
fundamental research, applied R&D,
and high technology commercial
segments.

TrustedPurposeful

Read more on page 9.

24

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Within our chosen end markets, our products, solutions andservices are helping customers accelerate their applied R&D,
increase productivity and make ground-breaking discoveries.

Driven by ourstrategic objectives

Our operations

OutcomesThrough our sectors

Adjusted basic earnings
per share

78.69p1. Being customer-centric,
market driven
Read more on pages 30 and 31.

Revenue

2. Maintaining productand technical leadership

Materials & Characterisation

Read more on pages 30 and 31.

Read more on pages 34 to 39.

3. Transforming
customer services

Dividend per share – full year

17.0p

Read more on pages 30 and 31.

4. Delivering operational
excellence
Read more on pages 30 and 31.

£318.5m

Research & Discovery
Read more on pages 40 to 43.

Group gender split

77:23
male : female

5. Developing capability
and culture for success
Read more on pages 30 and 31.

Reduction in carbon emissions

90%
Service & Healthcare
We are engaged throughout thetechnology cycle and are well
positioned to benefit from each wave
of commercialisation and market
disruption.

Read more on pages 44 and 45.

Read more about our investment
proposition on page 7.

Oxford Instruments plc | Report and Financial Statements 2021

25

Engaging with Stakeholders
Engagement with our stakeholders allows us to grow and execute
our strategy; we therefore consider the impact we have on them aswell as what they consider important when developing our plansfor continued success.

Our stakeholders

Their material issues

Localcommunities

We work hard to ensure that we havea positive impact on those around us
and give back to our local communities.
We believe the work we do and what
we enable others to do is important andboth benefits and advances society.

•

Local investment•

Opportunity for local employment•

Impact on local environment

Employees

Our employees are fundamental to
our business success. We continuallyinvest in our people, developing thecapabilities that we will need tosucceed over the longer term. We arecommitted to being the company where
the best in our sector want to work andstrive to offer opportunities that will
attract, motivate and retain talented
employees, enabling them to give
their best.

•

To work in a diverse and inclusive culture•

The opportunity for development andprogression•

Consideration of their health andwellbeing•

To be trusted to do an excellent job
and encouraged to contribute•

To be supported through engagement
programmes and regular communications

The Group places considerable
importance on regular communications
with its Shareholders, with whom it has
an ongoing programme of dialogue.
Our goal is to deliver shareholder
returns through profitable, sustainablegrowth with strong cash conversion
and efficient use of capital.

•

Current and future financial performance•

Sustainability•

Good governance•Strong dividend position

Shareholders

26

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Section 172 Statement
Engaging with our stakeholders and acting in a way that
promotes the long-term success of the Company, while taking
into account the impacts of our business decisions on our
stakeholders, is central to our strategic thinking and is in linewith our statutory duty in accordance with Section 172(1) of
the Companies Act 2006 (s.172). This constitutes our s.172
Statement, as required under the Companies (Miscellaneous
Reporting) Regulations 2018.

Financial Statements

Company Information

We set out in the table below our key stakeholder groups, theirmaterial issues and how we engage with them. We deploy atailored engagement approach to each stakeholder group tofoster effective and mutually beneficial relationships. By
understanding our stakeholders, we can factor into Boardroom
discussions the potential impact of our decisions on eachstakeholder group and consider their needs and concerns,
in accordance with s.172 of the Companies Act 2006.

How we engage

2020 highlights

We are committed to helping the generations coming up
through all stages of education to see the importance of choosing
STEM subjects and the career opportunities this will offer them.
Our sites run school visits, work experience programmes andoffer industrial postdoctoral placements, allowing students theopportunity to gain meaningful industrial experience. We also
encourage our sites to support their local communities throughcharity and community activities.

•

Maintained support ofscience prizes to help
individuals producing
innovative research•

Undertook 3D printing of
PPE for local hospitals
where possible•

Maintained R&D
investment to continue
developing products that
benefit and advancesociety

It is important for our employees to feel connected to our purpose.
Within the Group we continue to enhance commercial focus and corecapabilities across and within the Group at an operational level. Thisis a dual approach of investing in our existing employees as well as
looking outside the organisation for individuals with specificcapabilities and experience to accelerate our progress. We regularly
conduct global employee engagement surveys and feedback
sessions to find out more from our employees about their experiencesof working for Oxford Instruments across all our businesses and theregions in which we operate. We work hard to create a sense of
belonging for our employees and recognise that in order to retain,
attract and enable the best people to perform, we need to create an
inclusive environment and culture, where difference is valued andeveryone can contribute to their full potential.

•

Enhanced engagement
and communications
during pandemic,
additional mental healthsupport and wellbeing
portal

We take a proactive approach to investor relations and actively
engage with Shareholders throughout the year to ensure they
understand the performance of the business. We hold numerous
Shareholder meetings and roadshows, publish the Report and
Financial Statements, and undertake full-year and half-year results
announcements. All Shareholders are encouraged to participate in
the AGM, at which the Chair and Chief Executive present an
overview of the Group’s business, review the results and makecomments on strategy and current business activity. The
Non‑Executive Directors meet informally with Shareholders both
before and after the AGM and respond to Shareholder queries andrequests. The Chair and the Senior Independent Director makethemselves available to meet Shareholders as required.

Oxford Instruments plc | Report and Financial Statements 2021•

Hybrid working model
including revised
covid‑safe practices•

Health and safety checks
for remote working•

Continued investment incapability development•

Sustainability section
developed on website,
supporting creating ofBoard sustainability
committee•

Engagement with
Shareholders onsustainability agenda•

Virtual meetings with
Shareholders to ensure
continued communications

Further links•

Pages 51 and
52, diversity
and inclusion•

Page 53, socialand community
involvement•

Pages 50
and 51, ouremployees•

Page 52,
developing
capability•

Page 50, healthand wellbeing•

Pages 74 to 81,
Company
leadershipand purpose•

Pages 97 and98, corporate
performanceand annual
bonus

•

Page 84,
investor
relations27

Engaging with Stakeholders continued
Our stakeholders

Suppliers

Their material issues

The Group recognises that
relationships built on trust and respectwith our business partners establish
mutually beneficial relations. Our supply
chain plays a vital role in supporting
sustainable growth and efficiency
across the business.

•

Long-term partnerships and fairagreements•

Sustainability and trust•

Opportunity for growth•

Visibility to forecast requirements•

Potential disruption during pandemic•

High standard of business conduct•

Appropriate use and storage of personal
information•

Fair pricing strategy•

Appropriate engagement and support
through buying cycle•

Excellent ongoing customer support•

High quality products and technicalexpertise•

Remote access and continuity of supply
and support during disruption

The Group outsources many
sub‑assemblies and we also purchasea wide variety of raw materials. It isessential to ensure we attain the highest
quality and service for our customers
whilst we enhance the efficiency of ourbusiness and reduce risk. As a result,
we develop strong working partnerships
with our suppliers, providing them withthe visibility to extend our supply chain
through their supply base too, in orderto create added value.

Customers

28

We provide advanced technology
solutions for a diversified range ofend markets, supported by new
product offerings and personalised
customer support. We have a wide rangeof academic and corporate customers
across many different industries andend applications. Our product andservice solutions, which image, analyseand manipulate materials down to theatomic and molecular level, support ourcustomers to address some of theworld’s most pressing challenges;
enabling a greener economy,increased connectivity, improved health,and leaps in scientific understanding.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

How we engage

2020 highlights

Further links

We have reviewed, and improved, our supplier due diligence andaudit procedures. We have a zero-tolerance approach to all formsof modern slavery, including servitude, forced, bonded andcompulsory labour and human trafficking and we expect our
suppliers to adopt the same approach. We have a Group suppliermanagement process in place that promotes a common supply
chain strategy, driving the business towards fewer, high level, quality
suppliers.

•

Continued consolidation of
supply base, allowing risk
reduction and added
volume to key partners•

Continuity of supply during
pandemic reflecting
strength of supplier
relationships

It is crucial to provide our suppliers accurate forward visibility inorder to align our customers’ requirements with our total supply
capabilities. We share the output from our sales & operations
planning process with them, and we have dedicated Category
Managers to help reduce risk and improve efficiency. We mustensure our extended supply chain adheres to our strict
environmental compliance, whilst challenging them to provide
improvements to quality. Our key suppliers are also encouraged
to become part of our new product introduction process, to allow
them to add value to our process.

By being customer-centric and market driven, the Group seeks tocontinuously increase our depth of understanding of customer
needs. Through a deeper understanding of our target market
segments and the diverse challenges faced by our customers, wehave changed the way we communicate and reach our prospective
and existing customers, more clearly identifying the value our
products can add. Our portfolio focuses on those areas where our
key enabling technologies are driving long-term success for ourcustomers. This has allowed us to help our customers accelerate
their applied R&D, increase productivity in high tech manufacturingand make ground-breaking discoveries. Insights from our stronger
customer relationships are informing and aligning our innovationand product development initiatives to customers’ strategic
roadmaps to allow us to create differentiated products andsolutions that will provide significant value for our customers.

Oxford Instruments plc | Report and Financial Statements 2021•

Supported suppliers during
covid, mindful of theirdifferent needs•

Shared supply chain
experience with suppliers,
helping build theirunderstanding ofstockholding andforecasting•

Accelerated transformationof service offering withdigital connectivity helping
maintain productivity
through remote accessand remote service••

Utilising cross-businesscapabilities to deliver
quicker response times andincreased local support
installations
Continued investment in
R&D to deliver cutting‑edge
products and services•

Page 20,
Operational
Excellence•

Pages 30
and 31,Our Strategy•

Page 18 to
20, Chief
Executive’s
Review•

Pages 44 and
45, Service &Healthcare•

Page 20,
Customer
Support•Page 19,
Market Intimacy•

Pages 30
and 31,Our Strategy

29

Our Strategy
Horizon is now well embedded across the Groupand is delivering tangible financial benefits.

HorizonHorizon enables us to deliver long-term sustainable growthand margin improvement by growing our presence and market
reach both organically and through acquisition, across materials
and life science end markets. Through our purpose we focus on
supporting our customers to enable a greener economy,increased connectivity, improved health, and leaps in scientificunderstanding.
Our transformational strategy focuses on positioning theGroup in attractive global niche markets where we canmaintain leadership through offering sustainabledifferentiation for our customers. We achieve this throughour customer-centric, market-driven approach combinedwith relentless product innovation and our continuous drive
to improve our operational efficiency. We create value for ourcustomers through our leading product performance, tailoredsolutions and broad range of aftermarket services, accelerating
our customers’ outcomes and increasing their productivity.

Operational
Excellence

st
ai

n

Maintaining
product andtechnical
leadership

Focusing our R&D investment
on higher growth segments,
prioritising our efforts on the mostvaluable product development
opportunities, aligning with market
developments and customer
needs. Protecting our investmentswith intellectual property (IP).

Transforming
customer
services

Providing a broad range ofaftermarket products andservices to accelerate
customer outcomes andmaximise their productivity.

Delivering
operational
excellence

Providing a world-classexperience for our customers
and continuing to drive
improvements throughcontinuous improvements inprocurement, operational
efficiency and logistics.

ilit
y

Su

st

Developing
capability
and culture
for success

Identifying and developing the
key capabilities needed tosupport our growth and strategic
priorities, creating a culture thatempowers our teams to own thechallenge and solution.

ilityCustomerInnovation
and ProductDevelopmentainLink to sustainability and SDGs
We have aligned with three of the UN’s Sustainability
Development Goals in areas where we have the mostpotential to influence and shape a sustainable future.

30

Building an in-depth
understanding of ourcustomers, applications andmarkets to help us strengthen
relationships whilst developing
a commercially strong sales
engine, equipped with thetools for success.

abMarketIntimacy

Ca
pa
bi
lit
ie
s

Pe
op
le
le
op
Pe

Su
ab

Being customercentric andmarket driven

y
lit
bi
na

Customer
SupportDescription

Su
st
ai

y
ilit
ab

s
ie
lit
bi
pa
Ca

Su
st
ai
n

Our key enabling technologies address a diverse range
of end markets with different growth and funding cycles.
This, alongside our proactive management through thefull technology cycle, provides resilience for our businessand positions us well to benefit from each wave ofcommercialisation and technology disruption.

Strategic priorities

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Through our Horizon focus we help our customers
accelerate their R&D, increase their productivity
and make ground‑breaking discoveries.

Progress in 2021

Priorities for 2022

Our market intimacy approach has allowed us to strengthen
relationships with customers despite restricted travel andface-to-face meetings. We have adapted and developed
new ways of efficiently and effectively reaching customers,
enabling growth.

Further develop end market segmentation and tailoredmarketing materials. Enter new markets using our market
intimacy to adapt our commercial practices to maintainthe enhanced connection we have built with customers.

We have remained focused on our strategic R&D programme,maintaining our progress and investment, providing ahealthy pipeline of future product launches. Maintained
the generation of IP to protect our developments andproduct leadership.

Continue to deliver long-term product roadmaps, refining
priorities according to the changing demands of our existingcustomers and expansion into new markets. Acceleration of
our product connectivity programme to enhance customer
productivity.

Our ability to deliver remote support has been an essential
part of our portfolio during the pandemic. We have driven
synergies across our global customer support teams,
enhancing our local support capabilities and response
times, whilst reducing our own travel requirements.

Continue to grow the digital offerings in our portfolio as
we look to create ongoing value for customers through their
lifetime utilisation of our products. Driving further efficiencies
through exploiting our global footprint. Creating more value
through tailoring service products to the specific needs ofmarket segments.

The continued execution of our operational improvement
programme has contributed to tangible financial gains inyear. The strengthened relationships cultivated with our
suppliers has strongly supported our performance during
the year and has ensured our supply chain has remainedrobust throughout the year.

Developing our supply chain to build stronger long-term
strategic partnerships with fewer suppliers, helping to
reduce lead times and to better leverage our scale.

We have continued to invest in the development of ouremployees and undertake selective recruitment to further
enhance the specific skills and capabilities needed for
future growth. We have provided access to online courses
and tutorials, with bespoke training packages andpathways developed for different job families and levelsin the organisation.

Continue to attract and retain the best people, including
those with the potential to take on more complex andhigher-level roles in the future, building on the inclusive
environment and culture we have created, where differenceis valued, and everyone can contribute to their full potential.

Oxford Instruments plc | Report and Financial Statements 2021

31

Key Performance Indicators
The Group uses a range of measures to monitor progressagainst its strategic plans. The key performance indicators
are presented below:
Strategic KPIs

Inventing the future1
(%)
30

2017

Adding personal value

37

37

39

38

1.44

1.53

1.51

1.50

1.52

2018

2019

2020

2021

2017

2018

2019

2020

2021

What we measure

What we measure

Proportion of revenue coming fromproducts launched in the previous
three years1“Value Add” = (adjusted operating
profit + employment costs)/
employment costs

Why we measure

Why we measure

To measure the effectiveness of our
R&D programmes

To measure efficiency

Link to strategy

Link to strategy

Note: Key performance indicators have been restated to remove the results of discontinued operations from previous years.
1.

To ensure this metric better reflects the performance of those businesses which invest in R&D, the revenue from the Group’s MRI Service division has been excluded
from this metric.

2.

Adjusted items exclude the amortisation and impairment of acquired intangible assets, acquisition items, profit or loss on disposal of operations, other significant
non‑recurring items, and the mark-to-market movement of financial derivatives. A full definition of adjusted numbers can be found in the Finance Review and Note 1.

3.

Adjusted operating profit margin is defined as adjusted operating profit expressed as a percentage of revenue from continuing operations.

4.

Cash conversion measures the percentage of adjusted cash from operations to adjusted operating profit, as set out in the Finance Review.

5.

Calculated as adjusted operating profit less amortisation of intangible assets divided by capital employed. Capital employed is defined as assets (excluding cash,
pension, tax and derivative assets) less liabilities (excluding tax, debt, derivative and pension liabilities).

32

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Strategic goals
Market Intimacy

Customer Support

Operational ExcellenceInnovation and Product Development

Financial KPIs
Goal: To deliver shareholder returns through profitable, sustainable growth and strong cash conversion and efficient use of capital.

Revenue growth
(%)
15.2

13.2

0.6
2017

Adjusted2 operating
profit margin3 (%)

2018

2019

13.6
1.1

0.3

2020

2021

2017

16.6

2018

15.2

2019

15.9

Adjusted2 earnings per
share (EPS) growth (%)
35.8

17.8
23.4

2020

2021

2017

2018

11.6

12.7

12.0

2019

2020

2021

Why we measure

Why we measure

Why we measure

To drive profitable, sustainablegrowth through the implementationof our strategy

To consistently maintainunderlying operating margins

To achieve long-term growth in EPS

Link to strategy

Link to strategy

Link to strategy

Cash flow conversion4(%)

Return on capital
employed (ROCE5) (%)

94

2017

100

124

101

68

2018

11.0
2019

2020

2021

2017

18.3

21.0

2018

2019

27.2

2020

Why we measure

Why we measure

To maintain a strong operating
cash conversion ratio and high levelof free cash flow

To deliver ROCE in excess of ourcost of capital

Link to strategy

Link to strategy

Oxford Instruments plc | Report and Financial Statements 2021

33.9

2021

33

Operations Review

Materials &Characterisation
Materials & Characterisation provides
products and solutions that enable thefabrication and characterisation ofmaterials and devices down to theatomic scale, predominantly supporting
customers across applied R&D, as wellas the production and manufacture ofhigh technology products.
The Materials & Characterisation sector
comprises Asylum Research,
NanoAnalysis, Magnetic Resonance andPlasma Technology. In the period wetransferred the Magnetic Resonancebusiness to this sector, better aligning theportfolio with end customer applications
and enabling further exploitation ofsynergies across the sales, marketing,and service teams.

34

The sector has a broad customer baseacross a wide range of applications forthe imaging and analysis of materials
down to the atomic level as well as the
fabrication of semiconductor devices andstructures through our range of advanced
semiconductor etch and deposition
process systems. Our portfolio of imaging
and analysis systems includes our rangeof market-leading X-ray and electron
analysis systems used in conjunction withelectron and ion microscopes as well as
our performance-leading atomic force
microscopes and magnetic resonanceanalysers.

The sector has a strong focus on
supporting and accelerating ourcustomers’ applied R&D, enabling thedevelopment of new devices, next
generation higher performance materials
and enhancing productivity in advanced
manufacturing, quality assurance (QA)
and quality control (QC). We provide
leading product performance, improved
ease of use and enhanced productivity,
through advanced analytics, to aid in theinterpretation of acquired data andprovide actionable insights.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Orders£175.0m+13.1%+14.4%(2020: £154.7m)

Constant currency growth1

Revenue£148.6m+1.9%(2020: £145.8m)+3.2%

Constant currency growth1

Adjusted2 operating profit£20.3mThis sector’s products are used in a wide
range of applications, including thefollowing:
•

•

•

•

Advanced compound semiconductor
power devices to enable fastercharging times and improved energy
efficiency for consumer electronics
and electric vehicles.

(2020: £21.0m)

Semiconductor laser and high-speed
devices used within communication
systems and hyperscale data centres
to support the exponential growth indata volumes and digital services.

Adjusted2 operating margin

13.7%

Advanced polymers used within
medical implants and higher
performing displays through to car
bumpers and tyres.

(2020: 14.4%)

Quality control and assurance withinhigh technology manufacturing ofbatteries, semiconductor devices andpharmaceutical tablets.

Statutory operating profit£16.6m(2020: £12.3m)

Oxford Instruments plc | Report and Financial Statements 2021

1.

For definition refer to note on page 2.

2.

Details of adjusting items can be found in Note 1 to the Financial Statements.

35

Operations Review continued
Materials &Characterisation

Demand outstripped ability tosupply due to covid disruption,
resulting in a particularly strong
order book

Successful launches ofadded‑value products that
expand our addressable
markets

Strong growth across Asia,
aided by Europe; good North
American demand wastempered by covid disruption

Materials & Characterisation delivered
strong growth in reported orders, up 13.1%
to £175.0m (2020: £154.7m), reflecting
buoyant demand for our products fromour Semiconductor & Communications,
Advanced Materials, Healthcare &Lifescience, and Quantum Technology
end markets in particular. Covid-related
disruptions held back the shipment to andinstallation of product at customers’facilities, resulting in more subdued
growth in reported revenue, up 1.9% to£148.6m (2020: £145.8m). The
disproportionate delay in shipments ofour higher-margin imaging and analysis
systems, alongside increased investment
within the sector to enhance future
growth, led to adjusted operating profit
and margin slightly behind the previous
year at £20.3m (2020: £21.0m) and 13.7%(2020: 14.4%). However, the combinationof the buoyant demand and the delayed
shipments drove a 40% increase in theorder book to £74.7m (2020: £53.4m),
giving us greater visibility into the current
financial year, as we leverage ourinvestments.

Strong reported order growth was
supported by the success of recently
launched products and our relentlesscustomer-centric approach, which
exploits our market insights to tailor
product offerings for specific end
customer applications, increasing the
product value and expanding ouraddressable markets.

Order growth was particularly strong
across Asia, supported by good
growth in North America with Europe
broadly in line with the previous year.
Covid‑related disruption varied by region,
resulting in revenue growth in Asia andEurope and a decline in North America
despite the underlying demand andpositive order intake.

Strong demand from academic
and commercial customers,
with greater disruption tocommercial installations

Strong demand from global
niche markets with long-term
growth drivers

36

We had strong order growth from bothacademic and commercial customers,
which translated into good revenue
growth from academic customers whilst
covid-related disruption to shipments
held back revenue growth fromcommercial customers. Academic
customers accounted for 44.2% of thesector’s revenue (2020: 44.0%).

Looking at our end markets, building on a
positive first half to the year we continued
to see sustained underlying demand forour products leading to strong order
growth in the year across the
Semiconductor & Communications,
Advanced Materials, Healthcare &Lifescience, and Quantum Technology
end market segments. Orders from
customers in Energy & Environment
markets were marginally below previous
year despite strong growth into battery
applications.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceThe combination of regional variations
within our end markets and the varying
extent of covid-related disruptions
resulted in strong revenue growth in
Semiconductor & Communications(representing 48.3% of sales for the sector),
Healthcare & Lifescience (5.8% of sales)
and Quantum Technology (1.7% of sales)
market segments. Revenues to customers
in Advanced Materials and Energy &Environment were disproportionallyimpacted by covid‑related disruption
relative to order intake and represented
35.5% and 8.5% of sales, respectively(2020: 38.6% and 11.1%).

Semiconductor & Communications– well positioned for structural
growth trends
The Semiconductor & Communications
segment remains a significant focus forthe sector. The continued drive for
improved energy efficiency, increased
connectivity, faster data transmission andgrowing consumer electronics volumes
continues to elevate the importance ofsemiconductors within the global
economy. Our expertise in semiconductor
processing and the characterisation ofdevices, as well as the breadth of ourreach across research, development andproduction leaves us in a strong position
to capitalise on the long-term growth
opportunities.

Financial Statements

In the year we had strong order andrevenue growth with increased demandacross our imaging and analysis solutionsin the silicon semiconductor andconsumer electronics markets, as well as
our portfolio of semiconductor etch anddeposition processing solutions in thecompound semiconductor markets.
The increased volumes and improved
performance requirements ofsemiconductor chips needed to satisfy
the growing consumer electronics
markets as well as the proliferation ofuse with the trend towards autonomousvehicles is driving both increased
production capacity and the investment
in next generation devices. We have hadstrong growth across our imaging andanalysis systems in support of new andnext generation device R&D as well as in
the quality control and quality assurance(QA and QC) in high volume
manufacturing where our solutions areused to inspect wafers and devices fordefects and structural integrity down to
the nanoscale. With device dimensions
shrinking to provide the necessary
improvements in processing power,
speed and reduced cost, the ability tocharacterise and control the compositionand structure at ever-smaller dimensions
becomes increasingly important. We havecontinued to develop new solutions tomeet these new challenges. For example,
Jupiter, our recently launched large
sample atomic force microscope system,
is being used to detect and remove
contamination on photomasks withparticles below a nanometre in scale,
which are now leading to critical defects
in device production.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

Governments around the world are
identifying improved connectivity as a
critical component for future economic
growth, whilst exponential growth indata volumes and digital services isbeing driven by increased demands fromdigital streaming, online conferencing,autonomous vehicles, and gaming.
This is increasing investment in production
capacity and the development of higher
performing compound semiconductor
devices. As a result of these trends, wehave had strong growth in our indium
phosphide and gallium arsenide
compound semiconductor processing
solutions to commercial customers
developing and manufacturing theoptical devices such as lasers, switches,
amplifiers, and receivers utilised within
hyperscale data centres and within fibre
optic communication systems. These
compound semiconductor devices
enable faster and more efficient transfer
of vast data volumes above and beyond
that of conventional silicon-based
devices. We have also seen good growthacross other optoelectronics applications
including 3D sensors for facial recognition
and micro LEDs for use in displays andconsumer electronics.

37

Operations Review continued
Materials &Characterisation

The pressing need to find solutions toenable a greener economy is driving a
move away from higher polluting fuelssuch as oil and gas towards sustainable
electricity generation and the need forhigher energy efficiency power
conversion devices. Power electronics are
the enabling technologies to efficiently
use, distribute and generate electricalenergy. With a significant and increasing
proportion of global energy consumption
being electrical, the move to advanced
compound semiconductors utilisingsilicon carbide (SiC) or gallium nitride(GaN) devices have the potential to
improve electrical efficiency by up to
30%, providing a significant contribution
towards meeting the world’s global
emission targets. In the year we
continued to improve the performanceof our SiC process solutions used for highpower devices enabling faster electricvehicle charging times and larger driving
ranges and our GaN solutions being
deployed in the more cost-sensitive
consumer electrics markets aiding fastercharging and better battery life for mobile
phones, tablets and laptops. Ouradvanced solutions are providing therequired device performance
improvements with increased yields andreduced manufacturing costs.

38

Advanced Materials – building on
our strong market positions acrossa range of applications
Within the Advanced Materials segment
we continued to see strong growth acrossour market-leading portfolio of imaging
and analysis systems, supported by the
strive to develop and manufacturestronger, lighter and higher-performing
materials, whilst increasing productivity,
sustainable manufacturing and the
reduction in the use of essential and finite
resources. Our key enabling technologies
allow researchers to image andmanipulate materials that are used ineverything we do, own or use down to
the nanoscale. Within the sector, we saw
good growth in our advanced solutions
with manufacturers developing newsteels and super alloys. These advanced
high strength materials offer significant
improvements in strength and allow parts
to be made with less material, at lower
weight and cost, and improving fuel/energy efficiency. Our systems are alsoenabling the analysis of the layered
structures in 2D materials such asgraphene, offering ten times better
resolution to improve accuracy in thecharacterisation of these revolutionary
materials. We have also seen increased
sales into the development of advanced
polymers across a diverse range of end
applications.

Advanced polymers provide theopportunity to replace more conventional
materials because of their lower costand ability to be flexible, biocompatible
and biodegradable, with a highstrength‑to‑weight ratio. These polymers
have applications from medical devices
and implants, to membranes withinbatteries through to displays and cartyres. Our products are used tocharacterise and control the structure
and composition of polymers at thenanoscale, which determines their value
and utility for each application.
Through our market intimacy focus wecontinue to look for additional
opportunities to expand into more routine
testing markets, extending our reach tocustomers that would not have used ourequipment before. This has driven
increased demand for our cost-effective
tools for routine material analysis where
our solutions are helping undertake the
QA and QC of products ranging from
simple screws through to components fordriverless vehicles. The growth in demandfor our products across steels andpolymers has been partially offset by theongoing weakness in the mainstream
automotive and aerospace markets,
which have been severely impacted bycovid.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceGood growth in Quantum
Technology
We continue to see good growth inquantum technology markets, where
we have developed dedicatedsolutions building on our expertisein semiconductor processing andcharacterisation. For many quantum
applications, such as computers andsensors, the uniformity, high purity, andsurface structure are critical to achieve
the desired quantum properties withuseable lifetimes.

Energy & Environment – growth inbattery offset by certain subdued
markets
Within Energy & Environment, orders andrevenue were down, with strong growthacross battery applications being morethan offset by subdued markets acrossforensics, environmental monitoring, andphotovoltaic R&D. With batteries offering
affordable and flexible energy storage
and delivery, they form a key elementin the transition to a greener economy.
This is leading to increased production
volumes and investment in battery
innovation to provide higher-performing
and more energy efficient systems.
We are using our experience from othermarkets to provide dedicated researchand production support solutions for thisexciting market.

Financial Statements

Company Information

This has led to good growth in the quality
control of the raw materials used foranode and cathode manufacturing,
improving yield, minimising
manufacturing waste, and avoiding
catastrophic failure. Our analysis
solutions are also being used to develop
next generation battery materials andstructures with the goal of improved
lifetime, increased storage capacity,
faster charging times and lower
environmental impact.

Healthcare & Lifescience – strong
growth across a range ofapplications
Our continued focus on tailored solutions
for the Healthcare & Lifescience market
has resulted in strong revenue growth in
the segment across a range of end
applications. Our AFM systems are
helping researchers develop thescaffolding materials that are used incell growth, increasing throughput fromhours to minutes. We have also seen
increased demand for our dedicatedregulatory‑approved pharmaceuticalsoftware used by manufacturers toscreen for foreign body contamination
within and on the surface of medicine
tablets. Another growth area for oursolutions has been in the characterisationof biomaterials, especially those used in
medical devices. Here it is important tounderstand the size and distribution of thenanoscale precipitates that are contained
in medical devices, as some can cause
variable and unpredictable reactions in
the body.

Oxford Instruments plc | Report and Financial Statements 2021

39

Operations Review continued

Research& Discovery
Research & Discovery provides
advanced solutions that create uniqueenvironments and enable imaging
and analytical measurements down
to the atomic and molecular level,
predominantly used across scientificresearch and applied R&D.
The Research & Discovery sector includes
Andor Technology, NanoScience and
X-Ray Technology. We build on our
relationships with customers, working on
breakthrough applications in research togain insights and support futurecommercial applications. We have strong
brand recognition and leading productperformance in our chosen market
segments.

40

The sector’s products play a key role inapplications including:•Supporting the global fight against
covid, including the use of scientificcameras within diagnostic testing
equipment, and a range of products
helping researchers to study the virus.

•

Rapid gene sequencing for research
into cancer and other disease states.

•

Advancing quantum technologies andthe development of commercially
viable quantum computers.

•

Fundamental research into material
properties, disease mechanisms andspace exploration.

Significant profit growth realised
from Horizon initiatives, despite
revenues and orders being heldback by covid
Revenues and orders for the sector were
impacted by significant covid-related
disruptions to certain end application
segments at the start of the year whichwere not fully offset by a return to growthin the second half of the year in mostmarkets. The severity of the impact in thefirst quarter was a combination of
reduced activity at many of ourcustomers’ sites, due to temporary
closures, reduced occupancy, or
restricted access, and constraints to ourmanufacturing capacity, as we adapted
sites to covid-safe workplaces andestablished new working practices.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Orders£115.7m(6.9)%(5.1)%(2020: £124.3m)

Constant currency growth1

Revenue£113.4m(3.7)%(2020: £117.8m)(2.0)%

Constant currency growth1

Adjusted2 operating profit£19.5mThis resulted in a 6.9% reduction inreported orders to £115.7m (2020:£124.3m) and a 3.7% decline in reported
revenue to £113.4m (2020: £117.8m).
However, profitability for the sector was
significantly improved through therealisation of the culmination of business
improvements in commercial practices
and operational efficiencies madethrough our ongoing Horizon programme.
This supported an increase in reported
adjusted operating profit of 34.5% to£19.5m (2020: £14.5m) and an
improvement in reported adjusted
operational margin of 490 basis points to
17.2% (2020: 12.3%), representing an
increase of 450 basis points at constantcurrency.

(2020: £14.5m)

Adjusted2 operating margin17.2%(2020: 12.3%)

Statutory operating profit£13.1m(2020: £13.3m)

Oxford Instruments plc | Report and Financial Statements 2021

1.

For definition refer to note on page 2.

2.

Details of adjusting items can be found in Note 1 to the Financial Statements.

41

Operations Review continued
Research& Discovery

Growth in academic markets
more than offset by disruption
to commercial customers.
Strong revenue growth in
Asia, held back by customer
disruption in North America
and Europe
Revenue growth into academic
customers was more than offset by adecrease to commercial customers,
resulting in an increased proportion ofsales within the sector into academic or
Government-funded customers of 74%.
From a geographical perspective, strong
revenue growth in Asia was more thanoffset by the reduction across North
American and Europe, due primarily to
end customer disruption.

Demand building in most end
markets, albeit reduced
customer activity continued
to hold back Research &Fundamental Science
The disruption to orders was most severein the first quarter, with continued
improvement quarter on quarter acrossmost of our end markets; however, there
continued to be subdued activity from
customers involved in Research &Fundamental Science applications.
The strong recovery in end markets inthe second half resulted in significant
full‑year order growth across Quantum
Technology and Advanced Materials,
good growth into Semiconductor and an
in-line performance in Healthcare &Lifescience.

42

Research & Fundamental Science ended
significantly down on the previous year,
reflecting continued subdued customer
activity from customers.

Healthcare & Lifescience –supporting the renewed fightagainst old and new diseases
Healthcare & Lifescience saw significant
covid disruption to the working practicesof our customers in the first quarter, as
well as the reallocation of resources anddeferred funding programmes throughout
the year. This included the temporary or
partial site closures at some researchfacilities and central laboratories in thefirst quarter in particular. The long-term
fundamental market drivers of improving
the health and wellbeing of society
remain robust, driven by the need tobetter understand fundamental diseasemechanisms at the cellular andmolecular level, and for the developmentof new treatments, therapies, andpersonalised medicines. The positive
momentum that built over the year, withmany laboratories starting to reopen,
brought good year-on-year growth in thesecond half, with orders for the year
broadly in line with previous year but
constant currency revenue down 7.7%
due primarily to the phasing of orders.
We had strong growth for products thatwere used to support the global fightagainst covid, including the use of ourscientific cameras within diagnostic
testing equipment, and our broad rangeof products helping researchers study thevirus to understand its genetic sequence,mutations, impact on patient cells andthe immune response it generates.

We had increased demand for our
Dragonfly 200 microscopy system for
rapid gene sequencing, which is used forresearch into cancer and other diseasestates. Dragonfly can provide very fast,easy-to-use multicolour imaging andwhen synchronised with complex fluid
handling systems provides aneasy‑to‑use platform for this advanced
application which helps drive forward
a much deeper understanding of how
genes influence the behaviours ofindividual cells and the corresponding
responses to cancer. We also increased
sales of our cameras in the growing
application of cancer diagnostics anddrug discovery in the year. The closureof customer facilities as well as thereprioritisation of work and resources
towards covid-related initiatives
negatively impacted sales in Europe andin North America into central researchfacilities as well as customers involved incell biology. This impacted sales acrossthe portfolio including our higher-end
research microscopy systems in the year.
In support of our customers’ changing
working practices, sales of our analysis
and visualisation software increased in
the year with our “satellite manager
function” being particularly popular,
allowing customers to work remotely
and share data efficiently across theirteams and with collaborators regardlessof location.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Quantum – strong order andrevenue growth as the timeline forpractical applications accelerates
The quantum market is in a state ofacceleration, with significant scientificand technical breakthroughs in the field
dramatically accelerating the timeline
for disruptive quantum computers andsensor‑based systems and making usefulsystems a possibility today. This progresshas driven a rise in the number of nationaland corporate programmes and anincrease in the associated funding being
made available, which resulted in verystrong growth in demand for our cryogenic
platforms and high field magnet systems
across fundamental research, andincreasingly across applied R&D. The
achievements already delivered in thisarea have resulted in Governments andcommercial organisations looking toharness the “quantum advantage” in thenear term where marginal practicalimprovements can be achieved relative
to existing computers, such as thecalculations to quote derivative prices inreal time rather than taking several hours.
In the year, we have made good progresswith the consortium project with Rigetti todeliver the UK’s first commercial quantum
computer which will provide cloud-based
access for customers. We havecompleted the facility build at our
Tubney Woods site near Oxford, installed
the cryogenic platform, with Rigetti
working on installation of the quantum
computing device.

Financial Statements

Company Information

Collaboration partners from financial,materials design, energy andpharmaceuticals applications areawaiting access to the machine. Most
experts believe we are a number of years
away from systems with 1000 qubits
which could fundamentally disrupt a
number of end markets, with the potential
to benefit all in society by removing thelimitations that hold back progress in aplethora of areas from drug discovery,
through financial services, to climatechange and logistics.

Energy & Environment and Research& Fundamental Science particularly
impacted by covid

Continued underlying customer
demand drove strong revenue andorder growth across Advanced
Materials

Covid-related site closures at many
research institutions impacted sales into
Research & Fundamental Science.
However, we have continued to see
long-term interest in our key enabling
technologies, such as our magnet
systems and high-end scientific cameras
across a wide range of areas, including
fundamental physics and chemistry.
There was positive momentum in thesecond half of the year, as multi-sitecollaborative teams progressed research
remotely. In the year, a third of thesystems for the Institute of Physics in
Beijing were installed as part of themultisystem order into their extreme
environments laboratory.

Growth in the Advanced Materials
segment reflected the ongoing demandfor our cryogenic platforms, high fieldmagnet systems, scientific cameras andoptical components. With end
applications such as sensors,
semiconductors and batteries, oursolutions are helping researchers analyseand characterise the fundamental
properties of exotic materials such asgraphene and their use in next generation
devices.

Oxford Instruments plc | Report and Financial Statements 2021

Whilst not a significant market for thesector, our sales into Energy &Environment were impacted by thedramatic reduction in global air travel
and airport footfall which led tosignificantly reduced demand from our
OEM customers for our technologies usedwithin airport security solutions. However,
we expect to see the market strengthen
once travel restrictions are lifted.

43

Operations Review continued

Service &Healthcare
The Service & Healthcare sector
comprises the Group’s maintenanceservice contracts, billable repairs, training
and support services, and spare partsales related to Oxford Instruments’ own
products; and the support and service ofthird-party MRI scanners in Japan.

Improved profitability as wemeet increased demand forour services more efficiently
Throughout the pandemic we maintained
high levels of support for our customers,
meeting increased demand for services
related to our own products, the ongoing
requirements for the essential MRI
equipment for our hospital customers
in Japan, and for our broader range ofservice products. This was reflected ina 10.5% increase in reported orders to£63.0m (2020: £57.0m) and a 5.0%
increase in reported revenue to £56.5m(2020: £53.8m).

44

Our increased local provision of services,
combined with enhanced digital andremote offerings, supported improved
profitability, leading to a 12.7% increase
in reported adjusted operating profit to£16.9m (2020: £15.0m), with the operating
margin up 200 basis points to 29.9%(2020: 27.9%).

Accelerated the transformationof our customer service approach
Our service offerings are a key
differentiator for us in our markets
and covid has provided us with newopportunities to further enhance thevalue of our relationships with ourcustomers. In the year we continued
with the accelerated transformation of
our customer support services, adapting
existing and developing new service
offerings to ensure we continued to meet
our customers’ changing needs. This has
included the provision of increased digitalproducts, remote servicing andinstallations, and better leveraging ofour global footprint.

We have helped our customers workoutside their laboratories, providing
remote access to their systems andfacilitating data sharing between teams
to allow them to progress their research.
Whilst covid has made access to ourcustomer sites challenging, by improving
online accessibility to our technicalsupport teams and developing thecapabilities of our in-country support
teams, we have been able to respondquickly to customer queries without thesame requirement for travel. Our
customers are increasingly getting used
to having their issues fixed much quicker
than pre-covid, which is driving thecontinual development of our support
to meet this demand.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Orders£63.0m+10.5%+11.8%(2020: £57.0m)

Constant currency growth1

Revenue£56.5m+5.0%(2020: £53.8m)+5.9%Constant currency growth1

Adjusted2 operating profit£16.9mAs we continue to build a better
understanding of how our customers areusing our products, we are tailoring ourservice offerings for the individual needsof the different groups. Our goal is toincrease our customers’ productivity,
enhance their capabilities and create
more value from their initial investment.
In support of this, and as part of ourtransformation, we are developing ourmanaged services offering which provides
enhanced lifetime support options. This
allows us to take care of training users,
upgrading their software and hardware
where appropriate, providing more
relevant data, with more actionableinsights and assurance of result accuracy.
Whilst we are at the early stages of ourservices transformation, we have built ahealthy pipeline of opportunities to further
support our customers in the future.

(2020: £15.0m)

Adjusted2 operating margin

29.9%(2020: 27.9%)

Statutory operating profit£16.9m(2020: £15.0m)

Oxford Instruments plc | Report and Financial Statements 2021

1.

For definition refer to note on page 2.

2.

Details of adjusting items can be found in Note 1 to the Financial Statements.

45

Sustainability

Making amaterial
difference
Staff survey completion

Global carbon footprint

81%

520 tCO2e(2020: 75%)

(2020: 5,382 tCO2e)

Accidents in year

Employee peer recognition scheme

34 minor
1 major

1,230 badges awarded(2020: 43 minor, 5 major)

n/a; new scheme introduced in the year

+6%

46

(90%)

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

A culture of sustainability
We take our role in the world seriously andrecognise that how we do business is as
important as what we do. Internally, we
work to minimise the environmental
footprint of our products and services,while investing in our employees to keepthem safe and help them develop theircareer. Externally, we work collaboratively
with our customers and suppliers toprovide key enabling technologies tobenefit and advance society.

Our role in supporting all our stakeholders
has never been clearer than during thecovid pandemic and the ongoing battle
against global environmental challenges.
Our purpose is to support our customers
to address some of the world’s mostpressing challenges. Rarely has our work
to enable a greener economy, increased
connectivity, improved health and leaps
in scientific understanding seemed aspressing as it has throughout 2020/21.

Despite the challenges, our shared senseof purpose united our employees aroundthe world and increased their engagementin the work we did throughout the yearwith all our distinct stakeholder groups.
In support of our ongoing sustainability
drive, this year we have formed a Board
sustainability committee, chaired by Neil
Carson, bringing together the various
aspects of our sustainability programmeand supporting our focus on proactively
managing our business risks and theimpact on the world and communities
in which we operate.

Our guiding principles for our approach to sustainability are:Environment

We recognise the role we have in addressing environmental issues including climate change
through our operations and products.

Employees

We create an inclusive environment and culture, with continued investment in our people tohelp them succeed.

Governance

We maintain high standards of corporate governance and are committed to conducting
business responsibly.

Health and safety

We provide a safe workplace and working environments for all our employees, ensuring ourpeople work injury free and with support for their health and wellbeing

Customers

We deliver value for our customers, helping them to achieve their own sustainability objectives
and address some of the world’s most pressing challenges.

Compliance

We are united by strong standards and values and through our policies have createdtransparency for our stakeholders on how we do business and what we expect of ourselves
and those we work with.

We have aligned with three of the UN’s Sustainability Development Goals in areas where we have the most potential to influenceand shape a sustainable future. The three we have chosen are:

3. Ensure healthy lives
and promote wellbeing
for all at all ages

7. Ensure access toaffordable, reliable,
sustainable and modern
energy for all

9. Build resilient
infrastructure, promote
inclusive and sustainableindustrialisation andfoster innovation

Whilst Oxford Instruments has a low impact on the environment with a relatively low carbon footprint, chemical and water use,
we recognise the need for all businesses to be mindful of the effect they have on climate change and the planet.
We have clear goals with respect to our environmental impact, the effect on our employees, the communities and societies
we operate in; and governance practices that ensure we operate to our own high standards and within the relevant
legislative requirements.

Oxford Instruments plc | Report and Financial Statements 2021

47

Sustainability continued
Whilst Oxford Instruments has a low impact on the environment
with a relatively low carbon footprint, chemical and water use,
we recognise the need for all businesses to be mindful of the effectthey have on climate change and the planet.

Environment
The Group has continued on its journey
to minimise the environmental footprintof our operations, products and services,
recognising the ongoing threat climatechange plays to the world.
Encouraged by a strong level of
employee engagement, we haveestablished a “Go Green” committee at
each site to deliver a local environment
agenda and promote positive behaviours
amongst peers. The committees arefocused on finding innovative ways tohelp further improve our environmental
impact. This has included energy
reduction initiatives, wildflower seed gifts,
removing single-use plastic from oursites, installing electric vehicle charging
points and reducing our food miles byoffering seasonal food in our canteens.
As our business continues to grow, we aretaking the opportunity to make an
investment in sustainable infrastructure.
Our new Plasma facility is being designed
from the start to be energy efficient, with
LED lighting, reusing heat from thebuilding’s cooling and heating systems,
and harvesting rainwater. We have also
had solar panels installed on our X-Ray
Technology site in California and have
moved our other California business,
Asylum, to a more environmentallyfriendly building.

Energy and emissions

Water and waste

A key achievement in the year was theglobal move to source our electricity fromcertified renewable sources. We have
moved 100% of the electricity consumed
by our manufacturing activities torenewable sources and are now looking
to transition our remaining office facilities
across. We continue to look at ways toreduce our fossil fuel consumptions.
However, some of our sites currently relyon oil and gas for heating and, due to thepandemic, we had to run our heating
systems more intensely to increase theair circulation in our buildings to reduce
the possible transmission of the virus.
This has meant that our oil and gas
usage has increased in the year.

While we measure our water usage,
the level is minimal and not material
so has been excluded from this report.
We have also excluded our use ofhydrofluorocarbons as our usage falls
below 5kg. Three of our main
manufacturing sites are zero waste tolandfill, where our waste is recycled either
directly or indirectly, for example generalwaste being used to generate electricity
at dedicated incinerator sites.

Oxford Instruments consumed a total of
11.85 GWh of energy globally during
2020/21. This figure consisted of 10.01
GWh of electricity (2019/20: 10.13 GWh),
1.270 GWh of gas (2019/20: 1.03 GWh)
and 0.570 GWh of oil (2019/20:
0.512 GWh).
With continued focus on energy
efficiency we have been able to reduceusage per million pound of revenue to37.17 MWh/£m (2020: 37.92 MWh/£m)
despite increased heating and air
circulation requirements.
The Group’s Scope 1 and 2 global carbon
footprint for 2021 was significantly
reduced to 520 tCO2e from 5,382 tCO2e inthe previous year. Our significant
reduction was due to our commitment inmoving our manufacturing to renewably
sourced energy – which accounted for
94% of our energy consumption.

Transport
Our biggest impact on the environment
after energy is transport, which wassignificantly reduced due to covid-related
restrictions and our adoption of new ways
of working. By introducing a range of new
digital communication and support tools
we have been able to grow the businessdespite the restrictions on travel. As wemove towards the global recovery andthe increased ability to travel, we arefurther embedding our hybrid working
model utilising digital and remotecommunications. This will allow us tocontinue to leverage our regional offices
and global digital tools to reduce ourongoing travel requirements.
Air travel was down 94% during the year,
primarily due to the covid pandemic. Thisdrop equated to around 14 million km,
which reduced the UK and US air travel
carbon equivalent to 130.31 tCO2e.
Air travel
2020/21=900,074 km

Carbonequivalent=130.31 tCO2e

Car fuel
The car fuel figures are drawn from fuelcard and business mileage expense claim
records and these totalled 52,389 litres offuel used in the last year.
UK car fuelcarbonequivalentcalculation:

48

52,389litres2.54039kg/litre= 133.1 tCO e
2

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Electricity consumption as carbon

UK
North America
EuropePurchased
electricity(tCO 2 e)Secondary
fuel(tCO 2 e)

Fugitiveemissions(tCO 2 e)

Total(tCO 2 e)

0 (2020: 2,101.9)
54.14 (2020: 371.9)

379.84 (2020: 321.15)

0 (2020: 0)379.84 (2020: 2,423.05)

0 (2020: 0)

0 (2020: 0)54.14 (2020: 371.9)

Excluded – very low use(2020: 18.35)

0 (2020: 0)

0 (2020: 0)

0 (2020: 18.35)

Asia

86.63 (2020: 95.8)

0 (2020: 0)

0 (2020: 0)86.63 (2020: 95.8)

Total

140.77 (2020: 2,587.95)

379.84 (2020: 321.15)

0 (2020: 0)520.61 (2020: 2,909.1)

Environmental Directives
The Group complies with allenvironmental legislation in countries
where it operates. This includes European
Directives such as:
•

•

•

•

Waste Electronic and Electrical
Equipment (WEEE) Directive –compliance achieved in the UK bymembership of B2B Compliance – anauthorised compliance body. Other
compliance bodies are contracted for
our European operations.

The Streamlined Energy and Carbon
Reporting (SECR) regulations came into
force from 1 April 2019 and Oxford
Instruments are required to comply withthese regulations. The cost of carbon
compliance has been transferred to ourenergy bills via an increase in the Climate
Change Levy. The cost burden of theabove change will be neutral to thebusiness.

SECR responsibility andmethodology

Restriction on use of certain
Hazardous Substances (RoHS)
regulations – all products that were
within scope and were sold into
Europe since July 2017 complied withthese regulations. Some of our
products are outside of the RoHS
scope or are covered by exemptions.
Registration, Evaluation, Authorisationof Chemicals (REACh) Directive. All
sites are working towards compliance
via their supply chains.
European Waste Framework Directive.
This requires the Company to enter
data on parts and products that may
contain Substances of Very High
Concern (SVHC) into a database being
set up by the European Chemical
Agency (ECHA). This is known as the
SCIP database and businesses are
currently engaged in determining whatshould be entered into the database toensure compliance.

Total electricity consumption 2015-2020
versus carbon emissions
2015

Streamlined Energy and Carbon
Reporting (SECR) regulations

The Group Health, Safety andEnvironment Manager is responsible forcollating energy data, on a monthly basis,and reporting to the Board on an annual
basis. He is further responsible forcompiling the SECR report to submit tosenior management for sign off. Data
collected for compiling the SECR report isgathered by various methods, including:•

submetering;•

direct meter readings; and•direct readings from energy bills.

With regard to carbon equivalence,the 2020 GHG conversion factors havebeen used:•

Purchased grid electricity = 0.23314
kg/kWh•Natural gas consumption = 0.18387 kg/
kWh•

Gas oil consumption = 0.25672 kg/kWh

GWh

16.9

7.8

2016

3.6

2019
0

0.1

520.41tCO2e

Revenue£318.5m2

1.

(2019/20: 2,909.1 tCO2e)2.

(2019/20: £317.4m)

3.

(2019/20: 9.17 tCO2e/£m)

1.633 tCO2e/= £m ofrevenue

The data from the SECR report for
2020/21 gives an emissions ratio forenergy of 1.63 tCO2e/£m of revenue(2019/20: 9.17 tCO2e/£m). The UK
Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations require
the SECR report to be included as part of
the Directors’ Report in the Report and
Financial Statements.
During 2020/21 all six manufacturing
sites were supplied with electricity fromguaranteed renewable sources.
This removed the carbon equivalent of
1,928.58 tCO2e from UK electricity and261.58 tCO2e from the North America
electricity numbers.

Beyond SECR
It is our objective to be carbon net zero
before 2050. The business is currently
analysing our options in detail, including
engaging with energy specialists to lookat ways we can reduce our energy
usage now.

12.6
10.1

2.6

2020

Carbonemissions

12.9

4.5

2018

Oxford Instruments has a statutory duty
to report greenhouse gas emissions as
tonnes of carbon dioxide equivalent(tCO2e). The Company’s chosen carbon
intensity measure for energy use is tonnesof carbon dioxide equivalent (tCO2e) per£m of revenue.

15.5

6.4

2017

Thousand tCO2e

SECR carbon intensity
measure from energy use

10.0
6

12

Oxford Instruments plc | Report and Financial Statements 2021

18

49

Sustainability continued
One significant positive from the pandemic has been
the increased levels of communication at all levels.

SocialEmployees
Our people vision is that all employees
are proud to work for a company that isrecognised as the leaders in what wedo and understand the positive difference
we make in the world. Our objective isto ensure that we have a high capability,
diverse workforce that enables us tobetter understand our customers andmarkets. Building an organisation witha broad range of perspectives andexperiences increases our ability toinnovate, to make the right decisions andto exceed our customers’ expectations.

Health and wellbeing
Our Health and Safety function is led by
Vicki Potter, Group HR Director, who has
responsibility across the Oxford
Instruments Group. Protecting the healthand wellbeing of our employees, whilst
continuing business operations andsupporting our customers, has been ourpriority this year. As the pandemic spreadaround the world, we were quick to adapt
our working practices to protect our staff
and our business interests. By enabling
people to work remotely andimplementing covid-safe workplacesat our manufacturing sites, we were able
to keep our businesses safely open
throughout the year. Our sites andfacilities have remained open throughout
the pandemic, although many employees
were encouraged to work from home to
reduce the number of people on site at
any time. This reduced site occupancy
has also been instrumental in reducing
the number of accidents.

50

Early in the year we introduced anumber of additional resources tosupport employee health and wellbeing.
This included a focused H&S risk
assessment for those working remotely
and increasing the amount ofcommunication and support for
employees to ensure their emotional
wellbeing during the early stage of thepandemic. We created an employee
wellbeing portal on our intranet providing
information, support and access toresources such as our global Mental
Health First Aider network, employee
assistance programmes and, for our
UK-based employees, unlimited accessto a wellbeing app. As part of ourcovid‑safe working environment,
we introduced additional precautions
such as sanitising stations, distanced
workstations and one-way systems.
We are continuing to promote our“Push for Zero” programme to raise
employee awareness of hazards and risks
and to maintain our focus on preventative
measures to reduce accident numbers.
Our new Health and Safety software
platform, SHIELD, is now fully embedded
across our manufacturing sites and thisinvestment is beginning to show goodresults through an increased focus onreporting hazards so that we can prevent
accidents before they happen.
With 1,000+ safety observations and 70+
near misses being recorded in 2020/21,
this was an increase from 481 safety
observations and 23 near misses
recorded in the previous year. In turn,this increase has been instrumental in
reducing the total number of accidents
recorded worldwide during 2020/21 from48 to 35. The ratio of accidents per 1,000
employees has reduced to 21.5 from 33
the previous year, a positive benchmark
against industry norms.

Most of the accidents recorded were very
minor in nature, but we are committed toachieving, promoting and maintaining ahigh standard of health and safety for all
our employees and everyone involved in,or affected by, our activities. Recording
even the smallest cuts and abrasions
helps us to identify and remove hazards
before they can escalate into more
serious accidents. We recorded one
serious accident in year, which was a
reduction from five serious accidents inthe previous year.
Whilst safety observation reporting
is now firmly established in our
manufacturing sites, we are now
focusing on the employees in our office
workplaces around the world. We want
all our employees, wherever they work,
to feel safe in their working environments.
To facilitate this, a team has been drawn
together to promote wellbeing, healthand safety and expand our safety
observation reporting for all employees,
under a theme of “safety is the choice
you make” and this forms part of our“Push for Zero” programme.

Communicating with
our employees
We work hard to create a sense of
belonging for all of our employees.
We know from our annual employee
survey that we have a high level of
employee engagement and this is driven
by our efforts to ensure that everyone in
the organisation feels included andvalued. One significant positive from thepandemic has been the increased levelsof communication at all levels that has
been enabled through embracing andproactively managing a wider digitalcommunication strategy, including
online meetings. Through our approach,overseas and cross-functional teams
have built stronger, more effective
relationships, supporting each other withthe challenges they have been facing
during this time.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Five-year view of accidents in ongoing businesses
Minorshowing severity Excludes disposals
2016

48
49

3

2018

48

5

43

2020
0

34
10

20

Serious

7

2017

2019

Company Information

5

1

30

We recognised that moving the
majority of employees to remote working
represented a risk to our company culture
and so we redoubled our efforts toincrease leadership visibility andcommunication over the course of theyear. From regular CEO and leadership
updates in blogs and vlogs, to films
showing how our products were
supporting the fight against covid or
how travel restrictions have changed
how we support our customers, we
increased the cadence and variety ofchannels for our internal communications.
As a result, our annual employee survey
showed improved employee sentimentfor questions relating to leadershipcommunications.

Engagement
We have enjoyed great success building
our culture through a wide range ofactivities that help connect employees
across our businesses and countries.
We continue to build on these activities,
finding new ways to engage despite
covid restrictions. We have introduced
a new employee-to-employee
recognition scheme to acknowledge
colleagues who go out of their way
to support and encourage each other.
So far 1,230 awards have been given
between colleagues.
As many of our regular social events were
not possible during the pandemic, manysites introduced virtual events, including
regular coffee mornings, online quizzes
and photo competitions. Over the holiday
period, all employees received a gift tosay thank you for their contribution during
the year. We had an online choir singing
Christmas songs, which had participationfrom all of our sites.

40

50

60

As the pandemic eased at some ofour sites, specifically socially distanced
re-orientation events were organised tohelp individuals feel safe and welcome
when returning to the workplace.

Employee survey
For the third year running, we conducteda Company-wide employee engagement
survey. Over 80% of our employees
responded to the survey, which is ourhighest participation rate since we
implemented an annual survey cycle.
Despite the challenges of the year,
we were pleased that employee
engagement levels remain high aroundthe world. Our staff feel prouder to workfor us than the global benchmark (84%
positive) and we have seen improvements
since the last survey in intention to stay(+2%) and likelihood to recommend us asan employer (+3%).
Raising awareness of career development
and promotion opportunities across theGroup was a key action from our 2019
survey. We were pleased to see asignificant improvement in the perceptionthat there are opportunities for our
employees to develop their careerswith us (+9%). Following the success of our
new Sales Careers framework in improving
sentiment in this job family, over the next
year we will be launching new careerframeworks, capability and experiencemodels and indicative pathways for more
job families.

Oxford Instruments plc | Report and Financial Statements 2021

Diversity and inclusion
Being inclusive is a core company value
and is based on respect for the individualand creating a sense of belonging. Our
people vision is that all employees areproud to work for a company that isrecognised as the leader in what we doand understand the positive difference
we make in the world. In support of this,and to attract, retain and enable the best
people to perform, we are dedicated tocreating an inclusive environment andculture, where difference is valued, andpeople are recognised for what they
deliver and bring to the team.
We are pleased that our employees
recognise the work we have done toensure everyone is treated with respect
regardless of who they are. We continue
to look for ways to further enhance ouractivities here and our Management
Board is committed to a range of actions
to help increase the visibility of ourapproach to diversity and inclusion
and we are proud to be partnering withan external organisation as a global
diversity champion.
We have analysed the findings of ourrecent engagement survey to look forstatistically significant differences in
responses across gender. There were
no topics where sentiment among ourfemale employees was significantly
behind our male employees, while wesaw our female employees were morepositive about our senior leadershipcommunications and had a better
understanding of how their work
contributes to our strategic objectives.

51

Sustainability continued
The high level of support we saw for our celebration of International
Women’s Day this year demonstrates that there is a desire andenthusiasm across the Company to make a difference in this area.

Social continued
Diversity and inclusion continued
During the year we published ourfourth gender pay gap report, available
on our website at www.oxinst.com/
gender‑pay‑review. The mean pay gap
has decreased, while the median pay
gap has increased since last year.
We also achieved a slight increase in
the proportion of female employees.
The high level of support we saw for
our celebration of International
Women’s Day this year demonstrates
that there is a desire and enthusiasm
across the Company to make adifference in this area.
Having met our objective to ensure
shortlists for Director-level appointments
included at least one candidate from agroup that is under-represented in the
Company, we have now extended thisto introduce “balanced shortlists” forall levels of recruitment. 57% of ourappointments were made from abalanced shortlist, against our targetof 50%. We have increased our target
for next year to 60%. In the year wedeveloped and introduced a newe-learning programme for hiring
managers, including a course on
unconscious bias.

Our values

Developing capability

As we continue to evolve as anorganisation it is important that we
ensure our values also evolve and reflect
us as an organisation. Throughengagement with our business leadersand employee focus groups around theworld, we have refreshed our values andwhat they represent.

We regularly undertake capability
reviews to ensure we have the skills weneed to deliver long-term sustainablegrowth. We have continued to invest in
the development of our employees andundertake selective recruitment to further
enhance specific skills and capabilities toprovide the foundations for future growth.
Using an online Learning Management
System embedded in our human resource
information system, we have given all
employees access to online courses andtutorials, with bespoke training packages
and pathways developed for different job
families and levels in the organisation.

Our values are:•Inclusive: by seeking out different
perspectives and diverse
collaboration, we deliver better
solutions and lasting success.

•Innovative: through our knowledge,
expertise and focused curiosity, we
create new possibilities for ourselves
and for our customers.

••

Trusted: we build successful,long‑term relationships based on
accountability, integrity and respect.
Purposeful: we care, and our passion
and commitment drive positive change
in the world.

Gender		Our flagship Management
Development Programme covers
the skills needed to be a successful
manager in Oxford Instruments.

•

Our Project Leadership Programme
ensures our technical managers areequipped with the hard and soft skills
they need to successfully deliver
all projects.

Geographical spreadof employees
MaleFemaleGlobal Oxford Instruments

77%

23%

Plc Board

67%

33%

Management Board

86%

14%

Managers

81%

19%

Employees

75%

25%

52

•

UK 60.8%

Americas 16.7%
Asia 16.2%
Europe 6.3%

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

•

•

•

Governance

Our Aspire Programme is for highpotential employees representing
all our job families and regions.
Our Apprentice Scheme supports
future business requirements for talent
with hard and soft skills that can be
hard to find externally. Our apprentices
achieve external qualifications anddevelop specific skills used in the
production of our products as well as
the broader capabilities that enablecareer development within othertechnical, engineering and wider
business roles.
We have structured careerdevelopment frameworks for our sales
and our technical staff. Competency
frameworks and careers ladders offer
our employees in these roles a clear
future career path that can take themin the direction that suits them best.

Financial Statements

Company Information

Our communities
We believe that the work we do, andour products and services, enable ourcustomers to benefit and advancesociety. To ensure this continues, we arecommitted to raising the profile of STEM
subjects among young people at allstages of education. Unfortunately,
like many other organisations, we wereunable to host our usual school andundergraduate student visits to oursites due to lockdown restrictions.
We are aware that there is a critical andoften difficult stage for many between
completing their PhD and gaining
a permanent research position.
We therefore like to help individuals whoare producing innovative work throughour science prizes.
As an organisation we supported ourcommunities in ways which were more
immediately relevant to the situation
around the world. At a local level, manyof our sites set up initiatives such as food
donation points over the Christmas period
or fundraising events for mental healthcharities and our sites equipped with 3D
printers also manufactured and donated
PPE to their local hospitals.

Oxford Instruments plc | Report and Financial Statements 2021

53

Sustainability continued
Governance
Our Board is committed to conducting
business responsibly and maintaining
high standards of corporate governance.
This commitment extends to driving theGroup’s long-term objectives andoverseeing the Group’s operations toensure competent and prudent
management, continuous leadershipdevelopment and ongoing succession
planning.

In addition to the Code there are anumber of other compliance-related
policies and procedures which look at
discrete areas of ethical importance.
These are:••

Reporting a Business Malpractice
Policy – this procedure explains how
to report any type of ethical issue anemployee may witness or beconcerned with around the Group.
Alternatively, there is an external routeavailable to all employees via theconfidential and independent Safecall
hotline.

•Share Dealing Policy and Procedure –this policy helps employees
understand the Market Abuse
Regulations and explains theprocedure for dealing in Oxford
Instruments shares.

Throughout the disruption, the Board andexecutive team have made it their priority
to protect the health and wellbeing of ouremployees, support our customers andother stakeholders, and secure thelong-term future of the business.
We recognise the importance of building
positive and constructive relationships
with our suppliers and other partnerorganisations. We have continued withthe rollout of our new ERP system, which
offers a more efficient means to dobusiness with us, including how wepurchase materials, how we work with
our suppliers and how we serve ourcustomers. In addition, we perform
regular inspections and audits, andstrategic reviews are in place for key
suppliers. In accordance with ISO 9001
and ISO 14001, only quality approved
organisations are used. There is a Groupsupplier management process in placethat promotes a common supply chain
strategy split by commodity, driving
stronger relationships with a smaller
number of high level and quality
suppliers.

Compliance
We are a company united by strong
standards and values. Through ourpolicies, we have created transparency
for our stakeholders on how we dobusiness and what we expect ofourselves and those we work with. The
main Group‑wide governance documents
are the Oxford Instruments Code ofBusiness Conduct and Ethics together
with the policies that can be found on our
website. This also provides all our
employees with the confidence that they
are taking the right actions in various
situations.

54

Anti-bribery and Anti-corruption
Policy – sets out expectations andrequirements for employees andany third party acting on our behalf,
including guidance on the giving andreceiving of gifts and hospitality.

Anti-bribery and corruption
Our Code of Business Conduct and Ethics
is available in hard copy in every sitearound the world, as well as
electronically on our intranet. It is also
included in the offer paperwork for all
new hires. It clearly sets out how we dobusiness and what we expect ofourselves and those we work with.
It covers topics such as bribery andcorruption, hospitality and gifts, humanrights and modern slavery and gives
advice and guidance for dealing withconcerns, including the contact detailsof a confidential and independentwhistle‑blowing service.

Human rights and modern
slavery
Our Human Rights Policy is guided by theUnited Nations Guiding Principles on
Business and Human Rights. It states ourintent to be inclusive, supportive and safe,covering matters including forced labour,child labour, discrimination and the rightto form or join a trade union and to
bargain collectively.

We expect every employee to adhere
to the spirit of our policy and it is fully
supported by our Board. All members of
the Group’s Executive Committee takeresponsibility for ensuring implementation
within their part of the Group. We also
extend our expectations on human rights
to other organisations we work with, suchas our partners, contractors andsuppliers.
We are committed to preventing acts ofmodern slavery and human trafficking
from occurring within our business andsupply chain and put in place effective
systems and controls in order to do so.
We have a zero-tolerance approach to all
forms of modern slavery, including
servitude, forced, bonded andcompulsory labour and human trafficking
and we expect our suppliers to adopt thesame approach.

Privacy and data protection
We have a Global Privacy Standard whichsets out the principles underpinning ourapproach to handling personal data. We
achieve these principles through several
policies, including our Global IT(Infrastructure & Use) Policy, our local
GDPR Data Protection Policy and several
policies and FAQs guidance documentsfor our marketing and sales teams.
Our commitment to our UK and EU-based
employees regarding our handling of
their personal data in compliance with
the GDPR is set out in our GDPR Privacy
Notice for Employees which is distributed
to employees by local HR teams, alongwith addendums for specific processing
activities from time to time, andaddendums for compliance with local
laws throughout the EU.
To ensure our employees understandwhat is required from them whenhandling personal data in their role, we
require them to take mandatory dataprotection training, which is now
accessible through our digital training
platform in several languages.

Data security
Along with privacy and data security
controls listed above, we apply amulti-layered approach to data security.
The Global IT Infrastructure and Use
Policy details both the Company’s andemployees’ responsibilities in managing
and controlling the use of IT systems,
services and data.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Non-financial information statement
In line with the Non-Financial Reporting requirements contained in sections 414CA and 414CB of the Companies Act 2006, the tablebelow, and the information it refers to, is intended to help stakeholders understand our position on key non-financial matters.

Key policies and standards
Employees

Environment

Social matters

Human rights

Additional information•

Health and Safety Policy•

Working at Oxford Instruments Policy•

Leaving Oxford Instruments Policy•

IT Infrastructure and Use Policy•

Conflicts of Interest Policy•

Business Travel Policy•

Crisis Management Policy•

Reward and Recognition Policy•

Performance Management Policy•

Opportunity and Career Policy•

Dissemination of Price Sensitive Informationwww.oxinst.com/investors-content/compliance/
dissemination-of-price-sensitive-information•

Health and Safety Policy

www.oxinst.com/corporate-content/sustainability•Group Energy Policy

www.oxinst.com/CBCE•

Environmental Policy•

Supplier Due Diligence and Audit Procedureswww.oxinst.com/corporate-content/supplierand-partner-engagement

www.oxinst.com/corporate-content/health-andsafety
www.oxinst.com/CBCE
www.oxinst.com/corporate-content/employees
www.oxinst.com/corporate-content/diversityand-inclusion
https://careers.oxinst.com/working-here
Employee engagement: pages 26 and 27; 50 and 51
How we look after our employees: pages 50 to 53

Sustainability – protecting the environment:
pages 46 to 54•

Export Control Policy

www.oxinst.com/corporate-content/privacy•

Privacy Policy

www.oxinst.com/CBCE•

Code of Business Conduct and Ethics•

Group Sanctions Policy

Community engagement: pages 26 and 27.

•

Global Marketing Policy•Group Export Controls

www.oxinst.com/investors-content/compliance/group-export-controls-policy•

Global Human Rights Policy•

Modern Slavery Statement•

Gender Pay Report•

Privacy Policy

www.oxinst.com/corporate-content/humanrights-policy
www.oxinst.com/corporate-content/modernslavery
www.oxinst.com/corporate-content/gender-payreportwww.oxinst.com/corporate-content/privacy
Ethics – human rights: page 54

Anti-corruption
and anti-bribery

Additional
disclosure•

Anti-bribery and Anti-corruption Policy•

Reporting a Business Malpractice Policy•

Share Dealing Policy

Ethics – anti-bribery and corruption: page 54•

Supplier Code of Conduct

Supplier engagement: pages 28 and 29.

•

Conflicts of Interest Policy•

Supplier Due Diligence and Audit Procedures•Group Tax Strategy

www.oxinst.com/CBCE

www.oxinst.com/investors-content/compliance/group-tax-strategy
Investment case: page 7
Business Model: pages 24 and 25
Strategy: pages 30 and 31
KPIs: pages 32 and 33
Principal Risks: pages 66 to 70

Oxford Instruments plc | Report and Financial Statements 2021

55

Finance Review

We delivered strong growth inprofit and margin, with good cash
conversion enhancing our robust
financial strength.
Gavin Hill
Group Finance Director

Strong order growth
up 5.3% to £353.7m
Read more on page 58.

Order book growth
up 13.2% to £198.1m
Read more on page 58.

Improved margin
17.8%
Read more on page 59.

High cash conversion£97.6m net cash
Read more on page 62.

Summary
Oxford Instruments uses certain
alternative performance measures
to help it effectively monitor the
performance of the Group, as
management believe that these
represent a more consistent measure ofunderlying performance. Adjusted items
exclude the amortisation and impairmentof acquired intangible assets; acquisition
items; profit or loss on disposal of
operations; other significant non-recurring
items; and the mark-to-market
revaluation of financial derivatives. All ofthese are included in the statutory figures.
Note 1 provides further analysis of theadjusting items in reaching adjusted profit
measures. Definitions of the Group’smaterial alternative performancemeasures along with reconciliation totheir equivalent IFRS measure areincluded within the Finance Review.
The Group trades in many foreign
currencies and makes reference toconstant currency numbers to remove
the impact of currency effects in theyear. These are prepared on amonth‑by‑month basis using thetranslational and transactional exchange
rates which prevailed in the previous year
rather than the actual exchange rates
which prevailed in the year. Transactional
exchange rates include the effect of ourhedging programme.

56

In January 2020, the Group disposed ofits minority equity stake in the Scienta
Omicron joint venture to existing
Shareholders. In the following month,the Group completed the disposal of its
OI Healthcare business in the US. For
the purpose of comparative reporting,OI Healthcare is classified as a
discontinued operation.
Orders increased by 5.3% to £353.7m(2020: £336.0m), an increase of 6.7% atconstant currency. At the end of theperiod, the Group’s order book for futuredeliveries stood at £198.1m (31 March
2020: £175.0m). The order book grew
13.2% on a reported basis and 17.8% atconstant currency.
Revenue on a continuing basis increased
by 0.3% to £318.5m (2020: £317.4m).
Revenue from continuing operations,excluding currency effects, increased by
1.7%, with the movement in average
currency exchange rates over the year
reducing reported revenue by £4.4m.
Adjusted operating profit from continuing
operations increased by 12.3% to £56.7m(2020: £50.5m). Adjusted operating profit,
excluding currency effects, increased by
13.3%, with a currency headwind in theyear of £0.5m. Adjusted operating margin
from continuing operations increased by
190 basis points to 17.8% (2020: 15.9%).
Excluding currency effects, adjusted
operating margin increased by 180 basis
points to 17.7%.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceStatutory operating profit includes theamortisation of acquired intangibles of£8.4m, business reorganisation items of£0.4m, impairment of capitalised
development costs of £1.3m and a creditof £6.4m relating to the movement in themark-to-market valuation of
uncrystallised currency hedges for futureyears. Statutory operating profit of £53.0m(2020: £39.8m) grew by 33.2%.
Adjusted profit before tax from continuing
operations grew by 12.9% to £55.9m(2020: £49.5m), representing a marginof 17.6% (2020: 15.6%).

Financial Statements

Statutory profit before tax from continuing
operations grew by 34.5% to £52.2m(2020: £38.8m), representing a margin of
16.4% (2020: 12.2%).
Continuing adjusted basic earnings per
share grew by 12.0% to 78.6p (2020:
70.2p). Continuing basic earnings per
share were 72.8p (2020: 55.9p), growthof 30.2%.
Cash generated from operations of£49.7m (2020: £62.3m) represents 101%
(2020: 124%) cash conversion.

Company Information

Net cash increased from £67.5m on
31 March 2020 to £97.6m, aided by good
operating cash flow, and is stated afteran additional contribution to the UK
defined benefit pension scheme of £8.1m
that was made in March 2021.
At the end of March, our revolving credit
facility remained undrawn, leaving
approximately £100m of committed
facilities. This represents total headroomof just under £200m. At the end of
March 2021, the Group repaid
outstanding private placement loan
notes of £27.9m from its cash balances.

Income Statement
The Group’s Income Statement is summarised below.
Year ended
31 March 2021£m

Year ended
31 March 2020£m

Revenue
Adjusted operating profit
Amortisation of acquired intangible assets
Non-recurring items
Mark-to-market movement of currency hedges
Statutory operating profit
Net finance costs
Adjusted profit before taxation
Statutory profit before taxation

318.5
56.7
(8.4)
(1.7)
6.4
53.0
(0.8)
55.9
52.2

317.4
50.5
(8.7)
(0.6)
(1.4)
39.8
(1.0)
49.5
38.8

Adjusted effective tax rate
Effective tax rate

19.3%
19.9%

18.8%
17.5%

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

78.6p
72.8p

70.2p
55.9p

Dividend per share (total)

17.0p

—

Oxford Instruments plc | Report and Financial Statements 2021

Change+0.3%+12.3%+33.2%+12.9%+34.5%+12.0%+30.2%

57

Finance Review continued
Income Statement continued
Orders and revenue
An internal reorganisation during the year means that our Magnetic Resonance business and research and development facility
in Finland are now reported within the Materials & Characterisation segment, having been previously presented within Research& Discovery. This has led to a small change in the comparative split of revenue across the two segments.
Total orders grew by 5.3% (+6.7% at constant currency) to £353.7m. Orders grew by 13.1% (+14.4% at constant currency) for Materials &Characterisation and by 10.5% (+11.8% at constant currency) for Service & Healthcare but declined by 6.9% (-5.1% at constantcurrency) for Research & Discovery.
Revenue of £318.5m (2020: £317.4m) increased by 0.3% (+1.7% at constant currency). Revenue grew by 1.9% for Materials &Characterisation (+3.2% at constant currency), with growth for our semiconductor processing tools and scanning probe microscopes
offsetting a small decline in deliveries of our analysers for electron microscopes due to covid-related customer site access
restrictions and supply chain constraints. Growth in revenue was also moderated by the impact of delays and frustrations in
obtaining export licences. Strong revenue growth for our cryogenic and complex magnets was offset by a decline in deliveries from
our imaging and microscopy business, resulting in a fall in reported revenue for Research & Discovery of 3.7% (-2.0% at constantcurrency). The decline in shipments of our imaging products was impacted by a slowdown in production due to supply chain
constraints and the adoption of covid working practices. Revenue growth from service of our own products resulted in growth of
5.0% (+5.9% at constant currency) for Service & Healthcare.
The book-to-bill ratio (orders received to goods and services billed in the period) for the year was 111% (2020: 106%).
On a geographic basis, revenue grew by 2.7% in Europe (+1.2% at constant currency). Revenue for North America declined by 14.3%
on a reported basis and by 10.8% at constant currency, partly impacted by covid-related delays to customer acceptances; orders forthe region grew by 3.0% (+6.9% at constant currency). Asia delivered strong growth of 9.9% (+11.9% at constant currency) and remains
our largest region by revenue.

Geographic revenue growth
2019/20

2020/21£m

EuropeNorth America
Asia
Rest of World£m% of total£m% of total

Change
£m

87.2
76.7
150.2
4.4
318.5

27%
24%
47%
2%
100%

84.9
89.5
136.6
6.4
317.4

27%
28%
43%
2%
100%

+2.3
(12.8)
+13.6
(2.0)
+1.1

%
growth% growth atconstant
currency

2.7%(14.3%)
10.0%(31.2%)
0.3%

1.2%(10.8%)
11.9%(31.3%)
1.7%

The total order book grew by 13.2% (17.8% at constant currency) to £198.1m. The order book, at constant currency, compared to
31 March 2020, increased by 39.9% for Materials & Characterisation, with strong growth across all constituent businesses. Strong
order growth in the final quarter means that related shipments are scheduled to be made in the 2021/22 financial year. Research& Discovery was broadly flat, with strong growth for our imaging and microscopy products offset by a decline in our X-Ray
Technology business due to the phasing of a large regular order that slipped into the following year. Continued focus on own
product service resulted in growth of 9.4% from Service & Healthcare.
Materials &Characterisation

Research &Discovery

Service &Healthcare

Total

Revenue1: 2019/20
Constant currency growth/(decline)
Revenue at constant currency: 2020/21
Foreign exchange
Revenue: 2020/21

145.8
4.7
150.5
(1.9)
148.6

117.8
(2.4)
115.4
(2.0)
113.4

53.8
3.2
57.0
(0.5)
56.5

317.4
5.5
322.9
(4.4)
318.5

Revenue growth: reported
Revenue growth: constant currency

1.9%
3.2%

(3.7%)(2.0%)

5.0%
5.9%

0.3%
1.7%

£m

1.

58

From continuing operations.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Gross profit
Gross profit grew by 4.0% to £164.8m (2020: £158.4m), representing a gross profit margin of 51.7%, an increase of 180 basis points overlast year, assisted by procurement savings and operating efficiencies delivered from our operational excellence programme.

Adjusted operating profit and margin
An internal reorganisation during the year resulted in our Magnetic Resonance business and research and development facility
in Finland being reported within the Materials & Characterisation segment, having been previously presented within Research& Discovery. This has led to a small change in the comparative split of adjusted operating profit across the two segments.
Adjusted operating profit from continuing operations increased by 12.3% to £56.7m (2020: £50.5m), representing an adjusted
operating profit margin of 17.8%, an increase of 190 basis points against last year. At constant currency, the adjusted operating
profit margin was 17.7%, an increase of 180 basis points.
Materials & Characterisation adjusted operating profit fell by 3.3% (a decline of 1.9% at constant currency) with margin declining by
70 basis points to 13.7% (2020: 14.4%). This was attributable to lower revenue from our higher-margin imaging and analysis systems,
additional investment in the sector, and a warranty provision on a particular product in their portfolio which had been withdrawn
from sale in the year.
Research & Discovery’s adjusted operating margin increased to 17.2% (2020: 12.3%), growth of 490 basis points. At constant currency,
the margin was 16.8%, an increase of 450 basis points. Our cryogenic and complex magnet business has delivered a material uplift
in profitability, supported by improved commercial practices, operational efficiencies, and a high level of customer acceptances inthe year. In addition, lower discretionary costs in our optical imaging business have led to an improvement in margin. These positive
performances more than offset the loss of profit following the sale of our shareholding in Scienta Omicron at the end of last year
(recording a profit of £0.7m in the comparative period).
Service & Healthcare margin increased by 200 basis points to 29.9% (2020: 27.9%). At constant currency, the margin was 30.2%,
an increase of 230 basis points, owing to our focus on improving service revenue on our own products.
Currency effects (including the impact of transactional currency hedging) have reduced reported adjusted operating profit by £0.5m
when compared to blended hedged exchange rates for the comparative period.
Materials &Characterisation

Research &Discovery

Service &Healthcare

Total

Adjusted operating profit1: 2019/20
Constant currency growth/(decline)
Adjusted operating profit at constant currency: 2020/21
Foreign exchange
Adjusted operating profit: 2020/21

21.0
(0.4)
20.6
(0.3)
20.3

14.5
4.9
19.4
0.1
19.5

15.0
2.2
17.2
(0.3)
16.9

50.5
6.7
57.2
(0.5)
56.7

Adjusted margin2: 2019/20
Adjusted margin2: 2020/21
Adjusted margin2 (constant currency): 2020/21

14.4%
13.7%
13.7%

12.3%
17.2%
16.8%

27.9%
29.9%
30.2%

15.9%
17.8%
17.7%

£m

1.

From continuing operations.

2.

Adjusted margin is calculated as adjusted operating profit divided by revenue. Adjusted margin at constant currency is defined as adjusted operating profit at constantcurrency divided by revenue at constant currency.

Statutory operating profit and margin
Statutory operating profit from continuing operations increased by 33.2% to £53.0m (2020: £39.8m), representing an operating profit
margin of 16.6%, an increase of 410 basis points against last year. Continuing statutory operating profit includes the amortisation andimpairment of acquired intangible assets; acquisition items; profit or loss on disposal of operations; other significant non-recurring
items; and the mark-to-market of financial derivatives. The growth in statutory operating profit is primarily due to an increase in theoperating margin and a large credit from the mark-to-market gain on the valuation of financial derivatives.

Oxford Instruments plc | Report and Financial Statements 2021

59

Finance Review continued
Income Statement continued
Adjusting items
Amortisation of acquired intangibles of £8.4m relates to intangible assets recognised on acquisitions, being the value of technology,
customer relationships and brands.
Non-recurring items include £0.4m of one-off professional fees and property-related costs, and an impairment charge of £1.3m
relating to delays in market launch of some specific development projects within the Materials & Characterisation segment.
The Group uses derivative products to hedge its short-term exposure to fluctuations in foreign exchange rates. Our hedging policy
allows for forward contracts to be entered into up to 18 months forward from the end of the next reporting period. The Group policy
is to have in place at the beginning of the financial year hedging instruments to cover approximately 80% of its forecast
transactional exposure for the following twelve months and, subject to pricing, up to 20% of exposures for the next six months.
The Group has decided that the additional costs of meeting the extensive documentation requirements of IFRS 9 to apply hedge
accounting to these foreign exchange hedges cannot be justified. Accordingly, the Group does not use hedge accounting forthese derivatives.
Net movements on mark-to-market derivatives in respect of transactional currency exposures of the Group in future periods aredisclosed in the Income Statement as foreign exchange and excluded from our calculation of adjusted profit before tax. In thecurrent year this amounted to a credit of £6.4m (2020: £1.4m charge). The year-end asset reflects an uncrystallised gain arising froma rise in the value of Sterling at the balance sheet date against a blended rate achieved on US Dollar, Euro and Japanese Yen
forward contracts that will mature over the next 18 months.

Net finance costs
The Group’s adjusted net interest costs rose by £0.7m to £1.7m (2020: £1.0m) due to the inclusion of a refund of overpaid interest of£0.4m in last year’s comparative. Interest credit on pension scheme net assets of £0.9m (2020: £nil) arising from the pension surplus
brings net finance charges to £0.8m (2020: £1.0m).

Adjusted profit before tax and margin
Continuing adjusted profit before tax increased by 12.9% to £55.9m (2020: £49.5m). The adjusted profit before tax margin of 17.6%(2020: 15.6%) was above last year due to an increase in the adjusted operating margin and lower net finance costs.

Reconciliation of statutory profit before tax to adjusted profit before tax

Statutory profit before tax
Add back:
Amortisation of acquired intangible assets
Non-recurring items (Note 1)
Mark-to-market movement of currency hedges
Adjusted profit before tax

Year ended
31 March 2021£m

Year ended
31 March 2020
£m

52.2

38.8

8.4
1.7
(6.4)
55.9

8.7
0.6
1.4
49.5

Statutory profit before tax and margin
The continuing statutory profit before tax increased by 34.5% to £52.2m (2020: £38.8m). Continuing statutory profit before tax
includes the amortisation and impairment of acquired intangible assets; acquisition items; profit or loss on disposal of operations;other significant non-recurring items; and the mark-to-market of financial derivatives. The profit before tax margin of 16.4% (2020:
12.2%) was above last year due to an increase in the operating margin, lower net finance costs and a large credit from the mark-to
market gain on the valuation financial derivatives.

Taxation
The adjusted tax charge from continuing operations of £10.8m (2020: £9.3m) represents an effective tax rate of 19.3% (2020: 18.8%).
The tax charge from continuing operations of £10.4m (2020: £6.8m) represents an effective tax rate of 19.9% (2020: 17.5%). The
movements reflect a change in the geographical mix of profits earned.

Earnings per share
Continuing adjusted basic earnings per share increased by 12.0% to 78.6p (2020: 70.2p); continuing adjusted diluted earnings per
share grew by 11.7% to 77.6p (2020: 69.5p). Continuing basic earnings per share increased by 30.2% to 72.8p (2020: 55.9p); continuing
diluted earnings per share grew by 30.0% to 71.9p (2020: 55.3p).
The number of undiluted weighted average shares increased to 57.4m (2020: 57.3m).

60

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Strategic Report

Governance

Financial Statements

Company Information

Foreign exchange
The Group faces transactional and translational currency exposure, most notably against the US Dollar, Euro and Japanese Yen.
For the year, approximately 19% of Group revenue was denominated in Sterling, 46% in US Dollars, 21% in Euros, 12% in Japanese Yen
and 2% in other currencies. Translational exposures arise on the consolidation of overseas company results into Sterling.
Transactional exposures arise where the currency of sale or purchase transactions differs from the functional currency in which
each company prepares its local accounts.
The Group’s foreign currency exposure for the full year is summarised below.

£m (equivalent)

Sterling
US Dollar
Euro
Japanese Yen
Chinese Renminbi
Other

Revenue

Adjusted
operatingprofit

61.5
145.0
68.4
37.9
4.8
0.9
318.5

(69.3)
64.1
36.8
21.9
2.7
0.5
56.7

The Group maintains a hedging programme against its net transactional exposure using internal projections of currency tradingtransactions expected to arise over a period extending from 12 to 24 months. As at 31 March 2021, the Group had currency hedges
in place extending up to 18 months forward.
For the full year 2021/22, our assessment of the currency impact is, based on hedges currently in place and current currency rates,
a headwind of approximately £18.5m to revenue and £2.5m to profit. Current rates are: GBP:USD 1.42; GBP:EUR 1.17; GBP:JPY 155. For
the full year 2022/23, using the same assumptions, there is an additional headwind of £6.4m to profit owing to the unwinding ofcurrency hedges that have a positive benefit in 2021/22. This impact does not affect the underlying future growth of the Group andis prior to mitigating actions. Uncertain volume and timing of shipments and acceptances, currency mix and FX volatility may
significantly affect full-year currency forecast effects.

Disposal of Scienta Omicron
On 29 January 2020, the Group sold its 47% share in Scienta Omicron to a group of existing Shareholders in the joint venture for aconsideration of SEK 147m (£11.7m). Within adjusted operating profit for the comparative period the Group recorded a profit of £0.7m.
A gain of £6.5m on disposal is treated as a non‑recurring item in the comparative period.

Disposal of OI Healthcare – discontinued operations
On 24 February 2020, the Group sold the OI Healthcare business in the US to MXR Imaging, Inc, for a consideration of $14.9m(£11.5m). The business has been treated as a discontinued operation. A loss of £0.5m after taxation has been recorded underdiscontinued operations in the prior year.

Dividend
The Group’s policy is to increase the dividend each year in line with the increase in underlying earnings, considering movements incurrency. Following the high uncertainty created by the impact of covid, the Group did not pay a dividend for the 2019/20 financial
year. After a resilient year of trading, the Board has proposed a final dividend of 12.9p per share. This results in a total dividend of
17.0p per share, equivalent to a two-year compound annual growth rate of 8.7% from 2018/19. An interim dividend of 4.1p per share
was paid on 14 April 2021. The final dividend will be paid, subject to Shareholder approval, on 15 October 2021 to Shareholders on
the register as at 10 September 2021.

Oxford Instruments plc | Report and Financial Statements 2021

61

Finance Review continued
Cash flow
The Group cash flow is summarised below.

Adjusted operating profit
Depreciation and amortisation
Adjusted1 EBITDA
Working capital movement
Equity settled share schemes
Share of profit from associate
Non-recurring items
Pension scheme payments above charge to operating profit
Cash from operations
Interest
Tax
Capitalised development expenditure
Expenditure on tangible and intangible assets
Proceeds from sale of associate
Decrease in long-term receivables
Dividends paid
Proceeds from issue of share capital and exercise of share options
Payments made in respect of lease liabilities
Decrease in borrowings
Net increase in cash and cash equivalents from continuing operations
1.

Year ended
31 March 2021£m

Year ended
31 March 2020
£m

56.7
9.1
65.8
(2.7)
1.8
—
0.3
(15.5)
49.7
(1.6)
(6.3)
(0.9)
(4.0)
—
—
—
0.2
(2.8)
(27.9)
6.4

50.5
9.9
60.4
10.1
3.1
(0.7)
(0.6)
(10.0)
62.3
(1.0)
(6.1)
(2.8)
(4.3)
11.7
1.4
(8.2)
0.7
(3.3)
(0.6)
49.8

Adjusted EBITDA is defined as adjusted operating profit before depreciation and amortisation of capitalised development costs. The Consolidated Statement of Cash
Flows provides further analysis of the definition of adjusted EBITDA.

Cash from operations
Cash from operations of £49.7m (2020: £62.3m) represents 101% (2020: 124%) cash conversion. Cash conversion is defined as cash fromoperations before non-recurring items and pension scheme payments above charge to operating profit, less capitalised development
expenditure, capital expenditure and payments made in respect of leases liabilities, divided by adjusted operating profit.
Year ended
31 March 2021£m

Year ended
31 March 2020£m

Cash from operations
Non-recurring items
Pension scheme payments above charge to operating profit
Capitalised development expenditure
Expenditure on tangible and intangible assets
Payments made in respect of lease liabilities

49.7
(0.3)
15.5
(0.9)
(4.0)
(2.8)

62.3
0.6
10.0
(2.8)
(4.3)
(3.3)

Adjusted cash from operations
Cash conversion % (adjusted cash from operations/adjusted operating profit)

57.2
101%

62.5
124%

Reconciliation of cash generated from operations to adjusted operating cash flow

Working capital increased by £2.7m. Inventories rose by £1.3m and receivables increased by £10.5m following a high number of
shipments and acceptances at the year end compared to the corresponding period, which was impacted by covid. Payables
and customer deposits increased by £9.1m.
Looking forward, we would expect capital expenditure of approximately £32m to complete the construction and fit-out of our new
facility near Bristol for our Plasma Technology business. It is expected that costs of approximately £20m will be incurred in thefinancial year 2021/22, with the remainder falling into the following year. The business will enter a 20-year lease on completionof construction, which is anticipated to commence at the end of the first half of the 2022/23 financial year.

62

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Strategic Report

Governance

Financial Statements

Company Information

PensionPension payments above charge to operating profit of £15.5m included a one-off contribution of £8.1m to the UK defined benefit
pension scheme, in addition to the current recovery payments.

Interest
Net interest paid was £1.6m (2020: £1.0m), the increase reflecting a receipt of overpaid interest of £0.4m in the comparative period.

Tax
Tax paid was £6.3m (2020: £6.1m), with cash tax in both years benefitting from utilisation of prior year losses carried forward.

Investment in Research and Development (R&D)
Total cash spend on R&D in the year was £28.9m, equivalent to 9.1% of sales (2020: £26.8m, 8.4% of sales). A reconciliation between
the adjusted amounts charged to the Income Statement and the cash spent is given below:

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

Year ended
31 March 2021£m

Year ended
31 March 2020
£m

30.0
(0.1)
0.6
(2.5)
0.9
28.9

26.6
—
0.1
(2.7)
2.8
26.8

Net cash and funding
Net cash
Good cash generation in the year increased the Group’s net cash position from £67.5m to £97.6m. Cash generated from operations
was £49.7m (2020: £62.3m) after the inclusion of an additional contribution to the UK defined benefit pension scheme that increased
deficit recovery payments to £15.5m. The Group invested in capitalised development costs of £0.9m and tangible and intangible
assets of £4.0m, with investments in semiconductor processing development tools, quantum computing related assets andinfrastructure, and expenditure to increase production capacity.
Movement in net cash

Net cash after borrowings as at 31 March 2020
Cash generated from operations
Interest
Tax
Capitalised development expenditure
Capital expenditure on tangible and intangible assets
Other items
Net cash after borrowings as at 31 March 2021

£m

67.5
49.7
(1.6)
(6.3)
(0.9)
(4.0)
(6.8)
97.6

In early 2021, the Financial Reporting Council (FRC) conducted a review on the Group’s Report and Financial Statements for theyear ended 31 March 2020. Following completion of this review we have concluded that overdraft balances should be presented
gross, rather than netted off against cash and cash equivalents. As a result, the Consolidated Statement of Financial Position as
at 31 March 2020 has been restated. Full details can be found in the Accounting Policies note. The restatement did not result inany change to reported profit, earnings per share, net assets or cash flows reported in the 2020 financial year.

Oxford Instruments plc | Report and Financial Statements 2021

63

Finance Review continued
Net cash and funding continued
Return on capital employed (ROCE)ROCE measures effective management of capital employed relative to the profitability of the business. ROCE is calculated as
adjusted operating profit less amortisation of intangible assets divided by average capital employed. Capital employed is definedas assets (excluding cash, pension, tax and derivative assets) less liabilities (excluding tax, debt and derivative liabilities). Average
capital employed is defined as the average of the closing balance at the current and prior year end. ROCE has risen to 32.7%, withthe change principally reflecting a higher level of earnings.

Return on capital employed

Adjusted operating profit
Amortisation of acquired intangible assets
Adjusted operating profit after amortisation of acquired intangible assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Inventories
Trade and other receivables
Non-current lease payables
Non-current provisions
Trade and other payables
Current lease payables
Current provisions
Capital employed

Year ended
31 March 2021£m

Year ended
31 March 2020
£m

56.7
(8.4)
48.3
21.1
7.3
122.6
58.7
75.6
(4.9)
(0.7)
(126.1)
(2.6)
(8.7)
142.3

50.5
(8.7)
41.8
21.8
8.2
135.5
58.8
71.1
(6.5)
(0.9)
(125.1)
(2.1)
(7.5)
153.3

Average capital employed

147.8

174.1

Return on capital employed (ROCE)

32.7%

24.0%

Return on invested capital (ROIC)
ROIC measures the after-tax return on the total capital invested in the business. It is calculated as adjusted operating profit after tax
divided by average invested capital. Invested capital is total equity less net cash, including lease liabilities. Average invested capitalis defined as the average of the closing balance at the current and prior year end. Oxford Instruments aims to deliver high returns,
measured by a return on capital in excess of our weighted average cost of capital.

Return on invested capital

Adjusted operating profit
Taxation
Adjusted operating profit after taxation
Total equity
Net cash (including lease liabilities)
Invested capitalYear ended
31 March 2021£m

Year ended
31 March 2020£m

56.7
(10.8)
45.9
266.2(90.1)
176.1

50.5
(9.3)
41.2
251.6
(58.9)
192.7

Average invested capital

184.4

198.8

Return on invested capital (ROIC)

24.9%

20.7%

Year ended
31 March 2021£m

Year ended
31 March 2020
£m

97.6
(7.5)
90.1

67.5
(8.6)
58.9

Net cash including lease liabilities

Net cash after borrowings
Lease liabilities
Net cash and lease liabilities after borrowings

64

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceFunding
On 2 July 2018, the Group entered into
an unsecured multi-currency revolving
facility agreement, which is committed
until June 2024 with one-year extension
options at the end of the first and second
years. The facility has been entered intowith two banks and comprises aEuro‑denominated multi-currency
facility of €50.0m (£43m) and a US
Dollar-denominated multi-currency
facility of $80.0m (£56m).
We are in discussions to extend thefacility by one year to June 2025.
The Group repaid bilateral private
placement notes of £27.9m on
31 March 2021 from its cash balance.
Debt covenants are net debt to EBITDA
less than 3.0 times and EBITDA to interest
greater than 4.0 times. As at 31 March
2021 the business had net cash.

Financial Statements

The scheme’s actuarial valuation review,
rather than the accounting basis,
determines our cash payments into thescheme. The cash contributions into thescheme are expected to continue until
early 2026, at which point we expect,based on current assumptions, thescheme to achieve self-sufficiency.
In 2021, these contributions amounted to£15.5m, of which £8.1m was an additional
one-off payment made at the end of theyear, following which we will further
de-risk the investment strategy of thescheme. The scheme rules provide thatin the event of a surplus remaining after
settling contractual obligations tomembers, the Group may determine
how the surplus is utilised.

Going concern

The Group has a defined benefit pension
scheme in the UK. This has been closed
to new entrants since 2001 and closed
to future accrual from 2010.

The Group’s business activities, together
with the factors likely to affect its future
development, performance and position,
are set out in the Performance, Strategy
and Operations sections. The financial
position of the Group, its cash flows,
liquidity position and borrowing facilities
are described in the Finance Review.

On an IAS 19 basis, the surplus arisingfrom our defined benefit pension scheme
obligations on 31 March 2021 was £16.3m(2020: £30.7m). The value of scheme
assets increased to £340.2m (2020:£321.4m). Scheme liabilities increasedto £323.9m (2020: £290.7m) due tomovements in the discount rate andinflation rate. The discount rate
decreased from 2.5% to 2.1%, because ofa reduction in bond yields that followed
low central bank rates due to the covid
pandemic. The inflation rate has
increased from 2.6% to 3.1%, reflecting
economic conditions at the balance
sheet date.

Trading for the Group has remainedrobust during the covid pandemic.
The Group has prepared and reviewed anumber of scenarios for the Group basedon key risks noted for the business andthe potential impact on orders, trading
and cash flow performance. In addition,
the Group has overlaid the risk oflong-term adverse movements in foreignexchange rates to our cash flow
forecasts. The Board is satisfied, having
considered the sensitivity analysis, aswell as its funding facilities, that theGroup has adequate resources tocontinue in operational existence forthe foreseeable future.

Pensions

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

Forward-looking statements
This document contains certain
forward‑looking statements. The
forward-looking statements reflect theknowledge and information 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 forecastby the Company.

Gavin Hill
Group Finance Director
7 June 2021

65

Risk Management
Principal risks and uncertainties
The Group’s approach to risk
management has evolved over thecourse of the last financial year with theaim of making risk reviews more effective.
The result is a more targeted quarterly
risk review by the Audit and Risk
Committee, which is underpinned by adetailed risk review at business unit andGroup level. This approach supports theGroup in mitigating against the adverse
impacts of material risks which could
hinder the achievement of strategic plansand objectives. Group risk management
also piloted a sustainability risk review
with the NanoScience business unit and it
is planned that sustainability risk reviews
will be conducted at all business units
during 2021/22. This forms a key elementof the Group’s review of emerging risks.
The first phase of the risk management
process has not changed and continues
with a detailed assessment of key risks inall operating business units which arereported to Group on a quarterly basis.
This standardised approach with scoresfor the gross risk and residual risk forms
the basis of risk discussions between
Group risk management and the business
units and the compilation of the quarterlyGroup risk register.

The key change in the risk management
process comes in reporting risks to the
Audit and Risk Committee. Group risk
management reports common risks
across business units, categorised under
key themes. This reporting facilitatescomparison across business units and thesharing of good practice in one business
unit amongst others.

The working group met between May and
September 2020 to consider and address
the key issues that arose, notably in
relation to operational practices, healthand wellbeing. Further, across the globe,
our service teams adapted andimplemented new tools and techniques
to deliver remote support to customers
when travel restrictions were in effect.

At a business unit level, the risk
management process has not changed
significantly. The update and review ofindividual business units’ risk registers
remains a core part of recurring activitiesof the senior management teams.
The output is discussed with Group risk
management on a quarterly basis toensure that key risks have beeneffectively communicated and thatmitigating actions are appropriate.
These discussions play a key role in
informing Group risk management of themost significant risks to report to the
Audit and Risk Committee.

Principal risks matrix

Response to covid

The methodology for mapping the risks isbased on the Group’s assessment of theresidual risk i.e. the probability of the risk
occurring and the potential impact it may
have based on the mitigating actions andcontrols that are in place to manage therisk. The output of this assessment isshown in the chart below.

SevereIn addition to the actions taken at Board
level to prepare for the possible adverse
impacts that might arise from covid,
the Group established a working groupinvolving senior management andemployee representatives from acrossHead Office and all of the UK’s operating
business units.

For the first time in the Report and
Financial Statements, the principal risks
and uncertainties have been mapped
onto a probability and impact matrix(“PI matrix”) to facilitate comparison of therelative importance of the risks at a Grouplevel. The PI matrix includes arrows whichshow the direction of travel for each risk.

R3

R5

R1

U1

Covid

R7

Foreign exchange

R1

Geopolitical risk

R8

BrexitR2

OEM route to market

R9PeopleR3

New product innovation
(NPI)

R10

Business interruption

R11

Pension

R4

Supply chain

R5

Cyber

R6

Legal & regulatory 		
breach

U1
R4
R11

R2

R7
R6

Moderate

ImpactR10

Significant

Major

Key:

R9

Minor

R8

Rare

Unlikely

Possible

Probable

Very likely

Arrows indicate movementcompared to the prior year

Probability

66

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Strategic Report

1

Governance

Financial Statements

Specific uncertainty 1:
Impact of covid-19

1

Company Information

Specific risk 1:
Political risk

2

Specific risk 2:
Routes to market

Context: While the Group has
demonstrated resilience to theeconomic impact of covid, thepandemic might still cause further
disruption to supply chains, production
and service operations, andcustomers. The Group will continue
with the customer-centric approachthat is a key pillar of the Horizon
strategy to focus on growth markets.

Context: The Group operates in global
markets and can be required to secure
export licences from Governments.
As an example, China accounts for
24% of annual revenue.

Context: In some instances, the Group’s
products are components ofhigher‑level systems sold by OEMs,and thus the Group does not control its
route to market.

Risk factor/uncertainty

Risk

Risk

•

Fall in demand due to reduced funding
for academic customers in key markets/
deferral of capex for industrial customers•

Short-term supply chain disruption•

Workforce disruption in production•

Ongoing travel restrictions for service
personnel

Possible impact•

Changes in the geopolitical landscape oran escalation in global trade tensions
resulting in major obstacles to trade withcustomers in key markets. This could
arise from export licence refusals, trade
tariffs or nations seeking to reducereliance on foreign imports in strategic
technologies through the development ofdomestic competition and/or
protectionist measures.

Possible impact

Short-term reduction in sales volumes
and contribution••

Potentially unable to meet delivery
deadlines/reduction in capacity•

Increases to input costs and lower grossmargins•

Installations and on-site service activities
disrupted•

Limitations on ability to provide
after-sales service to existing customers•

Negative cash flow/liquidity risk•

Certain product lines might not besustainable if access to key export
markets is severely restricted•

Management actions•

Customer intimacy•

Working closely with key supplier base•

Safe ways of working and changes toshift patterns to maximise capacity•

Remote service activities•

Iterative financing review and review of
cost base

Mitigation•

Sales and operational planning process•

Contractual protection•

Strategic procurement, working with
supply chain to mitigate risk•

Strong balance sheet and options forexternal funding

Change in the year:

Lower export volumes or net pricing to
key markets adversely affecting revenue

Control mechanisms•

Contract review and protection against
breach of contract should export licences
be withheld•

Proactive dialogue with relevant
Government authorities

Mitigation•

Vertical integration by OEMs

Possible impact•

Loss of key customers/routes to market•

Reduction in sales volumes and/or
pricing and lower profitability

Control mechanisms•

Customer intimacy to match productperformance to customer needs•

Positioning of the Oxford Instruments
brand and marketing directly to end
users

Mitigation•

Broad global customer base;contractual protection•

Strategic relationships with OEMs to sell
performance of combined systems•

Improved information flows todecision‑makers•

Product differentiation to promoteadvantages of Oxford Instruments’equipment and solutions•

Direct marketing to end users

Change in the year:

Oxford Instruments plc | Report and Financial Statements 2021

Change in the year:67

Risk Management continued
3

Specific risk 3:
Technical risk

4

Specific risk 4:
Supply chain risk

5

Specific risk 5:
Cyber risk

Context: The Group provides hightechnology equipment, systems andservices to its customers.

Context: The Group operates a
strategic “make or buy” policy whichplaces reliance on key partners,
notably single-source suppliers, interms of pricing and on-time delivery.

Context: Elements of production,
financial and other systems rely on IT
availability.

Risk

Risk

Risk

•

Failure of the advanced technologies
applied by the Group to produce
commercially viable products

Possible impact•

Loss of market share or negative pricing
pressure resulting in lower turnover andreduced profitability•

Additional NPI expenditure•

Adverse impact on the Group’s brand andreputation

Control mechanisms•••“Voice of the Customer” approach andmarket intimacy to direct productdevelopment activities
Formal NPI processes to prioritise
investment and to manage R&D
expenditure
Product lifecycle management

Mitigation•••

Understanding customer needs/
expectations and targeted new productdevelopment programme to maintainand strengthen product positioning
Stage gate process in productdevelopment to challenge commercial
business case and mitigate technical risks
Operational practices aroundsales‑production matching and inventory
management to mitigate stock
obsolescence risks

Change in the year:

68•

Operational disruption, due to supply
chain shortages•

Cyber-attack on the Group’s IT
infrastructure•

Change of ownership resulting in lossof supply•

Ransomware/spread of viruses
or malware•

Regulatory changes or economic viability
causing suppliers to discontinue
production, impacting the long-term
availability of key components

Possible impact

Possible impact•

Reduction or halt to production output•

Lost revenue•

System failure/data loss and sustained
disruption to production operations••

Decreased margins•

Loss of business-critical data

Increased lead times••

Poor customer service

Financial and reputational damage•

Increased inventory leading to cash flow
reduction•

Negative impact on quality

Control mechanisms

Control mechanisms•

Group consolidated risk database plus
sales and operational planning process•

Group strategic sourcing programme
to manage key supplier risks•

Focused efforts on higher-risk suppliers
identified•

Long-term contracts with key suppliers

Suite of IT protection mechanisms
including penetration testing, regular
backups, virtual machines, and cyberreviews•

External IT security consultants•

Internal IT governance to maintainprotection systems and our incident
response•

Employee awareness training

Mitigation

Mitigation•

Long-term demand planning•

Buffer stock in extended supply chain•

Relationship management with key
suppliers•

Responsive and adaptive engineeringchange process

Change in the year:••

Managed service with third-party
security specialists providing incident
monitoring•

Regular review, monitoring and testing of
key security measures to assess
adequacy of protection against known
threats•

End user education and phishing
simulation exercises

Change in the year:

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

6

Governance

Financial Statements

Specific risk 6:
Legal/compliance risk

7Company Information

Specific risk 7:
Adverse movements inlong-term foreign
currency rates

8Specific risk 8:
Brexit-related risks

Context: The Group operates in acomplex regulatory and technologicalenvironment. The Group may at times
experience unintentional
non‑conformance with regulations
and competitors may seek to protect
their position through intellectual
property rights.

Context: A high proportion of theGroup’s revenue is in foreign
currencies, notably US Dollars, while
the cost base is predominantly
denominated in Sterling.

Context: Although the UK has enteredinto a Free Trade Agreement with theEU, non-tariff barriers to trade may
damage cross-border trade with EU
customers and suppliers.

Risk

Risk

Risk

•

Infringement of a third party’s intellectual
property•

Regulatory breachPossible impact•

Potential loss of future revenue•

Future royalty payments•

Payment of damages•

Fines and non-financial sanctions such as
restrictions on trade, disbarment frompublic procurement contracts••

Formal “Freedom to Operate” assessment
to identify potential IP issues during
product development•

Internal control framework including
policies, procedures and training in risk
areas such as bribery and corruption,
sanctions, and export controls

Mitigation•

Long-term strengthening of Sterling
against key currencies such as the US
Dollar, Japanese Yen and the Euro

Possible impact•

Reduced revenue and profitability•

EU customers might favour competitors
within the EU•

Lower participation in EU-funded
research projects•

Additional costs in the supply chain/additional freight costs•

UK becomes less attractive to EU
nationals as a place to work

Possible impact•

Lower sales and profitability•

Increased input costs and reduced
margins•

Salary inflation•

Loss of key skills and/or increased
recruitment and/or salary costs

Reputational damage

Control mechanisms••

Confirmation of “Freedom to Operate”
during new product development stagegate process

Control mechanisms
Treasury management of short-term
hedging programme•

Sales production matching and resource
planning•

Strategic management of currency
exposure•

Customer intimacy and monitoring offunded projects•

Strategic sourcing programme•

Product pricing reviews•

Skills and capabilities reviews

Mitigation

Mitigation•

Review of supply chain currency base•Succession management plans•

Active review of net exposure in key
currencies•

Technical career paths•

UK work permit scheme to facilitate
employment of non‑UK nationals in place

Compliance monitoring programme

Change in the year:

Control mechanisms•

Change in the year:

Oxford Instruments plc | Report and Financial Statements 2021

Change in the year:

69

Risk Management continued
9

Specific risk 9:People10Specific risk 10:
Operational risk

11

Specific risk 11:
Pensions

Context: A number of the Group’s
employees have business-criticalskills.

Context: Business units’ production
facilities are typically located at asingle site.

Context: The actuarial pension deficit
is sensitive to changes in the actuarial
assumptions.

Risk

Risk

Risk

•

Key employees leave and effective
replacements are not recruited on atimely basis

Possible impact•

Adverse impact on NPI•

Operational disruption•

Lower sales and profitability

Control mechanisms•

HR people strategy for retention andrecruitment of staff with key skills

Mitigation•

Succession management plans•

Technical career paths•

UK work permit scheme to facilitate
employment of non‑UK nationals in place

Change in the year:

70•

Sustained disruption to production arisingfrom a major incident at a site

Possible impact
Inability to fulfil orders in the short term,
resulting in a reduction in sales andprofitability•

Additional, non-recurring overhead costs

Control mechanisms•

Variations to the current deficit recovery
plan•

Increase in the annual levy paid to thePension Protection FundControl mechanisms•

Contingency plans are in place for all
manufacturing sites•

Contractual clauses to limit financial
consequences of delayed delivery

Mitigation•

Ongoing review of investment strategy,
including active control of risk, by thetrustee’s investment sub-committee•

Liability hedging programme to mitigate
exposure to movements in interest rates
and inflation•

Reduced exposure to equity markets

Mitigation

Detailed responses in contingency plans
can reduce downtime arising fromincidents and facilitate the restoration or
relocation of production•

Standard sales contracts include clauses
for limitation of liability, liquidated
damages and the exclusion ofconsequential losses•

Business interruption insurance

Change in the year:

The actuarial pension deficit is sensitive
to movements in actuarial assumptions
and returns on investments

Possible impact

•

•

•

•

The Group closed its UK defined benefit
pension scheme to future accrual in 2010•

The Group has a funding plan in place toeliminate the actuarial deficit by 2025/26.

Change in the year:

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Viability Statement
In accordance with the UK Corporate Governance Code 2018, the Directors are required to perform an assessment of the Group’s
viability over a period longer than the twelve months required for the going concern statement. As in all previous years since it was
introduced in 2016, the viability assessment period extends over three years. The Directors consider that three years continues tobe the most appropriate time frame for assessing the Group’s longer‑term viability. Due to the uncertainty relating to covid, themethodology used in the viability assessment for the year ended 31 March 2020 varied from the methodology used in all preceding
years. The viability assessment for the year ended 31 March 2021 reverts to a methodology that is broadly consistent with that usedin all preceding years, albeit with some adaptations. While covid continues to create some uncertainty, the Group’s experience inthe last twelve months suggests that the potential volatility in financial performance considered last year was too pessimistic.
This year’s assessment covers the period from 1 April 2021 to 31 March 2024 (the “Viability Assessment Period”).

Key criteria applied in the assessment
In keeping with the prior year, the Group starts the Viability Assessment Period with a positive net cash position and the criteria
used to assess the Group’s viability remain the same as the prior year. The Directors hold the view that either maintaining a positive
net cash position during the Viability Assessment Period or, alternatively, operating within agreed debt arrangements (particularly
relevant if retained cash is used to fund acquisitions), would demonstrate the Group’s liquidity to meet its liabilities as they fall due.
Currently, the Group has committed credit facilities of approximately £100m. There are covenants associated with the facilities
which principally require the Group to operate within a ratio of three times EBITDA to net debt. These covenants therefore could limit
the headroom available from facilities and are factored into the viability assessment calculations where relevant.

Methodology and sensitivities applied
In performing the assessment, the Group has considered the potential impact of the principal risks and uncertainties and theirlikelihood of arising to categorise the risks and uncertainties by the nature of the impact. The list of key risks and uncertainties thathave been considered in this assessment are disclosed on the preceding pages 67 to 70 of the Report and Financial Statements.
The table below summarises the risks by their potential impact and the sensitivities that have been applied.
Sensitivity

Risk areas

Potential impact

1

Political, routes to market, technical andBrexit-related risks
Supply chain risk, operational risk

Loss of revenue due to lower volumes

2
3
4

Sustained disruption to production at a single business unit, resulting
in lost output and hence lost revenue for a significant period
Foreign exchange risk
Lower revenue and margin in Sterling
Legal/compliance, people and pensions risks Additional non-recurring overhead costs

The potential impact of cyber risk (e.g. disruption to business as usual operations arising from a cyber-attack, malware, etc.) has
not been estimated through the inclusion of a specific sensitivity. This is partly because the impact is unpredictable (it would
depend on the nature and duration of the issue) and also because the downside impact assessed from the impact of the other risks
is considered to be sufficient to account for this risk. Further, although uncertainty over the potential impact of covid remains, theDirectors do not consider it necessary to include additional downside beyond sensitivities 1 to 4.
Sensitivity one considers the potential reduction in revenue and contribution margin that could arise from the risks identified. It is themost significant of all the sensitivities applied in value terms. In each year of the Viability Assessment Period, a common reduction
to forecast growth was applied to the forecasts for all business units with the exception of Japan MRI, which faces dissimilar risks to
the other business units in relation to these risks.
The second sensitivity applied has the second largest impact on operating profit and is designed to simulate the impact of major
disruption to production at a single business unit for a period of months. It was applied to the NanoAnalysis business unit in year
three of the Viability Assessment Period to quantify the impact of losing several months’ production to an event causing major
operational disruption.
The potential impact of foreign exchange risk is estimated in all years of the Viability Assessment Period. As treasury is managedat Group level, the potential impact of this risk is quantified at Group level also. Since the short-term hedging programme affords
significant risk mitigation in year one, the estimated impact is more significant in years two and three. The estimate is supported bya detailed calculation linked to the expected net exposure against key currencies (i.e. US Dollar, Euro and Japanese Yen).
The fourth of the sensitivities deals with risks that would likely cause an isolated (or non-recurring) increase in overhead costs.
This sensitivity was also applied at a Group level rather than at an individual business unit level.

Oxford Instruments plc | Report and Financial Statements 2021

71

Viability Statement continued
The starting point to undertake theviability assessment is the three-year
Group forecast (“Forecast”) produced aspart of the annual budgeting process.
The Forecast has several scenarios which
include a negative market case, a midcase and an upside case. The mid case
Forecast forms the “Baseline” for theviability assessment calculations.
The sensitivities set out above wereapplied to the Baseline to provide asensitised operating profit figure for
the Group.
The Forecast includes cash flow forecasts
for each year of the Viability Assessment
Period at Group level only, starting with
operating profit, before considering
working capital movements, investing
activities, tax, dividends paid, etc. toforecast the net cash flow in each year.
The viability assessment uses the samemodel as the Forecasts to estimate
annual movements in net cash.
The cumulative impact of the sensitivities
applied is to reduce revenue by £130m(18% of the Baseline total) and operating
profit by roughly 58% compared to theBaseline in the three-year period coveredby the assessment. However, the only
elements of the cash flow forecasts thathave been adjusted in the viability
assessment relate to the movements
in working capital and the tax payment.
All other cash flows including, but notlimited to, capital expenditure, R&D
expenditure and dividends, have not beenadjusted in the viability assessment.
In practical terms, in the event of serious
adverse movements in profitability, theGroup would take actions to mitigate thenet cash impact. However, in order toexercise a high level of prudence, theGroup has not quantified the potential
impact of such mitigating actions in theviability assessment.

72

OutcomeGoing concern statement

In each year of the Viability Assessment
Period, the sensitised forecasts show that
the Group would remain profitable andwould continue to generate a positive
operating cash flow in each year.
The net movement in cash in the viability
assessment would be positive in year one
but negative in years two and three,with the cumulative impact being a net
outflow of less than £10m. Consequently,
the Group would still retain a healthy net
cash balance at the end of the Viability
Assessment Period.

The Group’s business activities andfactors that are considered likely to affectits performance and position in the future
are set out in the Strategic Report on
pages 1 to 72. The Finance Review on
pages 56 to 65 discloses information
relevant to the Group’s financial position,
its cash flows, borrowing facilities andliquidity.

The forecast level of net cash, combinedwith banking facilities of approximately£100m, indicate that during the Viability
Assessment Period, the Group’s forecasts
show substantial headroom available.
Consequently, the Board has areasonable expectation that the Groupwill be able to continue in operation andmeet its liabilities as they fall due overthe next three years.
This assessment supports not only
the viability statement above, but also
the statement on going concern, set
out below.

The Directors have considered theGroup’s current financial position andfuture prospects and, as set out in theviability statement above, have
performed an assessment of longer‑termviability up to 31 March 2024. On thisbasis, the Directors conclude that there isa reasonable expectation that the Groupwill continue in operational existence forthe foreseeable future and that there areno material uncertainties that may castsignificant doubt over its ability tocontinue as a going concern.
As a result, the Directors continue toprepare the Financial Statements under
the going concern basis.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Governance
Governance is an important element of our Board
environment. To support how we do business andhow we serve our stakeholders, it needs to be
relevant, authentic and meaningful.

Board Leadership and Company Purpose
See pages 74 to 78 of the Corporate Governance Report.

Division of Responsibility
See pages 79 to 81 of the Corporate Governance Report.

Composition, Succession and Evaluation
See pages 82 to 87 of the Corporate Governance Report.

Audit, Risk and Internal Control
See pages 88 to 96 of the Corporate Governance Report.

Remuneration
See pages 97 to 119 of the Corporate Governance Report.

Relations with Shareholders
See pages 120 and 121 of the Corporate Governance Report.

Report of the Directors
See pages 122 to 124 of the Corporate Governance Report.

Oxford Instruments plc | Report and Financial Statements 2021

73

Board Leadership and Company Purpose
Chair’s Introduction
Throughout the disruption, we havemade it our priority to protect ouremployees, support our customers
and other stakeholders, and secure
the long‑term future of the business.
Neil Carson
Chair

The Board is committed to conducting
business responsibly and maintaining
high standards of corporate
governance. This commitment extends
to driving the Group’s long-term
objectives and overseeing the Group’s
operations to ensure competent andprudent management, continuous
leadership development and ongoing
succession planning. Throughout thecovid disruption, the Board andexecutive team have made it theirpriority to protect the health andwellbeing of our employees, support
our customers and other stakeholders,and secure the long-term future of thebusiness. Over the year and into the
new financial year, the governancemodel has stood up well to managing
these challenges.

74

Dear Shareholders,
I am pleased to introduce the Group’s
Corporate Governance Report on behalfof the Board. The Corporate GovernanceStatement provides an insight into how
the Board operated during the year.
The Board is committed to conducting
business responsibly and maintaining
high standards of corporate governanceand is collectively responsible for thelong‑term success of the Group. This will,when underpinned by our businessstrategy and close attention tooperations, finance and risk, enhance
performance and grow the business of
Oxford Instruments. The Board remains
committed to driving the Group’s
long‑term objectives, overseeing theGroup’s operations to ensure competentand prudent management, continuous
leadership development and succession
planning. The approach to governance isset by the Board and the Management
Board ensures that the approach iseffectively implemented across Oxford
Instruments’ businesses around the world.

The main Group‑wide governancedocuments are the Oxford Instruments
Code of Business Conduct and Ethics
together with the policies which sit within
our statement on sustainability. Thesecan be found on our website atwww.oxinst.com/investors-content/
sustainability. During the year, the Board
has been debating and agreeing its
strategy towards sustainability and ESG.
It has also decided to establish a newcommittee of the Board, the sustainability
committee, which will be led by a
Non-Executive Director of the Board.
Initially, this committee will be chaired by
me. The terms of reference are in theprocess of being drawn up and processes
are being established within the businessto report into this committee. I will reporton the work of the sustainability
committee next year.
The ethics programme is actively
managed by a cross‑functional team,
the CBCE Forum, which regularly reviews
the policies and works with the Group’sbusinesses to ensure that employee
communications relating to the ethics
programme are delivered in a consistentand engaging manner.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

There is a policy portal on the intranet
which makes it easy for employees toaccess those policies and proceduresthat are relevant to them. There are an
established set of values which informthe way in which we all work throughout
the Group. With the help of our businessleadership teams and contributions fromfocus groups and individuals around theworld, we have refreshed our values.
These values, Inclusive, Innovative,
Trusted and Purposeful, have beencommunicated to all staff.
These policies and statements set out thevalues and standards that we expect ouremployees to meet. These documents,
together with our policies, govern how we
conduct our business and set thestandards that drive performance.
Compliance training and, in some areas,
standard procedures, help to enforce this.
Board oversight, reviews and audits form
part of the monitoring and supervision
process. Risk processes are embedded
and reviewed on an ongoing basis acrossthe organisation.

Financial Statements

Ordinarily, the Board would have carriedout its triennial external Board evaluation
this year. However, given the constraints
that have been present during the year
due to the pandemic and our view thatan external evaluation carried out
remotely could not be as insightful as
usual, I agreed with the Board that wewould carry out an internal evaluationin the early months of 2021 and carryout an in‑depth external evaluation of
the strategic process and strategy for
the Group during 2021/22. I am pleased
to confirm that the conclusion drawn
from the effectiveness review is that we
continue to have a committed, engaged
and effective Board that is operating well.
More details on the findings of theevaluation are outlined on pages
82 and 83.
Given the restrictions during the year, andthe covid working practices introduced
onto our sites to maintain the safety of
those employees who need to be on site
to manufacture product, the Board has
not been able to visit sites. However,I have been able to hold video meetings
with all our business Managing Directors
during the year and individual Directors
have continued to hold meetings withmanagement. To allow the Board tocontinue to function effectively, managers
have presented remotely to the Board on
their areas of expertise. Our people haveshown their resilience during the year,changing their working practices
as necessary.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

All businesses continue to have strong
new product pipelines and are fullycommitted to the advancement of the
Oxford Instruments strategy. It is clearthat we continue to have committed andenthusiastic teams of people who deliver
leading-edge products that help theircustomers meet their varied needs.
The Chief Executive’s Review on pages
16 to 21 and the Operations Review on
pages 34 to 45 give full details of theyear’s activities.
I encourage all Shareholders to engage
with us ahead of the AGM which will beheld on 21 September 2021. Notice of,and details of the arrangements for, theAGM will be provided to Shareholders at
the usual time and will take into accountlegislative requirements and thecircumstances at the time.

Neil Carson
Chair
7 June 2021

75

Board Leadership and Company Purpose continued
Board of Directors

Neil Carson (64)

Ian Barkshire (55)Gavin Hill (53)

Steve Blair (61)Non‑Executive Chair

Chief Executive

Group Finance Director

Independent
Non‑Executive Director
and Senior Independent
Director

Appointed to the Board
December 2018

Appointed to the Board
November 2015

Appointed to the Board
May 2016

Appointed to the Board
July 2017

Appointed Chairman
December 2018

Appointed Chief Executive
May 2016

Background
Over 30 years’ experience of
operations management in the
UK and the US, technicalinnovation and strategicplanning, culminating in ten years
as Chief Executive at the FTSE
100 science/R&D based
company, Johnson Matthey. In
2016 Neil was awarded an OBE
for services to the chemicalindustry.

BackgroundHolds a BSc and DPhil in physics
from the University of York, is a
Chartered Physicist, a Memberof the Institute of Physics and a
Fellow of the Royal Academy ofEngineering. Ian has worked for
Oxford Instruments since 1997
in a number of seniorleadership roles, including
NanoCharacterisation DivisionalHead, Group Technical Director
and Chief Operating Officer.

BackgroundHolds a BA in economics andagricultural economics from the
University of Exeter. Gavin is a
Chartered Accountant and an
Associate Member of the
Association of Corporate
Treasurers.

BackgroundHolds an engineering degreefrom the University of Sheffield.
Extensive experience inestablished and high‑growth
emerging markets, strategicplanning and portfolio
development.

Previous experience
Group Finance Director:
Synergy Health plc

External appointments
Chief Executive:
Ordnance Survey

External appointments
Non‑Executive Director andChair of Remuneration
Committee:
Royal Dutch Shell plc
Director:
The Goldsmiths’ Company
CharityPrevious experience
Senior Principal Scientist:
GEC Marconi Materials
Technology
Research Fellow:
University of York

Director, Corporate Finance:
Serco Group plc
Senior finance positions:Syngenta AG and AstraZeneca
plc

Previous experience
Chief Executive:
e2v
Director:
Spectris plc

Previous experience
Chairman:
TT Electronics plc
Deputy Chairman:
TI Fluid Systems plc
Non‑Executive Director:
Paypoint plc
Amec Foster Wheeler plc
Founder Member:
Prince of Wales’ Corporate
Leaders Group on Climate
ChangeHonorary President:
SCI (the Society ofChemical Industry)
Chief Executive:
Johnson Matthey plc

Key to Committees
Audit and Risk
Nomination
Remuneration
Chair of Committee76

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Mary Waldner (51)Thomas Geitner (65)

Independent
Non‑Executive Director

Independent
Non‑Executive Director

Appointed to the Board
February 2016

Appointed to the Board
January 2013

Appointed to the Board
September 2014

Appointed to the Board
September 2020

BackgroundHolds an MA in physics from the
University of Oxford and is a
Fellow of the Chartered Instituteof Management Accountants.
Mary started her career at
Coopers & Lybrand Management
Consultancy Services and thenwent on to hold senior financial
positions in a number of major
businesses.

BackgroundA graduate of the Technische
Universität München and holds
an INSEAD MBA. Having spentover 30 years in businesses
operating across the globe,
Thomas has extensive
international experience in thetechnology and engineering
sectors.

Background
Richard’s research encompasses
the physics, materials scienceand engineering ofsemiconductor devices madewith carbon‑based
semiconductors. Richard is a
Fellow of the Royal Society andof the Royal Academy ofEngineering and a Foreign
Member of the US National
Academy of Engineering.

BackgroundHolds a BA in engineering,
economics and managementfrom the University of Oxford andan MBA from Harvard Business
School. Alison has a wide
experience in strategic planning,business development and M&A
across a variety of sectors andis a highly experienced
Non‑Executive Director
and Committee Chair.

External appointments
Professor of Physics and a Fellowof St. John’s College at the
University of Cambridge

External appointments
Non-Executive Director andRemuneration Committee Chair:
TT Electronics plc
Cairn Energy PLC
British Standards Institute

External appointments
Chief Financial Officer:
Lloyd’s Register
Previous experience
Group Finance Director:
Ultra Electronics plc
Director, Group Finance:
QinetiQ plc

External appointments
Non-Executive Director:
Bibliotheca RFID Library Systems
AG Switzerland
Supervisory Board:
HolidayCheck Group AG
Previous experience
Executive Director:
Vodafone Group Plc
Henkel AG & Co. KGaA
RWE AG
Chairman:
Bibliotheca RFID Library Systems
AG Switzerland
Non‑Executive Director:
BBC Worldwide Limited
Supervisory Board:
Haniel & Cie GmbH Duisburg
Constantia Flexibles GmbH

Professor Sir
Richard Friend (68)Company Information

Independent
Non‑Executive Director

Non‑Executive Director:
Cambridge Photon Technology
LimitedEight19 Limited
Helio Display Materials Limited
Previous experience
Council member:
The Engineering and PhysicalSciences Research Council

Alison Wood (57)
Independent
Non‑Executive Director

Senior Independent Director andRemuneration Committee Chair:
Costain Group PLC
Previous experience
Non-Executive Director andRemuneration Committee Chair:
Cobham plc
Senior Independent Director:
e2v plc
Non-Executive Director:
BTG plc
THUS plc

Committee membership
Secretary:

Appointed January 2007

Susan Johnson‑Brett

BackgroundHolds a BA from the University of
Keele and has previously worked
in the Secretariats of St. Modwen
Properties plc, Hydro Agri (UK)
Limited and TSB Group plc.

Company Secretary

Oxford Instruments plc | Report and Financial Statements 2021

77

Board Leadership and Company Purpose continued
Corporate Governance Report
Board priorities during the year

Strategic

Operations

Leadershipand people

Finance

Governanceand ethics•

Annual strategy day and technology strategy session to consider progress and provide
challenge on the Horizon strategy and next steps.

•

Reviewed, challenged and approved the strategic direction of the Group’s medium‑term plan.

•

Regular reviews of business development activities and acquisition proposal pipeline.

•

Deep-dive reviews into aspects of the strategic plan.

•

Received regular operational updates.

•

Monitored performance and provided challenge in key areas of operations, such as healthand safety, operational excellence, human resources, innovation and business development.

•

Closely monitored and reviewed the impact of covid on global operations, employees andother stakeholders.

•

Authorised relocation of Plasma Technology site to a new building in Bristol.

•Continued the focus on organisation capability and succession planning within the seniorleadership teams and more generally across the organisation.

•

Completed search for, and appointed, a Non-Executive Director with strong remunerationcommittee experience.

•

Commenced search for a Non-Executive Director.

•

Orderly transition of Chair of Remuneration Committee.

•

Monitored progress against the 2020/21 financial plan and considered and approved the2021/22 financial plan.

•

Reviewed and approved the financial elements of the Group’s medium‑term plan.

•

Continued to monitor the progress of Project Connect (the new ERP system) and
its implementation.

•

Updates on major tax matters.

•

Oversight of appointment and transition of new auditors.

•

Approved the Report and Financial Statements, half‑year results and presentations to analysts.

•

Considered and approved the Group’s going concern and viability statements.

•

Review of the interim and final dividends.

•

Development of sustainability strategy.

•

Agreed to establish a sustainability committee.

•

Carried out an internal Board evaluation, discussed the output openly and transparently andagreed opportunities for improvement.

•

Reviewed feedback from institutional Shareholders.

•Regular meetings of the Non‑Executive Directors without management being present.

Compliance
The Board endorses the main and supporting principles and the provisions set out in the UK Corporate Governance Code (2018) (“theGovernance Code”) and considers that, throughout the period under review, save for delaying its triennial externally facilitated board
evaluation by one year as explained below, the Group has complied with the provisions recommended in the Governance Code.
Taken together with the reports of the Nomination Committee, Audit and Risk Committee, and the reports on remuneration andsustainability, this Statement explains how Oxford Instruments has applied the principles of good corporate governance as set out in
the Governance Code.
Thomas Geitner and Steve Blair are standing down at the forthcoming AGM. Resolutions for the re-election of all other Directors will
be put to Shareholders at the Company’s forthcoming AGM. It has also been agreed that Alison Wood will succeed Steve Blair as
Senior Independent Director. Once the resolutions have passed, this will continue to deliver a Board which meets the requirementsof Principle G of the Governance Code.

Preservation of value
The basis on which the Group generates and preserves value over the longer term and the strategy for delivering the objectives of
the Group are to be found in the Strategic Report.

78

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Division of Responsibility
Board of Directors andmanagement structure

Operation of the Board

Board of Directors
As at the date of this report, the Board
comprises the Chair, five Non‑Executive
Directors and two Executive Directors.
The Directors’ biographies and details oflength of service are shown on pages
76 and 77. All the Directors have written
letters of appointment that have been
approved by the Board and which areavailable for inspection at the Company’s
Annual General Meeting.
The Chair is responsible for leadershipof the Board and for ensuring its
effectiveness in all aspects of its role.
The division of responsibilities between therole of the Chair and the Chief Executive
has been agreed by the Board anddocumented in the Board Reference File.
The Board is responsible to Shareholders
for good corporate governance, setting
the Group’s strategic objectives, values
and standards, and ensuring thenecessary resources are in place toachieve the objectives.
The Board has delegated Group
responsibility for the management ofhealth, safety and the environment to
Ian Barkshire and he reports to the Boardon these matters at each meeting.
Board members’ length of service

Thomas Geitner
Richard Friend
Ian Barkshire
Mary Waldner
Gavin Hill
Steve Blair
Neil Carson
Alison Wood

8 years
6 years
5 years
5 years
5 years
4 years
2 years
1 yearManagement Board
The Board delegates management of thebusiness to the Chief Executive. To assist
in this, the Chief Executive has created aManagement Board that consists of the
Executive Directors, senior managers withGroup‑wide functional responsibilities
and the Managing Directors of theprincipal operating businesses.

The Board is responsible to Shareholders
for delivering sustainable incremental
shareholder value through entrepreneurial
leadership within a framework of controls
for managing risk. The Board sets theGroup’s strategy and maintains the policy
and decision‑making framework in which
this strategy is implemented. Further, it
verifies that the necessary financial andhuman resources are in place to meetstrategic aims, monitors performanceagainst key financial and non‑financial
indicators, oversees the system of risk
management and sets values andstandards in governance matters.
The details of the way the Board operates,
including a schedule of matters reservedto the Board for decision, are set out in the
Board Reference File, which also includes
the documented policies and procedures
and sets out the roles and delegatedauthorities applying to the Directors, theBoard and the Board Committees. The
Board Reference File is reviewed annuallyas part of the annual governance review
undertaken by the Chair.
The Board retains control over strategy,
investments and capital expenditure, andlimits the decisions which can be taken bymanagement in the areas of strategic
and financial management andshareholder reporting. The Board alsodecides on the Group’s capital structure,corporate actions, mergers andacquisitions, major contracts and othercommitments, litigation and regulatory
proceedings, remuneration and share
incentive plans.
Where the Board delegates authority to
management it is on a structured basis,
which requires that proper management
oversight exists at the appropriate level.
Compliance with the delegation of
authorities is monitored by the Group’s
internal audit function.

The Board meets on a regular basis, atleast seven times a year, and otherwise
as required. Board meetings are held at
a number of Group and other locations
during the year. The Board holds one
meeting specifically to discuss theCompany’s strategic direction during
the year.
Board meetings involve reviews offinancial and business performanceagainst the plan approved by the Board.
Risk management review, both at Grouplevel and also for each of the Group’sbusinesses, is embedded in the reporting
system. On a rotating basis, the Board
receives presentations from thebusinesses and key functional areas,
enabling it to explore specific issues inmore detail. Matters requiring a decisionby the Board are supported by apre‑circulated paper analysing all
relevant aspects of the proposal andrecommending a course of action.
Board papers are distributed in advanceof the relevant meeting in sufficient timeto allow the Directors to prepare formeetings. Minutes of Committee
meetings are circulated to the relevant
Directors. In the very few instances whena Director has not been able to attend
Board or Committee meetings, his/hercomments on the papers to beconsidered at the meeting arecommunicated in advance to therelevant Chair.
The Non‑Executive Directors meetwithout the Executive Directors after most
Board meetings, with the Chair leadingthese meetings. The Non‑Executive
Directors also meet annually without the
Chair in attendance. The Senior
Independent Director chairs thesemeetings.
The Company Secretary and theCompany Secretary’s office areresponsible for implementing Board
procedures and for advising the Boardon corporate governance matters.

The Management Board meets monthly,
either in person or by video or telephone
conference, and focuses on Group‑wide
performance, strategy and risk
management.

Oxford Instruments plc | Report and Financial Statements 2021

79Division of Responsibility continued
Corporate Governance Report continued
Board balance andindependence
The Governance Code requires theBoard to be of sufficient size that thebalance of skills and experience isappropriate for the requirements of thebusiness and that there is a balance of
Executive and Non‑Executive Directors
such that no individual or small groupof individuals can dominate theBoard’s decision making. The Board
is committed to promoting diversity
and inclusiveness of all kinds, both on
the Board and throughout the Group.
The Board recognises that diversity,
construed in its broadest sense andincluding gender, religious andethnic diversity, social and economic
backgrounds, age and cognitive andpersonal strengths, is an importantfactor in Board and, indeed,
operational effectiveness.
The way in which the Board manages
diversity within the Board is reported on
more fully in the Nomination Committee
Report on pages 85 and 86 and diversity
is more generally reported on pages
51 and 52 in the Sustainability Report.
The composition of the Board and the
combination of diverse backgrounds andexpertise of the Non‑Executive Directors
meet these principles.
Neil Carson, Chair, was appointed to
the Board as Non‑Executive Chair in
December 2018. Neil has a proven trackrecord of delivering growth as a leaderof Johnson Matthey, a FTSE 100
science/R&D based company, where heworked for over 30 years, including from2004 until his retirement in 2014 as Chief
Executive, gaining experience of
operations management, technicalinnovation and strategic planning; allskills which are highly complementary
to the Company’s needs. He has also
worked across a wide range of industry
sectors, having served as a
Non‑Executive Director to a number of
UK listed companies, on a number ofGovernment bodies and has worked with
the Corporate Leaders Group on Climate
Change. In June 2019, Neil wasappointed as a Non-Executive
Director of the Board and Chair of theRemuneration Committee of Royal Dutch
Shell plc.

80

Neil is also Chair of the Nomination
Committee and a member of theRemuneration Committee.
Steve Blair was appointed to the Board
in July 2017. Prior to his appointment, he
was Chief Executive of Teledyne e2v
Limited (previously e2v technologies plc),
a manufacturer of sensors, radio
frequency generators andsemiconductors and a listed company
until its acquisition by Teledyne
Technologies in March 2017. Previously
he was Business Group Director forSpectris plc. He has broad operational
experience and a breadth of experience
covering established and high‑growth
emerging markets, strategic planningand portfolio development.
Steve is Senior Independent Director
and also a member of the Audit andRisk, Remuneration and Nomination
Committees.
Steve is standing down at thisyear’s AGM.
Richard Friend was appointed to theBoard as an independent Non‑Executive
Director in September 2014. Richard is a
Fellow of the Royal Society and Fellowof the Royal Academy of Engineering. He
is also Professor of Physics and a Fellowof St. John’s College at the University ofCambridge and a Director of the Winton
Programme for the Physics of
Sustainability and of the Maxwell Centre.
He was knighted for services to physics
in the Queen’s Birthday Honours List in
2003. He has also been directly involvedin the commercialisation of technology
through several spin‑off companies fromthe University of Cambridge.
His research encompasses the physics,
materials science and engineering ofsemiconductor devices made withcarbon-based semiconductors,
particularly polymers. His researchadvances have shown that thesematerials have significant applications
in LEDs, solar cells, lasers, photovoltaics
and electronics. Richard’s knowledge
and understanding of the science that
underpins the Group’s businesses andresearch and development programmes
bring unique insights to the Board.

Thomas Geitner was appointed to theBoard as an independent Non‑Executive
Director in January 2013. He is a
graduate of the Technische Universität
München and holds an INSEAD MBA.
Thomas has extensive international
experience in the technology andengineering sectors, having spent morethan 30 years in businesses operating
across the globe. Having worked in a
number of global companies, heunderstands the importance of
remuneration connecting with strategy
to appropriately incentivise theexecutive team.
Thomas is a member of the Audit andRisk, Remuneration and Nomination
Committees and was Chair of theRemuneration Committee until
January 2021.
Having served on the Board for morethan eight years, Thomas is standing
down at this year’s AGM.
Mary Waldner was appointed to theBoard as an independent Non‑Executive
Director in February 2016. She is Chief
Financial Officer at Lloyd’s Register.
She has a Masters degree in physics
from Oxford University and is a Fellow of
the Chartered Institute of Management
Accountants.
Mary has a broad range of financial
experience in high technology
companies that operate internationallyand has worked in a number of seniorfinancial roles within major public limited
companies, including as Group FinanceDirector of Ultra Electronics plc andDirector, Group Finance, at QinetiQ
Group plc. She is also a member of the
remuneration committee of St Edmund
Hall, University of Oxford.
The Board believes that Mary’s
background gives her the various
insights needed to be a well-qualified
Chair of the Audit and Risk Committee.
Mary is Chair of the Audit and Risk
Committee and also a member of theRemuneration and Nomination
Committees.

Richard is a member of the Audit andRisk, Remuneration and Nomination
Committees.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceAlison Wood was appointed
to the Board as an independent
Non‑Executive Director in September
2020. She holds a BA in Engineering,
Economics and Management from the
University of Oxford and an MBA from
Harvard Business School.
Alison has wide experience in strategicplanning, business development and
M&A across a variety of sectors. She
previously held various leadershiproles in business development andstrategy in BAE Systems plc and was
Global Director of Strategy andCorporate Development at National
Grid. Alison is a highly experienced
Non-Executive Director andRemuneration Committee Chair. She iscurrently a Non-Executive Director andRemuneration Committee Chair of TT
Electronics plc, Cairn Energy plc andBritish Standards Institute (non-listed),
Senior Independent Director andRemuneration Committee Chair of
Costain plc. She was previously a
Non-Executive Director at e2V plc,
Cobham plc, BTG plc and THUS plc.
Having sat on and chaired a numberof remuneration committees at FTSE
listed companies over a number ofyears, the Board believes that her
skills, experience and knowledge
make Alison well suited to chair theRemuneration Committee. Alison
succeeded Thomas Geitner as Chairof the Remuneration Committee inJanuary 2021 and she is also amember of the Audit and Risk andNomination Committees.

Financial Statements

Company Information

Independence of
Non‑Executive Directors
In the opinion of the Board, Steve Blair,
Richard Friend, Thomas Geitner,
Mary Waldner and Alison Wood are
independent and Neil Carson, Chair of theBoard, was independent on appointment.
The Board considers that they are eachindependent in character and judgement,
provide constructive challenge and do
not have relationships which are likely
to affect their judgement. This opinion isbased on current participation andperformance on both the Board andBoard Committees, including
consideration of the length ofservice at Oxford Instruments plc.

Term of appointment of
Non‑Executive Directors
Each Non‑Executive Director was
appointed for an initial term of three
years. In line with Provision 18 of theGovernance Code, the Board has
determined that all Directors of the Board
are to be subject to annual re‑election by
Shareholders and, accordingly, theappropriate resolutions will be put toShareholders at the Company’s
forthcoming AGM.

Composition of the Board
6

2
Independent

Oxford Instruments plc | Report and Financial Statements 2021

Non‑independent81

Composition, Succession and Evaluation
Corporate Governance Report continued
Board development
and evaluation
Board development
On appointment, Directors undertake an
induction process which is designed todevelop knowledge and understanding of
the Group’s businesses through visits tovarious Group operating sites, discussionof relevant technology, as well as productdemonstrations, briefings frommanagement and familiarisation withinvestor perceptions of the Group. This
induction is supported by briefing papers
prepared by the Company Secretary.
The operating businesses’ senior
management teams and functional
leaders present to the Board on a regularbasis. Non‑Executive Directors areencouraged to meet individual membersof the senior management team and areinvited to participate in relevant events.
This they have done during the year
under review.
Throughout the year, Non‑Executive
Directors attend Oxford Instruments
events, exhibitions and award
presentations.
The Company Secretary and her office
act as advisers to the Board on mattersconcerning governance and ensurecompliance with Board procedures. All
Directors have access to this advice anda procedure also exists for Directors totake independent professional advice at
the Group’s expense. No such advice wassought during the year. The appointment
and removal of the Company Secretary
are matters for the Board as a whole.

82

Board evaluation
To comply with the provisions of Principle
L of the Governance Code, the Board
expects to carry out an externallyfacilitated review of Board effectivenessat least triennially. It underwent such an
externally facilitated evaluation in 2018,
in which ICSA Board Evaluation carriedout a full evaluation of the performanceof the Board of the Company andconcluded that: the Board was
performing well in all areas that werereviewed; the Board comprised a strong
team of Executive and Non‑Executive
Directors; the Committees of the Board
were effective; and the Board has
adopted high governance standards
throughout.
The Board was planning to have an
externally facilitated Board effectiveness
review this year. However, in light of therestrictions on meeting in person imposedby covid and wanting such a review
to deliver good value, it was agreed todelay this review until later in 2021,
once meetings in person become
viable again.
This year, therefore, the Chair determinedwith the rest of the Board that the annual
evaluation of the performance andeffectiveness of the Board, its principal
Committees and its Directors should be
subject to an internal review. This exercise
was under the control of the Chair, using
detailed questionnaires completed by all
Directors in relation to the key areas ofBoard accountability and thearrangements in place to enable effective
focus on these areas. Topics covered
included Group strategy, performance,delegation and accountability, success,development and reward, Board andCommittee composition and Committee
effectiveness, Board training, internal
control and risk management. The outputof the questionnaires was shared with all
Directors. The Chair had one‑to‑one
discussions with each Director at which
they discussed individual performanceand the operation of the Board and its
Committees in some detail. Each
Committee followed the same process
and the Chair of each held similar
meetings with members of their
Committees.

The Senior Independent Director
discussed with the Non‑Executive
Directors the effectiveness of the Chair of
the Board. The process culminated in around table discussion, chaired by the
Chair, at which each Chair reported on
his/her findings and led an open and frank
discussion on the effectiveness of theoperation of the Board and Committees.
The Board came to a collective viewaround what worked well and where there
were areas for improvement. The process
as a whole allows the Chair, with theBoard, to objectively evaluate the overallbalance and effectiveness of the Boardand its Committees.
The Chair noted that after every Board
meeting the NEDs and Chair discuss boththe effectiveness of the meeting and the
key messages, which are then fed back to
the Executive as necessary. This wasconsidered to be the most impactful wayof monitoring the effectiveness of theBoard and Committees and leads tocontinuous improvement.
The Board concluded that it is wellbalanced, collegiate and challenging.
It works well as a team with eachmember participative and able to say
what they think with the range of people
around the Board table allowing
challenges to be looked at throughdifferent lenses. The Board is operating inan open and transparent way with goodtransparency from the Executive.
All Board members feel able to express
their opinions, creating an appropriate
environment to take effective decisions
and providing appropriate challenge
and support to the Executive Directors.
The Board noted that good progress has
been made on the areas of attention
identified as part of last year’s
effectiveness review. In summary, thisyear’s evaluation found that the Boardand each Committee was considered to
be working well and meeting its legal
obligations. In terms of possible areasof attention in the future, the Board
evaluation process highlighted thefollowing as areas for improvement:

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information•

The restrictions imposed by covid severely limited the interactions between the Board and employees. However, as covid has
expanded the use, and acceptance, of meeting virtually throughout the organisation, new opportunities are opening up for the
Board to meet effectively with a more diverse range of employees at all its locations around the world. This will benefit both theBoard and employees.

•

Board meetings are run efficiently and effectively and often finish ahead of time. This provides an opportunity for wider ranging
Board discussions at the end of meetings.

•

The focus on strategy at each meeting was welcomed. There is benefit in “prodding and probing” to allow the strategic thinking
within the Board to go in different directions. The Board has agreed that there will be an externally facilitated strategic review
over the summer to think more broadly about its future direction.

The Chair of the Audit and Risk Committee confirmed that she had concluded that her Committee is operating effectively, meetingits legal and governance obligations and providing an appropriate focus on risk. The FRC letter, received in January, althoughrequiring a change to the balance sheet disclosure of cash and overdrafts, had no impact on reported profit, earnings per share,
net assets or cash flow. The change in auditor from KPMG to BDO was welcomed and the members of the Committee commented
that the handover has gone well. The questionnaires and individual meetings put forward some helpful suggestions on how tofurther improve the effectiveness of the Committee:•

There has been good progress in the way the Committee and the Board look at risk and this continues to evolve. The Committee
will continue to focus on the principal risks facing the business.

•

The Group has effective processes in place for managing the cyber risk through the IT lens. There would be additional benefit
from looking more widely at cyber risk and considering how this might be used to benefit the business more widely in terms of
product and service development.

The Chair of the Nomination Committee reported that the consensus was that the Committee was operating well and had carriedout its duties effectively. The process for appointing a new NED was appropriate and delivered a well-qualified director with strong
remuneration credentials.
The Chair of the Remuneration Committee reported that no significant issues were identified in the questionnaires or one-to-one
meetings and that the Committee was considered to be well run and effective. The quality and clarity of advice from theCommittee’s adviser helps the Committee steer its way through guidance and external expectations to develop appropriate
remuneration packages. The key areas of focus during 2021/22 include factoring ESG measures into remuneration, keeping up
with changes in the remuneration landscape and assuring that there is appropriate transparency around remuneration with the
Executive Directors.
Overall, the Board concluded that it and its Committees had performed satisfactorily in the year under review.
To complete the internal Board evaluation, the Chair reviewed the performance of each Board member and has confirmed with theNomination Committee that all Directors continue to perform effectively and demonstrate commitment to their roles. In May 2021,
the Chief Executive was appraised by the Chair and the Non‑Executive Directors, and the Group Finance Director was appraised by
the Chair, the Non‑Executive Directors and the Chief Executive. Led by the Senior Independent Director, the Non‑Executive Directors
carried out an evaluation of the Chair’s performance and concluded that they were satisfied with the Chair’s commitment,
effectiveness and performance.

Attendance at meetings
Only the Committee Chair and members are entitled to be present at a meeting of the Audit and Risk, Nomination or Remuneration
Committees, but others may attend by invitation. No Director votes on matters where he or she has a conflict of interest. Further
details of the individual Committees’ activities are described below and in the Committee reports.
The following table sets out the frequency of, and attendance at, Board and principal Board Committee meetings for the year to
31 March 2021:

Number of meetings held
Neil Carson
Ian Barkshire
Gavin Hill
Steve Blair
Richard Friend
Thomas GeitnerMary Waldner
Alison Wood2
1.

Attended by invitation.

2.

Alison Wood attended all meetings since her appointment on 8 September 2020.

Oxford Instruments plc | Report and Financial Statements 2021

Board

Audit and Risk
Committee

Remuneration
Committee

Nomination
Committee

8
8
8
7
8
8
8
8
3

4
41
41
41
4
4
4
4
2

6
6
31
21
6
6
6
6
2

2
2
11
11
2
2
2
2
1

83

Composition, Succession and Evaluation continued
Corporate Governance Report continued
Board Committees
The Board has formed the following
Committees: Audit and Risk, Nomination,
Remuneration, and Administration. The
Board is establishing a sustainability
committee.
Membership of Board Committees, which
is set out on pages 76 and 77 and above,is determined by the Board and isreviewed regularly. The written terms ofreference of the Board Committees arereviewed annually by each Committee
and the Board and are available on the
Company’s website at www.oxinst.com/
investors and from the Company onrequest. They will be available at theAnnual General Meeting.
Detail on the operation of each of the
Audit and Risk, Remuneration and
Nomination Committees is to be foundwithin the relevant Committees’ reports.

Nomination Committee
The Nomination Committee comprises all
the Non‑Executive Directors and ischaired by the Chair of the Board. The
Nomination Committee is responsible forleading the process in the formal
selection and appointment of Directors
and ensures plans are in place for an
orderly succession of Board and senior
management positions and oversees thedevelopment of a diverse pipeline
for succession.
The report on the work of the Nomination
Committee is on pages 85 to 87.

Remuneration Committee
The Remuneration Committee comprises
all the independent Non‑Executive
Directors and the Chair of the Board. In
January 2021, Alison Wood replaced
Thomas Geitner as the Chair of theCommittee. The Board considers that
Alison, with her wealth of experience asa remuneration committee chair of otherlisted companies and her wide
operational experience, has
an appropriate blend of skills to makea successful Chair of the Remuneration
Committee. The members of theCommittee are appointed by the Board.

professional advice is sought when
considered necessary. The Chair and the
Executive Directors are responsible forfixing the remuneration of theNon‑Executive Directors and theRemuneration Committee is responsible
for fixing the remuneration of the Chair.
No Director is involved in the process thatsets his/her own remuneration.
The Chief Executive is invited to attend
all or part of Remuneration Committee
meetings as deemed appropriate, forexample when consideration is being
given to the performance of other
Executive Directors and on significant
Group‑wide changes in salary structure
and terms and conditions affecting other
employees at senior executive level.
Full details of the operation and the workof the Remuneration Committee areincluded in the Directors’ Remuneration
Report set out on pages 97 to 119.

Audit and Risk Committee
The Audit and Risk Committee comprises
all the independent Non‑Executive
Directors and its Chair is Mary Waldner.
Other members of the Board, senior
management and the external auditor
are invited to attend all or part of any
meetings. The Board has determined that
Mary, with her background in financial
management, is the designated financial
expert and is a well qualified Audit
Committee Chair.
The Audit and Risk Committee’s main
responsibilities are focused on financial
reporting, external audit, internal audit,
internal controls and risk management.
Full details of the operation and thework of the Audit and Risk Committee areincluded in the Audit and Risk Committee
Report set out on pages 88 to 96.

Administration Committee

Annual General Meeting (AGM)
The AGM is an opportunity for the Board
to meet Shareholders. At its AGM, theGroup complies with the provisions of theGovernance Code relating to thedisclosure of proxy votes, the separationof resolutions and the attendance ofCommittee Chairs. The Group arranges
for the Report and Financial Statements
and related papers to be posted on its
website and, where Shareholders haveelected to receive paper copies, posted toShareholders so as to allow at least 20
working days for consideration prior to
the AGM.
The next AGM will be held on
21 September 2021.

Investor relations
The Group places considerable
importance on regular communications
with its Shareholders, with whom it has
an ongoing programme of dialogue.
All Shareholders are encouraged toparticipate in the AGM and areencouraged to raise questions in
the period leading up to the AGM
through the dedicated email address
AGM@oxinst.com.
The Non‑Executive Directors meetinformally with Shareholders both before
and after the AGM and respond to
Shareholder queries and requests.
The Chair and the Senior Independent
Director make themselves available tomeet Shareholders as required.
All Group announcements are posted on
the Group website, www.oxinst.com/
investors, as soon as they are released.
The Investor Relations section of thewebsite provides financial and otherinformation on the Group and the website
itself carries additional information on theGroup’s products, services and markets.

The Administration Committee consistsof a minimum of two Directors and deals
with items of a routine and administrative
nature. At each of its meetings, the Board
receives a summary outlining all matters
decided by the Administration Committee
since the previous Board meeting.

The Remuneration Committee has
responsibility for determining the policy
for the remuneration packages for
Executive Directors and the bonus andshare option strategy for the Group’s
executive management. Independent

84

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Nomination Committee Report

The Committee continues to focus on
ensuring that the composition of theBoard is appropriate for the deliveryof the Group’s strategy.
Neil Carson
Chair of the Nomination Committee

Key responsibilities•

The Committee is responsible forassisting the Board in the formal
selection and appointment of
Directors. It considers potential
candidates and recommends
appointments of new Directors to
the Board.

•

The Committee considers succession
planning for the Board and the top
level of senior management.

•

Annual performance appraisal of
the Chief Executive, Group FinanceDirector and Chair.

•

Annual review of the Committee’s
terms of reference.

Dear Shareholder,I am pleased to introduce theNomination Committee Report for
2020/21. The Committee’s key objective
is to support the Board in fulfilling its
responsibilities to ensure there is a formal,
rigorous and transparent process for theappointment of new Directors to theBoard and to ensure that effective
succession planning processes are inplace across the Group.

Attendance at meetings year ended 31 March 2021
Nomination
Committee

Number of meetings held
Number of meetings attended:
Neil Carson (Chair)
Steve Blair
Richard Friend
Thomas GeitnerMary Waldner
Alison Wood
Number of meetings in attendance:
Ian Barkshire1
Gavin Hill1
1.

Date of appointment
to Committee

2
2
2
2
2
2
1/1

1 December 2018
1 July 2017
1 September 201415 January 2013
4 February 2016
8 September 2020

11
11

Attended by invitation.

The Committee continues to focus on
ensuring that the present and futurecomposition of the Board is appropriate
for the delivery of the Group’s strategy
and to maintain and, where applicable,
broaden, the range of expertise,
experience and diversity of those servingon the Board.
During the year, we recruited Alison Woodonto the Board as a Non-Executive
Director with wide experience in strategicplanning, business development and
M&A across a variety of sectors. She isalso an experienced remunerationcommittee chair and in January 2021 she
succeeded Thomas Geitner as Chair of
our Remuneration Committee.

Oxford Instruments plc | Report and Financial Statements 2021

Thomas is stepping down from the Board
at the Annual General Meeting in
September 2021. Steve Blair has also
indicated that he too will not be standing
for re-election. We have agreed that
Alison Wood will be appointed Senior
Independent Director when Steve leaves
the Board. As part of the last annual
Board effectiveness review, we identified
that the Board would benefit fromrecruiting a Non-Executive Director who
had experience in one of a number ofareas relevant to our strategic direction.
We have started a search for such anindividual and have retained Russell
Reynolds to help us in this task.

85

Composition, Succession and Evaluation continued
Nomination Committee Report continued
Members of the Committee are pleased
to see the strength of the leadershipteams in place across the Group and thebreadth of skills that they now offer.
Succession planning and processes thatencourage both the onboarding of newtalent and further development of the
careers and capabilities of employees
across all businesses and functions havecontinued during the year. During theyear, we have seen management
maintain its focus on building anorganisation with a broad range ofperspectives and experiences. There
continues to be momentum in developing
the pipeline of talent and capabilities
throughout the Group that we will need tobe successful into the future.
The Committee will continue to work toensure all relevant requirements in the
UK Corporate Governance Code 2018 (the“Governance Code”) are met.
Our objective is to ensure that we have ahigh capability, diverse workforce thatenables us to better understand ourcustomers and markets. Building anorganisation with a broad range ofperspectives and experiences increases
our ability to innovate, to make the rightdecisions and to exceed our customers’
expectations. In order to retain, attractand enable the best people to perform,
we work hard to create an inclusive
environment and culture, where
difference is valued and everyone cancontribute to their full potential.

The Nomination Committee comprises all
the Non‑Executive Directors, under thechairmanship of the Chair of the Board.
The composition of the Committee istherefore compliant with Provision 17 of theGovernance Code. Full details of theCommittee’s responsibilities are set out inits terms of reference, which can be foundon our website at www.oxinst.com/
investors-content/advisersand‑company-secretary, and include all
matters required by the Governance Code.

the Board recognises thatdiversity, construed in its
broadest sense and including
gender, religious and ethnic
diversity, age, personality andbackground, is an importantfactor in Board and operational
effectiveness;•in drawing up long and shortlistsof potential candidates, theCommittee considers not only
relevant skills, experience andknowledge but also diversity;
and•the Committee actively
considers diversity, in all its
forms, before making a
recommendation to appoint to
the Board;

The main responsibilities of theCommittee are summarised below:•

the Committee is responsible forassisting the Board in the formal
selection and appointment of
Directors. It considers potential
candidates and recommends
appointments of new Directors to
the Board:•

there is a formal, rigorous andtransparent procedure for theappointment of new Directors to
the Board, the prime responsibility
for which is delegated to theCommittee;•

the purpose of the Committee’s
selection process is to identify themost suitably qualified candidates
who will complement and balance
the current skills, knowledge andexperience of the Board:•

Neil Carson
Chair of the Nomination Committee
7 June 2021
•

86

•

recommendations forappointments seek to strengthen
the Board by selecting the best
candidate based on merit andagainst objective criteria,
including time available and thecommitment that will be
required of the potential Director;•

the Committee takes external
advice when consideredappropriate and will only engage
executive search firms who havesigned up to the Voluntary Code of
Conduct for Executive Search Firms
on gender diversity and bestpractice;•

the Committee considers succession
planning for the Board and the top
level of senior management;•

annual performance appraisal of the
Chief Executive;•

annual effectiveness review of theCommittee; and•annual review of the Committee’s
terms of reference.

each appointment process
begins with an evaluation of thebalance of skills, knowledge,
experience and diversity existingon the Board that is drawn up
through a series of meetings
between the Committee Chairand Directors;

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Principal activities of the Committee during the year
Succession planning•

The Committee followed up on its
2019/20 annual review of the succession
plan for the Board which determinedthat an additional Non‑Executive
Director was needed and a process
to recruit and subsequently appointsuch a Director was carried out. It wasrecognised that Thomas Geitner, who
was first appointed in 2013, was likely
to be standing down at the 2021 Annual
General Meeting and thus it would benecessary for his successor as Chairof the Remuneration Committee to be
identified. This was effected during
the year.

•

The Committee, following its annual
review of the balance of skills on the
Board and those needed for the future,
lengths of tenure and diversity agreed
that it would be beneficial to recruit anadditional Non-Executive Director,
preferably with experience insustainability and ESG.
The Group HR Director and the Chief
Executive presented the work that had
been carried out within the business on
succession planning, talent management,
and leadership, including at Management
Board and Executive Director level.
In the first part of the year, theCommittee undertook a search for,and appointed, Alison Wood as a
Non‑Executive Director of the Board.
The Committee set up a process to
identify potential candidates anddevelop a shortlist for considerationby the Board.
•

The Committee established asub‑committee comprising the
Chair, CEO and Group HR Director.

••

establishing a clear
specification of requirementand drawing up a description of
the role and desired capabilities
for candidates;•

taking external advice onmarket conditions andexpectations;•considering diversity, including
gender, religion, ethnicity, age,personality and background,reviewing a longlist of potential
candidates, whittling it down toa shortlist, undertaking
interviews as appropriate;•drawing up a shortlist of
candidates for discussion with
the Committee; and•all members of the subcommittee met with thepreferred candidates.

•

All members of the Committee
met with, in person or by videoconference, the final choice ofcandidate.

•

Appropriate references were taken
up for the final shortlisted
candidates.

•

The Committee convened ameeting where it considered each
Director’s feedback and agreed its
recommended candidate.

Constitution of the Board•

The sub-committee’s work
comprised:

The Board convened a meeting at
which the Committee’s recommended
candidate was considered andapproval was given to appoint thepreferred candidate.
Following successful completion of
the search, on 8 June 2020, theCompany announced that Alison
Wood was to be appointed a
Non‑Executive Director with effectfrom 8 September 2020.

•

The resolution put to Shareholders
at the Annual General Meeting in
September 2020 confirming theappointment passed with 93% ofvotes cast.

Towards the end of the year, theCommittee agreed to undertake asearch for a further Non-Executive
Director to join the Board. The
Committee identified the skills andexperience that the new appointment
could usefully bring to the Board. The
process to be followed is similar to that
described above and will be reported
on in next year’s report.
Thomas Geitner, who was appointed in
January 2013, has agreed that given thelength of his tenure, he will stand downat the forthcoming Annual General
Meeting. Steve Blair has also advised
the Chair of the Committee that hewill not be putting himself forward
for re-election.
The Committee, taking into account boththe performance and value that each
Director brings to the Board, hasconsidered whether each of theNon‑Executive and Executive Director
appointments should be renewed for afurther year and, accordingly, aresolution to re‑appoint the rest of theBoard will be put to Shareholders at theCompany’s forthcoming Annual General
Meeting.

Performance review of
Executive Directors
The members of the Committee also
carried out their annual review of theperformance of:•

the Chief Executive;•

with the help of the Chief Executive,
the Group Finance Director; and•excluding the Chair, reviewed theperformance of the Chair.

Other
Annual review of the performance of theNomination Committee and of its termsof reference.

Oxford Instruments plc | Report and Financial Statements 2021

87

Audit, Risk and Internal Control
Introduction
Risk management

Internal audit and assurance

Within the Group there is an ongoingprocess for identifying, evaluating andmanaging the significant risks faced by
the Group that is embedded in all
business units. Day‑to‑day managementof this process has been delegated by the
Board to the Executive Directors. Detailsof the process are set out in the Audit andRisk Committee Report on page 96. This
process has been in place throughout thefinancial year and up to the date of
approval of the Report and Financial
Statements. It is regularly reviewed by the
Board of Directors and accords with theprinciples of the Governance Code.

The Group’s internal audit function
assesses the adequacy and effectivenessof the management of significant risk
areas and provides oversight ofoperational management’s front line andassurance activities. Further details of thescope of internal audit activities are set
out in the Audit and Risk Committee
Report on pages 95 and 96.

The Board has carried out a robust
assessment of the principal risks facing
the Group, including those which threaten
its business model, future performance,
solvency and liquidity. Details of all majorrisks identified, and the mitigating actions
adopted, are reported to and reviewed by
the Board and the Audit and Risk
Committee on at least a quarterly basis.
The principal risks set out on pages 66 to
70 provide an overview of the major risks
and uncertainties faced by the Group.
All operating businesses follow astandard process for risk identification
and reporting. The process is further
described on page 96. On a regular basis,each business reviews and updates its
risk register which is then reported to theChief Executive. If a material risk changes
or arises, the Managing Director of thebusiness reports this to the Chief
Executive, at which time there is a
discussion on the adequacy of the
mitigating actions taken. In addition, theBoard and the Audit and Risk Committee
consider risks to the Group’s strategic
objectives which arise at a Group leveland develop appropriate actions tomanage and mitigate these risks where
possible.

88

Internal control
The Board has accountability forreviewing and approving the adequacyand effectiveness of internal controls
operated by the Group. This covers
financial, operational and compliance
controls and risk management. The
management of each business is
responsible for risk management andcontrol within their business and, throughthe Management Board, implementing
Board policies on risk and control.
The internal control framework includes
central direction, oversight and risk
management of the key activities within
the Group. This framework includes afinancial planning process which
comprises a five‑year planning modeland a detailed annual budget which is
subject to Board approval. All Groupbusinesses’ results are reported monthly
and include variance analysis to budget
and the prior year. Management also
prepares monthly reforecasts.
Control activities include policies andprocedures for appropriate authorisation
and approval of transactions, theapplication of financial reporting
standards and reviews of significant
judgements and financial performance.
Financial, regulatory and operational
controls, procedures and risk activities
across the Group are reviewed by theGroup’s assurance function.

The internal control frameworkhas been designed to manage rather
than eliminate material risks to theachievement of strategic and businessobjectives and can provide only
reasonable, and not absolute, assurance
against material misstatement or loss.
Because of inherent limitations, internal
controls over financial reporting may notprevent or detect all misstatements.
There has been no material change to theGroup’s internal control framework during
the period covered by this Report and
Financial Statements.
The key components designed to provide
effective internal control within the Group
include the following:•

there is a formal schedule of mattersreserved to the Board for decision;other than these matters, the Board
delegates to the Chief Executive andreviews the delegation of authorities
throughout the management structure;•

the Group’s management structure isheaded up by the Management Board.
Its membership comprises the
Executive Directors, senior managers
with Group‑wide functional
responsibilities and the heads of theprincipal businesses of the Group’s
activities. Day‑to‑day responsibility
for the management of the Group isdelegated to the Management Board.
The responsibility is based on theidentification of separate businesses
for each of the Group’s activities forwhich there are clearly defined linesof management responsibilities at alllevels up to and including the Group
Board and the Group’s accounting andreporting functions reflect thisorganisation;•

financial executives within Groupbusinesses report to their own
operational head but there is also awell‑established and acknowledged
functional reporting relationshipthrough to the Group Finance Director;

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance•the Board reviews strategic issues andoptions formally once a year during
the annual strategic planning process
and during the year as appropriate.
In addition, the Executive Directors
maintain a five‑year planning modelof the Group and its individual
businesses;•

annual budgets are prepared for eachof the Group’s businesses which
include monthly figures for turnover,profit, capital expenditure, cash flow
and borrowings. The budgets arereviewed through the Groupmanagement structure and result in
a Group financial budget which isconsidered and approved by the
Board;•••

the businesses prepare monthly
management accounts which
compare the actual operating resultwith both the budget and the prioryear. The businesses also prepare
rolling reforecasts for orders, turnover,
operating profit and cash. Both arereviewed by the Board at each of its
scheduled meetings;
the Board approves all acquisitionand divestment proposals and there
are established procedures for theplanning, approval and monitoringof capital expenditure;•

Financial Statements

an internal audit is carried out througha system of regular reviews of thefinancial and non‑financial internal
controls at each site. This is further
reported on in the Audit and Risk
Committee Report on pages 90 to 96.
These reviews are co-ordinated by theGroup Risk, Assurance & International
Trade Compliance Manager;•

the Board receives regular updates onpensions, sustainability, businessethics and health and safety and the
Audit and Risk Committee receives
regular updates on treasury, tax,
insurance and litigation;•authorisation limits are set atappropriate levels throughout theGroup; compliance with these limits ismonitored by the Group FinanceDirector and the Group Risk, Assurance& International Trade ComplianceManager;•

there is a detailed and risk‑based
delegation of authority structure inplace for sales contracts andmanaging commercial risks. Contracts
with onerous terms and conditions(such as unlimited liability contracts)
require approval by either the Chief
Executive or Group Finance Director;

Company Information•

the International Trade Committeemonitors, considers action and makes
recommendations around the
management of key risks relating tointernational trade, including
sanctions, export controls and tariffs;
and•with respect to the UK pension
scheme, the Group nominates half ofthe trustee directors of the corporate
trustee to the pension scheme,
involves as appropriate its own
independent actuary to review
actuarial assumptions, agrees theinvestment policy with the trustee,works with the trustee on its
investment sub‑committee to deal
with day‑to‑day investment matters,
ensures there is an independentactuarial valuation every three years
and agrees funding levels to provide
adequate funding to meet the benefit
payments to the members as theyfall due.

Susan Johnson-BrettCompany Secretary
7 June 2021

for all major investments, theperformance of at least the first twelve
months against the original proposal isreviewed by the Board;

Oxford Instruments plc | Report and Financial Statements 2021

89

Audit, Risk and Internal Control continued
Audit and Risk Committee Report
The Committee continues to review
and adapt its activities to consider
the most significant risks faced by
the Group while retaining its corefocus on corporate governance.
Mary Waldner
Chair of the Audit and Risk Committee

Key responsibilities•

Financial reporting.

•External audit.

•

Internal controls and risk
management.

•Internal audit.

•

Business malpractice reporting.

Attendance at meetings year ended 31 March 2021
Audit and Risk
Committee

Number of meetings held
Number of meetings attended:
Mary Waldner (Chair)
Steve Blair
Richard Friend
Thomas Geitner
Alison Wood
Number of meetings in attendance:
Neil Carson
Ian Barkshire
Gavin Hill
1.

Dear Shareholder,
It goes without saying that the last twelve
months have generated many challenges
for business and society across the globe
and Oxford Instruments has not been
immune to the effects of the pandemic.
I write this in the context of the UK
emerging from its second national
lockdown and the Group’s management
and operations continuing to adapt to thechanging paradigm. The pandemic has
impacted the ways of working across allfunctions and a key future challenge liesin the Group finding and adopting themost effective solutions to continue its
innovation journey.

90

Date of appointment
to Committee

4
4
4
4
4
2

4 February 2016
1 July 2017
1 September 201415 January 2013
8 September 2020

41
41
41

Attended by invitation.

Looking back on the past year, and thepotential challenges anticipated as aresult of covid, I take encouragementfrom the Group’s response to thepandemic and its overall resilience andfinancial performance. In the immediate
aftermath of the pandemic, faced withsignificant uncertainty over the potential
impacts of covid, the Group took prudent
actions to preserve liquidity and maintain
operations in a covid secure manner. By
the half year, with positive operating cash
flow and a strong balance sheet, it wasapparent that the Group was well placed
to manage the challenges presented by
the pandemic and, as a result, it repaid infull the furlough funding that had been
received from the UK Government.

While this is testimony to the resilience of
the Group, the Audit and Risk Committee
remains vigilant and continues to fulfil its
remit in corporate governance and toseek assurance over the identificationand management of the key risks thatare faced by Oxford Instruments.
The Group’s risk and assurance function
has continued to adapt its focus to theareas of greatest risk. The key area ofinternational trade compliance wasformally adopted into the remit of Grouprisk and assurance and an internal
compliance programme around customs
and export controls was developed
during 2020/21 to be rolled out in
2021/22. Further, following a review of
key risk areas in 2020/21, assurance
will collaborate with the Group Head of
Quality to oversee a product compliancereview to be delivered in the current
financial year.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

The scope of the Committee’s remit andoversight is broadly the same as in theprior year although, as set out on
page 66, it has driven changes to the risk
reporting process. The core elements ofcorporate governance have been fulfilledwith reviews on the effectiveness ofexternal and internal audit and themonitoring of non-audit services. Further,at the half year and year end theCommittee assessed the impact ofsignificant accounting estimates andjudgements on the Financial Statements
and considered whether, in their entirety,
they are fair, balanced andunderstandable.
In early 2021, the Financial Reporting
Council (FRC) submitted a request for
further information on the Group’s Report
and Financial Statements for the year
ended 31 March 2020. The Group
responded fully to the matters raised in
the correspondence and has restated therelevant sections of this year’s accounts
to reflect this. The restatement impacted
the balance sheet reported in the 2020
Report and Financial Statements asdetailed in the Accounting Policies Note.
The FRC’s enquiry did not result in any
changes to reported profit, earnings per
share, net assets, or the cash flows
reported in the 2020 financial year. The
Chair of the Audit and Risk Committee
has been involved in reviewing theGroup’s response to the points raised andis satisfied that the matters have beenaddressed effectively, with additional oramended disclosure adopted in thisyear’s Annual Report and Accounts.
Largely as a result of the travel
restrictions arising from the pandemic,
risk and assurance plans were modified
to address matters that could be
performed remotely. Further, the forensic
accounting experience within Group risk
and assurance was put to effective use in
responding to a completion accounts
dispute related to the disposal of the OI
Healthcare business in February 2021
which was successfully resolved. This
limited the assurance activity performedin the first half of 2020/21.

Financial Statements

The Audit and Risk Committee retained its
focus on key non-financial audit topics
including new product innovation, IT andcyber‑security, human resources andhealth and safety. Despite the impact ofcovid, internal audits on key risk areas
have continued. Assurance work relating
to revenue recognition, sales processcompliance and the implementation of
CSI at the NanoAnalysis business unit
were delivered in the second half of theyear. Group risk and assurance has also
played an active role, collaborating withcolleagues in Group Finance and Group
Business Systems, to perform a review
of post Brexit trade between the UK and
the EU.
Risk reporting has continued to evolve
over the year with greater focus on
significant changes in risks or new risk
areas. The quarterly Group risk register
provides the foundations for risk
management review, and this iscomplemented by the provision of moredetailed commentary on both key andemerging risks. From the start of 2021/22
the areas of focus will be grouped bytheme, to provide a clearer view of how
similar risks are being managed acrossthe business units. Risk management also
piloted a sustainability risk review with
the NanoScience business unit and plansto roll this out further in 2021/22.
Looking to the year ahead, the internal
audit programme for 2021/22 includes
assurance over key financial controls(focused on two regional offices and one
operating business unit in the US) but isfocused primarily on other key risk areas
such as international trade compliance,
the ongoing implementation of CSI andoversight of product-related compliancework. The Audit and Risk Committee,
together with Group management, willcontinue to monitor the risk environment
and will adapt and refocus assurance
activities if required.
The principal areas of focus for theCommittee over the last financial year are
summarised below:•

review of the Financial Statements,
the key accounting judgements used
to compile them and an assessment
as to whether, taken as a whole, they
are fair, balanced and understandable;

Oxford Instruments plc | Report and Financial Statements 2021

Company Information•

review of the Group’s viability
statement together with themethodology used and associatedcalculations;•review of the statement issued at
the AGM and the statements issued at
the half year and year end;•

review and discussion of the Group’s
risk register and supporting
commentary at each of its meetings;•

a recurring annual review of treasury
and tax matters;•

a biannual litigation review ofsignificant areas of ongoing litigationand potential litigation risks;•assessment of internal audit’s
effectiveness;•review of external audit’s effectiveness;•review of cyber-security risks andcontrols;•

further development of theinternational trade complianceprogramme; and•the implementation of CSI at
NanoAnalysis.

The remainder of the Audit and Risk
Committee Report is set out in thefollowing sections:•composition and terms of reference;•role and responsibilities;•

summary of activities during the year;•

significant matters relating to the
Financial Statements;•

external auditor and auditor
independence;•

internal audit, internal control and risk
management; and•whistle-blowing.

As in previous years, I am planning toattend the AGM in September. In themeantime, if you have any questions orcomments I would be delighted to hearfrom you.

Mary Waldner
Audit and Risk Committee Chair
7 June 2021

91

Audit, Risk and Internal Control continued
Audit and Risk Committee Report continued
Composition and termsof reference

Financial reporting•

The Audit and Risk Committee wasstrengthened by the appointment of
Alison Wood in September 2020. Fourof the five members of the Audit and Risk
Committee have served throughout theyear. Mary Waldner continues in the roleof Chair. The other members are Richard
Friend, Thomas Geitner, Steve Blair andAlison Wood, who was formally appointed
at the AGM in September 2020.
Guidance from the FRC relating to thecomposition of an audit committee
requires that at least one of its members
has recent and relevant financial
experience. Mary Waldner, theCommittee’s Chair, is the Chief Financial
Officer of Lloyd’s Register and previously
held senior roles in finance at a number oflisted companies. On this basis, the Board
considers that this FRC requirement isfulfilled. All members of the Audit andRisk Committee are considered to be
independent and they bring both
corporate and academic experience inthe science and technology sectors toprovide appropriate challenge andinsight to bear.
The Audit and Risk Committee reviews
the Group risk register at each meetingand uses it, along with other reports frommanagement, the external auditors andsubject matter experts, to assess theactions taken by the Group to identify andaddress the key risk areas that it faces. It
has regular meetings with the external
auditors to discuss audit-related mattersand can do so without the Executive
Directors in attendance.

Role and responsibilities
The Committee’s responsibilities are set
out in its terms of reference. These can befound on our website at www.oxinst.
com/investors-content/advisers-andcompany-secretary. These are subject toperiodic review by the Committee and, if itconsiders that any changes are required,
it recommends amendments to theBoard. The Committee’s principal
responsibilities are as follows:

92

•

•

The Committee reviews the Financial
Statements and the results
announcements at the half year andfull year. It also advises the Board
whether it considers that the Report
and Financial Statements, taken asa whole, are fair, balanced andunderstandable. The Committee
also considers whether the informationand disclosures in the Financial
Statements are sufficient to enable
Shareholders to assess the Group’s
strategy, performance, businessmodel and risks.
The review includes consideration ofmatters that require significant
financial reporting judgement,
accounting policies and compliancewith accounting standards. Commentsfrom the Chair of the Committee on
significant financial reporting
judgement are set out on pages 94
and 95. The Committee’s review also
assesses whether all material mattershave been treated appropriately.
The Committee also monitors
compliance with relevant statutory
and listing requirements.

Internal controls andrisk management•

Monitors the adequacy andeffectiveness of the internal control
environment.

•

Performs a review of risk management
processes and reviews the Group risk
register and associated reports on aquarterly basis.

Internal audit•

Undertakes an annual assessment of
the effectiveness of the internal audit
function.

•

Approves the annual internal audit
programme, reviews all risk andassurance reports.

Compliance, fraud andwhistle‑blowing•

Monitors compliance with the UK
Corporate Governance Code.

•

Reviews the Group’s procedures
and controls relating to the prevention
and detection of fraud.

•

Reviews the adequacy of the Group’s
whistle-blowing procedures and asummary report of the outcome into
the investigation of any
whistle‑blowing reports received.

External audit••

The Committee maintains oversight ofthe external audit relationship. This
includes making recommendations to
the Board regarding the appointmentof the external auditor.
There are regular meetings with BDO
to discuss key matters such as audit
planning, audit risk areas andreporting.

•

The Committee reviews and approves
the annual audit plan, reviews audit
findings and is responsible for
evaluating the effectiveness of theexternal audit process.

•It also monitors and assesses theexternal auditor’s independence andobjectivity, is responsible for theGroup’s non-audit services policy andreviews the level of non-audit services
provided.

•At both the half year and year end theCommittee reviews the key external
audit findings and considers whether
any adjustments to the Financial
Statements are required as a result.

Reporting•

Reports on the Committee’s activities,
in accordance with the UK Corporate
Governance Code.

•

Reports to the Board on any matter it
considers requires action or
improvement.

•

Provides advice to the Board on
Directors’ responsibilities relating to
the Financial Statements.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Activities of the Committee during the financial year ended 31 March 2021
The Committee continues to oversee a range of risk areas that are key to the Group’s long-term success or compliance with
relevant regulations. In addition to its core remit regarding financial controls, the Committee also reviews assurance activities
relating to key non-financial areas such as new product innovation, IT and cyber-security, people and health and safety. Further, theCommittee receives ad hoc reports on non-recurring areas of risk and regular reports on recurring matters such as treasury and tax,
litigation and intellectual property disputes. Findings from Group financial internal audit reports are reported at every meeting, inaddition to findings from the recurring health and safety audits. As the risk environment evolves, the Committee will continue toreview its areas of focus so that its activities address the areas of greatest importance.
The majority of the Committee’s work derives from a structured programme that is designed to fulfil its responsibilities as set out in theterms of reference. The table below summarises the key activities at each meeting since last year’s Report and Financial Statements:
Agenda item

Sep 2020

Nov 2020

Jan 2021

Jun 2021

Review draft Financial Statements, appropriateness of accounting
policies and going concern assumption (reports from management
and external auditors)••

Review and recommend for approval the half-year and year‑end
announcements, interim management and AGM statements andthe Report and Financial Statements••

Review of significant financial reporting issues and judgements••

Review viability statement
Assess the effectiveness of the external audit process••

Review the year-end external audit plan•

Consider the independence and objectivity of the external auditor•

Review internal management representation letters•

Review and agree the internal audit plan
Review the output of financial and non-financial internal audit work

•
•

•

•

Discussion with external auditors without Executive Directors present

•

•

•

Review of cyber-security•

Review the effectiveness of the Audit and Risk Committee•

Review litigation register••

Evaluate the effectiveness of the internal audit function••

Review the internal control framework•

Review the risk management processes•

Review the Group risk register and supporting commentary••

Review of whistle-blowing arrangements•

Review systems and controls for detecting fraud and the preventionof bribery and corruption
Annual review of insurance

•

•
•
•

Annual review and approval of policy relating to non-audit services•

Annual review of tax arrangements•

Annual review of treasury arrangements•

The UK Corporate Governance Code (2018) requires the Directors to prepare the Report and Financial Statements and to state thatthey consider them, taken as a whole, to be fair, balanced and understandable and provide the information necessary for
Shareholders to assess the Group’s position and performance, business model and strategy. The Board requested that theCommittee advise it as to whether the Report and Financial Statements meets those requirements. This work formed part of thereview of the draft Financial Statements that was undertaken by the Committee in May and June 2021.

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93

Audit, Risk and Internal Control continued
Audit and Risk Committee Report continued
Significant matters relating
to the Financial Statements
The Committee performs a review ofsignificant matters that relate to the
Financial Statements. The matters that
the Committee considers are significant inrespect of the 2021 Financial Statements
are set out below:

Revenue recognition
Revenue is recognised in accordance withIFRS 15 Revenue from Contracts with
Customers. Revenue is recognised using
principles-based criteria and the trigger
point for recognition is fulfilment of theperformance conditions in the contract
with the customer. The Group applies
prescriptive rules relating to revenue
recognition that are appropriate to bothproducts and services. As a result of the
adoption of IFRS 15, revenue recognitionis less subjective than in the past,
although revenue cut-off remains an areaof audit focus. The Committee hasreceived no reports of any significant
error in revenue recognition.

UK defined benefit pension scheme
Under IAS 19, the Group is required torecognise in the balance sheet any
difference between the net present valueof the pension scheme’s liabilities and thefair value of its assets as at 31 March 2021
as either a pension scheme asset or
deficit.
The Group is required to appoint an
external actuary to advise on suitable
assumptions to be used to calculate thenet present value of the scheme’s
liabilities at the half year and year end.
Aon Hewitt, the pension scheme‘s actuary,
has been retained to perform biannual
valuations to satisfy this requirement.

94

Aon Hewitt recommended assumptions
on a consistent basis with those adopted
at the previous year end. The net present
value of the scheme’s liabilities increased
during the year, largely as a result of
remeasurement losses. River andMercantile (the scheme’s investment
manager) provided a valuation of thescheme assets in accordance withmarket practice for the valuation of
investment assets. The methodology
used for valuations has not changed.
As disclosed in Note 25 to the Financial
Statements, the actuarial surplus for the
UK scheme has reduced from £30.7m inthe prior year to £16.3m at 31 March 2021.
This was largely due to theremeasurement losses on the value of thescheme’s liabilities which were partially
offset by increases to the asset valuation
and additional contributions of £8.1m
above those recommended by thetrustee.

Product quality related provisions
During the year, a quality issue was
identified with a component that isincorporated into a customer’s system.
The underlying cause is currently being
investigated. At the year end, the affectedbusiness unit recognised a provision of£1.9m in respect of the potential costs toremediate this issue. The Committee has
reviewed management’s calculations in
support of this provision and the external
auditor’s report on the matter. While it islikely that the ultimate outcome will differ
from the amount provided, the Committee
is satisfied that the Group has adopted an
appropriate and prudent approach in thismatter.

Provisions for intellectual
property claims
The Group faces potential exposure tothird‑party claims in relation to alleged
intellectual property infringement.
The Audit and Risk Committee obtains
management reports and analysis on
potential claims twice a year. The
Committee has reviewed the informationand explanations provided bymanagement relating to the provisions
for intellectual property claims that havebeen recognised in the Financial
Statements. This also covers claims forwhich no provision has been recognised.
The external auditor has also reported on
intellectual property provisions. As at
31 March 2021, the value of the provisions
recognised in the Financial Statements is
not material but, nonetheless, it remains
an area of significant accounting
judgement and estimation. The
Committee has verified that the approachand calculations performed to estimate
the level of provisions required isreasonable and is consistent with theprior year. It should be noted that theoutcome of each specific case is likely tovary from the amount provided but theCommittee has concluded that no
adjustments to the provisions are
required.

Adjusted profit and EPS
The Group applies adjustments to thestatutory definition of profit and EPS topresent adjusted profitability andearnings, as the Board considers thatthey present a clearer picture of thefinancial performance of the Group.
These adjustments are set out at Note 1
to the Financial Statements. For the year
ended 31 March 2021, the aggregate sumof the adjustments to operating profit was£3.7m. At £8.4m, the amortisation charge
relating to capitalised intangible assets
was the most significant in value terms.
The Group also recognised additionalcharges against the carrying value ofcapitalised development costs of£1.3m as a result of the annual
impairment review.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

The Group also incurred transaction costsof £0.4m related to a potential acquisition.
The Group recognised gains of £6.4m
arising from the mark-to-market impactof currency hedging contracts. The
Committee has reviewed Group reports
setting out the nature of the adjustments
and the methodologies used to calculatethem and as a result concluded that
adjustments have been appliedconsistently. Further, the Committee issatisfied with disclosure of theseadjusting items in the 2021 Financial
Statements.

Misstatements
Group management reported to theCommittee that they were not aware ofany material misstatements or immaterial
misstatements that had been made with
the intent of achieving a particularpresentation in the Financial Statements.
The Committee also reviewed the reportfrom BDO relating to unadjusted audit
differences and these were discussed
during the Audit and Risk Committee
meeting in June 2021. Following thisreview process, the Committee concluded
that no adjustment to the Financial
Statements was necessary as theunadjusted audit differences were notmaterial. The Committee also concluded
that the external auditor had fulfilled its
duties with diligence and with a suitablelevel of professional scepticism.
Based on the Committee’s review ofmanagement reports and informationand explanations provided by BDO, it was
satisfied that key estimates and criticaljudgements required in the preparation of
the Financial Statements had been
appropriately addressed with regard toboth the information disclosed and also invalue terms. The Committee also
concluded that there had been suitable
scrutiny of the key assumptions used todetermine the value of assets andliabilities reported in the Financial
Statements and that these had been
subject to appropriate challenge.

Financial Statements

Company Information

External auditor

Auditor independence

The Committee monitors theperformance, objectivity andindependence of the external auditor andmakes recommendations for its
appointment or re-appointment.
Following the call for tender process inthe year ended 31 March 2020, BDO wasselected to replace KPMG as external
auditor with effect from the 31 March 2021
year end. As a result, the Committee
confirms that the provisions of the
Statutory Audit Services for Large
Companies Market Investigation(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014 have been
complied with. The Committee also bears
the responsibility for approval of theexternal auditor’s fees.

The Committee obtains confirmation of
any relationships between the Group andthe external auditor that may have abearing on its independence as part of its
work to evaluate the external auditor’s
independence. It also receives
confirmation from the external auditor
that it considers itself to be independent.

The Audit and Risk Committee received
BDO’s presentation on its audit strategy
and planning memorandum at its
January 2021 meeting. The audit strategy
and planning memorandum set out the
proposed audit methodology, scope andplanned materiality for its audit of the
Financial Statements for the year ended
31 March 2021. It also identified theprincipal areas of audit risk and theplanned approach for addressing them.
The audit strategy was informed in partthrough meetings with various
stakeholders such as the Chair of the
Audit and Risk Committee, the Chair of
the Board and the Group Finance Director.
Following its review and discussion, theCommittee approved the audit strategy
and planning memorandum that waspresented by BDO.
The Committee maintains responsibility
for assessing the effectiveness of theexternal audit process. This assessment
includes reports from the external auditor
at both the half year and year end andfeedback from key members of theGroup’s finance team. The Committee’s
evaluation of external audit’s
effectiveness for the year ended
31 March 2021 is scheduled to take placein September 2021.

Oxford Instruments plc | Report and Financial Statements 2021

The Committee oversees a strict policythat governs the provision of non-audit
services by the external auditor. This
policy is reviewed annually and sets out alist of prohibited services and a series ofauthority levels for permitted services.
All non-audit related engagements
require formal approval by theCommittee. Note 4 (page 149) to the
Financial Statements sets out the value ofaudit fees for the year, together with fees
for non-audit services. In the year ended
31 March 2021, audit fees paid to BDO
were £549,000 and non‑audit fees were£50,000 This represents a non-audit toaudit fee ratio of 0.09:1.

Internal audit andinternal control
Internal audit provides assurance overthe effectiveness of internal controls.
The annual assurance programme isapproved by the Audit and Risk
Committee and it includes audits that
address the effectiveness of internalfinancial controls. These audits are
performed on a rotational basis acrossoperational business units and theprincipal regional offices. To complement
the core audits on financial controls, theprogramme includes risk-based audit
areas which are agreed with the
Executive Directors and the Committee.

95

Audit, Risk and Internal Control continued
Audit and Risk Committee Report continued
Internal audit andinternal control continued
CSI implementation will continue in
2021/22 and a post-implementation
at one business unit is included in the
programme. Other areas of focus include
international trade compliance audits
and oversight of product-related
compliance. The internal audit plan for2021/22 was approved by the Committee
at its meeting in January 2021.
The Head of Risk and Assurance canreport directly to the Chair of the Audit
and Risk Committee and they holdregular discussions to discuss key
areas of risk and findings from audit work.
The external auditor is provided with allinternal audit reports once issued.
The Committee undertakes an annual
assessment of the effectiveness of theinternal control environment. This is
informed by reports from a variety ofsources, including both internal andexternal audit reports. Further, theCommittee has discussions with theHead of Internal Audit at each meeting.
The Committee reviewed the system ofinternal financial control on behalf of theBoard and concluded that the Group has
met the required standards both for theyear ended 31 March 2021 and up to thedate of approval of this Report and
Financial Statements. The Committee
received no reports in the year about
concerns of possible improprieties inmatters of financial reporting.

96

Risk management
Key risk management activities
performed by the Group are summarisedon page 66. In addition to reviewing
Group risk reports at each of its meetings,
the Committee has directed Group risk
and assurance to adapt its risk reporting
to provide greater focus on key risk areas
across the Group. The reporting of risks in
the Report and Financial Statements has
also been enhanced, to provide a heatmap of the principal risks anduncertainties. This is set out on page 66,
preceding the principal risks anduncertainties which are disclosed on
pages 67 to 70. The potential impact ofcovid continues to be disclosed as a key
uncertainty. The Committee will continue
to review risk reporting and risk
management activities during the year
ahead. This will include additional focus
on sustainability risks and other areas of
emerging risks.

The Committee performs an annual
review of its whistle-blowing policy
and receives a summary report into
the outcome of investigations during
the year. It also receives a report frommanagement on its activities in this area.
The latest report and review took placein January 2021 and all matters raisedin the year to date had been resolved.
There were no significant matters arising.

Summary
The Committee concludes that, on thebasis of its activities throughout the year,
it has acted in accordance with its termsof reference and fulfilled its
responsibilities. I will be available
at the AGM in September to answer
any questions.

Mary Waldner
Audit and Risk Committee Chair
7 June 2021

Whistle-blowing
Employees can report concerns of
non-compliance, ethical issues ormalpractice via a confidential reporting
route that is delivered by a third-party
provider. Reports can be madeanonymously if required and are coveredby the Group’s whistle-blowing policy
which provides for protected disclosure.
The Group recognises the importance ofother reporting channels such as via line
management and HR. Further, a reporting
route to the Senior Independent Director
is also available. Employees are informedof the reporting channels through theCode of Business Conduct and Ethics.
Irrespective of the reporting channel
used, the Group operates a formal
protocol for the independent investigationof reports which is overseen by the Group
HR Director and Group Compliance.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Remuneration
Directors’ Remuneration Report
We operated the policy carefully in
2020/21 and have ensured that the
remuneration outcome for executives isaligned to the experience of Shareholders,
employees and wider stakeholders.
Alison Wood
Chair of the Remuneration Committee

Key responsibilities•

Determining the Remuneration
Policy for the Executive Directors
and senior management.

•

Determining the total executive
remuneration packages.

•

Designing effective
performance‑related incentive
plans aligned to the businessstrategy and the wider workforce.

•

Reviewing the Group’s
Remuneration Policy periodically.

•

Determining the policy for pension
arrangements, service agreements,
recruitment terms and termination
payments.

Attendance at meetings year ended 31 March 2021
Remuneration
Committee

Number of meetings held
Number of meetings attended:
Thomas Geitner, Chair (to 26 January 2021)
Alison Wood, Chair (from 26 January 2021)2,3
Neil Carson
Steve Blair
Richard Friend
Mary Waldner
Number of meetings in attendance:
Ian Barkshire1
Gavin Hill1

Date of appointment
to Committee

6
6
3/3
6
6
6
6

15 January 2013
8 September 2020
1 December 2018
1 July 2017
1 September 2014
4 February 2016

3
2

1.

Attended by invitation.

2.

Alison Wood took over as Chair of the Committee on 26 January 2021.

3.

Alison Wood has attended all meetings of the Committee since her appointment on 8 September 2020.

Executive Directors’ remuneration at a glance
Total remuneration payable for 2020/21
Ian Barkshire
Gavin Hill

Base salary£’000

Benefits£’000

Pension£’000

Annual bonus
£’000

LTIP
£’000

Other
£’000

Total
£’000

424
330

52
22

55
43

451
352

1,261
984

1
1

2,244
1,732

Annual bonus
Link to strategy
As in previous years, the Committee set stretching
performance targets for the annual bonus which
are clearly linked to the strategy and financial
performance of the Group (see page 78 for details).

42.5%
Adjusted
PBT

21.25%

Adjusted
operating profit
margin21.25%
Cashconversion

15%

Strategic
objectives

Performance Share Plan (three-year performance)
Link to strategy
The performance targets ensure a continued focus on
growing profitability and a close link to the business strategy
by rewarding efficient redeployment of capital for the
performance period ending in the year under review.

Oxford Instruments plc | Report and Financial Statements 2021

50%

50%

Earnings per
share
growthReturn on
capitalemployed97Remuneration continued
Directors’ Remuneration Report continued
Remuneration report at a glanceBasesalaryBenefits

Annualbonus

Pension

Fixed

Total
remuneration

LTIP

Variable

Adjusted
operatingprofit margin

Adjusted
PBT

Annualbonus
Strategic
objectives

Cashconversion

Adjusted operating
profit margin

Adjusted PBTThreshold:Target:Max:£43.6m£46.6m£53.6mActual:£55.9mCash conversion
Threshold:Target:Max:

Threshold:Target:Max:

Actual:

15.6%
16.1%
17%

17.8%

Strategic objectives
Actual:

82%
85%
92%

Targets based on a rangeof objectives – see pages
111 and 112 for details

101%
Earnings per
share growth

Performance
Share Plan

Actual:StrongReturn on capital
employed

Adjusted earnings per
share growth (% CAGR p.a.)Actual (CAGR over three
years to 31 March 2021):

Return on capital
employed

Actual (2020/21):

Threshold:
Max:

12.0%

Threshold:
Max:

33.9%

98

4% p.a. CAGR
12% p.a. CAGR

16%
20%

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Dear Shareholder,
In January 2021, I took over as Chair of
the Committee from Thomas Geitner.
I would like to thank Thomas for chairing
the Remuneration Committee since 2013
and I am looking forward to continuing
to build on the good work that theCommittee has done during his tenure.
We delivered a strong set of results
despite the backdrop of the covid
pandemic. Adjusted operating profit grewby 12.3% to £56.7m alongside a strong
order book, which provides continued
confidence. Recognising the further
strengthening in our financial position,
the Board has resumed the payment ofinterim and final dividends, resulting in a
total dividend of 17.0p per share payablefor 2020/21. In addition to resuming
dividend payments, the shareholder
experience over the year has been very
positive with our share price currently at
an all‑time high.

Operation of the Remuneration
Policy in 2020/21, response
to covid and incentive plan
payments
Our priority during the year has been thehealth and wellbeing of all of ouremployees, supporting our customers,
and the prudent management of thebusiness throughout this period of global
crisis. Recognising the need to conserve
cash within the business, we suspended
the payment of the 2019/20 interim andfinal dividends and we also took
advantage of Government support
through the Coronavirus Job Retention
Scheme up until July 2020. We received
no other UK Government financial
support during the year, and later in theyear we repaid all furlough money
received by the UK Government.
To ensure the wellbeing of all
furloughed employees, we continued
to pay full salaries where these wereabove the furlough limit.

Financial Statements

As announced last year, with effect from
6 April 2020, the Chief Executive andGroup Finance Director, together with therest of the Board, agreed that their basesalary and fees should be reduced by
20% for the three-month period that some
employees were furloughed. The
reduction in salary and fees has not been
repaid to the Directors. We also delayed
the payout of the bonuses earned for2019/20 and the implementation of any
pay increases for both the Executive
Directors and most of the workforce, until
we had better visibility of the financial
consequences for the Company. As thebusiness recovered strongly in the middle
part of the year we were able to resume
payment of full salaries, pay 2019/20
bonuses and implement the planned 2%
workforce salary increase (delayed from
July for our mid to high earners) toNovember (including the CEO and GFD
and the rest of the Board).
The Committee’s consideration of theperformance targets for the annual bonus
and PSP awards for 2020/21 wasdeferred until later in the year, to a time
when there was a better understandingof the impact of covid and which
subsequently resulted in the targets
being set at a more stretching level thanif they had been set at the more usual
time at the start of the financial year.
The grant of the 2021 to 2023
Performance Share Plan award is subject
to EPS growth over the performance
period and ROCE targets to be achievedin 2022/23, which were consideredappropriately stretching at that time.
The Committee has carefully reviewed
these target ranges at the end of the year
and concluded that the EPS target range
remained appropriately pitched, requiring
growth of 3%-8% CAGR over the three
years. However, it reviewed the 20.5% to23.4% ROCE range in light of updated
business plan numbers and has useddiscretion to increase the target range to
24% to 30%. There is also an explicit
requirement on vesting for the Committee
to consider whether there has been any
windfall due to a bounce-back from thecurrent covid-impacted environment.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

The annual bonus for 2020/21 has been
determined by a combination of cash,
operating margin, profit and non-financial
strategic targets. As in previous years,
the Committee set stretching
performance targets which were clearly
linked to the strategy and financial
performance of the Group. Groupfinancial performance was again strong,
as highlighted above, and the annual
bonus payout was 100% of base salary
for the CEO and GFD. A portion of thebonus will be paid in shares, which aredeferred for three years.
Awards granted under the Performance
Share Plan (PSP) in 2018 were based on
performance over the three years to
31 March 2021. The EPS performance
condition, applied to 50% of the award,
was met in full with compound EPS
growth of 12.0%. The Company’s ROCE
was outstanding, at 33.9% for the year
ended 31 March 2021, which exceeded
the stretch target, resulting in 100% of thiselement vesting. Accordingly, across bothmeasures, 100% of the total award vests
and shares are now required to be held
for a further two years.
The Committee reflected on theformula‑driven outturn from theseincentive plan payments in the context
of the broader environment andemployee and shareholder experience.
In relation to employees there have been
good bonus payments across the Group
with all businesses receiving at least atarget level of bonus (and where
performance had been indicating a
below-target level payout this has been
topped up). In addition, recognising theexceptional commitment and resilienceof all of our employees globally in thesevery challenging circumstances, anadditional “thank you” award of £300
was paid in April 2021. In relation to theshareholder experience, despitesuspending dividend payments during
the year the Committee recognised thestrong shareholder return (50%+) over thebonus year and the significantly higher
total shareholder return over thethree‑year performance period of the
PSP award cycle. Payment of dividends toShareholders resumed in October 2020.

99

Remuneration continued
Directors’ Remuneration Report continued
Operation of the Remuneration
Policy in 2020/21, response tocovid and incentive plan
payments continued
Given the strong performance of thebusiness over both 2020/21 and thelonger three-year performance periodof the PSP award, the Committee is
comfortable that there has been a robust
link between reward and performanceand alignment with investor returns.
Accordingly, the Committee is satisfied
the policy has operated as intended andhas concluded that there are no
circumstances arising where it would
need to exercise discretion to adjust anyof the 2020/21 variable pay outcomes.

Operation of the Remuneration
Policy in 2021/22
We consulted with our major
Shareholders in 2020 in relation to thebase salary positioning of our Chief
Executive and had initially proposed a
one-off increase to £500,000 per annum
to recognise his development in role, thestrong performance of the business under
his leadership and his relatively low
market positioning on and since his
appointment. In 2020, in light of theuncertainties introduced by the
pandemic, the Committee and theChief Executive agreed that last year was
not the right time to propose a significant
salary increase. As signalled last year, weconsulted again with our major
Shareholders in early 2021, with a view
to implementing the salary increase in
2021/22 and having received support, will
now be increasing the Chief Executive’ssalary from £451,452 to £500,000 on
1 July 2021 (a year later than originallyenvisaged). The salary for the GFD will
be increased by 2% to £359,406, in linewith the average increase for the UK
workforce. The Committee intends toreview the base salary positioning for
the GFD within the next twelve months,
recognising the strong business andindividual performance and thebroadening of the GFD’s role in taking
on wider operational responsibilities.

Notwithstanding that the new Directors’
Remuneration Policy, which Shareholders
approved at the 2020 AGM, increased the
maximum opportunity under the annual
bonus scheme to 125% of salary, theCommittee agreed that the annual bonus
for 2020/21 would continue to be capped
at 100% of base salary to ensure that
there was no increase to potential
remuneration at that time. The policy
also brought in a new requirement suchthat half of any bonus paid above thetarget bonus level will be paid in shares
which must be held for at least three
years. This feature has been applied
to the 2020/21 bonus (even though
the Committee did not increase thebonus opportunity).
In early 2021, the Committee consulted
again and received support from our
major Shareholders to implement theincrease to the annual bonus maximum
potential to 125% of salary from 2021/22
as business circumstances bettersupported the timing of such an increase
to maximum bonus potential.
The performance measures for 2021/22
continue to be based on profit growth(55% of salary), cash generation (27.5% ofsalary), operating margin improvement(27.5% of salary) and strategic objectives(15% of salary).
PSP awards will continue to be based
50% on ROCE and 50% on earnings per
share, with stretching targets set for eachmeasure, building on the excellent
performance delivered recently.

Non-Executive Directors’ fees
The Chair’s fee and the Non‑Executive
Directors’ fees were increased by 2%, inline with the workforce average increase,with the increase taking effect at thesame time as the Company-widesalary increase on 1 November 2020.
We intend to increase fees with effectfrom 1 July 2021 in line with the 2%
workforce average.

Broader employee
remuneration considerations
During the year, the Committee aligned
the timing of pay rises and payment ofbonus for Directors with those for all
employees, albeit employees earning
below a specified threshold received their
pay rises in July (rather than delayed toNovember). We pay above minimum
wages across the world and above theliving wage in the UK and we aim to offer
benefits above the statutory minimums
where appropriate. The Committee
continues to monitor the gender pay gap
and was pleased to see the steps being
taken to close the gap. The structures ofbonus plans throughout the organisation
are aligned to incentivise the behaviours
which deliver value, both financial andnon-financial, to Shareholders and all
stakeholders. There are processes inplace to address unconscious diversity
and inclusion biases during recruitment,
including the use of balanced shortlists,and decisions about career progression
and remuneration. The increasing focus
on matters relating to ESG andsustainability, as described in the
Sustainability Report on pages 46 to 55,
were particularly welcomed and during
this coming year the Committee will belooking to establish how sustainability
metrics can be most effectively
incorporated into Director remuneration.

Conclusion
We have thought very carefully about
the operation of the Remuneration Policy
during 2020/21 and 2021/22 to ensurethat there is a strong alignment between
remuneration paid to the executives
and the experience of Shareholders,
employees and other stakeholders.
We have consulted Shareholders along
the way and I hope you will be supportiveof the annual advisory vote to approve
the Annual Report on Remuneration,
which sets out the remuneration
outcomes for the year under review andhow the policy will be operated for theyear ahead. I look forward to our AGM
on 21 September 2021.

Alison Wood
Chair of the Remuneration Committee
7 June 2021

100

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Strategic Report

Governance

Financial Statements

Company Information

PART A: Directors’ Remuneration Policy
This part of the Directors’ Remuneration Report sets out the Group’s Remuneration Policy for its Directors. The policy
was subject to a binding Shareholder vote at our AGM in September 2020 and the policy, unless changed with Shareholders’prior agreement, will continue until September 2023.

Policy overview
The Remuneration Policy promotes the delivery of the Group’s strategy and seeks to align the interests of Directors, Shareholders
and other stakeholders. The Committee regularly reviews the link between its incentive structures and strategy to ensure that
remuneration packages are appropriate to attract, motivate and retain the high calibre executives that are needed to deliver theGroup’s strategy.
The Company seeks to reward executives fairly and responsibly based on Group performance and their individual contribution.
The Company has a strategy aimed at delivering significant, balanced and sustainable long‑term growth and it is important for
motivation and retention that the remuneration of the executives reflects this.
The Committee considers carefully the motivational effects of the incentive structure in order to ensure that it is effective and does
not have an unintentional negative impact on matters such as governance, environmental or social issues. More generally, theCommittee ensures that the overall Remuneration Policy does not encourage inappropriate risk-taking.

The Committee’s approach to determining the new policy
The Committee has considered the following factors when determining the new policy:
Principle

Committee approach

Clarity – remuneration arrangements
should be transparent and promote
effective engagement with
Shareholders and the workforce.

•

The metrics used in our annual bonus have a direct link to our Company KPIs,
which are familiar to our Shareholders and the workforce.

•

Performance Shares are linked to our long-term business strategy, familiar to our
Shareholders and the workforce.

•

The Remuneration Committee consults with Shareholders to explain and clearly
set out any proposed changes to the policy and is committed to having an open
and constructive dialogue with Shareholders.

Simplicity – remuneration structures
should avoid complexity and theirrationale and operation should beeasy to understand.

•

Our Remuneration Policy is in line with market norms.

•

The application of the policy is described clearly each year in this report witha clear link between reward and performance.

Risk – remuneration arrangements
should ensure reputational and otherrisks from excessive rewards, andbehavioural risks that can arise fromtarget-based incentive plans, areidentified and mitigated.

•

The Committee has ensured that risks are identified and mitigated by:•

Performance Shares (with holding periods), annual bonus deferral, together withstretching share ownership requirements, including post-employment shareownership requirements, ensure executives are not encouraged to make short-term
decisions but to deliver sustainable shareholder returns over the long term for the
benefit of all stakeholders.

Predictability – the range of possible
values of rewards to individual
Directors and any other limits or
discretions should be identified andexplained at the time of approving
the policy.

•

The scenario chart on page 107 sets out the potential rewards available to the
Executive Directors under three different performance scenarios.

•

Limits to incentive plans and the basis for the Committee to use discretion are
clearly set out.

•

introducing discretion to override the formulaic outturn of incentives; and•enhancing clawback and malus provisions.

Oxford Instruments plc | Report and Financial Statements 2021

101

Remuneration continued
Directors’ Remuneration Report continued
The Committee’s approach to determining the new policy continued
Principle

Committee approach

Proportionality – the link between
individual awards, the delivery ofstrategy and the long-term
performance of the Company should
be clear. Outcomes should not reward
poor performance.

•

Variable pay comprises the majority of the Executive Directors’ packages, with theindividual limits and payout for different levels of performance set out in the policy
on pages 102 to 105 and the scenario chart on page 107.

•

The performance conditions are aligned to strategy and the targets are set to be
stretching to reward for delivering above-market returns.

•

The Committee retains discretion to override the formulaic outturns of incentives
if the payout does not reflect broader Company performance and other factors.

•

The alignment of metrics to the medium and long-term strategy ensures behaviours
consistent with the Company’s purpose and values are being encouraged.

•

The presence of clawback and malus provisions discourages behaviours thatare not consistent with the Company’s purpose, values and strategy.

•

The Committee reviews the wider workforce pay and policies to ensure there isalignment with the Executive Directors’ Remuneration Policy and that
remuneration is designed to support the Company’s people-centric culture.
There is a broadly consistent cascade of the Remuneration Policy throughout thesenior management team.

Alignment to culture – incentive
schemes should drive behaviours
consistent with Company purpose,values and strategy.

Consideration of Shareholder views
The Committee considers feedback from Shareholders received at each AGM, together with any feedback from additional
meetings, as part of any review of Executive Director remuneration. In addition, the Committee engages proactively with
Shareholders and their proxy advisers where any material changes to the Remuneration Policy are proposed and has done soduring the year. During the period of consultation on revisions it wished to make to the Remuneration Policy, the Committee listened
to the views of those it consulted with and amended the proposals put forward to address concerns raised.

Remuneration Policy
The Remuneration Policy of the Company is set out in the following table and is applicable for three years from the date of the2020 AGM, 8 September, when the policy was approved. Explanations of how each element operates and how each part links
to the corporate strategy have been provided.
Element of pay

Purpose and link to strategy

Base salary

•

•

102

To provide a competitive
and appropriate level ofbasic fixed pay to recruitand retain superior talent
and avoid excessiverisk‑taking that mightotherwise result from an
over‑reliance on variable
remuneration.
Reflects the experience,
performance andresponsibilities of theindividual.

Operation

Maximum opportunity•

Reviewed annually with any increaseusually effective 1 July.

•

There is no minimum or
maximum annual increase.

•

Takes account of experience,
performance and responsibilities as wellas the performance of the Company, thecomplexity of the role within the Groupand salary increases for employees
generally.

••

Set with regard to market data forcomparable positions in similar
companies in terms of size,internationality, business model, structure
and complexity, including within theindustry.

Higher increases than the
average percentage for theworkforce may be appropriate;
for example, where an
individual changes role, where
the complexity of the Groupchanges, where an individual ismaterially below market
comparators or is appointed ona below‑market salary with the
expectation that his/her salarywill increase with experienceand performance.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Element of pay

Purpose and link to strategy

Benefits•

Pension•

Provided on amarket‑competitive basis,
aids retention and follows
the reward structure for all
employees.

To contribute towards thecost of living in retirement.

Financial Statements

Operation•

Currently include, but are not limited to,the cost of:•life assurance;•

private medical insurance;•company car benefit (car, driver, carallowance, fuel); and/or•

overnight hotel accommodation
where necessary to enable theexecutive to carry out his duties
efficiently at the Head Office and other
Company sites.

•

The benefits provided may be subject toamendment from time to time by theCommittee within this policy.

•

Relocation costs and other incidental
expenses may be provided as necessary
and reasonable.

•

Benefits are not part of pensionableearnings.

•

Company contributions to a money
purchase pension scheme.

•

Salary supplement where HMRC annual
or lifetime allowances are exceeded.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

Maximum opportunity•

The value of benefits varies
from year to year depending on
the cost to the Company and is
not subject to a specific cap.

•

Benefit costs are monitored andcontrolled and represent asmall element of total
remuneration costs.

•

14% of base salary based on the
2019/20 salaries forincumbents, which represents£61,964 and £48,363 per year
for the CEO and GFD
respectively.

•

Pension contributions forincumbents will reduce to therate applying to the majority of
the workforce at the end of thepolicy period.

•

Newly recruited Directors will
receive a pension contribution
in line with the rate applying to
the majority of the workforce.

103Remuneration continued
Directors’ Remuneration Report continued
Remuneration Policy continued
Element of pay

Purpose and link to strategy

Annual bonus•

Long‑term
incentive(Performance
Share Plan)

All‑employee
share schemes

104

Drives and rewards the
successful achievement ofannual targets set at thestart of the year.

•

To incentivise theexecutives and reward
them for meeting
stretching long-termtargets linked to thebusiness strategy.

•

To align the Directors’interests with those of
Shareholders.

•

Facilitates shareownership to provide
further alignment with
Shareholders.

•

To encourage employee
share participation.

Operation

Maximum opportunity•

Performance targets based on the key
performance indicators and strategic
objectives of the business.

•

At least 70% of the bonus is based on
financial metrics and the balance on
non‑financial strategic metrics.

•

Clawback and malus provisions apply for
misstatement, error, misconduct,
corporate failure or reputational damage.

•For any bonus earned in excess of thetarget level, 50% will be paid in shares,
which are beneficially owned and whichmust be held by the Executive Director forat least three years.

•

The Committee may use discretion to
override the result of any formula-driven
bonus payment.

•

Annual awards of Performance Shareswith vesting subject to achievement of
performance targets. Both the vestingand performance period will be over aminimum of three years.

•

The Committee will set targets each year
based on long‑term financial
performance and/or a stock
market‑based metric.

•

25% of the awards will vest at thresholdperformance under each performance
condition.

•

Clawback and malus may be applied for
misstatement, error, misconduct,
corporate failure or reputational damage.

•

Vested awards must be held for a further
two years before sale of the shares (otherthan to pay tax).

•

The Committee may use discretion to
override the result of any formula-driven
payment.

•

The Company may from time to time
operate tax‑approved share schemes(such as the HMRC‑approved Share
Incentive Plan (SIP)) for which Executive
Directors could be eligible.

•

The SIP is open to all UK permanent staff
employed for at least six months.

•

75% of salary at year end
payable at target performance.

•

125% of salary at year end
payable for maximum
performance.

•

Bonuses start to be earned
from 15% of salary for achieving
threshold performance.

•

The maximum normal award
limit is 150% of salary. This limit
may be exceeded in
exceptional circumstances,e.g. recruitment, up to a limit of200% of base salary.

•

Dividend equivalents may
accrue on the PSP awards overthe vesting period and would
normally be paid out as sharesin respect of the number ofshares that have vested.

•

The schemes are subject to thelimits set by tax authorities.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Element of pay

Purpose and link to strategy

Shareholding
guideline•

Non‑Executive
Director fees•

To further align Executive
Directors’ interests with
Shareholders’.

To remunerate the Chair
and Non‑Executive
Directors.

Financial Statements

Operation•

The Committee has establishedshareholding guidelines which
encourage the Executive Directors tobuild and retain a holding of Company
shares equivalent to 200% of base salary.

•

Until the guideline is met in full, Executive
Directors are expected to retain or
acquire shares equivalent to the value of
50% of the net amount realised fromexercise/vesting of share awards asappropriate after allowing for tax
payable.

•Post cessation of employment there will
be a requirement to retain the lower ofthe level of shareholding at that time, or200% of base salary, for two years(unless by genuine exception e.g. serious
ill health). At the Committee’s discretion,
shares which have been purchased
voluntarily may be excluded, so as not todiscourage further self-purchases.

•

Reviewed annually.

•

Determined and reviewed taking into
account time commitment, experience,
knowledge and responsibilities of the role
as well as market data for similar roles inother companies of a similar size and/or
business to Oxford Instruments.

•

Out‑of‑pocket expenses including travel
may be reimbursed by the Company inaccordance with the Company’s
expenses policy including tax thereon“grossed up” as appropriate.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

Maximum opportunity•

Not applicable.

•

There is no prescribedmaximum or maximum
annual increase.

105Remuneration continued
Directors’ Remuneration Report continued
Differences in the Remuneration
Policy of the Executive Directors
and the general employees
There are no material differences in the
structure of remuneration arrangements
for the Executive Directors and senior
management population, aside fromquantum and participation levels in
incentive schemes, which reflect the factthat a greater emphasis is placed on
performance-related pay for Executive
Directors and the most senior individuals
in the management team. Outside thesenior management team, the Company
aims to provide remuneration structures
for employees which reflect market
norms, business and personal
performance. The Committee is regularly
apprised of the remuneration policy
throughout the Company to ensure thatdecisions in relation to executive pay are
considered in the round.
The objectives and targets for all
employees are cascaded through theorganisation each year to ensurealignment with the Company strategy.
The bonus plans for the workforce aredesigned around the same performance
metrics as those set for the Executive
Directors. The structure of senior
management bonuses and long-term
incentive plans directly reflects those of
the Executive Directors, with somemeasures being Group-wide and others
specific to their areas of control. Thisalignment is explained to the workforce
at the time that objectives and targets are
set each year.

Choice of performancemeasures and approachto setting targets
The Committee selects financial andstrategic measures for the annual bonusthat are key performance indicators forthe business over the short term. For thelong‑term incentives, the Committee will
select a combination of measures thatprovide a good focus on the outcomes of
the Company strategy together withsustainable improvements in long‑term
profitability.

106

The Committee sets appropriate anddemanding targets for variable pay inthe context of the Company’s trading
environment and strategic objectives.
The targets for the annual bonus plan
will be set each year with reference to
the Company’s budget and business andstrategic plan. The Committee will review
the performance conditions and targets
for awards under the PSP each year prior
to awards being made, taking account of
the Company’s internal financial planning,market forecasts and the businessenvironment.

Discretions retained by theCommittee in operating its
incentive plans
The Committee may adjust theformula‑driven outturn for an annual
bonus or PSP performance condition in
the event that the Committee considers
that the quantum would be inappropriate
in light of wider Company performance oroverall shareholder experience. Any suchuse of discretion would be detailed in the
Annual Report on Remuneration in Part B
and in the annual statement from the
Chair of the Committee.
The Committee operates the Group’s
various incentive plans according to theirrespective rules and in accordance with
HMRC rules where relevant. To ensure theefficient administration of these plans, theCommittee may apply certain operational
discretions. These include the following:•

selecting the participants in the plans;•

determining the timing of grants
and/or payments;•

determining the quantum of grants
and/or payments;•

determining the extent of vesting
based on the assessment of
performance;•

determining “good leaver” status and,
where relevant, the extent of vesting in
the case of the share‑based plans;•

where relevant, determining the extent
of vesting in the case of share‑basedplans in the event of a change ofcontrol;•making the appropriate adjustments
required in certain circumstances (e.g.
rights issues, corporate restructuring
events, variation of capital and special
dividends); and•the annual review of weighting of
performance measures and setting
targets for annual bonus plan anddiscretionary share plans from year
to year.

The Committee may adjust the targets
and/or set different measures and alterweightings for existing annual bonus
plans and share‑based awards only if an
event occurs which causes theCommittee to reasonably consider thatthe performance conditions would notwithout alteration achieve their original
purpose and the varied conditions are
no less difficult to satisfy than the original
conditions. Any changes, and therationale for those changes, will be set
out clearly in the Annual Report on
Remuneration in respect of the year inwhich they are made.

Legacy arrangements
In approving this Directors’ Remuneration
Policy, authority is given to the Company
to honour any commitments entered intowith current or former Directors (such as
the payment of a pension or the vestingor exercise of past share awards) thathave been disclosed to and approved by
Shareholders in previous remuneration
reports. Details of any payments toformer Directors will be set out in the
Annual Report on Remuneration as
they arise.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Remuneration scenarios for Executive Directors
The charts below show the level of remuneration potentially payable to Executive Directors under different performance scenarios
for the financial year 2021/22 (see notes for assumptions):

Remuneration scenarios
Chief Executive (CEO)£’000Group Finance Director (GFD)
Total including
share price growth:

2,500£2,364k
Fixed pay

Total:£1,989k

Annual bonus

2,000

Total including
share price growth:

LTIP
50% share price growth on LTIP value£1,688k38%

1,500

Total:£1,418k£1,364k
27%

1,000

£969k
31%

£614k

0

28%

27%

500
100%

46%

31%

Fixed pay

Target

Max

38%

32%

£430k

28%

100%

44%

30%

Fixed pay

TargetMax

Assumptions for charts above:•
Fixed pay comprises salary levels as at 1 July 2021, fixed pension contribution and the value of benefits received in 2020/21.
•

The on‑target level of bonus is 75% of salary.

•

The on‑target level of vesting under the annual PSP is taken to be 50% of the face value of the award at grant, i.e. 75% of salary.

•

The maximum level of bonus and vesting under the PSP is 125% of the bonus opportunity and 100% of the face value of the PSP award at grant, i.e. 125% and150% of salary, respectively.

•

To show the impact of potential share price growth on the value of an Executive Director’s package, the impact of share price growth of 50% on the PSP is used.

Recruitment and promotion policy for Executive Directors
In setting total remuneration levels and in considering quantum for each element of the package for a new Executive Director,
the Committee takes into account the skills and experience of the individual, the market rate for a candidate of that experience andthe importance of securing the relevant individual.
The Company seeks to align the remuneration package with the Remuneration Policy approved by Shareholders, including the
maximum plan limit for the long‑term incentives and an annual bonus entitlement in line with that of the other Executive Directors.
Salary is provided at such a level as required to secure the most appropriate candidate. For new appointments, base salary andtotal remuneration may be set initially at below normal market rates on the basis that it may be increased once expertise andperformance has been proven and sustained.
Specific variable remuneration performance targets can be introduced for an individual where necessary for the first year of
appointment if it is appropriate to do so to reflect the individual’s responsibilities and the point in the year in which he or she joined
the Board.
Flexibility is retained to offer additional cash and/or share‑based payments on appointment in respect of deferred remuneration
or benefit arrangements forfeited on leaving a previous employer. The Committee would look to replicate the arrangements being
forfeited as closely as possible and, in doing so, will take account of relevant factors including the nature of the deferredremuneration, performance conditions, attributed expected value and the time over which they would have vested or been paid.
Such awards may be made under the terms of the PSP or as permitted under the Listing Rules.
For an internal appointment, any variable pay element awarded in respect of the prior role may be allowed to pay out according
to its terms, adjusted as relevant to take into account the appointment. In addition, any other ongoing remuneration obligations
existing prior to appointment may continue.
For external and internal appointments, the Committee may agree that the Company will meet certain relocation, legal and anyother incidental expenses as appropriate.

Oxford Instruments plc | Report and Financial Statements 2021

107

Remuneration continued
Directors’ Remuneration Report continued
Executive Directors’ service contracts and policy on cessation
Details of the service contracts of the Executive Directors, available for inspection at the Company’s registered office and at theCompany’s AGM, are as follows:
Contract date
11 May 2016
9 February 2016

Ian Barkshire
Gavin Hill

Unexpired term of contract
Twelve-month rolling contract
Twelve-month rolling contract

Details of contractual terms and the policy on cessation of employment are summarised in the table below. Payments to departing
Directors can only be made in line with this Shareholder-approved policy:
Contractual provision

Detailed terms

Notice period

Twelve months by the Company or by the Director.

Termination
payment

A Director’s service contract may be terminated without notice and without any further payment orcompensation, except for sums accrued up to the date of termination, in the event of gross misconduct.
For termination in other circumstances, the Company has a right to pay salary in lieu of the notice period(or part thereof) if it so determines.
In addition, any statutory entitlements in connection with the termination would be paid as necessary, and,at the Committee’s discretion if deemed necessary and appropriate, outplacement, legal fees andsettlement of claims or potential compensation claims.

Remuneration
entitlements

Pro‑rata bonus may also become payable for the period of active service along with vesting foroutstanding share awards or deferred bonus shares (in certain circumstances – see below).

Change of control

No Executive Director’s contract contains additional provisions in respect of a change of control.

Any share‑based entitlements granted to an Executive Director under the Company’s share plans will be determined based on
the relevant plan rules. The default treatment for existing awards is that any unvested awards lapse on cessation of employment.
However, in certain prescribed circumstances, such as death, injury, ill health, disability, retirement or other circumstances at thediscretion of the Committee, “good leaver” status may be applied. Under the 2014 PSP, awards to good leavers will vest on thenormal vesting date, subject to the satisfaction of the relevant performance conditions at that time and normally be scaled backto reflect the proportion of the original vesting period actually served. In the event of a good leaver there would be no early releasefrom a post-vest holding period (again, unless by genuine exception, for example serious ill health). The Committee has discretion in
exceptional circumstances to disapply time pro‑rating, to measure performance to, and vest awards at, the date of cessation.
Vesting at cessation would be the default position where a participant dies. Deferred bonus shares are beneficially owned by the
executive from the time of the bonus payment, so are not at risk of forfeiture (other than in relation to clawback).

External appointments
The Board encourages Executive Directors to accept one appropriate external non‑executive appointment provided the aggregate
commitment is compatible with their duties as Executive Directors. The Executive Director concerned may retain fees paid for these
services, which will be subject to approval by the Board. Currently, the Executive Directors do not hold any outside directorships.

Non‑Executive Directors
For the appointment of a new Chair or Non‑Executive Director, the fee arrangement would be in accordance with the approved
Remuneration Policy in place at the time.
Non‑Executive Directors do not have service contracts but are appointed under letters of appointment for an initial period of three
years with subsequent reviews. Non‑Executive Director appointments are now renewed for periods of one year, terminating at thenext AGM. Their appointment can be terminated without notice and with no compensation payable on termination, other than
accrued fees and expenses.
Neil Carson
Richard Friend
Thomas GeitnerMary Waldner
Steve Blair
Alison Wood

108

Date of last appointment
1 December 2018
1 September 2014
13 March 2017
4 February 2016
1 July 2017
8 September 2020

Notice period
Rolling six months
None
None
None
None
None

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

PART B: Annual Report on Remuneration
The financial information in this part of the report has been audited where indicated.

The Remuneration Committee (unaudited)
The Remuneration Committee (the “Committee”) is responsible for recommending to the Board the remuneration packages for
Executive Directors and has oversight of the pay, bonus and share incentive strategy for the Group’s executive management.
The Chair and the Executive Directors are responsible for determining the remuneration of the Non‑Executive Directors, and theRemuneration Committee, in the absence of the Chair, is responsible for determining the remuneration of the Chair.
The role of the Committee includes:•considering and determining the Remuneration Policy for the Executive Directors;•

within this agreed policy, considering and determining the various elements and total remuneration packages of each
Executive Director of the Company;•

approving the structure and targets for all performance‑related remuneration plans for executives as well as the overall
payments made under such plans;•reviewing and noting remuneration policy and trends across the Group and considering the Executive Directors’ remuneration
within this context; and•determining the policy for pension arrangements, service agreements, recruitment terms and termination payments to
Executive Directors.

The members of the Committee are appointed by the Board and currently comprise all the independent Non‑Executive Directors:
Alison Wood, Thomas Geitner, Steve Blair, Richard Friend, Mary Waldner, and the Chair of the Board, Neil Carson. Alison Woodserved on the Committee from 8 September 2020 and all other members served throughout the year. Thomas Geitner was the
Chair of the Committee until 26 January 2021. Recognising that Thomas will be standing down as a Director at the 2021 AGM,
Alison Wood, who has significant experience chairing Remuneration Committees at other listed companies and prior remunerationcommittee experience as required under Provision 32 of the UK Corporate Governance Code 2018 (the “Governance Code”), wasappointed Chair of the Committee from 26 January to assure an orderly handover.
The Chief Executive, the Group HR Director and other executives are invited to attend Committee meetings as deemed appropriate.
For example, the Chief Executive is able to make a significant contribution when considering the performance of other Executive
Directors and to discuss the wider Group remuneration policy affecting employees. However, no Executive Director is present when
the Committee is determining his or her own remuneration.
The Committee acts within its agreed written terms of reference (which are published on the Company’s website:www.oxinst.com/investors) and complies with the provisions of the Governance Code regarding remuneration.
The performance of the Committee is reviewed at least once a year as part of the Board evaluation process.
During the year, the Committee fulfilled its duties, as laid down in the Committee’s terms of reference, in line with the normal
annual cycle of remuneration-related matters, except as disclosed below. In particular, there was a consultation with major
Shareholders and proxy agencies to ensure that they were supportive of the increase to the Chief Executive’s salary and theincrease to the maximum potential for the annual bonus scheme to 125%. In light of the impact of the covid pandemic on thebusiness, there was significant thought given to how to set targets for the annual bonus and the awards under the PSP in 2019/20.
After careful consideration, the Committee took the decision, in light of the unknown impact of the pandemic on performance,
to delay the setting of the annual bonus metrics to the half year and the granting of awards under the PSP until September.
The Committee noted that had they set the bonus metrics and performance targets at the usual time, based on the performanceoutlook at that time, the performance target ranges would have been lower.
Korn Ferry (KF) was the Committee’s independent remuneration consultant during the year and continues with this appointment in
2021/22. KF is appointed by the Committee to provide advice on all aspects of executive remuneration as required by the Committee.
KF is a signatory to the Remuneration Consultants’ Code of Conduct and has confirmed to the Committee that it adheres to theCode. During the year, KF had discussions with the Committee Chair on remuneration matters relevant to the Company and on
how best their team can work with the Committee to meet the Company’s needs.
Fees are charged predominantly on a “time spent” basis. The total fees paid to KF for the advice provided to the Committee during
the year were £35,357.
During the year KF also provided executive search related services to the Company (but not for Board appointments) through aseparate part of the business. The Committee was comfortable that the controls in place at KF do not result in the potential for any
conflicts of interest to arise.

Oxford Instruments plc | Report and Financial Statements 2021

109

Remuneration continued
Directors’ Remuneration Report continued
Directors’ remuneration (audited)
The remuneration paid to the Directors during the year under review and the previous year is summarised in the tables below:

Executive

Ian Barkshire
Gavin Hill
Total

2021
2020
2021
2020
2021
2020

Salaryand fees1£’000

Benefits
£’000

424
440
330
343
754
783

52
88
22
20
74
108

2

Pension
£’000

55
55
43
43
98
98

3

Annualbonus 4£’000

Long‑term
incentive
awards5£’000

Other6
£’000

Total
fixed

Total
variable

Total

451
279
352
224
803
503

1,261
1,104
984
862
2,245
1,966

1
1
1
1
2
2

532
584
396
407
928
991

1,712
1,383
1,336
1,086
3,048
2,469

2,244
1,967
1,732
1,492
3,976
3,460

1.

“Salary and fees” – As a response to the possible impact of covid on the business, the Directors waived 20% of their base salary remuneration from 6 April 2020 to
5 July 2020. This has not been repaid to Directors.

2.

“Benefits” comprise provision of a car or car allowance, health insurance, life assurance, overnight hotel accommodation where necessary to carry out duties at the
Head Office of the Company and, for Ian Barkshire, provision of a driver to allow him to make best use of his commuting time. For the year to 31 March 2021, a driver
was provided from 1 April 2020 to 5 April 2020 and from 22 June 2020 to 31 December 2020. The provision of a driver accounted for £31,664 (2020: £66,534) of the total
benefits for Ian Barkshire.

3.

Each Executive Director is entitled to receive a contribution to a money purchase pension scheme for a fixed value, which is calculated as 14% of base salary earned on
1 April 2020. Where the contractual pension contribution exceeds the annual or lifetime allowance, any balancing payment is made by the Company as a cash allowance
which, in line with the policy for all UK employees, is paid net of employer’s national insurance contributions.

4.

“Annual bonus” represents the full annual bonus for the year to 31 March 2021 and would usually be paid in the July 2021 payroll. Of the amounts disclosed, £56,431 and£44,045 will be paid in shares for the CEO and GFD respectively, which must be held for three years, as per the policy.

5.

“Long‑term incentive awards” are those awards where the vesting is determined by performance periods ending in the year under review and therefore reports the valueof the PSP award granted on 3 July 2018. The value has been determined using the average share price over the three months to 31 March 2021, £19.10. Further details of
how these sums are arrived at are set out on pages 113 and 114. The share price used on grant of the 2018 PSP award was £10.00 and the total face value at grant of thevested number of shares is £646,125 for the CEO and £504,300 for the GFD. On vesting (based on an average share price for the last three months of the financial year)
the share price was £19.10, giving a total vested award value of £1,234,108 for the CEO and £963,213 for the GFD. The value of the PSP award that has been attributable
to share price growth is, therefore, £587,983 and £458,913 for the CEO and GFD respectively. Dividend equivalents have been added to arrive at the total figure includedin the table above. The value of the prior year awards has been restated using the share price on the vesting date of 25 September 2020 of £16.24, giving a total vested
award value, including dividend equivalents, of £1,104,288 (before restatement £975,567) for the CEO and £861,873 (before restatement £761,410) for the GFD.

6.

The Company operates a Share Incentive Plan (SIP) which is open to all UK permanent staff employed for at least six months. “Other” is the value of matching SIP shares
attributable to the year. In 2020/21, Ian Barkshire and Gavin Hill participated in the SIP up to the maximum extent permitted by HMRC. The Company offers a 1:5 match forpartnership shares purchased by employees and this amounted to £360 each of matching shares for Ian Barkshire and Gavin Hill.

Non‑Executive

Neil Carson
Steve Blair
Richard Friend
Thomas Geitner2
Mary Waldner
Alison Wood3
Total

2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020

Fees1
£’000

Benefits£’000

Pension£’000

Annual
bonus
£’000

172
180
55
57
48
50
53
57
55
57
31
—
414
401

—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—

Long‑term
incentive
awards
£’000

Total

—
—
—
—
—
—
—
—
—
—
—
—
—
—

172
180
55
57
48
50
53
57
55
57
31
—
414
401

1.

“Fees” – In response to the possible impact of covid on the business, the Directors waived 20% of their fees from 6 April 2020 to 5 July 2020. This has not been repaid to
Directors.

2.

Thomas Geitner was Chair of the Remuneration Committee until 26 January 2021.

3.

Alison Wood was appointed a Non-Executive Director on 8 September 2020 and appointed Chair of the Remuneration Committee on 26 January 2021.

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Financial Statements

Company Information

External appointments (unaudited)
The Board encourages Executive Directors to accept one appropriate external non‑executive appointment provided the aggregate
commitment is compatible with their duties as Executive Directors. The Executive Director concerned may retain fees paid for these
services, which will be subject to approval by the Board. There were no such appointments during the year.

Details of annual bonus earned in year (audited)
As in previous years, the Committee set stretching performance targets for the annual bonus which are clearly linked to the strategy
and financial performance of the Group. The targets set and the achievement against them are set out in the table below.
Percentage of salary payable
MeasureAdjusted PBTAdjusted operating
profit margin
Cash conversion
Strategic objectives

Targets

ThresholdOn target

Maximum

Threshold£m

On target£m

Maximum£mActual£m

Payout% of salary

7.5%

30%

42.5%

43.6

46.6

53.6

55.9

42.5%

3.75%
3.75%
—

15%
15%
15%

21.25%
21.25%
—

15.6%
82%
—

16.1%
85%
—

17%
92%
—

17.8%
101%

21.25%
21.25%CEO 15%
GFD 15%CEO 100%
GFD 100%

See
below

The non‑financial strategic objectives were set at the start of the year. Performance against them is set out below. The Committee
in its review noted the exceptional performance in achieving the Horizon strategy objectives, laying the foundations for future
growth and agreed that, when taking into account all the circumstances, a bonus of 15% out of the total 15% of salary available
was appropriate for both Ian Barkshire and Gavin Hill. Details of the objectives and an assessment as to their achievement are set
out below:
CEO objectives

WeightingAchievements towards objectives/performance

Provide agile leadership of the businessthrough the covid pandemic. In the shortterm, protecting the health and wellbeingof our employees, whilst supporting ourcustomers and taking actions to ensurebusiness continuity. For the long term,
progressing key strategic development
and growth initiatives that will enable thebusiness to emerge from the pandemic
period in a strong position.

2/3•

Outstanding grasp of financial implications of options
presented to the Board.

•

Clear and responsive leadership through the pandemic.

•

Focused on employee welfare and supporting customers.

•

Led the business innovation and rapid response to changes
in the markets and communities in which it operates.

•

An effective balance between short-term demands of thepandemic and investment in the long-term development andgrowth of the Company as evidenced by the financial
performance delivered.
10 out of 10

Develop advanced business engagementwith progressive environmental, socialand governance standards that arealigned with our purpose and global
impact and are clearly reflected in ourinvestor relations communications.

1/3•

Established a comprehensive sustainability framework for
the Company aligned with the relevant UN Sustainability
Development Goals with clear ownership and active
programmes in place as discussed elsewhere in this Report
and Financial Statements.

•

Good improvements in the sustainability narrative bothinternally and externally.
5 out of 5

Total

100%

Oxford Instruments plc | Report and Financial Statements 2021

15%

111

Remuneration continued
Directors’ Remuneration Report continued
Details of annual bonus earned in year (audited) continued
GFD objectives

WeightingAchievements towards objectives/performance

Provide leadership of the business toensure business continuity and liquidity
throughout the covid market disruption.

1/2•

Measured and pragmatic decisions during the year as
the business environment evolved rapidly.

•

Options presented to the Board and swift execution toensure the business would continue to operate at a highlevel of performance notwithstanding the pandemic.

•

Strong levels of liquidity maintained throughout the year.
7.5 out of 7.5

Lead the operational excellence
programme and deliver tangible
financial gains.

1/2•

Took on overall leadership of the OpEx programme.

•

Brought new capabilities into the team.

•Identified initiatives that are now delivering meaningfulimprovements.

•

Consistent Group-wide KPIs to measure tangible gains.

•

Structured approach served the businesses well during
a period of significant turbulence with planning andprocurement responding well to rapidly changing demands
throughout the pandemic.

•

Actions resulted in an outstanding financial performance
as shown in the financial results.
7.5 out of 7.5

Total

100%

15%

The on‑target and maximum bonus potentials for the Executive Directors, as well as the amounts actually payable for the year
ended 31 March 2021, are set out below.

Ian Barkshire
Gavin Hill

On‑targetbonus(% of salary)

Maximum
bonus(% of salary)

Actual bonus
payable for2020/21(% of salary)1

Actual bonus
payable1,2 for2020/21(£’000)

75%
75%

100%
100%

100%
100%

451,452
352,359

1.

Bonus is calculated on salary as at 31 March 2021.

2.

Of the amounts disclosed, £56,431 and £44,045 will be paid in shares for the CEO and GFD respectively, which must be held for three years, as per the policy.

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Financial Statements

Company Information

Long‑term incentive plans (audited)
The performance targets, performance against them and the resulting value in respect of the long‑term incentive awards where
vesting is determined by a performance period ending in 2020/21 are as follows:

Performance Share Plan (PSP)The performance targets which applied to the awards made on 3 July 2018 for the performance period ending in the year underreview and actual performance achieved against them were as follows:
50% of the award is based on EPS measured over a three‑year performance period starting 1 April 2018:
Performance level

Below threshold
Threshold
Between threshold and maximum
Maximum
Actual EPS
Actual growth achieved over the period (per annum)

EPS growth required% of award that will vest

Less than 4% per annum over three years
4% per annum over three years
4% to 12% per annum over three years
12% per annum and above over three years
78.6p
12.0%

0%
25%
25%-100%
100%
100%

50% of the award is based on the Company’s return on capital employed in the final year of the three-year performance period:
Performance level

ROCE1 for the final year of the performance period% of award that will vest

Less than 16%
16%
Between 16% and 20%
20% per annum and above
33.9%

0%
25%
25%-100%
100%
100%

Below threshold
Threshold
Between threshold and maximum
Maximum
Actual ROCE achieved in 2020/21
1.

ROCE is calculated as EBIT/capital employed where EBIT is adjusted operating profit less amortisation of acquired intangibles, and capital employed is defined as
documented in the Finance Review on page 64.

Based on the performance against targets as set out above, the PSP awards will vest on 3 July 2021 as follows:

Ian Barkshire
Gavin Hill

Date
award
grantedTotal numberof shares
granted

Percentage
of award
vesting

Number ofshares vesting

Value1 ofshares vesting(£’000)

Number ofsharesawarded as
dividend
equivalent 2

3 July 2018
3 July 2018

64,61350,430100%
100%

64,61350,430

1,234
963

1,416
1,105

Value1 ofshares vesting
including
dividend
equivalent(£’000)

1,261
984

1.

As the awards vest after the date of this report, value has been calculated using the average mid‑market closing price of the Company’s shares over the three‑month
period ending 31 March 2021, £19.10. This will be restated for the actual value on vesting in next year’s report.

2.

Dividend equivalents have been calculated based on dividends paid up until the date of this report. If dividends are payable between the date of this report and thevesting date, additional dividend equivalents will be awarded.

Performance Share Plan awards made in the year and outstanding share incentive awards (audited)Awards made under the PSP on 23 September 2020 were as follows:

Ian Barkshire
Gavin Hill

Date award granted

Total numberof shares
granted

Percentage
of salary

Share priceon day before
award date

Vesting date23 September 2020
23 September 2020

42,01932,796150%
150%£15.80£15.8023 September 2023
23 September 2023

The Committee carefully considered the performance targets for the PSP awards, which had been delayed until later in the year, toa time when there was a better understanding of the impact of covid and which subsequently resulted in the targets being set at amore stretching level than if they had been set at the more usual time at the start of the financial year. The EPS growth and ROCE
targets to be achieved in 2022/23 were considered stretching at that time and were higher than if the target ranges would havebeen set if the grant had been made earlier in the year. The Committee has carefully reviewed these target ranges at the end of theyear and concluded that the EPS target range remains appropriately pitched. However, the Committee has revisited the 20.5% to23.4% ROCE range in light of updated business plan numbers and has used discretion to increase the target range to 24% to 30%.

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Remuneration continued
Directors’ Remuneration Report continued
Long‑term incentive plans (audited) continued
Performance Share Plan awards made in the year and outstanding share incentive awards (audited) continued
Vesting of 50% of the award is based on EPS measured over a three‑year performance period starting 1 April 2020 as follows:
Performance level

Below threshold
Threshold
Between threshold and maximum
Maximum

EPS growth over three years% of award
that will vest

Less than 3% per annum
3% per annum
3% to 8% per annum
8% per annum and above

0%
25%
25%-100%
100%

Vesting of the other 50% of the award is based on return on capital employed (ROCE) for the final year of the three‑year
performance period starting 1 April 2020:
ROCE for the final yearof the performance period

ROCE for the final yearof the performance period

Original target range

Revised target range

Less than 20.5%
20.5%
Between 20.5% and 23.4%
23.4% per annum and above

Less than 24%
24%
Between 24% and 30%
30% per annum and above

Performance level

Below threshold
Threshold
Between threshold and maximum
Maximum% of award
that will vest

0%25%
25%-100%100%

As at 31 March 2021, the outstanding options for Ian Barkshire and Gavin Hill under the Executive Share Option Scheme (ESOS) and
the PSP1 were as follows:

SchemeMarch
2021

Ian Barkshire2 ESOS
ESOS
PSP
PSP
PSP
PSP
PSP
Gavin Hill
PSP
PSP
PSP
PSP
PSP

15,00037,54980,97367,99864,61348,31942,01963,19853,07150,43037,71332,798Name

GrantedExercised

LapsedDividend
equivalents1

2,368

42,0191,848

32,796

March
2020

Exercise
price

Share
price
on dateof grant

15,00037,54980,97365,63064,61348,319—63,19851,22350,43037,713—£9.90£10.28
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

£9.87 14/12/11 14/12/14 13/12/21£10.31 15/06/15 15/06/18 14/06/25£7.34 21/06/16 21/06/19 20/06/26£9.58 25/09/17 25/09/20 24/09/27£10.10 03/07/18 03/07/21 02/07/28£14.00 15/07/19 15/07/22 14/07/29£16.24 23/09/20 23/09/23 22/09/30£7.34 21/06/16 21/06/19 20/06/26£9.58 25/09/17 25/09/20 24/09/27£10.10 03/07/18 03/07/21 02/07/28£14.00 15/07/19 15/07/22 14/07/29£16.24 23/09/20 23/09/23 22/09/30

Date of
grant

Earliest
exercise

Latestexercise1.

Dividend equivalents are awarded on PSP shares vesting, for the period to vesting, in respect of the actual number of shares vesting.

2.

Ian Barkshire was appointed to the Board on 10 November 2015. His ESOS options were granted to him as an employee of the Company prior to his appointment to the Board.

The market price of the shares at 31 March 2021 was £19.06 (2020: £12.80) and the range during the year was £11.36-£20.85(2020: £9.55‑£16.54).
Performance conditions for outstanding awards are described below:
PSP

50% of award

50% of award

3 July 20182,3

EPS growth – 4% p.a.
(25% vesting) to 12% p.a. (100% vesting)
EPS growth – 4% p.a.
(25% vesting) to 12% p.a. (100% vesting)
EPS growth – 3% p.a.
(25% vesting) to 8% p.a. (100% vesting)

ROCE1 in the final year of the performance period– 16% (25% vesting) to 20% (100% vesting)
ROCE1 in the final year of the performance period– 20.5% (25% vesting) to 23.4% (100% vesting)
ROCE1 in the final year of the performance period– 20.5% (25% vesting) to 23.4% (100% vesting)– subsequently increased to 24%-30% by theCommittee using Committee discretion

15 July 20192
25 September 20202,3

1.

ROCE is calculated as EBIT/capital employed where EBIT is adjusted operating profit less amortisation of acquired intangibles, and capital employed is defined as
documented in the Finance Review on page 64.

2.

Three‑year performance period commencing 1 April prior to date of grant.

3.

The performance conditions relating to this award have been tested and have exceeded maximum vesting. They are included in this table as the awards vest after
the date of this report.

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Company Information

Achievement of performance conditions (unaudited)
EPS and ROCE performance targets are tested using the audited accounts of the Company. Performance against targets andthe resulting level of vesting is then verified by the Remuneration Committee.

Dilution limits (unaudited)
The Company’s share plans provide that overall dilution through the issuance of new shares for employee share schemes should
not exceed an amount equivalent to 10% of the Company’s issued share capital over a ten‑year period. The SIP scheme only uses
market‑purchased shares.
The Committee monitors the position prior to the making of any award under these share schemes to ensure that theCompany remains within this limit. As at the date of this report, the Company’s utilisation is under 2%, well within the available
10% headroom position.

Shareholding requirements (audited)
The Executive Directors are required to build and retain a shareholding in the Company equivalent in value to 200% of basic salary.
Until the requirement is met, the Executive Directors are expected to retain or purchase shares equivalent to the value of 50% of the
net amount realised on exercise of long‑term incentive awards after allowing for tax payable. The value of vested but unexercised
PSP awards may count towards the shareholding level, calculated at the net of tax value.
Executive Directors’ shareholdings as at 31 March 20211 are shown in the table below.

Ian Barkshire
Gavin Hill

Beneficiallyowned

PSP and
ESOS awards
vested but
unexercised

Percentage ofsalary held inshares undershareholding
guideline1

Guideline
met as at
31 March 2021

Unvested PSP
awards2

12,642660

201,520
116,269

387%
337%

yes
yes

154,951
120,939

1.

The tax rate used to determine the net value of the vested PSP awards is 47%. Value of vested ESOS options excluded from percentage of salary held calculation. Sharesvalued using the market price of the shares on 31 March 2021: £19.06.

2.

Awards granted in July 2019 and September 2020 remain subject to performance conditions.

Pension arrangements
Executive Director pension arrangements (audited)
Executive Directors can decide to contribute to a pension plan of their choice. The Company contributes a fixed amount, calculated
as 14% of base salary paid in year to 31 March 2020. Only base salary is pensionable. Where the Company’s pension contribution
exceeds the annual allowance, a balancing payment is paid by the Company to the Director, which is taxed as income. In line withthe policy for all UK employees, this cash payment is reduced by 12.12% to cover employer’s national insurance costs.
During the year, the Company contributed £4,000 (2020: £10,000) into the Company’s Group Personal Pension Plan in respectof Ian Barkshire and £4,000 (2020: £10,000) into a personal defined contribution plan in respect of Gavin Hill. Balancing paymentsof £51,392 to Ian Barkshire and £39,340 to Gavin Hill (net of employer’s national insurance contributions) were paid as cash.
Ian Barkshire is a deferred member of the defined benefit pension scheme and is no longer accruing benefits in the scheme.
In accordance with the rules of the scheme, his deferred benefits are subject to increases in line with statutory revaluation.
The transfer value of his accrued benefits at 31 March 2021 was £996,936 (2020: £958,367).

Payments to past Directors and for loss of office (audited)
There were no payments to Directors for loss of office or any payments to past Directors.

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Remuneration continued
Directors’ Remuneration Report continued
Performance graph and CEO’s remuneration (unaudited)
The graph below shows for the ten years ended 31 March 2021 the total shareholder return (TSR) on a holding of the Company’s
ordinary shares compared with the TSR of an equivalent value invested in the FTSE 250, FTSE Techmark and FTSE 350 Electronic
and Electrical Equipment indices. These indices have been chosen as they are considered to be the most appropriate comparatorgroups for the Company. TSR has been calculated by reference to the relevant share price for each constituent company assuming
dividends are reinvested.
£
500
Oxford Instruments
FTSE Techmark

400

FTSE 350 E & EE
FTSE 250

300

200

100
31 March
2011

31 March
2012

31 March
2013

31 March
2014

31 March
2015

31 March
2016

31 March
2017

31 March
2018

31 March
2019

31 March
2020

31 March
2021

This graph shows the value, by 31 March 2021, of £100 invested in Oxford Instruments plc on 31 March 2011 compared with the valueof £100 invested in the FTSE 250, FTSE Techmark and FTSE 350 Electronic and Electrical Equipment indices. The other points
plotted are the values at intervening financial year ends.
The total remuneration of the CEO over the last ten years is shown in the table below. The annual bonus payout and PSP vestinglevel as a percentage of the maximum opportunity are also shown.

2017 1
Year ending 31 March

Total remuneration (£’000)
Annual bonus outcome (%)
ESOS2 vesting (%)
SELTIS/PSP2 vesting (%)

2012

2013

2014

2015

2016

DJF

IRB

2018

2019

2020

2021

3,464
100%
100%
100%

2,348
69.1%
100%
100%

1,179
15.0%
100%
100%

579
7.5%
0%
0%

743
38.6%
0%
0%

64
0%
0%
0%

620
56.3%
N/A
N/A

791
63.7%
N/A
N/A

1,957
94.4%
N/A
92.8%

1,967
62.9%
N/A
100%

2,244
100%
N/A
100%

1.

2016/17 financial year: remuneration shown separately for Jonathan Flint (DJF) who was CEO from 1 April to 11 May 2016 and Ian Barkshire (IRB) who was CEO from
12 May 2016 to 31 March 2017.

2.

Executive Directors were last granted ESOS (market value share options) and SELTIS (nil cost options) in June 2014. PSP awards have been granted after June 2014 as
the sole long‑term incentive.

Ratio of Chief Executive pay to that of employees generally
The Chief Executive to employee pay ratio for 2020/21 and the prior financial year is set out below:
Financial year

2020/212019/20

Method25th
percentile

50th
percentile

75th
percentileAA

72.6:1
66.9:1

55.0:1
51.1:1

39.8:1
35.7:1CEO

25th
percentile

50th
percentile

75th
percentile£424,202£2,243,791£28,036£30,891£37,370£40,781£51,990£56,284

The pay for the CEO and the employees at the percentiles for the 2020/21 ratio are set out below:

SalaryTotal pay

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Company Information

The ratios have been calculated in accordance with Option A under the relevant regulations, as this is the most statisticallyaccurate method. The CEO pay is compared to the pay of our UK employees at the 25th, 50th and 75th percentile, calculated basedon full-time equivalent pay data for the full financial year to 31 March 2021. All UK employees employed at the end of the financial
year who had worked the full year have been included, part-time employees have been included and pay has been converted toa full-time equivalent number by calculating total part-time pay and grossing up to the full-time equivalent for the role. Accordingly,
any employees that left the Company or joined during the year have been excluded.
The calculations use the pay for Ian Barkshire as disclosed in the single figure table. The pay for all UK employees comprises salary,
benefits, pension and annual bonus payments due for 2020/21. None of the employees at the percentiles received share awards.
The Committee is satisfied the pay of the employees identified for the quartiles appropriately reflects the employee pay structure ineach quartile and the resulting pay ratios are consistent with the pay, reward and progression policies in place for all employees.
The CEO pay ratio has slightly increased this year at the 25th, 50th and 75th percentile as a result of the higher bonus outcome of 100%of maximum for 2020/21 compared to 62.9% of maximum for 2019/20. In addition, while the LTIP will also vest at 100% of maximum, inline with the LTIP vesting level last year, the estimated value of the July 2018 award is slightly higher due to share price. As set out in the
Remuneration Committee Chair’s letter, the CEO took a three-month 20% salary reduction effective 6 April 2020 and employee salaries
continued to be paid in full during the year. This is reflected in the remuneration used to calculate the CEO pay ratio. Therefore,
primarily as a result of the incentive payout levels for 2020/21, and as variable pay comprises a greater proportion of the remuneration
package for the CEO compared to employees more generally, the ratio has slightly increased this year.
As the Committee is regularly apprised of the remuneration policy throughout the Company to ensure that decisions in relation to
executive pay are considered in the round, the Committee is satisfied the pay of the employees identified for the quartiles
appropriately reflects the employee pay structure in each quartile and the resulting pay ratios are consistent with the pay, rewardand progression policies in place for all employees,

Percentage change in the remuneration of the Directors (unaudited)
The table below shows the percentage change in each of the Director’s salaries, taxable benefits and annual bonus
earned between 2019/20 and 2020/21, compared to that for the average UK‑based employee of the Group (on a per capita
full‑time equivalent basis).
Salary2£’000

Ian Barkshire
Gavin Hill
Neil Carson
Steve Blair
Richard Friend
Thomas GeitnerMary Waldner
Alison Wood4
Average employee pay1

Benefits

Bonus32020/212019/20% change

2020/212019/20% change

2020/212019/20% change

424.2
329.5
172.5
55.2
48.0
53.2
55.0
30.6
41.7

439.6
343.1
180.0
57.2
49.7
57.2
57.2
—
42.0

-3.6%
-4.1%
-4.3%
-3.5%
-3.4%
-7.0%
-3.8%
—
-0.7%

51.6
22.5
—
—
—
—
—
—
1.4

87.9
20.8
—
—
—
—
—
—
1.5

-41.3%
8.2%
—
—
—
—
—
—
-6.7%

451.5
352.4
—
—
—
—
—
—
3.93

278.6
224.3
—
—
—
—
—
—
2.6

62.1%
57.1%
—
—
—
—
—
—
50%

1.

Average employee includes all UK employees in service on 1 April 2019 and 31 March 2021 but excludes those who were on maternity leave, long‑term sick leaveand those who started or ended employment within the period.

2.

The average pay increase across all employees in the UK in 2020/21 was 2%.

3.

The value of the average employee bonus for the year ended 31 March 2021 (to be paid in July 2021) was not known at the time the Report and Financial Statements
were approved and consequently the number included is management’s best estimate of the bonus that will be paid.

4.

Alison Wood joined the Board on 8 September 2020 and was appointed Chair of the Remuneration Committee on 26 January 2021.

Relative importance of the spend on pay
The following table shows the Group’s employee costs relative to dividends and share buybacks:

Employee costs (£m)
Dividends (£m)1
Share buybacks (£m)
1.

Year ended
31 March
2021

Year ended
31 March2020% change

101.9
9.8
0

100.3
0
0

1.6%
100%
0%

For the year to 31 March 2020, the Board neither paid an interim nor a final dividend.

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117

Remuneration continued
Directors’ Remuneration Report continued
Statement of Shareholder voting (unaudited)
The resolution to approve the Directors’ Remuneration Policy was passed at the 2020 AGM and received the following votes from
Shareholders:Votes forVotes against% for% against

Votes marked
as abstain

46,549,719

1,849,350

96.2

3.8

4,242

Resolution

To approve the Directors’ Remuneration Policy

The resolution to approve the Annual Report on Remuneration at the 2020 AGM received the following votes from Shareholders:Votes forVotes against% for% against

Votes marked
as abstain

46,736,131

1,661,438

96.6

3.4

6,342

Resolution

To approve the Annual Report on Remuneration

How the policy will be applied in 2021/22 (unaudited)
Base salaries
As explained in the report, the CEO’s salary will be increasing from £451,452 to £500,000 effective from 1 July 2021. In line withthe general workforce, the GFD will receive a salary increase of 2% for 2021/22 effective from 1 July 2021. The GFD’s salary as aresult of the increase will be £359,406 (from £352,359).

Benefits and pension
These will be awarded in accordance with the approved policy. Benefits will be in line with those received in 2020/21. Pension willbe £61,964 for the CEO and £48,363 for the GFD (14% of the level of the (normal) salary rate at the start of 2020/21, frozen for theduration of this policy period).

Annual bonus
The maximum opportunity under the annual bonus plan for 2021/22 will be 125% of base salary for both the CEO and GFD, payablein cash up to the target level and then 50% in shares for any bonus earned in excess of the target payout level. Shares must be held
for three years.
A combination of financial (85%) and non‑financial strategic (15%) metrics will be used to determine the level of payment under theannual bonus for the CEO and GFD as detailed in the table below:
Weighting as
a % of salary
MeasureAdjusted operating profit margin (%)
Profit (£m)
Cash conversion (%)
Strategic objectives

Maximum

27.5%
55%
27.5%
15%

Non-financial strategic targets have been agreed. For the CEO and GFD, these objectives are linked to progressing opportunities
identified through the strategic review and, for the CEO, establishing clear strategic goals across the broad sustainability agenda
and, for the GFD, leadership and governance oversight of delivering a key capital project and broadening engagement with theinvestment community.
The Committee has chosen not to disclose, in advance, the performance targets for the forthcoming year as these include matterswhich the Committee considers commercially sensitive. Retrospective disclosure of the performance against them will be made innext year’s Annual Report on Remuneration.

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Company Information

Long‑term incentives in respect of the 2021/22 financial year
The 2021/22 PSP awards will be over shares with a market value at grant of 150% of salary for the CEO and GFD. Vesting will be
subject to the performance conditions as set out below measured over a three-year performance period commencing 1 April 2021.
The range for the EPS measure has been increased from those set for last year’s awards and for the ROCE measure is set at thesame level as last year.
Half of the award

Half of the award

EPS growth – 4% p.a. (25% vesting) to 12% p.a. (100% vesting)over three financial years commencing with the 2021/22
financial year.

ROCE – 24% in the final year of the performance period(2023/24 financial year) (25% vesting) to 30% (100% vesting).

Non‑Executive Directors’ fees
The Committee and the Board, as appropriate, have reviewed the fees for the Chairman and Non-Executive Directors. In line withthe general workforce, the basic fees for the Chairman and the Non-Executive Directors will increase by 2% for 2021/22, effectivefrom 1 July 2021.
Board Chair
Additional fee for Deputy Chair
Basic fee
Additional fee for Senior Independent Director
Additional fee for Committee Chair

2020/212021/22% increase£183,600£5,100£51,050£7,650£7,650£187,272£5,202£52,071£7,803£7,803

2%
2%
2%
2%
2%

Note: The fees shown for 2020/21 and 2021/22 are the annual rates as at 1 November 2020 and 1 July 2021 respectively.

ApprovalThis report was approved by the Committee on 7 June 2021 and has been approved subsequently by the Board for submission
to Shareholders at the Annual General Meeting to be held on 21 September 2021.

Alison Wood
Chair of the Remuneration Committee
7 June 2021

Oxford Instruments plc | Report and Financial Statements 2021

119

Relations with Shareholders

Financial calendar
4 March 2021
5 March 2021
22 March 2021
31 March 2021
14 April 2021
8 June 2021
8 June 2021
July 2021
21 September 2021
9 September 2021
10 September 2021
24 September 2021
15 October 2021
9 November 2021
March 2022
March 2022
March 2022
31 March 2022

Ordinary shares quoted ex-dividendRecord date for interim dividend
Dividend reinvestment (DRIP) last date for election
Financial year end
Payment of interim dividend
Announcement of preliminary results
Announcement of final dividend
Publication of Report and Financial Statements
Annual General Meeting
Ordinary shares quoted ex-dividendRecord date for final dividend
DRIP date
Payment of final dividend
Announcement of half‑year results
Ordinary shares quoted ex-dividend
DRIP last date for election
Record date for interim dividend
Financial year end

Investor publications
The Group website provides up‑to‑date information on corporate and investor
news, as well as a wide range of additional supporting documentation.
The Company’s Annual and Interim Reports are available to download from thewebsite, alongside recent recordings of the City results presentations. Find out more
online at www.oxinst.com/investors

Administrative enquiries
concerning shareholdings
You may view your shareholding anddividend history, register to receive yourdividends direct to your bank account orelect to re‑invest your dividends andregister a change of address online atwww.signalshares.com. To register to
use this facility you will need your Investor
Code (IVC), which can be found on yourshare certificate, dividend confirmation
statement or proxy card.
Administrative enquiries concerning
shareholdings in Oxford Instruments plc,
such as the loss of a share certificate,
dividend payments, or a change ofaddress, should be directed, in the first
instance, to the Registrar, Link Group,
Link Group, Central Square, 10th Floor,
29 Wellington Street, Leeds, LS1 4DL.
Tel: +44 (0)371 664 0300 (calls arecharged at the standard geographic rate
and will vary by provider. Calls outside
the United Kingdom will be charged at
the applicable international rate. Lines
are open between 09:00-17:30, Monday
to Friday excluding public holidays in
England and Wales).
Email:
shareholder.enquiries@linkgroup.co.uk
Website: www.signalshares.com
Correspondence should refer to Oxford
Instruments plc and state clearly theregistered name and address of the
Shareholder. Please notify the Registrar
promptly of any change of address.

120

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Dividend bank mandates

Shareholder communications

Link Share Dealing Services

If you wish dividends to be paid directly
into a bank or building society accountand notification to be sent to yourShareholder register address,
please update your details via
www.signalshares.com (you will need
your Investor Code if you have notregistered before). Alternatively, you cancontact the Company’s Registrar at theaddress given above for a dividend
mandate form. Overseas holders can alsochoose to receive payment directly into
their bank account or can be sent a draftin local currency. Further details oninternational payments are available
at http://ips.linkassetservices.com.

Unless you have elected to continue toreceive Shareholder communications bypost, you will be notified by post or, where
you have given us an email address forelectronic notification, by email that
Shareholder communications areavailable for viewing on the Company’s
website at www.oxinst.com/investors.
The Company reserves the right todistribute any communication in hard
copy if it deems this necessary.

A quick and easy share dealing service toeither sell or buy shares in many leading
UK companies is provided by Link Share
Dealing Services. An online andtelephone facility is available, providing
our Shareholders with an easy‑to‑accessand simple‑to‑use service. There’s noneed to pre‑register and there are nocomplicated forms to fill in. The online
and telephone dealing service allows you
to trade “real time” at a known pricewhich will be given to you at the time you
give your instruction. To deal online or bytelephone all you need is your surname,
Investor Code (IVC) reference number, fullpostcode, your date of birth and National
Client Identifier. Your Investor Code canbe found on a recent share certificate,statement or tax voucher. Should you not
be able to locate your IVC number, pleasecontact Link Group on +44 (0)371 664
0300 (calls are charged at the standard
geographic rate and will vary by provider.
Calls outside the United Kingdom will becharged at the applicable internationalrate. Lines are open between 09:0017:30, Monday to Friday excluding public
holidays in England and Wales). Please
have the appropriate documents to handwhen you log on or call, as thisinformation will be needed before you
can buy or sell shares.

Tel: +44 (0)371 664 0300 (calls arecharged at the standard geographic rate
and will vary by provider. Calls outside
the United Kingdom will be charged at
the applicable international rate. Lines
are open between 09:00-17:30, Monday
to Friday excluding public holidays in
England and Wales).

Shareholder enquiries
Shareholders who have questions
relating to the Group’s business or who
wish to have additional copies of theReport and Financial Statements should
apply to:Company Secretary
Oxford Instruments plc, Tubney Woods,
Abingdon, Oxfordshire OX13 5QX
Tel: 01865 393200 Fax: 01865 393442
Email: info.oiplc@oxinst.com

Website: www.signalshares.com

Website: www.oxinst.com

Duplicate shareregister accounts

Company registration

If you are receiving more than one copyof our report, it may be that your sharesare registered in two or more accounts
on our register of members. If that was
not your intention you might consider
merging them into one single entry.
Please contact Link Group, who will bepleased to carry out your instructions.

Registered office: Tubney Woods,
Abingdon, Oxfordshire OX13 5QXRegistered in England number: 775598
Website: www.oxinst.com
Oxford Instruments has an extensive
website which gives details of all its
products and services, contact
information, vacancies and latest news
announcements. An interactive investor
relations section gives information on
recent trading reports, share price data
and forthcoming events.

Analysis of Shareholders as at 31 March 2021
Size of shareholding

Up to 5,000 shares
5,001 to 50,000 shares
50,001 to 500,000 sharesOver 500,000 shares
Total

Numberof holders% of total

Total holding% of total

1,776
169
107
24
2,076

85.5
8.1
5.2
1.2
100

1,024,819
3,122,623
18,410,677
34,903,335
57,461,454

1.8
5.4
32.0
60.8
100

Oxford Instruments plc | Report and Financial Statements 2021

For further information on this service,or to buy and sell shares, please contact
www.linksharedeal.com (online dealing)or +44 (0)371 664 0445 (telephonedealing). (Calls are charged at thestandard geographic rate and will varyby provider. Calls outside the United
Kingdom will be charged at theapplicable international rate. Lines areopen between 09:00-17:30, Monday to
Friday excluding public holidays in
England and Wales). Full terms,
conditions and risks apply and areavailable on request or by visitingwww.linksharedeal.com.
This is not a recommendation to buy orsell shares. Remember the price of sharescan go down as well as up, and you are
not guaranteed to get back the amountthat you originally invested.

121

Report of the Directors

The Directors present their Report andthe Financial Statements of Oxford
Instruments plc for the year ended
31 March 2021.

Principal activity andbusiness reviews
The Company is the ultimate holding
company of a group of subsidiary
undertakings (the “Group”) engaged in
the research, development, manufacture,sale and service of high technology tools
and systems and is a leading provider ofhigh technology products, systems andtools to the world’s leading industrial
companies and scientific communities.
The Company is required to set out in thisreport a true and fair view of the businessof the Group during the financial year
ended 31 March 2021, the position of theGroup at the end of the financial year anda description of the principal risks anduncertainties facing the Group.
The information which fulfils theserequirements includes the Operations
Review on pages 34 to 45, the Finance
Review on pages 56 to 65 and the reporton Sustainability on pages 46 to 55, which
are incorporated in this report byreference. The operations, the strategic
review, the Research and Development
activities and likely future prospects of
the Group are reviewed in the Strategic
Report on pages 1 to 72.

Results and dividends
The results for the year are shown in theConsolidated Statement of Income on
page 132. The Directors recommend a
final dividend of 12.9p per ordinary share,
which together with the interim dividendof 4.1p per ordinary share makes a total of
17.0p per ordinary share for the year
(2020: nil). Subject to Shareholder
approval, the final dividend will be paidon 15 October 2021 to Shareholders
registered at close of business on
10 September 2021.

122

Risks and uncertainties

Directors’ conflicts of interest

The Board exercises proper andappropriate corporate governance for theGroup. It ensures that there are effective
systems of internal controls in place tomanage Shareholders’ interests and theGroup’s assets, including the assessment
and the management of the risks towhich the businesses are exposed, and tomonitor and manage the compliance withall the legal requirements that affect theGroup’s worldwide business activities.
However, such systems are designed to
manage rather than eliminate the risk offailure to achieve business objectives andcan provide only reasonable and not
absolute assurance against material
misstatement or loss.

The Companies Act 2006 allows
Directors of public companies toauthorise conflicts and potential conflictsof interest, where appropriate. Only
Directors with no interest in the matter
under consideration may participate in
the relevant decision and in doing so theymust act in a way which they consider ingood faith will be most likely to promote
the Company’s success. A conflicts policy
has been drawn up, which is reviewed
annually, and a register of conflicts andpotential conflicts is maintained.

The Executive Directors report to theBoard on changes in the business andin the external environment which may
affect the risks which the Group faces.
The Executive Directors also provide theBoard with financial information at each
Board meeting. Key performanceindicators are reviewed periodically.
There are a number of risks anduncertainties which may have a material
effect on the Oxford Instruments Group.
These are described in Principal Risks on
pages 66 to 70.

Directors
Biographies of all the Directors at
the date of this report, including theNon‑Executive Directors, appear on
pages 76 and 77. There have been nochanges to the Board during the year
to 31 March 2021 other than theappointment of Alison Wood on
8 September 2020 as a Non-Executive
Director. Thomas Geitner and Steve Blair
have advised that they will not be putting
themselves forward for re‑election at thisyear’s Annual General Meeting.

Directors’ interests
The beneficial interests of the Directors
in the Company’s share capital, all in fully
paid up shares at 31 March 2021, areshown below.
Details of share options for the Executive
Directors are shown in the Remuneration
Report on pages 113 and 114.

Ian Barkshire
Neil Carson
Steve Blair
Richard Friend
Thomas Geitner
Gavin Hill
Mary Waldner
Alison Wood

31 March
2021
Shares31 March
2020
Shares12,642
8,000
—
—
—
660
1,000
—

12,528
8,000
—
—
—
6,046
1,000
n/a

No Director was beneficially interested in
the shares of any subsidiary company at
any time during the year.
In the year to 31 March 2021, no Director
had a material interest in any contract ofsignificance with the Company or any of
its subsidiaries. Since the year end, there
have been no changes to the above
shareholdings apart from for Ian
Barkshire and Gavin Hill, who eachparticipate in the Oxford Instruments
Share Incentive Plan and since the year
end have each increased their beneficial
holding by 64 shares.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceInsurance cover andDirectors’ indemnities
For a number of years, the Group has
purchased insurance to cover its Directors
and Officers against their costs indefending themselves in legal
proceedings taken against them in thatcapacity and in respect of damages
resulting from the unsuccessful defenceof any proceedings. In addition, to theextent permitted by UK law, the Group
indemnifies its Directors and Officers forliabilities arising from such proceedings.
Neither the insurance nor the indemnity
provides cover for situations where the
Director has acted fraudulently or
dishonestly.

Share capital
The Company only has one class of sharecapital, which comprises ordinary sharesof 5p each. All shares forming part of theordinary share capital have the samerights and carry one vote each. There are
no unusual restrictions on the transfer ofa share.

Financial Statements

The full rights and obligations attaching
to the Company’s ordinary shares, as wellas the powers of the Directors, are set out
in the Company’s Articles of Association,a copy of which is available on the
Company’s website. These can also be
obtained from Companies House or by
writing to the Company Secretary.
During the year to 31 March 2021, theBoard issued 26,690 new shares(2020: 59,159) following the exercise of
options under the Company’s shareoption schemes. At 31 March 2021, theissued share capital of the Company was
57,461,453 ordinary shares of 5p each.
In connection with the Company’s equity
incentive plans, a separately
administered trust held 52,631 ordinary
shares at 31 March 2021 (representing
0.1% of the total issued share capital of
the Company). No shares in the Company
were acquired by the Company during
the year (2020: nil). Details of the sharecapital and options outstanding as at
31 March 2021 are set out in Notes 23
and 12 respectively to the Financial
Statements.

Company Information

At this year’s Annual General Meeting, theDirectors propose to renew the authorities
granted to them at last year’s AGM to:•allot ordinary shares up to an
aggregate nominal value of one‑thirdof the Company’s issued share capital
and, where full pre‑emption rights areapplied, up to an aggregate nominal
value of two‑thirds of the Company’s
issued share capital;•

allot ordinary shares up to an
aggregate nominal value of 10% of theCompany’s issued share capital
without first offering them to existing
Shareholders; and•buy back up to 10% of the Company’s
issued share capital.

Shareholders will be requested to renew
these authorities at the AGM, details of
which are set out in the Notice of the
Meeting.

Substantial shareholdings
The following are beneficial interests of 3% or more (where the holding is direct), or of 5% or more (where the holding is indirect),which have been notified to the Directors of the Company, in accordance with Chapter 5 of the Disclosure Guidance andTransparency Rules, of the Company’s issued ordinary share capital, the only class of voting capital, at 2 June 2021:

Ameriprise Financial
BlackRock Investment Management (UK) Limited
Sir MF and Lady KA Wood
Artemis Investment Management LLP
Norges Bank

Oxford Instruments plc | Report and Financial Statements 2021

Direct/indirect

Shares
‘000

% of
total

Indirect/direct
Indirect
DirectIndirect
Direct

7,447,548
3,658,741
3,003,030
2,909,731
2,249,930

13.0
6.4
5.2
5.1
3.9

123

Report of the Directors continued
Tax strategy
The Group’s tax strategy supports thestrategic objectives of the Group andapplies equally to both UK and non-UK
taxes and to all forms of tax. The Grouppays a significant amount of tax tonational and local governments,
including taxes on employment,
corporate taxes on profits, customs andexcise duty on purchases, withholding
taxes and environmental taxes. We also
administer VAT and similar sales taxes
charged to our customers andwithholdings on payments made to ouremployees. The Group’s tax strategy ispublished on the Group’s website atwww.oxinst.com/investors-content/
tax-strategy.

Payment of suppliers
The Group does not follow a standard
payment practice but agrees terms andconditions for its business transactions
with each of its suppliers. Payment is thenmade in accordance with these terms.
At 31 March 2021, trade creditors of theCompany and the Group’s UK subsidiaries
were equivalent to 12 days (2020: 15) and48 days (2020: 45) of purchases
respectively, based on the amounts
invoiced by suppliers during the year andthe amounts owed to trade creditors at
the end of the year.

Charitable donations
During the year, the Group madecharitable donations of £3,871(2020: £11,986). There have been nopolitical donations during the year.

Fixed assets
Whilst the market value of some fixed
assets may differ from book value, theDirectors believe that the differences are
not material.

124

Disclosure of information
to auditor
Pursuant to Section 418(2) of theCompanies Act 2006, the Directors whoheld office at the date of approval of thisDirectors’ Report confirm that, so far as
they are each aware, there is no relevant
audit information of which the Company’s
auditor is unaware; and each Director hastaken all the steps that he or she mightreasonably have been expected to havetaken as a Director to make himself or
herself aware of any relevant audit
information and to establish that theCompany’s auditor is aware of that
information.

Annual General Meeting
The Notice of the Annual General
Meeting to be held on 21 September 2021
is set out in a letter to Shareholders
together with explanatory notes relating
to the resolutions.

External auditor
The resolution to appoint BDO LLP as
auditor for the financial year 2020/21 waspassed at the 2020 Annual General
Meeting. Accordingly, during the year, theexternal audit services transitioned fromKPMG LLP to BDO LLP. A resolution to
re-appoint BDO LLP as auditor and toauthorise the Directors to set theirremuneration will be proposed at theAnnual General Meeting.

Change of control arrangements
There are a number of agreements thattake effect, alter or terminate upon achange of control of the Company
following a takeover, such as banking
agreements and Company share plans.
On a change of control, the Company’scommitted credit facilities may becancelled by lenders by giving not lessthan three days’ notice. It is also possiblethat pension plan funding arrangements
would need to be changed following achange of control if that resulted in aweakening of the employer covenant.

Corporate governance
The Board reviews its work on corporate
governance in the Corporate Governance
Report on pages 78 to 84.

Financial risk management
Details of the Group’s financial risk
management objectives and policies,
including the exposure to price, credit andliquidity risk, are set out in Note 21 to the
Financial Statements.

Diversity and inclusion
The Board recognises that its employees
are fundamental to the Group’s success.
The Group’s aim is to ensure there are
equal opportunities for all employees andthat there is an inclusive culture where
differences are valued and people are
given the environment in which they cando their best work. The Sustainability
Report on pages 51 and 52 further
describes how diversity and inclusion is
managed within Oxford Instruments.

Greenhouse gas emissions
To meet the requirements of theCompanies Act 2006 (Strategic andDirectors’ Report) Regulations 2013, CO2
emissions are reported on as part of ourreporting on greenhouse gas emissions in
Sustainability on page 49.

Material events
There were no material events since theyear end to report.
By order of the Board

Susan Johnson-BrettCompany Secretary
7 June 2021

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Directors’ Responsibilities
in relation to the Report and Financial Statements
The Directors are responsible forpreparing the Report and the Groupand Parent Company Financial
Statements in accordance withapplicable law and regulations.

•Company law requires the Directors to
prepare Group and Parent Company
Financial Statements for each financial
year. Under that law they are required toprepare the Group Financial Statementsin accordance with International Financial
Reporting Standards as adopted by theEuropean Union (“IFRS as adopted by theEU”) and applicable law and have elected
to prepare the Parent Company Financial
Statements in accordance with UK
accounting standards, including FRS 101
Reduced Disclosure Framework.

•

Under company law the Directors must
not approve the Financial Statements
unless they are satisfied that they give atrue and fair view of the state of affairs of
the Group and Parent Company and of
their profit or loss for that period. In
preparing each of the Group and Parent
Company Financial Statements, theDirectors are required to:•

select suitable accounting policies andthen apply them consistently;•

make judgements and estimates thatare reasonable, relevant, reliable andprudent;••

for the Group Financial Statements,
state whether they have been
prepared in accordance with IFRS as
adopted by the EU;
for the Parent Company Financial
Statements, state whether applicable
UK accounting standards have been
followed, subject to any material
departures disclosed and explained in
the Parent Company Financial
Statements;

assess the Group and Parent
Company’s ability to continue as agoing concern, disclosing, asapplicable, matters related to going
concern; anduse the going concern basis ofaccounting unless they either intend
to liquidate the Group or the Parent
Company or to cease operations,or have no realistic alternative but
to do so.

The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Parent
Company’s transactions and disclose withreasonable accuracy at any time thefinancial position of the Parent Company
and enable them to ensure that its
Financial Statements comply with theCompanies Act 2006. They are
responsible for such internal control as
they determine is necessary to enable thepreparation of Financial Statements thatare free from material misstatement,
whether due to fraud or error, and havegeneral responsibility for taking such
steps as are reasonably open to themto safeguard the assets of the Group andto prevent and detect fraud and otherirregularities.
Under applicable law and regulations,the Directors are also responsible forpreparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report
and Corporate Governance Statementthat comply with that law and thoseregulations.
The Directors are responsible for the
maintenance and integrity of thecorporate and financial information
included on the Company’s website.
Legislation in the UK governing the
preparation and dissemination offinancial statements may differ fromlegislation in other jurisdictions.

Oxford Instruments plc | Report and Financial Statements 2021

Responsibility statement of
the Directors in respect of theannual financial report
We confirm that to the best of ourknowledge:•

the Financial Statements, prepared inaccordance with the applicable set ofaccounting standards, give a true andfair view of the assets, liabilities,
financial position and profit or loss of
the Company and the undertakings
included in the consolidation taken asa whole; and•the Strategic Report/Directors’ Report
includes a fair review of thedevelopment and performance of thebusiness and the position of the issuer
and the undertakings included in the
consolidation taken as a whole,
together with a description of theprincipal risks and uncertainties thatthey face.

We consider the Report and Financial
Statements, taken as a whole, is fair,balanced and understandable andprovides the information necessary for
Shareholders to assess the Group’s
position and performance, businessmodel and strategy.
Signed on behalf of the Board

Ian Barkshire Gavin Hill
Chief Executive	Group FinanceDirector
7 June 2021

125

Independent Auditor’s Reportto the members of Oxford Instruments plc
Opinion on the financial statements

Independence

In our opinion:

Following the recommendation of the audit committee, we wereappointed by the Board of Directors on 4 March 2020 to audit
the financial statements for the year ending 31 March 2021 andsubsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is one
year, covering the year ended 31 March 2021. We remain
independent of the Group and the Parent Company inaccordance with the ethical requirements that are relevant toour audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. The non-audit services
prohibited by that standard were not provided to the Group or
the Parent Company.

•

the financial statements give a true and fair view of thestate of the Group’s and of the Parent Company’s affairs as
at 31 March 2021 and of the Group’s profit for the year
then ended;•

the Group financial statements have been properly preparedin accordance with international accounting standards inconformity with the requirements of the Companies Act 2006;•

the Group financial statements have been properly
prepared in accordance with international financial
reporting standards adopted pursuant to Regulation (EC)No 1606/2002 as it applies in the European Union;•

the Parent Company financial statements have been
properly prepared in accordance with international
accounting standards in conformity with the requirements of
the Companies Act 2006 and as applied in accordance withthe provisions of the Companies Act 2006; and•the financial statements have been prepared in accordancewith the requirements of the Companies Act 2006; and,as regards the Group financial statements, Article 4 of the
IAS Regulation.

We have audited the financial statements of Oxford
Instruments Plc (the ‘Parent Company’) and its subsidiaries(the ‘Group’) for the year ended 31 March 2021 which comprise
the Consolidated Statement of Income, the Consolidated
Statement of Comprehensive Income, Consolidated statementof Financial Position, Consolidated Statement of Changes in
Equity, Consolidated Statement of Cash Flows, Parent Company
Statement of Financial Position, Parent Company Statement of
Changes in Equity and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied intheir preparation is applicable law and international accounting
standards in conformity with the requirements of theCompanies Act 2006 and international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union, and as regards the Parent
Company financial statements, as applied in accordance withthe provisions of the Companies Act 2006.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Ourevaluation of the Directors’ assessment of the Group and the
Parent Company’s ability to continue to adopt the going concern
basis of accounting included:•

Evaluating the Directors’ method including the relevance andreliability of underlying data used to make the assessment,
and whether assumptions and changes to assumptions fromprior years are appropriate and consistent with each other.

•

Reviewing the reverse stress test, testing the arithmetic
accuracy of the model, challenging the assumptions applied
and where possible agreeing the model to supporting
documentation.

•

Challenging management on whether the reverse stress test
is appropriate and appropriately stresses the business.

•

Reviewing the period assessed by management ensuringthat it meets the requirements and challenging management
on future events that may impact the assessment completed.

•

Reviewing the adequacy and appropriateness of disclosuresin the financial statements regarding the going concern
assessment and any material uncertainties that may exist.

•

Assessing the available bank facilities to understand thefinancial resources available to the Group during theforecast period, and considering any related covenantsrequirements.

•

Comparing the level of available financial resources with theGroup’s financial forecasts, including taking account of
reasonably possible (but not unrealistic) adverse effects that
could arise from risks, both individually and collectively,
relating to the Group.

Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further describedin the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion. Our audit opinion is consistent
with the additional report to the audit committee.

126

Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on theGroup and Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when thefinancial statements are authorised for issue.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceIn relation to the Parent Company’s reporting on how it hasapplied the UK Corporate Governance Code, we have nothingmaterial to add or draw attention to in relation to the Directors’
statement in the financial statements about whether the
Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors withrespect to going concern are described in the relevant sectionsof this report.

Overview
Coverage1

50% of Group profit before tax
36% of Group revenue
73% of Group total assets

Key audit
matters

2021

Materiality

Group financial statements as a whole

Revenue recognition£2.6m based on 5% of profit before tax
1.

These are areas which have been subject to a full scope audit by the Group
engagement team.

An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of
the Group and its environment, including the Group’s system ofinternal control, and assessing the risks of material
misstatement in the financial statements. We also addressed
the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directorsthat may have represented a risk of material misstatement.

Financial Statements

Company Information

Our involvement with component auditors
For the work performed by component auditors, we
determined the level of involvement needed in order to be able
to conclude whether sufficient appropriate audit evidence has
been obtained as a basis for our opinion on the Group financial
statements as a whole. Our involvement with component
auditors included the following:
The work on 8 of the 12 components was performed bycomponent auditors, with the remainder, including the audit of
the parent company, being performed by the Group audit team.
All component audits were undertaken by BDO member firms,
ensuring consistent audit methodology and quality. The groupteam instructed the component auditors with specific focus on
the significant risk areas to be covered, including the Key Audit
Matter detailed above. The component materialities were set
by the group audit team, and ranged from £0.8m to £1.95m,
having regards to the size and risk of the specific component
in relation to the group as a whole.
The audit work by the group engagement team, as well as
the components, was performed remotely, with the exceptionof the inventory counts, which were all attended in person.
The Group audit team were unable to visit component locations
due to Covid related travel restrictions, however regular ‘Teams’
calls were undertaken through the planning, execution andcompletion stages of the work, where findings were discussed,
remote reviews of component auditors’ files were performed atboth the planning and completion stages, and additional work
was undertaken as necessary.

For the group audit we determined the individual components
on which the scope of our work would be undertaken, and foreach of these components we then determined whether they
are significant, material or ‘other in-scope’. We consider that acomponent is significant if it either represents around 10% ofgroup revenues, or 15% of PBT. A full-scope audit wasundertaken for the significant components, along with certain
material components which had full-scope local reporting
requirements. This gave total coverage of 69% of revenues and
53% of PBT, of which 36% and 50% respectively was performedby the group engagement team, with the remainder performedby BDO member firms. Full scope procedures gave coverage of
93% across total group assets. In addition specific procedures,
including revenue testing, were performed on components
representing 25% of group revenues and 36% of PBT, of which
13% and 34% respectively was performed by the groupengagement team.

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127

Independent Auditor’s Report continued
to the members of Oxford Instruments plc
An overview of the scope of our audit continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due tofraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter
Revenue recognition(Revenue£318.5 million;
2020: £317.4 million)
Refer to page 94(Audit Committee
Report), page 141(accounting policy).

How the scope of our audit addressed the key audit matter
2020/2021 Sales:

Our procedures included:

There is a risk that productrevenue is recognised before
control has passed,
particularly in the
NanoScience business unit.

Tests of detail:
Testing, on a sample basis, whether specific product revenue
transactions during the year and around the year-end, including thosewithin deferred and accrued income balances at the year-end, hadbeen recognised in the appropriate period. Each item was tested byassessing the nature of products, the terms of sale within theassociated contracts, the estimated split of revenue between productdelivery and installation where installation has yet to occur, andverifying the shipping/delivery dates to carrier information. We tested asample of product sales around the year end, with a focus on thehigher value, more complex systems, and specifically in the
NanoScience division. For the NanoScience division, product andinstallation revenues are recognised 100% after installation has been
completed per the Group policy; we obtained evidence of installation
completion to verify that revenue has been recognised in theappropriate period.

Given the nature of the
products’ varying shipping
terms and installation
arrangements, across thevarious divisions, there aremanual procedures involved
in determining when control
has passed, which is assessedby two factors, when shipping
terms have been met andwhen the installation elementof the sale has been
completed.
High-value systems sales canbe individually significant to
the Group’s result for the year,
and due to complexity indetermining the point at which
control has passed, this wasconsidered a key audit matter.

Testing, on a sample basis, whether service revenue transactions
have been recognised over the appropriate service period, basedon review of contracts and related journal entries.
Testing, on a sample basis, credit notes issued after the year-end,
for evidence that related revenue for the year under audit should
be reduced.
Key observations:
Nothing has come to our attention which suggests that, in all material
respects, revenue has been recognised in the incorrect period.

Our application of materiality
Final materiality for the group financial statements as a whole was set at £2.6m, determined with reference to a benchmark of
profit before tax.
Materiality for the parent company financial statements as a whole was set at £1.5m, determined with reference to a benchmarkof company total assets, of which it represents 0.33%. The parent company’s primary purpose is to hold investments in the group’s
subsidiaries.
We agreed to report to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding £65,000,
in addition to other identified misstatements that warranted reporting on qualitative grounds.
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisionsof reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

128

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Strategic Report

Governance

Financial Statements

Company Information

Based on our professional judgement, we determined materiality for the financial statements as a whole and performancemateriality as follows:
Group financial statements

Materiality
Basis for determining materiality
Rationale forthe benchmark applied

Performance materiality
Basis for determining performance materiality

Parent company financial statements

2021
£m

2021
£m

2.6
Profit before tax

1.5
Company
total assets
Considered to be the most
relevant measurefor the users of thefinancial statements
0.9
60% of materiality

Considered to be the most
relevant measurefor the users of thefinancial statements
1.56
60% of materiality

Component materiality
We set materiality for each component of the Group based on a percentage of between 31% and 75% of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged
from £0.8m to £1.95m. In the audit of each component, we further applied performance materiality levels of 60% of the component
materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.

Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £65,000. We also
agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information
The directors are responsible for the other information. The other information comprises the information included in the Report
and Financial Statements other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form ofassurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the otherinformation is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required todetermine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.

Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate GovernanceStatement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern andlonger-term viability

Other Code provisions•

The Directors’ statement with regards to the appropriateness of adopting the going concern basisof accounting and any material uncertainties identified, set out on page 72; and•The Directors’ explanation as to its assessment of the entity’s prospects, the period thisassessment covers and why the period is appropriate, set out on pages 71 and 72.

•

Directors’ statement on fair, balanced and understandable, set out on page 125;•

Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 66;•

The section of the annual report that describes the review of effectiveness of risk management
and internal control systems, set out on pages 88 and 89; and•The section describing the work of the audit committee, set out on pages 90 and 91

Oxford Instruments plc | Report and Financial Statements 2021

129

Independent Auditor’s Report continued
to the members of Oxford Instruments plc
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by theCompanies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report andDirectors’ report

In our opinion, based on the work undertaken in the course of the audit:•

the information given in the Strategic report and the Directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and•the Strategic report and the Directors’ report have been prepared in accordance with applicablelegal requirements.

In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic
report or the Directors’ report.
Directors’
remuneration

In our opinion, the part of the Directors’ remuneration report to be audited has been properly preparedin accordance with the Companies Act 2006.

Corporate
governancestatement

In our opinion, based on the work undertaken in the course of the audit the information about internal
control and risk management systems in relation to financial reporting processes and about sharecapital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Guidance andTransparency Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent
with the financial statements and has been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its
environment obtained in the course of the audit, we have not identified material misstatements in thisinformation.
In our opinion, based on the work undertaken in the course of the audit information about theCompany’s corporate governance code and practices and about its administrative, management andsupervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
We have nothing to report arising from our responsibility to report if a corporate governance statement
has not been prepared by the Parent Company.

Matters on which weare required to reportby exception

We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:•adequate accounting records have not been kept by the Parent Company, or returns adequate forour audit have not been received from branches not visited by us; or•the Parent Company financial statements and the part of the Directors’ remuneration report to beaudited are not in agreement with the accounting records and returns; or•certain disclosures of Directors’ remuneration specified by law are not made; or•

we have not received all the information and explanations we require for our audit.

Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine isnecessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have norealistic alternative but to do so.

130

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Strategic Report

Governance

Auditor’s responsibilities for the auditof the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect amaterial misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually orin the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of thesefinancial statements.

Extent to which the audit was capable ofdetecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliancewith laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:•••

We identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error, andthen design and perform audit procedures responsive tothose risks, including obtaining audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
We have identified and assessed the potential risks related toirregularities, including fraud, by considering the following:•

The nature of the industry, including the design of theGroup’s remuneration policies, which reward theachievement of group performance targets;•

Enquiries of management regarding: the compliance withlaws and regulations; the detection and response to therisk of fraud and any knowledge of actual, suspected or
alleged fraud; and the controls in place to mitigate risks
related to fraud or non-compliance with laws andregulations;•Obtaining an understanding of the legal and regulatory
framework in which the Group operates.

We have responded to risks identified by performing
procedures including the following:•

Performance of sample cut-off procedures over revenue
recognition around the year-end;•

Enquiry of in-house management and external legal
counsel concerning actual and potential litigation andclaims;•Performing analytical procedures to identify any unusualor unexpected relationships which may indicate risks of
misstatement due to fraud; and•Reading the minutes of meetings of those charged withgovernance.

Oxford Instruments plc | Report and Financial Statements 2021

Financial Statements••

Company Information

We have also considered the risk of fraud throughmanagement override of controls by:•

Sample testing the appropriateness of journal entries
and other adjustments; and•Assessing whether the judgements made in making
accounting estimates are indicative of potential bias,
in particular in respect of provisions for intellectual
property‑related claims and assumptions used indetermining the defined benefit pension liability.

Our testing was performed at a level we deemed capableof identifying material error.

Our audit procedures were designed to respond to risks ofmaterial misstatement in the financial statements, recognisingthat the risk of not detecting a material misstatement due tofraud is higher than the risk of not detecting one resulting fromerror, as fraud may involve deliberate concealment by, forexample, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures
performed and the further removed non-compliance with laws
and regulations is from the events and transactions reflectedin the financial statements, the less likely we are to becomeaware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.

Use of our report
This report is made solely to the Parent Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken sothat we might state to the Parent Company’s members thosematters we are required to state to them in an auditor’s reportand for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than
the Parent Company and the Parent Company’s members as abody, for our audit work, for this report, or for the opinions wehave formed.

Ian Oliver(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Reading
7 June 2021
BDO LLP is a limited liability partnership registered in Englandand Wales (with registered number OC305127).

131

Consolidated Statement of Income
Year ended 31 March 2021
2020

2021

Note

Revenue
Cost of sales
Gross profit
Research and development
Selling and marketing
Administration and shared services
Share of profit of associate, net of tax
Foreign exchange gain/(loss)
Operating profit
Interest credit on pension scheme net
assetsOther financial income
Financial income
Financial expenditure
Profit/(loss) before income tax
Income tax (expense)/credit
Profit/(loss) for the year fromcontinuing operations(Loss)/profit from discontinued
operations after tax
Profit/(loss) for the year attributable
to equity holders of the parent

3

5

8
9
3
13

Total
£m

Adjusted£m

Adjusting
item1
£m

Total
£m

318.5
(153.7)164.8(30.0)(44.5)(34.5)
—
0.9
56.7

—
—
—
(1.3)
—
(8.8)
—
6.4
(3.7)

318.5
(153.7)164.8(31.3)(44.5)(43.3)
—
7.3
53.0

317.4
(158.6)158.8(26.6)(47.7)(34.7)
0.7
—
50.5

—
(0.4)
(0.4)
(7.1)
—
(8.3)
6.5
(1.4)
(10.7)

317.4(159.0)158.4(33.7)(47.7)(43.0)
7.2
(1.4)
39.8

0.9
0.2
1.1
(1.9)
55.9
(10.8)

—
—
—
—
(3.7)
0.4

0.9
0.2
1.1
(1.9)
52.2
(10.4)

—
0.3
0.3
(1.3)
49.5
(9.3)

—
—
—
—
(10.7)
2.5

—
0.3
0.3
(1.3)
38.8
(6.8)

45.1

(3.3)

41.8

40.2

(8.2)

32.0

—

—

—

(0.5)

2.3

1.8

45.1

(3.3)

41.8

39.7

(5.9)

33.8

pence

pence

pence

pence

78.6
—
78.6

72.8
—
72.8

70.2
(0.9)
69.3

55.9
3.1
59.0

77.6
—
77.6

71.9
—
71.9

69.5
(0.9)
68.6

55.3
3.1
58.4

7

Earnings per share

Basic earnings per share– From continuing operations– From discontinued operations
From profit for the year

2

Diluted earnings per share– From continuing operations– From discontinued operations
From profit for the year

2

Dividends per share
Dividends paid
Dividends proposed

14

1.

Adjusted£m

Adjustingitems1
£m

—
17.0

14.4
—

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

The attached notes form part of these Financial Statements.

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Strategic Report

Governance

Financial Statements

Company Information

Consolidated Statement of Comprehensive Income
Year ended 31 March 2021
2021
£m

2020
£m

Profit for the year

41.8

33.8

Other comprehensive (expense)/income:Items that may be reclassified subsequently to profit or loss
Foreign exchange translation differences
Net cumulative foreign exchange gain on disposal of subsidiaries recycled to the Income Statement

(4.9)
—

2.5
(4.4)

(30.8)
5.5(30.2)
11.6

26.8
(5.1)
19.8
53.6

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

Oxford Instruments plc | Report and Financial Statements 2021

133Consolidated Statement of Financial Position
As at 31 March 2021
2021
£m

2020
as restated1
£m

15
29
16
6
19
22
25
17

21.1
7.3
122.6
—
—
1.1
16.3
13.1
181.5

21.8
8.2
135.5
—
—
—
30.7
17.3
213.5

18
19

58.7
75.6
1.9
5.0
128.0
269.2
450.7

58.8
71.1
0.2
0.9
119.5
250.5
464.0

23

2.9
62.4
0.2
6.6
194.1
266.2

2.9
62.2
0.2
11.5
174.8
251.6

24
29
22
28
17

—
4.9
—
0.7
4.9
10.5

—
6.5
0.9
0.9
10.2
18.5

24
26
29

30.4
126.1
2.6
6.2
—
8.7
174.0
184.5
450.7

52.0
125.1
2.1
4.6
2.6
7.5
193.9
212.4
464.0

Note

AssetsNon-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment in associateLong-term receivables
Derivative financial instruments
Retirement benefit asset
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current income tax receivable
Derivative financial instruments
Cash and cash equivalents

22
20

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

22
28

Total liabilities
Total liabilities and equity
1.

Details of restatement of prior year numbers can be found in the accounting policies.

The Financial Statements were approved by the Board of Directors on 7 June 2021 and signed on its behalf by:

Ian Barkshire

Gavin Hill

Director

Director

Company number: 775598

134

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Strategic Report

Governance

Financial Statements

Company Information

Consolidated Statement of Changes in Equity
As at 31 March 2021
Share capital£m

Share premium£mOther reserves£mTranslation
reserve£m

Retainedearnings
£m

Total
£m

2.9

62.2

0.2

11.5

174.8

251.6

—

—

—

—

41.8

41.8

—

—

—

(4.9)

—

(4.9)

—

—

—

—

—

—

—

—

—

—

(30.8)(30.8)

—

—

—

—

5.5

5.5

—

—

—

(4.9)

16.5

11.6

—

—

—

—

—

—

—
—
—
—

—
—
0.2
—

—
—
—
—

—
—
—
—

1.8
1.0
—
—

1.8
1.0
0.2
—

—
2.9

0.2
62.4

—
0.2

—
6.6

2.8
194.1

3.0
266.2

2.9

61.7

0.2

13.4

124.0

202.2

—

—

—

—

33.8

33.8

—

—

—

2.5

—

2.5

—

—

—

(4.4)

—

(4.4)

—

—

—

—

26.8

26.8

—

—

—

—

(5.1)

(5.1)

—

—

—

(1.9)

55.5

53.6

—

—

—

—

0.2

0.2

—
—
—
—

—
—
0.5
—

—
—
—
—

—
—
—
—

3.1
0.2
—
(8.2)

3.1
0.2
0.5
(8.2)

—
2.9

0.5
62.2

—
0.2

—
11.5

(4.7)
174.8

(4.2)
251.6

As at 1 April 2020
Total comprehensive income/(expense):
Profit for the year
Other comprehensive (expense)/income:– Foreign exchange translation differences–N et cumulative foreign exchange gain on disposal ofsubsidiaries recycled to the Income Statement– Remeasurement loss in respect of post‑retirement
benefits– Tax credit on items that will not be reclassified to
profit or loss
Total comprehensive (expense)/income
attributable to equity Shareholders of the parent
Transactions with owners recorded directly in equity:– Proceeds from exercise of share options– Credit in respect of employee service costs settled
by award of share options– Tax credit in respect of share options– Proceeds from shares issued– Dividends
Total transactions with owners recorded directlyin equity:
As at 31 March 2021
As at 1 April 2019
Total comprehensive income/(expense):
Profit for the year
Other comprehensive income/(expense):– Foreign exchange translation differences–N et cumulative foreign exchange gain on disposal ofsubsidiaries recycled to the Income Statement– Remeasurement gain in respect of post‑retirement
benefits– Tax charge on items that will not be reclassified to
profit or loss
Total comprehensive (expense)/income
attributable to equity Shareholders of the parent
Transactions with owners recorded directly in equity:– Proceeds from exercise of share options– Credit in respect of employee service costs settled
by award of share options– Tax credit in respect of share options– Proceeds from shares issued– Dividends
Total transactions with owners recorded directlyin equity:
As at 31 March 2020

Other reserves comprise the capital redemption reserve, which represents the nominal value of shares repurchased and thencancelled during the year ended 31 March 1999.
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 52,631 (2020: 72,121) of its own shares in an employee benefit trust. The cost of these shares is included within
retained earnings.

Oxford Instruments plc | Report and Financial Statements 2021

135

Consolidated Statement of Cash Flows
Year ended 31 March 2021
Note

Profit for the year
Profit for the year from discontinued operations
Profit for the year from continuing operations
Adjustments for:
Income tax expense
Net financial expense
Fair value movement on financial derivatives
Restructuring costs
Adjustments relating to defined benefit pension schemes
Profit on disposal of associate
Impairment of inventory
Impairment of capitalised development costs
Amortisation of acquired intangibles
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
Amortisation of capitalised development costs
Amortisation of capitalised software costs
Adjusted earnings before interest, tax, depreciation and amortisation
Charge in respect of equity settled employee share schemes
Share of profit of associate
Restructuring costs received/(paid)
Cash payments to the pension scheme more than the charge to operating profit
Operating cash flows before movements in working capital
Increase in inventories(Increase)/decrease in receivables
Increase in payables and provisions (includes FX movement of £3.3m (2020: (£1.9m))(Decrease)/increase in customer deposits
Cash generated from operations
Interest paid
Income taxes paid
Net cash from operating activities – continuing operations
Net cash from operating activities

136

7

13

6

16
29
15
16
16
12

2021
£m

2020
£m

41.8
—
41.8

33.8
(1.8)
32.0

10.4
0.8
(6.4)
0.4
—
—
—
1.3
8.4
2.8
3.8
2.5
—
65.8
1.8
—
0.3
(15.5)
52.4(1.3)(10.5)
11.3
(2.2)
49.7
(1.6)
(6.3)
41.8
41.8

6.8
1.0
1.4
0.2
(0.6)
(6.5)
0.4
7.1
8.7
3.4
3.5
2.7
0.3
60.4
3.1
(0.7)
(0.6)
(10.0)
52.2
(2.3)
3.3
2.5
6.6
62.3
(1.0)
(6.1)
55.2
55.2

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Note

Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Net cash flow on disposal of associate
Capitalised development expenditure
Decrease in long-term receivables
Net cash (used in)/generated from investing activities – continuing operations
Net cash generated from investing activities – discontinued operations
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from exercise of share options
Payments made in respect of lease liabilities
Repayment of borrowings
Dividends paid
Net cash used in financing activities – continuing operations
Net cash generated from financing activities – discontinued operations
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year
Cash and cash equivalents as per the Consolidated Statement of Financial Position
Bank overdrafts
Cash and cash equivalents in the Consolidated Statement of Cash Flows

Oxford Instruments plc | Report and Financial Statements 2021

29

20
20
24

2021
£m

2020
£m

0.2
(4.2)
—
(0.9)
—
(4.9)
—
(4.9)

0.1
(4.4)
11.7
(2.8)
1.4
6.0
8.7
14.7

0.2
—
(2.8)
(27.9)—(30.5)—(30.5)
6.4
95.4
(4.2)
97.6

0.5
0.2
(3.3)
(0.6)
(8.2)
(11.4)—(11.4)
58.5
35.2
1.7
95.4

128.0
(30.4)
97.6

119.5(24.1)
95.4

137

Accounting Policies
Year ended 31 March 2021
Oxford Instruments plc (the “Company”)
is a company incorporated and domiciledin the UK.
The Group Financial Statements havebeen prepared and approved by the
Directors in accordance with international
accounting standards in conformity withthe requirements of the Companies Act
2006, and in accordance withinternational financial reporting
standards adopted pursuant toRegulation (EC) No 1606/2002
as it applies in the European Union.
The Company has elected to prepare its
Parent Company Financial Statementsin accordance with FRS 101; these arepresented on pages 175 to 185.
The accounting policies set out below
have, unless otherwise stated, been
applied consistently to all periods
presented in these Group Financial
Statements.
The Financial Statements have been
prepared on a going concern basis basedon the Directors’ opinion, after making
reasonable enquiries, that the Group has
adequate resources to continue inoperational existence for theforeseeable future.
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position,
are set out in the Strategy section on
pages 30 and 31. The financial position of
the Group, its cash flows, liquidity position
and borrowing facilities are described in
the Finance Review on pages 56 to 65.
The relatively diverse nature of the Group
together with its current financial strength
provides a solid foundation. The Directors
have reviewed the Group’s forecasts andflexed them to incorporate a number ofpotential scenarios relating to changes in
trading performance and believe that theGroup will be able to operate within its
existing debt facilities which expire on
29 June 2023. This review also
considered hedging arrangements inplace. As a consequence, the Directors
believe that the Group is well placed to
manage its business risks successfully.
Further information can be found in theviability statement on pages 71 and 72.
The Financial Statements wereauthorised for issuance on 7 June 2021.

138(a) New accounting standards
No new accounting standards have been
adopted during the year.

(b) Significant estimatesand judgements
The preparation of Financial Statements
requires management to makejudgements, estimates and assumptions
that affect the application of accounting
policies and the reported amounts ofassets, liabilities, income and expenses.
Actual results may differ from theseestimates.

Significant judgements
In the opinion of the Group there are no
judgements made in the preparation of
the Financial Statements in respect ofwhich taking a different view would havea material impact on the Financial
Statements.

Significant estimates
Revisions to accounting estimates arerecognised in the period in which theestimate is revised if the revision affects
only that period or in the period of therevision and future periods if the revisionaffects both current and future periods.
Two key areas where estimates havebeen used and assumptions applied havebeen identified as follows.

Measurement of defined benefit
scheme liabilities
The Group recognises and measures costs
relating to defined benefit pension schemesin accordance with IAS 19 (Revised)
Employee Benefits. In applying IAS 19(Revised) the costs are assessed inaccordance with the advice of independent
qualified actuaries. This requires certain
estimates and assumptions in relation to
future changes in salaries and inflation, as
well as mortality rates, expected returns onplan assets and the selection of suitablediscount rates. The factors affecting theseassumptions are influenced by wider
macro-economic factors that are largely
outside of the Group’s control. A sensitivity
analysis is set out in Note 25.

Provisions for IP-related claims
Provisions for IP-related claims arerecognised in the period when it becomesprobable that there will be a future
outflow of funds resulting from past
expectations or events which can bereasonably estimated.

The timing of recognition requires theapplication of judgement to existing facts
and circumstances which can be subject
to change.
Amounts provided represent the Group’s
best estimate of exposure based on
currently available information.
Key assumptions surrounding estimation
uncertainty relate to estimating potential
royalty or profit-sharing rates surrounding
any product-related intellectual property
claims (see Note 27).

(c) Basis of preparationand consolidation
The Financial Statements are presented
in Sterling, rounded to the nearest £0.1m
and are prepared on the historical costbasis except as described below under
the heading “(e) Financial instruments”.
The Group Financial Statements include
the accounts of Oxford Instruments plc
and its subsidiary companies adjusted toeliminate intra-Group balances and any
unrealised gains and losses or income
and expenses arising from intra-Grouptransactions.
Subsidiaries are entities controlled by theGroup. Control exists when the Group is
exposed to or has rights to variable
returns from its investment with theinvestee and has the ability to affectthose returns through its power over theinvestee. In assessing control, potential
voting rights that are currently exercisable
or convertible are taken into account.
The results of subsidiary companies areincluded in the consolidated Financial
Statements from the date that control
commences until the date that control
ceases. The acquisition method is used toaccount for the acquisition of subsidiaries.
Associates are those entities in which theGroup holds more than 20% of the sharesand voting rights and has significant
influence, but not control, over thefinancial and operating policies.
The Group financial information
includes the Group’s share of the total
comprehensive income of the associate
on an equity accounted basis, from thedate that significant influencecommences until the date thatsignificant influence ceases.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

When the Group’s share of losses
exceeds its interest in associate, theGroup’s carrying amount is reduced to£nil and recognition of further losses is
discontinued except to the extent that theGroup has incurred legal or constructive
obligations or made payments on behalfof an associate.
The assets and liabilities of foreign
operations, including goodwill and fairvalue adjustments arising on
consolidation, are translated into Sterlingat exchange rates ruling at the end of thereporting period. Income statements andcash flows of foreign operations aretranslated into Sterling at averagemonthly exchange rates whichapproximate foreign exchange rates atthe date of the transaction. Foreignexchange differences arising on
retranslation are recognised through theStatement of Comprehensive Income.

(d) Foreign currency
An individual entity’s transactions inforeign currencies are translated at theforeign exchange rate ruling at the dateof the transaction. Monetary assets andliabilities denominated in foreign
currencies at the reporting date aretranslated at the foreign exchange rateruling at that date. Foreign exchange
differences arising on translation arerecognised in profit or loss. Non-monetary
assets and liabilities that are measured interms of historical cost in a foreign
currency are translated using theexchange rate at the date of thetransaction.

(e) Financial instruments
Financial assets and liabilities arerecognised in the Group’s Consolidated
Statement of Financial Position when theGroup becomes a party to the contractual
provisions of the instrument. Derivative
financial instruments of the Group areused to hedge its exposure to foreign
currency risks arising from operational,
financing and investment activities. The
Group does not hold or issue derivative
financial instruments for trading purposes.
All derivatives are initially recognised atfair value; attributable transaction costs
are recognised in profit or loss as incurred.
Foreign exchange contracts are classified
as “fair value through profit and loss” under
IFRS 9.

Financial Statements

Subsequent to initial recognition,
derivatives are measured at fair value andgains or losses on the settlement of suchderivatives are recognised in operating
expenses. Where such derivatives relate to
the following year’s exposure, any gains orlosses resulting from the change in fairvalue are recognised as an adjusting item
in operating expenses.
The fair value of forward exchange
contracts is their market price at theConsolidated Statement of Financial
Position date, being the present value ofthe forward price. The gain or loss on
remeasurement to fair value of forward
exchange contracts is recognised
immediately in the Consolidated
Statement of Income.
Contingent purchase consideration ismeasured at fair value at the date ofacquisition and subsequently carried atfair value, with movements recognised in
the Consolidated Statement of Income.

(f) Property, plantand equipment
Property, plant and equipment is statedat historical cost less provisions for
impairment (see accounting policy k) anddepreciation which, with the exception of
freehold land which is not depreciatedand rental assets (see below), is provided
on a straight-line basis over each asset’s
estimated economic life. Depreciation isprovided based on historical cost lessestimated residual value. The principal
estimated economic lives used for thispurpose are:Freehold buildings,
long leasehold landand buildings
Furniture and fittings
Machinery and otherequipment
Computer equipment
Vehicles50 years
10 years
5 to 10 years
4 years
4 years

For leasehold improvements, where thelength of the lease is less than theprincipal estimated economic lives noted
above, the length of the lease is used.

(g) Intangible assets(i) Goodwill
All business combinations are accounted
for by applying the acquisition method.
Goodwill represents amounts arising on
acquisition of subsidiaries.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

In respect of business acquisitions thathave occurred since 31 March 2004,
goodwill represents the difference
between the cost of the acquisition andthe fair value of the assets, liabilities andcontingent liabilities acquired. In respectof acquisitions prior to this date, goodwill
is included on the basis of its deemed
cost, which represents the amountrecorded under previous GAAP.
The Group expenses transaction costs
associated with its acquisitions andmovements in liabilities relating tocontingent consideration within theConsolidated Statement of Income inconformity with IFRS 3.
Goodwill arising on acquisitions is statedat cost less any accumulated impairment
losses and allocated to cash generating
units that are anticipated to benefit fromthe combination. It is not amortised but istested annually for impairment (seeaccounting policy k), or more frequently
when there is an indicator that the unit
may be impaired.

(ii) Development costs
Research and Development costs arecharged to the Consolidated Statementof Income in the year in which they are
incurred unless development expenditureis applied to a plan or design for the
production of new or substantially
improved products, in which case they
are capitalised. The criteria for
capitalisation include demonstration of
the technical feasibility of completing a
new intangible asset that will beavailable for sale and that the asset will
generate probable future economic
benefits. Where expenditure meets thecriteria, development costs arecapitalised and amortised through theConsolidated Statement of Income overtheir useful economic lives.

(iii) Acquired intangible assets
An intangible asset acquired with asubsidiary undertaking is recognised
as an intangible asset if it is separablefrom the acquired business or arises fromcontractual or legal rights, is expected togenerate future economic benefits andits fair value can be reliably measured.
The asset is amortised through theConsolidated Statement of Income overits useful economic life.

139

Accounting Policies continued
Year ended 31 March 2021
(g) Intangible assets continued(iv) Amortisation
Amortisation of intangible assets is
charged to the Consolidated Statementof Income on a systematic basis in
proportion to the use of the assets overtheir estimated useful economic lives asfollows:
Capitalised development
costs
3 to 5 years
Technology-relatedacquired intangibles
5 to 12 years
Customer-related acquired
6 months
intangibles
to 15 years
Development costs
acquired intangibles
10 years
Software10 years
Customer-related acquired intangible
assets include a number of different typesof asset. For example, the shorter end of
the useful economic life relates to theorder book of acquired businesses, whilst
the longer useful economic life relates toassets such as trademarks.

(h) Trade and other receivables
Trade and other receivables are initiallyrecognised at fair value and subsequently
stated at their amortised cost lessappropriate provision for impairment. The
provision for impairment of receivables isbased on lifetime expected credit losses,
which is then updated for any reasonable
and supportable forward-looking
information and expectations. Lifetime
expected credit losses are calculated byassessing historic credit loss experience.
The movement in the provision isrecognised in the Consolidated Statementof Income.

(i) Inventories
Inventories are stated at the lower of costand net realisable value. Cost includes
materials, direct labour, an attributableproportion of production overheads
based on normal operating capacity andall other expenditure incurred in acquiring
the inventories and bringing them to their
existing location and condition. Net
realisable value is the estimated selling
price in the ordinary course of business,less the estimated costs of completionand selling expenses.

140

Provision is made for obsolete,slow‑moving and defective stock whereappropriate in light of recent usage,
expected future requirements, newproduct introduction plans and likely
realisable values.
As outlined in note (r) below, the revenue
associated with both the sale andinstallation of certain complex products
is recognised at the time that the
installation is completed. The net
realisable value associated with complex
products is included in finished goods
inventories where the installation has
not yet been completed.

(j) Cash and cash equivalents
Cash and cash equivalents are carried in
the Statement of Financial Position atamortised cost.
Cash and cash equivalents comprise
cash balances and call deposits and are
carried at amortised cost. Bank
overdrafts that are repayable on demandand form an integral part of the Group’s
cash management are included as acomponent of cash and cash equivalents
for the purpose of the Statement of
Cash Flows.

(k) Impairment of
non‑current assets
All non-current assets are tested for
impairment whenever events orcircumstances indicate that their carrying
value may be impaired. Additionally,
goodwill is subject to an annual
impairment review.
For the purposes of impairment testing,assets are grouped together into thesmallest group of assets that generates
cash flows from continuing use that arelargely independent of the cash inflows
from other groups of assets.
An impairment loss is recognised in theConsolidated Statement of Income under
the administration and shared services
heading, to the extent that an asset’s
carrying value, or a cash generating unit’s
carrying value, exceeds its recoverable
amount, which represents the higher of its
net realisable value and its value in use.
Value in use is the present value of the
future cash flows expected to be derived
from the asset or from the cash
generating unit to which it relates.

The present value is calculated using
a discount rate that reflects the current
market assessment of the time value ofmoney and the risks specific to theasset concerned.
Impairment losses recognised in previous
periods for an asset other than goodwill
are reversed if there has been a change inestimates used to determine the asset’s
recoverable amount, but only to the extent
that the carrying amount of the asset does
not exceed its carrying amount had the
impairment loss not been recognised inprevious periods. Impairment losses inrespect of goodwill are not reversed.
Impairment losses recognised in respectof cash generating units are allocatedfirst to reduce the carrying amount of any
goodwill allocated to cash generating
units and then to reduce the carrying
amount of the other assets in the unit.

(l) Employee benefits
The Group operates a number of defined
benefit and defined contribution plans
which require contributions to be made to
independent trustee-administered funds.

(i) Defined contribution plans
Obligations for contributions to defined
contribution pension plans are recognised
as an expense in the Consolidated
Statement of Income as incurred.

(ii) Defined benefit plans
The Group’s net obligation in respect ofdefined benefit pension plans is calculated
separately for each plan by estimating theamount of future benefit that current andpast employees have earned in return for
their service in prior periods. That benefit is
discounted to determine its present value
and the fair value of any plan assets isdeducted. The calculation is performed bya qualified actuary using the projected unit
credit method.
All actuarial gains and losses incalculating the Group’s net obligation arerecognised in the Consolidated Statementof Comprehensive Income in the year.
The charge to the Consolidated Statementof Income reflects the current service cost.
The interest expense or income iscalculated on the net defined benefit
liability by applying the discount rate to
the net defined benefit liability, and isincluded within financial expenditure or
financial income in the Consolidated
Statement of Income respectively.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance(iii) Share-based paymenttransactions
The fair value of equity settled share option
programmes is measured at grant dateand charged to the Consolidated
Statement of Income, with a corresponding
increase in equity, on a straight-line basis
over the period during which theemployees become unconditionallyentitled to the options. The fair value of theoptions granted is measured using an
option valuation model, taking into accountthe terms and conditions upon which theoptions were granted.
The amount recognised as an expense isadjusted to reflect the actual number ofshare options that vest, except where
forfeiture is only due to market
performance conditions not being met.

Own shares held by ESOP trust
Transactions of the Group-sponsored
ESOP trust are treated as being those of
the Group and are therefore reflected in
the Group Financial Statements. In
particular, the trust’s purchases and salesof shares in the Group are debited andcredited directly to equity.

(m) Provisions
A provision is recognised in theConsolidated Statement of Financial
Position when the Group has a present
legal or constructive obligation as aresult of a past event and it is probablethat an outflow of economic benefits
will be required to settle the obligation.
A provision for warranty andproduct‑related liability is recognised
when the underlying products are sold.
A provision for restructuring is recognised
when the Group has approved a detailed
and formal restructuring plan and therestructuring has either commenced or
has been announced publicly. A provision
for onerous contracts is recognised whenthe expected benefits to be derived by theGroup from a contract are lower than theunavoidable cost of meeting its
obligations under the contract. A provision
for a claim or dispute is made when it isconsidered probable that an adverse
outcome will occur and the amount of
the loss can be reasonably estimated.

Financial Statements

Contractual and other provisions
represent the Directors’ best estimate of
the cost of settling future obligations
where the Directors, taking into accountprofessional advice received, assess that
it is more likely than not that suchproceedings may be successful.
If the effect is material, provisions are
determined by discounting the expected
future cash flows at a pre-tax rate thatreflects current market assessments ofthe time value of money and, whereappropriate, the risks specific to theliabilities.

(n) Trade and other payables
Trade and other payables are initiallyrecognised at their fair value andsubsequently stated at amortised cost.

(o) Contract liabilities
Customer deposits and deferred income
are classified as contract liabilities andincluded within trade and other payablesin the Statement of Financial Position:– Customer deposits represent the cash
payments received from customers prior
to the recognition of revenue in respect of
product sales; for example, deposits
received on order (and shipment in thecase of complex products where revenue
is not recognised until installation).
– Deferred income represents thecontract obligation of the Group toprovide services to customers where
payment has been received in advance,
typically at inception of a service ormaintenance contract.

(p) Government grants
Grants from Governments are recognised
at their fair value where there is areasonable assurance that the grant will
be received and the Group will comply
with all attached conditions.
Government grants relating to costs
are deferred and recognised in theConsolidated Statement of Income overthe period necessary to match them withthe costs they are intended tocompensate. Government grants relating
to property, plant and equipment are
deducted from the carrying amount of theasset and are credited to the Consolidated
Statement of Income on a straight-line
basis over the expected useful economic
lives of the related assets.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

During the year the Group received £0.4m
from the British Government as part of the
UK furlough scheme. This was fully repaid
during the year.

(q) Interest-bearing borrowings
Interest-bearing borrowings arerecognised initially at fair value lessattributable transaction costs. Subsequent
to initial recognition, interest-bearing
borrowings are stated at amortised costwith any difference between cost andredemption value being recognised in theConsolidated Statement of Income overthe period of the borrowings on an
effective interest basis.

(r) Revenue
Revenue is recognised in theConsolidated Statement of Incomewhen≈the performance conditions in
the contract with the customer are met.
In most cases where the contract
includes the sale of both a product andinstallation then the sale of the productand the related installation are treated as
two separate performance conditions.
This is because the Group considers thatthe customer is able to benefit from theproduct even if the Group does not supply
installation, i.e. it would be possible forthem to arrange installation by a third
party. In such situations, revenue inrespect of the product is recognised whencontrol passes to the customer which isnormally upon shipment of the product.
Revenue in respect of the installation isrecognised when the customer confirms
acceptance of the installation.
Revenue is allocated between the
product and installation based on therelative standalone selling prices of those
products and installation activities.
Where it is difficult to establish astandalone selling price by market
comparator, the standalone selling priceis estimated, where required, by applying
the cost plus margin approach.

141

Accounting Policies continued
Year ended 31 March 2021(r) Revenue continued
In the NanoScience business, which ispart of the Research & Discovery
segment, certain contracts for the saleof more complex systems are deemed tocomprise just one performance condition
as customers are unable to realise theeconomic benefit from having received
the equipment without the specialist
installation. Given the highlyinterdependent nature of the product andinstallation, this performance condition ismet, and the revenue recognised, when
the customer confirms acceptance of theinstalled product at their premises.
In the Service & Healthcare segment,
revenue for fixed term maintenance andsupport contracts is recognised using theoutput method by determining the
proportion of the elapsed time relative
to the contract period. Where the Service& Healthcare segment makes asset sales,similar considerations as those set out forthe other segments as outlined above
are applied.
Revenue excludes value added tax andsimilar sales-based taxes and is stated
before commission payable to agents
which is recognised in cost of sales.

(s) Income tax
Income tax on the profit or loss for theyear comprises current and deferred tax.
Income tax is recognised in profit or loss
except to the extent that it relates to items
recognised directly in equity, in whichcase it is recognised in equity.
Current tax is the expected tax payable
on the taxable income for the year, using
tax rates enacted or substantively
enacted at the reporting date, and any
adjustment to tax payable in respect ofprevious years. Tax positions are reviewed
to assess whether a provision should bemade based on prevailing circumstances.
Tax provisions are included within current
taxation liabilities.
Deferred tax is recognised in respect of
temporary differences between the
carrying amounts of assets and liabilities
for financial reporting purposes and theamounts used for taxation purposes.
The following temporary differences are
not provided for: the initial recognition of adeferred tax liability in respect of goodwill
arising on a business combination; theinitial recognition of assets or liabilities

142

that affect neither accounting nor taxable
profit; and differences relating toinvestments in subsidiaries to the extent
that they will probably not reverse in the
future.
The amount of deferred tax provided isbased on the expected manner ofrealisation or settlement of the carrying
amount of assets and liabilities, using tax
rates enacted or substantively enacted at
the Statement of Financial Position date.
A deferred tax asset is recognised only tothe extent that it is probable that futuretaxable profits will be available against
which the asset can be utilised. Deferred
tax assets are reduced to the extent that
it is no longer probable that the related
tax benefit will be realised.
Additional income taxes that arise fromthe distribution of dividends arerecognised at the same time as theliability to pay the related dividend.
Where there is uncertainty surrounding an
income tax position, consideration is given
to whether the tax authority (with fullknowledge of the facts) would probably bemore or less likely to accept the uncertain
tax position. If the conclusion reached isthat it is probable that the tax authority
would not accept a tax position a provision
is calculated either as the most likely
outcome (where the possible outcomesare binary or concentrated on one value)or as the expected value (where there is arange of possible outcomes) depending on
which method would provide the better
prediction for the resolution of theuncertainty.

(t) Leases
Leases under which the Group
acts as lessee
The Group recognises a right-of-use
asset and a lease liability at the leasecommencement date. The right-of-use
asset is initially measured at cost, which
comprises the initial amount of the leaseliability adjusted for any lease payments
made at or before the commencement
date, plus any initial direct costs incurredand an estimate of costs to dismantle andremove the underlying asset or to restore
the underlying asset or the site on which
it is located, less any lease incentives
received.

The right-of-use asset is subsequently
depreciated using the straight-line methodfrom the commencement date to theearlier of the end of the useful life of theright-of-use asset or the end of the lease
term. The estimated useful lives ofright-of-use assets are determined on thesame basis as those of property andequipment. In addition, the right-of-use
asset is periodically reduced by impairment
losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at
the present value of the lease paymentsthat are not paid at the commencement
date, discounted using the interest rate
implicit in the lease or, if that rate cannot
be readily determined, the lessee’s
incremental borrowing rate. Generally, theGroup uses its incremental borrowing rate
as the discount rate.
Lease payments included in themeasurement of the lease liability
comprise fixed payments.
The lease liability is measured atamortised cost using the effective interest
method. It is remeasured when there is achange in future lease payments arisingfrom a change in an index or rate, if there
is a change in the Group’s estimate of theamount expected to be payable under aresidual value guarantee, or if the Groupchanges its assessment of whether it will
exercise a purchase, extension or
termination option. If such
remeasurement is required, it isperformed using the original incremental
borrowing rate, unless there is a change
in estimated lease term; in which case it isperformed using a new incremental
borrowing rate.
When the lease liability is remeasured
in this way, a corresponding adjustment
is made to the carrying amount of theright-of-use asset, or is recorded in profit
or loss if the carrying amount of theright-of-use asset has been reduced
to zero.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a leaseterm of twelve months or less and leases of low-value assets, including IT equipment. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.

(u) Segment reporting
An operating segment is a distinguishable component of the Group that engages in business activities from which it may earnrevenues and incur expenses, including any revenues and expenses that relate to transactions with any of the Group’s othercomponents. Operating components are combined into aggregated operating segments to the extent that they have similar
economic characteristics. Aggregated operating segments’ operating results are reviewed regularly by the Group’s Board of
Directors to make decisions about resources to be allocated to the segment and to assess its performance, for which discrete
financial information is available. Segment results that are reported to the Board include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis.
A reportable segment is an aggregated operating segment in respect of which revenue or profit exceeds 10% of the Group total.
Discrete financial information is disclosed for each reportable segment.
During the year, the Directors reviewed the composition of the aggregated operating segments. The customer base of the Magnetic
Resonance operating segment was found to be more closely aligned to that of the Materials & Characterisation segment and thedecision was taken to move the Magnetic Resonance segment from the Research & Discovery segment to the Materials &Characterisation segment. The management of the segment was also realigned at the same time. The segmental information forthe prior year has been restated to reflect the amended aggregated operating segments.

(v) Dividends
Interim and final dividends are recognised as a liability when they are no longer at the discretion of the Company.

(w) New standards and interpretations not yet adopted
There are no standards or amendments that are not yet effective and that would be expected to have a material impact on theGroup in the current or future reporting periods and on foreseeable future transactions.

(x) Prior year restatement
In early 2021, the Financial Reporting Council (FRC) submitted a request for further information on the Group’s Report and Financial
Statements for the year ended 31 March 2020. The review conducted by the FRC was based solely on the Group’s published Reportand Accounts and does not provide any assurance that the Report and Accounts are correct in all material respects.
Following completion of this review, the Directors have concluded that the overdraft balances of Group entities should be separately
presented gross on the Consolidated Statement of Financial Position, rather than netted off against cash and cash equivalents held
either by the same entity, or other Group entities, with the same bank. These overdrafts are held with the Group’s relationship banks.
As a result, the Consolidated Statement of Financial Position as at 31 March 2020 has been restated as follows:

Consolidated Statement of Financial Position

Current assets
Cash and cash equivalents
Current liabilities
Bank loans and overdrafts
Net assets

2020(as reported)£m

Restatement£m

2020(restated)
£m

95.4

24.1

119.5

(27.9)
67.5(24.1)—(52.0)
67.5

The restatement did not result in any change to reported profit, earnings per share, net assets or cash flows reported in the 2020
financial year.
The impact on the opening Consolidated Statement of Financial Position as at 31 March 2019 is as follows:

Consolidated Statement of Financial Position

Current assets
Cash and cash equivalents
Current liabilities
Bank loans and overdrafts
Net assets

2019(as reported)£m

Restatement£m2019(restated)
£m

35.2

39.4

74.6

(0.6)
34.6

(39.4)—(40.0)
34.6

This did not result in any change to reported profit, earnings per share, net assets or cash flows reported in the 2019 financial year.

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143

Notes to the Financial Statements
Year ended 31 March 2021
1 Non-GAAP measures
In the preparation of adjusted numbers, the Directors exclude certain items in order to assist with comparability between peers
and to give what they consider to be a better indication of the underlying performance of the business. These adjusting items
are excluded in the calculation of adjusted operating profit, adjusted profit before tax, adjusted profit for the year from continuing
operations, adjusted EBITDA, adjusted EPS, adjusted cash conversion and adjusted effective tax rate. Details of adjusting items
are given below.
Adjusted EBITDA is calculated by adding back depreciation of property, plant and equipment, depreciation of right-of-use assets
and amortisation of intangible assets to adjusted operating profit, and can be found in the Consolidated Statement of Cash Flows.
The calculation of adjusted EPS can be found in Note 2. Adjusted effective tax rate is calculated by dividing the share of tax attributable
to adjusted profit before tax by adjusted profit before tax. The definition of cash conversion is set out in the Finance Review.

Reconciliation between operating profit and profit before income tax and adjusted profit
from continuing operations
2020

2021
Operating profit£mStatutory measure from continuing operations
Business reorganisation items
Adjustments relating to defined benefit pension schemes
Impairment of inventory
Impairment of capitalised development costs
Profit on disposal of associate
Amortisation and impairment of acquired intangibles
Fair value movement on financial derivatives
Total non-GAAP adjustments
Adjusted measure from continuing operations
Income tax expense
Adjusted profit for the year from continuing operations
Adjusted effective tax rates

53.0
0.4
—
—
1.3
—
8.4
(6.4)
3.7
56.7
56.7

Profit before
income tax£mOperating profit
£m

52.2
0.4
—
—
1.3
—
8.4
(6.4)
3.7
55.9
(10.8)
45.1

Profit before
income tax
£m

39.8
0.2
(0.6)
0.4
7.1
(6.5)
8.7
1.4
10.7
50.5

38.8
0.2
(0.6)
0.4
7.1
(6.5)
8.7
1.4
10.7
49.5
(9.3)
40.2

50.5

19.3%

18.8%

Business reorganisation items
These represent the costs of professional fees on an acquisition project and property-related one-off costs.
In the year to 31 March 2020, these represent the costs of one-off changes to senior management within the Research & Discovery
segment.

Adjustments relating to defined benefit pension schemes
During the year to 31 March 2020, the Group recognised a one-off accounting gain on the termination of its US defined benefit
pension scheme. See note 25 for further details.

Impairment of inventory
During the year to 31 March 2020, the Group implemented a new ERP system at a site within the Research & Discovery division.
In reconciling the inventory on the new system, a need for an impairment in respect of certain historic inventory differences was
identified. This has been treated as an adjusting item due to its one-off nature.

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Impairment of capitalised development costs
During the year, the Group reviewed the capitalised development costs to ensure they remained directly related to targeted productor software developments. The one-off non-cash impairment relates to delays in market launch of specific development projects
within the Materials & Characterisation segment.
During the year to 31 March 2020, the Group reviewed the capitalised development costs to ensure they remained directly related totargeted product or software developments. The one-off non-cash impairment relates to the Materials & Characterisation segment;
comprising software intangibles in Asylum Research, historical balances on general process development in Plasma Technology
and product development in NanoAnalysis that has been affected by a reduction in orders as a result of covid.

Profit on disposal of associate
During the year to 31 March 2020, the Group made a profit on disposal of its shareholding in Scienta Scientific AB; see Note 6.
This has been treated as an adjusting item due to its non-recurring nature.

Amortisation and impairment of acquired intangibles
Adjusted profit excludes the non-cash amortisation and impairment of acquired intangible assets and goodwill.

Fair value movement on financial derivatives
Under IFRS 9, 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 IFRS 9 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.

Share of taxation
Adjusting items include the income tax on each of the items described above.

Reconciliation of changes in cash and cash equivalents to movement in net cash
Net increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Repayment of borrowings
Movement in accrued interest
Movement in net cash in the year
Net cash at start of the year
Net cash at the end of the year

2021
£m

2020
£m

6.4
(4.2)
2.2
27.9
—
30.1
67.5
97.6

58.5
1.7
60.2
0.6
—
60.8
6.7
67.5

2021
£m

2020
as restated1£m—(30.4)
128.0
97.6(27.9)(24.1)
119.5
67.5

Reconciliation of net cash to Statement of Financial Position

Loan notes – unsecured
Overdrafts
Cash and cash equivalents
Net cash at the end of the year
1.

Prior year numbers have been restated. Details can be found in the accounting policies.

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145

Notes to the Financial Statements continued
Year ended 31 March 2021
2 Earnings per share
Basic and diluted EPS from continuing operations are based on the result for the year from continuing operations, as reported in theConsolidated Statement of Income. Basic and diluted EPS from total operations are based on the result for the year attributable toequity Shareholders of the parent. Adjusted and diluted adjusted EPS are based on adjusted profit for the year from continuing
operations. The profit measures noted above are divided by the weighted average number of ordinary shares outstanding during
the year, excluding shares held by the Employee Share Ownership Trust. The table below reconciles these different profit measures.

Profit for the year attributable to equity Shareholders of the parent
Discontinued operations
Adjusting items:
Business reorganisation items
Adjustments relating to defined benefit pension schemes
Impairment of inventory
Impairment of capitalised development costs
Profit on disposal of associate
Amortisation and impairment of acquired intangibles
Fair value movement on financial derivatives
Adjusted income tax expense
Adjusted profit for the year from continuing operations

2021
£m

2020
£m

41.8
—

33.8
(1.8)

0.4
—
—
1.3
—
8.4
(6.4)
(0.4)
45.1

0.2
(0.6)
0.4
7.1
(6.5)
8.7
1.4
(2.5)
40.2

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

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

2021
Sharesmillion2020
Sharesmillion

57.5
(0.1)
57.4

57.4
(0.1)
57.3

2021
Sharesmillion2020
Sharesmillion

57.4
0.7
58.1

57.3
0.6
57.9

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

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

For the purposes of calculating diluted and diluted adjusted EPS, the weighted average number of ordinary shares is adjusted toinclude the weighted average number of ordinary shares that would be issued on the conversion of all potentially dilutive ordinary
shares expected to vest, relating to the Company’s share-based payment plans. Potential ordinary shares are only treated as
dilutive when their conversion to ordinary shares would decrease EPS or increase loss per share.

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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 aggregated operating segments are as follows:•

the Materials & Characterisation segment comprises a group of businesses focusing on applied R&D and commercial customers,
enabling the fabrication and characterisation of materials and devices down to the atomic scale;•the Research & Discovery segment comprises a group of businesses providing advanced solutions that create uniqueenvironments and enable measurements down to the molecular and atomic level which are used in fundamental research; and•the Service & Healthcare segment provides customer service and support for the Group’s products and the service of third-party
healthcare imaging systems.

The Group’s internal management structure and financial reporting systems have been amended to differentiate the threeaggregated operating segments based on the economic characteristics discussed above.
Reportable segment results include items directly attributable to a segment as well as those which can be allocated on areasonable basis. The operating results of each are regularly reviewed by the Chief Operating Decision Maker, which is deemed tobe the Board of Directors. Discrete financial information is available for each segment and used by the Board of Directors for
decisions on resource allocation and to assess performance. No asset information is presented below as this information is notpresented in reporting to the Group’s Board of Directors.
The results of the year to 31 March 2020 have been restated to reflect Magnetic Resonance moving from the Research & Discovery
segment to the Materials & Characterisation segment. Further information can be found in the accounting policies.

Results from continuing operations
Materials &Characterisation£mResearch &Discovery£mService &Healthcare
£m

Total
£m

Total segment revenue

148.6

113.4

56.5

318.5

Segment adjusted operating profit from continuing operations

20.3

19.5

16.9

56.7

Materials &Characterisation£mResearch &Discovery£mService &Healthcare
£m

Total
£m

Total segment revenue

145.8

117.8

53.8

317.4

Segment adjusted operating profit from continuing operations

21.0

14.5

15.0

50.5

Year to 31 March 2021

Year to 31 March 2020 as restated

The adjusted profit after tax of £nil (2020: £0.7m) from the Group’s associate is reported within the Research & Discovery segment.
Revenue in the Materials & Characterisation and Research & Discovery segments represents the sale of products. Revenue in theService & Healthcare segment relates to service income.
As at 31 March 2021, the Group had unfulfilled performance obligations under IFRS 15 of £198.1m (2020: £175.0m). It is anticipatedthat £178.9m (2020: £144.8m) of this balance will be satisfied within one year. The remainder is anticipated to be satisfied in thefollowing financial year.

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147

Notes to the Financial Statements continued
Year ended 31 March 2021
3 Segment information continued
Reconciliation of reportable segment profit from continuing operations
Materials &Characterisation£mResearch &Discovery£mService &Healthcare£mUnallocatedGroup items
£m

Total
£m

20.3
(0.4)
(1.3)
(2.0)
—
—
—
16.6

19.5
—
—
(6.4)
—
—
—
13.1

16.9
—
—
—
—
—
—
16.9

—
—
—
—
6.4
1.1
(1.9)
5.6

56.7
(0.4)
(1.3)
(8.4)
6.4
1.1
(1.9)
52.2

Materials &Characterisation£mResearch &Discovery£mService &Healthcare£mUnallocatedGroup items
£m

Total
£m

21.0
(0.1)
—
—
(6.3)
—
(2.3)
—
—
—
12.3

14.5
(0.1)
—
(0.4)
(0.8)
6.5
(6.4)
—
—
—
13.3

15.0
—
—
—
—
—
—
—
—
—
15.0

—
—
0.6
—
—
—
—
(1.4)
0.3
(1.3)
(1.8)

50.5
(0.2)
0.6
(0.4)
(7.1)
6.5
(8.7)
(1.4)
0.3
(1.3)
38.8

Depreciation

2021
£m

2020
as restated£mMaterials & Characterisation
Research & Discovery
Service & Healthcare
Unallocated Group items
Total

3.3
1.3
0.6
1.4
6.6

2.9
1.4
1.1
1.5
6.9

Capital expenditure

2021
£m

2020
as restated£mMaterials & Characterisation
Research & Discovery
Service & Healthcare
Unallocated Group items
Total

3.2
1.3
0.1
0.2
4.8

2.7
1.1
0.1
0.5
4.4

Amortisation and impairment

2021
£m

2020
as restated£mMaterials & Characterisation
Research & Discovery
Service & Healthcare
Unallocated Group items
Total

5.6
6.6
—
—
12.2

10.7
7.8
—
0.3
18.8

Year to 31 March 2021

Segment adjusted operating profit from continuing operations
Restructuring costs
Impairment of capitalised development costs
Amortisation of acquired intangibles
Fair value movement on financial derivatives
Financial income
Financial expenditure
Profit before income tax from continuing operations

Year to 31 March 2020 as restated

Segment adjusted operating profit from continuing operations
Restructuring costs
Adjustments relating to defined benefit pension schemes
Impairment of inventory
Impairment of capitalised development costs
Profit on disposal of associate
Amortisation of acquired intangibles
Fair value movement on financial derivatives
Financial income
Financial expenditure
Profit/(loss) before income tax from continuing operations

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Capitalised development costs

2021
£m

2020
as restated£mMaterials & Characterisation
Research & Discovery
Service & Healthcare
Unallocated Group items
Total

0.8
0.1
—
—
0.9

2.4
0.4
—
—
2.8

Revenue from continuing operations from external customers by destination

2021
£m

2020
£m

14.5
76.8
39.6
72.1
32.8
39.9
33.8
9.0
318.5

13.4
69.7
38.5
83.5
26.7
44.8
28.4
12.4
317.4

2021
£m

2020
£m

146.0
2.9
8.7
0.6
0.3
7.8
0.2
0.9
167.4

170.2
4.0
9.7
1.4
0.5
8.8
0.3
1.3
196.2

2021
£’000

2020
£’000

200

215

349
—
44
6
599

287
—
28
—
530

UK
China
Japan
USA
Germany
Rest of Europe
Rest of Asia
Rest of World
Total
Non-current assets (excluding deferred tax)

UK
Germany
USA
Japan
China
Rest of Europe
Rest of Asia
Rest of World
Total

4 Auditor’s remuneration
Audit of these Financial Statements
Amounts received by the auditor and its associates in respect of:– Audit of Financial Statements of subsidiaries pursuant to legislation– Taxation compliance services– Audit-related assurance services– Other assurance services
Total fees payable to the auditor and its associates

Auditor remuneration in the year relates to the current auditor, BDO LLP. Auditor remuneration in the prior year relates to theprevious auditor, KPMG LLP.

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149

Notes to the Financial Statements continued
Year ended 31 March 2021
5 Research and development (R&D)
The total research and development spend by the Group is as follows:Year to 31 March 2021

Materials &Characterisation£mResearch &Discovery
£m

Total
£m

20.2
—
—
(2.3)
0.8
18.7

9.8
(0.1)
0.6
(0.2)
0.1
10.2

30.0
(0.1)
0.6
(2.5)
0.9
28.9

Materials &Characterisation£mResearch &Discovery
£m

Total
£m

16.0
—
0.1
(2.1)
2.4
16.4

10.6
—
—
(0.6)
0.4
10.4

26.6
—
0.1
(2.7)
2.8
26.8

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

Year to 31 March 2020 as restated

1

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
1.

Details of restatement of prior year numbers for changes in reporting segments can be found in the accounting policies.

6 Investment in associate
The Group held a 47% interest in the ordinary share capital of Scienta Scientific AB. Scienta Scientific AB is registered and has its
principal place of business in Sweden. On 28 January 2020, the Group sold its holdings in Scienta Scientific AB for £11.7m in cash.
The Group’s share of profit in its equity accounted associate for the period to 28 January 2020 was £0.7m. The Group did not receive
any dividend from the associate in the current or prior periods.
The profit on disposal recognised in the accounts to 31 March 2020 was £6.5m.

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7 Disposal of subsidiary and discontinued operations
On 21 February 2020, the Group disposed of its OI Healthcare business in the US for a final consideration of $14.9m, of which $1.5m
was held in escrow for 18 months pending any claims from the purchaser. By 31 March 2021, the balance held in escrow had
reduced to $0.6m given the resolution of certain purchase price adjustments.
In the year to 31 March 2020 the OI Healthcare business was classified as a discontinued operation. It was considered a major classof business on the basis of its size and that it was previously an operating segment and referred to in the Group’s Strategic Report.
During the year to 31 March 2021 there were no transactions relating to discontinued operations.
2020

2021

Results of discontinued operations

Revenue
Expenses
Adjusted (loss)/profit before tax
Income tax credit/(charge)
Adjusted (loss)/profit after tax
Adjusting items:
Restructuring costs
Amortisation of acquired intangibles
Income tax on adjusting items(Loss)/profit after tax
Gain on disposal
Tax on gain on disposal
Profit from discontinued operations after tax
Cash flows from discontinued operations
Net cash generated from operating activities
Net cash generated from investing activities
Net cash used in financing activitiesOI Healthcare£mIndustrial
Analysis£m

OI Healthcare£mIndustrial
Analysis
£m

—
—
—
—
—

—
—
—
—
—

14.8
(15.5)
(0.7)
0.2
(0.5)

—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

(0.1)
(0.8)
0.3
(1.1)
3.1
—
2.0

(0.2)
—
—
(0.2)
—
—
(0.2)

—
—
—

—
—
—

—
7.4
—

—
1.3
—

2021
pence

2020
pence

—
—
—
—

(0.9)
(0.9)
3.1
3.1

2021
£m

2020
£m

0.2
0.9
1.1

0.3
—
0.3

2021
£m

2020
£m

1.8
0.1
1.9

1.2
0.1
1.3

Earnings per share from discontinued operations
Adjusted basic loss per share
Adjusted diluted loss per share
Total basic earnings per share
Total diluted earnings per share

8 Financial income
Interest receivable
Interest credit on pension scheme net assets

9 Financial expenditure
Bank interest payable
Interest on lease liabilities

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151

Notes to the Financial Statements continued
Year ended 31 March 2021
10 Personnel costs
Wages and salaries
Social security costs
Contributions to defined contribution plans (Note 25)
Defined benefit (income)/expense (Note 25)
Charge in respect of employee share options

2021
£m

2020
£m

85.6
10.5
4.0
(0.5)
1.8
101.4

87.8
10.8
3.6
0.4
3.1
105.7

Directors’ emoluments are disclosed in the Remuneration Report on pages 97 to 119 of this Report and Financial Statements.
Included in the prior year total above is £5.3m in respect of discontinued operations.

11 Employees
The average number of people employed by the Group (including Directors and temporary employees) during the year was as follows:

Production
Sales and marketing
Research and development
Administration and shared services

2021
Number

2020
Number

628
405
367
219
1,619

611
394
365
215
1,585

12 Share option schemes
The Group operates three share option schemes:

All-employee Share Incentive Plan (SIP)All UK employees are eligible to participate in the Group’s HM Revenue and Customs-approved SIP. Participating employees make a cash
contribution to the plan each month. The Group contributes a further amount equal to 20% of the employee’s contribution. Independent
trustees then purchase matching shares in the market on behalf of the employees. The matching shares vest on the completion by theparticipating employee of a further three years’ service and can be withdrawn from the plan tax-free after five years’ service.

Medium-Term Incentive Plan Scheme (MTIP)
Options awarded under the Medium-Term Incentive Plan are made annually to certain senior managers. The exercise prices are £nil.
Options have a life of ten years with vesting subject to achievement of performance targets and a vesting period of a minimum of
three years (but may be up to five years).

Performance Share Plan Scheme (PSP)
Under the Performance Share Plan awards of performance shares (or nil-cost options) are made annually to certain senior
managers. Awards have a life of ten years with vesting subject to achievement of performance targets and a vesting period of aminimum of three years (but may be up to five years).
Share option schemes that have been discontinued but for which options were outstanding at the year end include the following:

Executive Share Option Scheme (ESO)
Options awarded under the Executive Share Option Scheme were made annually to certain senior managers. The exercise prices
were determined according to the mid-market closing share price on the day before the date of grant. Options have a life of ten
years and a vesting period of three years.
Some of the ESO options used total shareholder return (TSR) as a performance condition. As TSR is a market-based performance
condition, the accounting treatment differs from that for options subject to non-market performance conditions. This means that the
TSR performance conditions were incorporated into the calculation of the fair value as a discount in calculating the fair value.

Performance conditions
The ESO, MTIP and PSP schemes are or were subject to performance conditions which can be found in the Remuneration Report on
pages 97 to 119.
Administrative expenses include a charge of £1.8m (2020: £3.1m) in respect of the cost of providing share-based remuneration.
The cost of share options is calculated by estimating the fair value of the option at grant date and spreading that amount overthe vesting period after adjusting for an expectation of non-vesting.

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Fair values are determined using an internal valuation model based on a modified Black-Scholes model. Expected volatility has
been based on historical volatility over a period of time of the same length as the expected option life and ending on the grant date.
For options granted in the years ended 31 March 2021 and 2020, the fair value per option granted and the assumptions used in thecalculation are as follows:
Performance
Medium-Term
Share Plan
Incentive Plan
SchemeSchemeSeptember 2020 September 2020

Fair value at measurement date
Share price at grant date
Exercise price
Expected volatility
Expected option life (expressed as weighted average life used in
the modelling)
Expected dividend yieldRisk-free interest rate

Medium-Term
Incentive Plan
SchemeJuly 2019

Performance
Share Plan
SchemeJuly 2019£15.68£15.80£nil
42.4%£15.68£15.80£nil
42.4%£13.58£14.00£nil
38.2%£13.58£14.00£nil
38.2%

3 years
0.3%(0.1%)

3 years
0.3%(0.1%)

3 years
1.0%
0.5%

3 years
1.0%
0.5%

The options existing at the year end were as follows:
2020

2021

Options subsisting at the year end on unissued ordinary shares:
Executive Share Option Schemes
January 2011
December 2011
June 2015
June 2016
November 2016
Total options subsisting on existing ordinary shares
Percentage of issued share capital
Medium-Term Incentive Plan
September 2017
July 2018
July 2019
September 2020
Total options subsisting on existing ordinary shares
Percentage of issued share capital
Performance Share Plan
June 2016
September 2017
July 2018
July 2019
September 2020
Total options subsisting on existing ordinary shares
Percentage of issued share capital

Oxford Instruments plc | Report and Financial Statements 2021

Numberof shares

Numberof shares

Exercise
price

Period when exercisable—
22,426150,831
18,00043,849235,106
0.4%

£7.05
£9.90
£10.28£7.38£6.27

07/01/14 – 06/01/21
14/12/14 – 13/12/21
15/06/18 – 14/06/25
21/06/19 – 20/06/26
29/11/19 – 28/11/26

2,700
34,945
164,181
18,00049,750269,576
0.5%

48,53285,294
90,14980,376304,351
0.5%

£nil
£nil
£nil
£nil

25/09/20 – 24/09/27
03/07/21 – 02/07/28
15/07/22 – 14/07/29
23/09/23 – 22/09/30

99,39891,867
97,514—
288,779
0.5%

137,783
116,853
115,043
86,03274,815
530,526
0.9%

£nil
£nil
£nil
£nil
£nil

21/06/19 – 20/06/26
25/09/20 – 24/09/27
03/07/21 – 02/07/28
15/07/22 – 14/07/29
23/09/23 – 22/09/30

148,475
116,853
115,043
86,032—
466,4030.8%

153Notes to the Financial Statements continued
Year ended 31 March 2021
12 Share option schemes continued
The number and weighted average exercise prices of those options are as follows:
2020

2021
Numberof options

Weighted
exerciseaverage price

Numberof options

1,024,758
155,191(59,735)(45,850)(4,381)
1,069,983
538,274

£4.68
£0.00
£3.26
£9.03
£9.83
£2.44
£5.97

1,210,599
188,660(41,051)(307,450)(26,000)
1,024,758
418,051

2021
£m

2020
£m

9.7
(3.2)
6.5

9.1
(0.8)
8.3

2.0
1.9
3.9

(1.6)
0.1
(1.5)

10.4

6.8

52.2
11.0

38.8
8.5

0.4
0.1
—
0.3
(0.1)
(1.3)
10.4

0.1
0.1
(1.3)
0.6
—
(1.2)
6.8

Taxation (credit)/charge recognised directly in other comprehensive income
Deferred tax – relating to employee benefits

(5.5)

5.1

Taxation credit recognised directly in equity
Deferred tax – relating to share options

(1.0)

(0.2)

Weighted
average
exercise price

£2.44
£0.00
—
£5.97
£9.91
£2.04
£4.05

Outstanding at the beginning of the period
Granted during the year
Forfeited during the year
Exercised during the year
Lapsed during the year
Outstanding at the year end
Exercisable at the year end

The weighted average share price at the time of exercise of the options was £16.78 (2020: £13.55).
The total consideration received from exercise of options in the year was £0.2m (2020: £0.7m).

13 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
Adjustment in respect of prior years
Total tax expense
Reconciliation of effective tax rate
Profit before income tax
Income tax using the weighted average statutory tax rate of 21% (2020: 22%)
Effect of:Tax rates other than the weighted average statutory rate
Change in rate at which deferred tax recognised
Profit on disposal
Non-taxable income and expenses
Movement in unrecognised deferred tax
Adjustment in respect of prior years
Total tax expense

154

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Strategic Report

Governance

Financial Statements

Company Information

A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantively enacted on
6 September 2016. However, in the Budget on 11 March 2020, it was announced that this reduction would be reversed, which
was substantively enacted on 17 March 2020. Consequently, the UK corporation tax rate will remain at 19%. The UK deferred tax
liability at 31 March 2020 was calculated based on that rate.
On 5 March 2021 it was announced that the rate of UK corporation tax would be increased to 25% from 1 April 2023; however, at thereporting date, this change has not been substantively enacted. As such, the UK deferred tax assets and liabilities have been
calculated based on the enacted rate of 19%.
The Group carries tax provisions in relation to uncertain tax positions arising from the possible outcome of negotiations with tax
authorities. The provisions have been calculated based on the probable outcome of those negotiations from a range of possibilities
and assume that the tax authorities have full knowledge of the facts. Such provisions are a reflection of the geographical spread of
the Group’s operations and the variety of jurisdictions in which it carries out its activities.
On 2 April 2019 the EU Commission announced that it believes that in certain circumstances the UK’s Controlled Foreign Company(CFC) regime (introduced in 2013) for certain finance income constituted State Aid. The Commission instructed the UK Government torecover any such aid from affected parties. The Group has claimed the benefit of this exemption, and therefore may be required to
repay State Aid. The maximum amount of State Aid repayable as at 31 March 2020 was £1.2m in respect of tax and £0.1m in respectof interest, unless the decision is successfully challenged in the EU Courts. The Group believed that £0.2m might ultimately havebeen payable and a provision was made for that amount in the year to 31 March 2020. In early 2021, HM Revenue and Customs
advised the Group that it agreed with the Group’s position that it had not in fact been a beneficiary of State Aid. The provision of£0.2m has accordingly been released in the year to 31 March 2021.
In addition to the provision release following the enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act),
the Group was able to carry back tax losses in the US to earlier years, which resulted in a prior year adjustment of £2.7m.

14 Dividends per share
The following dividends per share were paid by the Group:

Previous period interim dividend
Previous period final dividend

2021
pence

2020
pence

—
—
—

3.8
10.6
14.4

2021
pence

2020
pence

4.1
12.9
17.0

—
—
—

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

Interim dividend
Final dividend

The interim dividend was not provided for at the year end and was paid on 14 April 2021. The final proposed dividend of 14.9 pence
per share was not provided at the year end and will be paid on 15 October 2021, subject to authorisation by the Shareholders at theforthcoming Annual General Meeting.

Oxford Instruments plc | Report and Financial Statements 2021

155

Notes to the Financial Statements continued
Year ended 31 March 2021
15 Property, plant and equipment
Land andbuildings£mPlant andequipment£mFixturesand fittings
£m

Total
£m

Cost
Balance at 1 April 2019
Additions – external
Disposals – sale of businesses
Disposals – other
Effect of movements in foreign exchange rates
Balance at 31 March 2020

14.9
0.2
(0.5)
—
(0.1)
14.5

49.1
4.2
(9.9)
(8.5)
0.5
35.4

9.9
0.7
(0.1)
(2.7)
—
7.8

73.9
5.1
(10.5)(11.2)
0.4
57.7

Balance at 1 April 2020
Additions – external
Disposals – other
Effect of movements in foreign exchange rates
Balance at 31 March 2021

14.5
0.2
(0.8)
(0.1)
13.8

35.4
3.8
(2.2)
(0.5)
36.5

7.8
0.1
(0.1)
(0.1)
7.7

57.7
4.1
(3.1)
(0.7)
58.0

Depreciation and impairment losses
Balance at 1 April 2019
Depreciation charge for the year
Disposals – sale of businesses
Disposals – other
Effect of movements in foreign exchange rates
Balance at 31 March 2020

5.1
0.4
(0.2)
—
(0.2)
5.1

36.6
3.5
(6.9)
(8.4)
0.4
25.2

8.0
0.3
(0.1)
(2.8)
0.2
5.6

49.7
4.2
(7.2)
(11.2)
0.4
35.9

Balance at 1 April 2020
Depreciation charge for the year
Disposals – other
Effect of movements in foreign exchange rates
Balance at 31 March 2021

5.1
0.4
—
(0.1)
5.4

25.2
3.1
(2.1)
(0.6)
25.6

5.6
0.4
—
(0.1)
5.9

35.9
3.9
(2.1)
(0.8)
36.9

Carrying amounts
Balance at 1 April 2019
Balance at 31 March 2020 and 1 April 2020
Balance at 31 March 2021

9.8
9.4
8.4

12.5
10.2
10.9

1.9
2.2
1.8

24.2
21.8
21.1

As at 31 March 2021, the net book value of plant and equipment included £1.2m (2020: £0.8m) of assets under construction.

156

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Strategic Report

Governance

Financial Statements

Company Information

16 Intangible assets

Cost
Balance at 1 April 2019
Additions – internally generated
Disposals – sale of businesses
Effect of movements in foreignexchange rates
Balance at 31 March 2020
Balance at 1 April 2020
Additions – internally generated
Disposals – other
Effect of movements in foreignexchange rates
Balance at 31 March 2021

Goodwill£m

Customerrelatedacquiredintangibles£mTechnologyrelatedacquiredintangibles£m

Development
costs acquired
intangibles£m

Development
costs internallygenerated£m

Software
£m

Total
£m

108.3
—
(5.9)

52.6
—
(22.0)

93.5
—
—

1.8
—
—

49.3
2.8
—

4.2
—
—

309.7
2.8
(27.9)

0.9
103.3

0.7
31.3

2.1
95.6

—
1.8

(0.1)
52.0

—
4.2

3.6
288.2

103.3
—
—

31.3
—
(0.5)

95.6
—
—

1.8
—
—

52.0
0.9
(4.4)

4.2
—
—

288.2
0.9
(4.9)

(1.5)
101.8

(1.5)
29.3

(3.9)
91.7

—
1.8

—
48.5

—
4.2

(6.9)
277.3

28.0
—
(5.9)

41.5
1.8
(20.7)

50.0
7.5
—

0.9
0.2
—

34.2
9.8
—

2.6
0.3
—

157.2
19.6
(26.6)

0.8
22.9

0.6
23.2

1.3
58.8

—
1.1

(0.1)
43.9

(0.1)
2.8

2.5
152.7

22.9
—
—

23.2
1.1
(0.5)

58.8
7.1
—

1.1
0.2
—

43.9
3.8
(4.4)

2.8
—
—

152.7
12.2
(4.9)

(1.2)
21.7

(1.3)
22.5

(2.9)
63.0

—
1.3

—
43.3

0.1
2.9

(5.3)
154.7

80.3

11.1

43.5

0.9

15.1

1.6

152.5

80.4
80.1

8.1
6.8

36.8
28.7

0.7
0.5

8.1
5.2

1.4
1.3

135.5
122.6

Amortisation and impairment losses
Balance at 1 April 2019
Amortisation and impairment charged
Disposals – sale of businesses
Effect of movements in foreignexchange rates
Balance at 31 March 2020
Balance at 1 April 2020
Amortisation and impairment charged
Disposals – other
Effect of movements in foreignexchange rates
Balance at 31 March 2021
Carrying amounts
Balance at 1 April 2019
Balance at 31 March 2020 and
1 April 2020
Balance at 31 March 2021

During the year the Group made impairments of £1.3m (2020: £7.1m) in respect of capitalised development costs. Further information
can be found in the Finance Review section of the Strategic Report.
The following intangible assets are considered material by the Directors as they represent 98% (2020: 93%) of total acquired
intangible assets:
2020

2021

Trademarks – Andor
Technology, know-how and patents – Andor:– Product related– Software related
Technology, know-how and patents – Asylum

Oxford Instruments plc | Report and Financial Statements 2021£m

Amortisation
periodyears

Remainingamortisation
period
years

£m

6.4

15.0

7.8

7.2

20.4
3.1
5.2

12.0
10.0
12.0

4.8
2.8
3.7

24.7
4.2
6.6

157

Notes to the Financial Statements continued
Year ended 31 March 2021
16 Intangible assets continued
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected tobenefit from that business combination. The carrying amount of goodwill was allocated to individual CGUs as follows:

Materials & Characterisation
NanoAnalysis
Research & Discovery
Andor
NanoScience
Magnetic Resonance

2021
£m

2020
£m

9.8

10.1

61.3
6.7
2.3
80.1

61.3
6.7
2.3
80.4

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
Accounting standards require an impairment test to be carried out by determining the recoverable amount of each CGU whichcontains goodwill. The recoverable amount is calculated as the higher of the fair value less costs to sell or the value in use of the
CGU. In the Group’s case, the recoverable amount is based on value in use calculations. Value in use is calculated by discounting
expected future cash flows. In previous years, the Group has used Board-approved five-year cash flow forecasts, prepared by the
management of each CGU and reviewed and amended by Group management as necessary together with 3.0% per annum growth
for the subsequent 20 years. This rate was considered to be at or below long-term market trends for the Group’s businesses.
The impact of coronavirus was considered in preparing the base case and downside profit forecast based on the Group’s five-yearplanning process completed in November 2020 and budget submitted in January 2021. The downside forecast was used as a basis
for the value in use calculation along with an assumption that annual average cash conversion would be 85%, which is the Group’s
target cash conversion and noted to be lower than that achieved over the last five years. Long-term growth was estimated to be
1.5% which was considered to be a prudent growth rate given current economic circumstances.

Key assumptions
The key assumptions are those regarding discount rates and growth rates.
The growth rates are at or below the Group’s view on long-term trends within its markets. Changes in selling prices and direct costs
are based on past practices and expectations of future changes in the market.
The pre-tax weighted average costs of capital used for Materials & Characterisation and Research & Discovery in impairment
testing are 13.6%-14.1% (2020: 13.7%-14.4%) and 13.6%-14.1% (2020: 12.5%-13.8%) respectively, in line with the risk associated with eachof the business segments. Management has estimated these discount rates by reference to past experience and an industry
average weighted cost of capital as adjusted for appropriate risk factors reflecting current economic circumstances and the risk
profiles of each CGU.

Sensitivity analysis
The Group’s estimate of impairments are most sensitive to changes in the discount rate and forecast growth rate. Sensitivity analysis
has been carried out by reference to both of these assumptions. This demonstrated that a 50 basis point increase in the discountrate would be required in order to eliminate the headroom of £0.8m in the X-Ray Technology business. Similarly, a reduction in thegrowth rate to -3.0% would be required in order to result in an impairment in that business. No reasonably possible change inassumptions would result in an impairment in the other businesses.

158

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Governance

Financial Statements

Company Information

17 Deferred tax

Balance at 1 April 2019
Recognised in income
Recognised in other comprehensive
incomeRecognised directly in equity
Effect of movements in foreignexchange rates
Balance at 31 March 2020
Recognised in income
Recognised in othercomprehensive income
Recognised directly in equity
Effect of movements in foreignexchange rates
Balance at 31 March 2021

Property,plant andequipment£m

Inventory£m

Employeebenefits£mIntangible
assets£m

Tax losses
£m

Other
£m

Total
£m

1.2
(0.4)

0.9
1.5

2.7
(1.4)

(3.0)
(3.4)

3.4
5.4

3.8
0.5

9.0
2.2

—
—

—
—

(5.1)
0.2

—
—

—
—

—
—

(5.1)
0.2

—
0.8
(0.1)

0.1
2.5
0.3

0.1
(3.5)
(3.0)

0.2
(6.2)
0.6

0.2
9.0
(1.5)

0.2
4.5
(0.2)

0.8
7.1
(3.9)

—
—

—
—

5.5
1.0

—
—

—
—

—
—

5.5
1.0

—
0.7

(0.2)
2.6

(0.1)
(0.1)

(0.1)
(5.7)

(0.7)
6.8

(0.4)
3.9

(1.5)
8.2

Certain deferred tax assets and liabilities have been offset as follows:
AssetsGross assets/(liabilities)
OffsetNet assets/(liabilities)

Liabilities

Net

2021
£m

2020
£m

2021
£m

2020
£m

2021
£m

2020
£m

15.1
(2.0)
13.1

19.0
(1.7)
17.3

(6.9)
2.0
(4.9)

(11.9)
1.7(10.2)

8.2
—
8.2

7.1
—
7.1

2021
£m

2020
£m

—
0.3
0.3

0.1
0.4
0.5

Deferred tax assets have not been recognised in respect of the following items:

Deductible temporary differences
Tax losses

The tax losses and the deductible temporary differences do not expire under current tax legislation. Deferred tax assets have notbeen recognised in respect of these items as it is not probable that future taxable profits will be available in the subsidiaries
concerned against which the Group can utilise the brought-forward tax losses.
No deferred tax liability has been recognised in respect of £32.2m (2020: £19.2m) of undistributed earnings of overseas subsidiaries
since the majority of such distributions would not be taxable. In other cases the Group considers that it is able to control the timing ofremittances so that any tax is not expected to arise in the foreseeable future.

18 Inventories
Raw materials and consumables
Work in progress
Finished goods

2021
£m

2020
£m

21.4
19.4
17.9
58.7

19.2
16.0
23.6
58.8

The amount of inventory recognised as an expense was £129.9m (2020: £134.3m). In the ordinary course of business, the Groupmakes impairment provisions for slow-moving, excess and obsolete inventory as appropriate. Inventory is stated after charging
impairments of £0.9m in the current period (2020: £3.2m). In the current year, £nil (2020: £nil) was reversed relating to previous
impairments. Impairments are included within gross profit.
Inventory carried at net realisable value is £0.3m (2020: £1.8m).

Oxford Instruments plc | Report and Financial Statements 2021

159

Notes to the Financial Statements continued
Year ended 31 March 2021
19 Trade and other receivables
Trade receivables
Less provision for impairment of receivables
Net trade receivables
Accrued income
Prepayments
Other receivables

2021
£m

2020
£m

61.5
(2.2)
59.3
2.9
4.1
9.3
75.6

61.8
(2.1)
59.7
1.2
3.7
6.5
71.1

Trade receivables are non-interest-bearing. Standard credit terms provided to customers differ according to business andcountry and are typically between 30 and 60 days.
The maximum exposure to credit risk for trade and other receivables plus accrued income, by geographic region, was:

UK
China
Japan
USA
Germany
Rest of Europe
Rest of Asia
Rest of World

2021
£m

2020
£m

9.0
11.1
10.5
17.3
8.3
9.0
5.5
0.8
71.5

6.6
11.8
9.8
17.6
4.2
10.0
5.9
1.5
67.4

The ageing of financial assets comprising net trade receivables and other receivables plus accrued income at the reporting date was:Current (not overdue)
Less than 31 days overdue
More than 30 but less than 91 days overdue
More than 90 days overdue

2021
£m

2020
£m

49.3
10.1
4.8
7.3
71.5

40.4
12.5
7.0
7.5
67.4

In both periods presented the entire provision against trade receivables relates to balances more than 90 days overdue.
The movement in the allowance for impairment of trade receivables during the year was as follows:

Balance at start of year
Increase/(decrease) in allowance
Balance at end of year

2021
£m

2020
£m

2.1
0.1
2.2

2.7
(0.6)
2.1

2021
£m

2020
as restated1
£m

128.0
(30.4)
97.6

119.5(24.1)
95.4

20 Cash and cash equivalents

Cash balances
Bank overdrafts
Cash and cash equivalents in the Consolidated Statement of Cash Flows1.

Details of restatement of prior year numbers can be found in the accounting policies.

160

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Governance

Financial Statements

Company Information

21 Financial risk management
The Group’s multinational operations and debt financing expose it to a variety of financial risks. In the course of its business, the Groupis exposed to foreign currency risk, interest rate risk, liquidity risk, commodity risk and credit risk. Financial risk management policies
are set by the Board of Directors. These policies are implemented by a central treasury function that has formal procedures to manage
foreign exchange risk, interest rate risk and liquidity risk, including, where appropriate, the use of derivative financial instruments.
Commodity risk is managed locally by the operating businesses. The Group has clearly defined authority and approval limits.
In accordance with its Treasury Policy, the Group does not hold or use derivative financial instruments for trading or speculative
purposes. Such instruments are only used to manage the risks arising from operating or financial assets or liabilities or highly
probable future transactions.
The Group uses derivative financial instruments to hedge its exposure to fluctuations in foreign exchange rates.
In common with a number of other companies, the Group has decided that the additional costs of meeting the extensive
documentation requirements of IFRS 9 to apply hedge accounting to derivative financial instruments used for hedging exposure
to foreign currency and interest rate volatility cannot be justified. Accordingly, the Group does not use hedge accounting forsuch derivatives.

Foreign currency risk
Foreign currency risk arises both where sale or purchase transactions are undertaken in currencies other than the respectivefunctional currencies of Group companies (transactional exposures) and where the results of overseas companies are consolidated
into the Group’s reporting currency of Sterling (translational exposures). The Group has operations around the world which record
their results in a variety of different local functional currencies. In countries where the Group does not have operations, it invariably
has some customers or suppliers that transact in a foreign currency. The Group is therefore exposed to the changes in foreign
currency exchange rates between a number of different currencies but the Group’s primary exposures relate to the US Dollar, theEuro and the Japanese Yen. To reduce uncertainty, the Group maintains a rolling hedge of forward contracts equivalent to 80%(2020: 80%) of the exposure expected to arise over the following twelve months. The remaining 20% is sold on the spot market.
The fair value of outstanding currency contracts recognised as a liability as at 31 March 2021 amount to £nil (2020: £3.5m) and thoserecognised as an asset amount to £6.1m (2020: £0.9m).
Movements in the fair value of derivative financial instruments are recognised in the Consolidated Statement of Income
immediately. However, in order to facilitate a more meaningful comparison of the Group’s performance year-on-year, the elementsof these movements that relate to hedges in respect of future sales are treated as an adjusting item in the calculation of adjusted
earnings (Note 1).
The Group’s translational exposures to foreign currency risks can relate both to the Consolidated Statement of Income and net
assets of overseas subsidiaries. The Group’s policy is not to hedge the translational exposure that arises on consolidation of theConsolidated Statements of Income of overseas subsidiaries.

Interest rate risk
Interest rate risk comprises both the interest rate price risk that results from borrowing at fixed rates of interest and also the interest
cash flow risk that results from borrowing at variable rates. The Group’s policy is to use a mixture of revolving short andmedium‑term floating rate debt underpinned by longer-term fixed rate debt. The short and medium-term floating rate debt provides
flexibility to reduce debt levels as appropriate. The longer-term fixed rate debt provides stability and cost certainty to the Group’s
financing structure.

Liquidity risk
Liquidity risk represents the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities whendue, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages this risk by maintaining adequate committed lines of funding from high quality lenders. The facilities committed
to the Group as at 31 March 2021 are set out in Note 24.

Oxford Instruments plc | Report and Financial Statements 2021

161

Notes to the Financial Statements continued
Year ended 31 March 2021
21 Financial risk management continued
Credit risk
Credit risk arises because a counterparty may fail to perform its obligations. The Group is exposed to credit risk on financial assets
such as cash balances, derivative financial instruments, accrued income, trade and other receivables. The Group’s credit risk is
primarily attributable to its trade receivables and cash balances. The amounts recognised in the Consolidated Statement of
Financial Position are net of expected credit losses, which are estimated by the Group’s management based on the Group’s
historical experience of losses, along with consideration of any reasonably and supportable forward-looking information and
expectations. Due to its wide geographic base and large number of customers, the Group is not exposed to material concentrationsof credit risk on its trade receivables. The Group’s experience of credit loss is minimal, which has and continues to be mitigatedthrough receiving payment in advance of delivery or using trade guarantees provided by the Group’s relationship banks. In theunusual event of a particular issue with a particular customer, a specific provision will be made if appropriate. Trade receivables are
subject to credit limits and control and approval procedures in the operating companies. There has been no material change in theGroup’s experience of credit losses over the reporting period.
Credit risk associated with cash balances and derivative financial instruments is managed by transacting with financial institutions
with high quality credit rating. In particular, a Board-approved policy sets out guidelines for which categories of institutions may be
used and the maximum amount which may be invested with each institution within a particular category. Accordingly, the Group’s
associated credit risk is limited. The Group has no significant concentration of credit risk. The Group’s maximum exposure to credit
risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the Group
Consolidated Statement of Financial Position.

Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk by type of
asset at 31 March 2021 is as shown below:

Long-term receivables
Trade receivables
Other receivables and accrued income
Cash and cash equivalents
Derivative financial instruments
1.

2021
£m

2020
as restated1
£m

—
59.3
12.2
128.0
6.1
205.6

—
59.7
7.7
119.5
0.9
187.8

Prior year numbers have been restated. Details can be found in the accounting policies.

The maximum exposure to credit risk for trade receivables is discussed in Note 19.
Other receivables include £7.9m (2020: £4.1m) in respect of VAT and similar taxes which are not past due date.

Capital management
The Board considers capital to comprise share capital, reserves and the net cash or net debt position of the Company. The Company
was in a net cash position at the year end. Total capital at the end of the current year totalled £168.6m (2020: £184.1m).
The Board’s long-term objective is to have an efficient capital structure by maintaining a balance between the higher returns thatmight be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. This ismonitored by reference to the ratio of net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) and theBoard has set itself internal limits, which are well inside any covenants the Group has with lenders. The Group maintains the rightto purchase its own shares in the market; the timing of these purchases would depend on market prices. Buy and sell decisions are
made on a specific transaction basis by the Board.
Each year the Board carefully considers the appropriate level of dividend payments. In doing this, the Board looks toincrease dividends in line with underlying earnings, although the Board will also take into account other considerations in theirdecision‑making process. The Board does not have a policy to pay a fixed dividend yield or to maintain a fixed rate of dividend
cover but assesses both of these metrics in line with sustained earnings growth.
As set out in the Chief Executive’s Statement, the Group will actively manage its portfolio of businesses and products, selecting
those markets with long-term growth drivers where we can maintain or grow leading positions. We will focus on those markets
where nanotechnology has the potential to address some of the world’s most complex and pressing challenges and where we candeliver unique solutions and service excellence. In line with the objective of maintaining a balance between borrowings and equity,
the Group would seek to finance organic growth (e.g. through investment in research and development) and smaller “bolt-on”
acquisitions from operating cash flow, thus maintaining balance sheet efficiency. Larger acquisitions would be financed either by
equity or a mixture of equity and debt so as to ensure the Group has a manageable ratio of net debt to EBITDA.

162

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Strategic Report

Governance

Financial Statements

Company Information

The Board encourages employees to hold shares in the Company. As well as various share option plans (full details of which are
given in Note 12), from April 2008 all UK employees have been offered the opportunity to take part in a Share Incentive Plan (SIP).
Under this plan, employees are able to invest up to £1,800 each tax year in shares in the Company. The Company awards one
additional free share (a matching share) for every five shares bought by each employee.
There were no changes to the Group’s approach to capital management during the year. Neither the Company nor any of its
subsidiaries are subject to externally imposed capital requirements.

22 Financial instruments
Fair values of financial assets and liabilities
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in
the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fairvalue if the carrying amount is a reasonable approximation of fair value.
2020 as restated1

2021
Fair value
hierarchy

Assets carried at amortised cost
Trade receivables
Other receivables and accrued income
Cash and cash equivalents
Assets carried at fair value
Derivative financial instruments:– Foreign currency contracts
Liabilities carried at fair value
Derivative financial instruments:– Foreign currency contracts
Liabilities carried at amortised cost
Trade and other payables
Bank overdrafts
Borrowings
Lease payables
1.

Carrying
amount£m

Fair value£m

Carrying
amount£m

Fair value
£m

59.7
7.7
119.5

59.3
12.2
128.0

2

6.1

6.1

0.9

0.9

2

—

—

(3.5)

(3.5)

(67.7)(30.4)—(7.5)(65.9)(24.1)(27.9)(8.6)

Prior year numbers have been restated. Details can be found in the accounting policies.

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflectedin the above table.

Derivative financial instruments
Derivative financial instruments are marked-to-market using market prices.

Fixed and floating rate borrowings
The fair value of fixed and floating rate borrowings is estimated by discounting the future contracted principal and interest cash
flows using the market rate of interest at the reporting date.

Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the carrying amount is deemed to reflect the fair value.
All other receivables/payables are discounted to determine their fair value. Advances received are excluded from other payables
above as these are not considered to be financial liabilities.

Lease payables
The lease liability is measured at amortised cost using the effective interest method.

Oxford Instruments plc | Report and Financial Statements 2021

163

Notes to the Financial Statements continued
Year ended 31 March 2021
22 Financial instruments continued
Fair values of financial assets and liabilities continued
Fair value hierarchy
The table above gives details of the valuation method used in arriving at the fair value of financial instruments. The different levels
have been identified as follows:•

Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;•

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and•Level 3: inputs for the asset or liability that are not based on observable market data.

There have been no transfers between levels during the year.

Maturity of financial liabilities
As at 31 March 2021

Foreign exchange contracts
Trade and other payables
Bank overdrafts
Borrowings
Lease payables

As at 31 March 2020 as restatedForeign exchange contracts
Trade and other payables
Bank overdrafts1
Borrowings
Lease payables
1.

Carrying
amount£m

Contractual
cash flows£m

Due within
one year£m

Due oneto five years£m

Due morethan five years£m—(67.7)(30.4)—(7.5)(105.6)

—
67.7
30.4
—
11.4
109.5

—
67.7
30.4
—
1.9
100.0

—
—
—
—
6.7
6.7

—
—
—
—
2.8
2.8

Carrying
amount£m

Contractual
cash flows£m

Due within
one year£m

Due oneto five years£m

Due morethan five years
£m

(3.5)
(65.9)(24.1)(27.9)(8.6)(130.0)

3.5
65.9
24.1
29.1
8.9
131.5

2.6
65.9
24.1
29.1
2.7
124.4

0.9
—
—
—
3.7
4.6

—
—
—
—
2.5
2.5

Carrying
amount2021£m

Carrying
amount2020
as restated1
£m

128.0
(30.4)

119.5(24.1)———(27.9)Net cashon disposal Reclassifications£m£m

At 31 March£m

Prior year numbers have been restated. Details can be found in the accounting policies.

Variable rate instruments
Financial assets
Financial liabilities
Fixed rate instruments
Financial assets
Financial liabilities
1.

Prior year numbers have been restated. Details can be found in the accounting policies.

Reconciliation of movements in net cash after borrowings and lease liabilities
2021

Cash balances
Bank overdrafts
Cash and cash equivalents per cash flow statement
Current borrowings
Lease liabilities
Financial liabilities
Net cash after borrowings and lease liabilities

164

At 1 April£m

Cash flow£mExchangedifferences
£m

119.5
(24.1)
95.4(27.9)(8.6)(36.5)
58.9

14.0
(7.6)
6.4
27.9
0.3
28.2
34.6

(5.5)
1.3
(4.2)
—
0.8
0.8
(3.4)

—
—
—
—
—
—
—

—
—
—
—
—
—
—

128.0
(30.4)
97.6
—
(7.5)
(7.5)
90.1

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance2020

Cash balances
Bank overdrafts
Cash and cash equivalents per cash flow statement
Non-current borrowings
Current borrowings
Lease liabilities
Financial liabilities
Net (debt)/cash after borrowings andlease liabilities

Financial Statements

Company Information

Net cashon disposal Reclassifications£m£m

At 1 April£m

Funds flow£mExchangedifferences£m

74.6(39.4)
35.2(27.9)(0.6)(9.0)(37.5)

42.5
16.0
58.5
—
0.6
(2.3)
(1.7)

2.4
(0.7)
1.7
—
—
(0.2)
(0.2)

—
—
—
—
—
2.9
2.9

—
—
—
27.9
(27.9)——

119.5(24.1)
95.4—(27.9)(8.6)(36.5)

(2.3)

56.8

1.5

2.9

—

58.9

At 31 March£m

Sensitivity analysis
The Group has estimated the impact on the Consolidated Statement of Income and on equity of the following changes in market
conditions at the balance sheet date:•

one percentage point increase in interest rates;•

ten percentage point weakening in the value of Sterling against all currencies; and•ten percentage point strengthening in the value of Sterling against all currencies.

The sensitivities above represent the Directors’ view of reasonably possible changes in each risk variable, not worst-casescenarios or stress tests. The outputs from the sensitivity analysis are estimates of the impact of market risk assuming that the
specified changes occur at the year end and are applied to the risk exposures at that date, including the foreign currency
denominated cash and receivable balances of £21.1m equivalent reduced by the forward currency sales of £98.4m equivalent
entered into in respect of anticipated future foreign currency denominated sales. Accordingly, they show the impact on the balance
sheet of an instantaneous shock. The calculations include all hedges in place at the year end, but not the anticipated transactions
that they were entered into to hedge.
Actual results in the future may differ materially from these estimates due to commercial actions taken to mitigate any potential
losses from such rate movements, to the interaction of more than one sensitivity occurring and to further developments in global
financial markets. As such, this table should not be considered as a projection of likely future gains and losses.

As at 31 March 2021

Impact on adjusted profit (Note 1)
Impact on reported profit
Impact on equity

As at 31 March 2020

Impact on adjusted profit (Note 1)
Impact on reported profit
Impact on equity

Oxford Instruments plc | Report and Financial Statements 2021

1%
increasein interest rates£m10%
weakeningin Sterling£m

10%strengthening
in Sterling
£m

0.8
0.8
0.8

(9.8)
(7.7)
3.9

9.8
7.7
(7.2)

1%
increasein interest rates£m10%
weakeningin Sterling£m

10%strengthening
in Sterling
£m

0.4
0.4
0.4

(10.6)(10.6)
4.5

10.6
10.6
(4.9)

165

Notes to the Financial Statements continued
Year ended 31 March 2021
23 Called up share capital
Issued and fully paid ordinary shares:

At the beginning of the year
Issued for cash
At the end of the year

Allotted, called up and fully paid
Ordinary shares of 5 pence each

57,461,453

2020
Number ofshares57,434,763
26,69057,461,453

57,375,604
59,15957,434,763

2020

2021
Number ofshares2021
Number ofshares£m

Number ofshares£m

2.9

57,434,763

2.9

The holders of the ordinary shares are entitled to receive dividends as declared, a proportionate amount of capital on a winding upof the Company and one vote per share at meetings of the Company.

24 Borrowings
Earlier ofrepricing date
Effective
interest rate or maturity dateCurrent
Loan notes – unsecured
Bank overdrafts
At the end of the year1.

4.36% March 2021

2021
£m

2020
as restated1
£m

—
30.4
30.4

27.9
24.1
52.0

Prior year numbers have been restated. Details can be found in the accounting policies.

The Group’s undrawn committed facilities available at 31 March 2021 were £100.7m, comprising the undrawn portion of the Group’s£100.7m revolving credit facility. This facility expires on 28 June 2024. An option to extend the facility to June 2025 has been
exercised.
Bank overdrafts reflect the aggregated overdrawn balances of Group companies (even if those companies have other positive cash
balances). The overdrafts are held with the Group’s relationship banks.
The Group’s uncommitted overdraft facilities at 31 March 2021 were £17.8m.
A reconciliation of the Group’s borrowings balances is shown below.

Balance at the beginning of the year
Repayment of borrowings (cash flow from financing activities)
Increase/(decrease) in bank overdrafts
Interest charged
Interest paid
At the end of the year
1.

2021
£m

2020
as restated1£m

52.0(27.9)
6.3
1.9
(1.9)
30.4

67.9
(0.6)
(15.3)
1.2
(1.2)
52.0

Prior year numbers have been restated. Details can be found in the accounting policies.

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Strategic Report

Governance

Financial Statements

Company Information

25 Retirement benefit obligations
The Group operates a defined benefit plan in the UK and operated a defined benefit plan in the US until February 2020. The UK planoffers pensions in retirement and death in service benefit to members. Pension benefits are related to members’ final salary atretirement and their length of service. The scheme has been closed to new members since 2001 and closed to future accrual since2010. Details of the termination of the US plan are given below.
The amounts recognised in the Consolidated Statement of Financial Position are:
2020

2021

Present value of funded obligations
Fair value of plan assets
Recognised (asset)/liability for defined benefit
obligations

UK
£m

US
£m

Total
£m

UK
£m

US
£m

Total
£m

323.9
(340.2)——323.9(340.2)290.7(321.4)

0.0
—

290.7
(321.4)(16.3)—(16.3)(30.7)

0.0(30.7)The reconciliation of the opening and closing balances of the present value of the defined benefit obligation is as follows:
2020

2021

Benefit obligation at the beginning of the year
Past service cost
Interest on defined benefit obligation
Benefits paid
Settlement payment
Remeasurement (gain)/loss on obligation
Exchange rate adjustment
Benefit obligation at the end of the year

UK
£m

US
£m

Total
£m

UK
£m

US
£m

Total
£m

290.7
—
7.2
(8.8)
—
34.8
—
323.9

—
—
—
—
—
—
—
—

290.7
—
7.2
(8.8)
—
34.8
—
323.9

309.8
—
7.6
(9.3)
—
(17.4)
—
290.7

8.1
—
0.3
(0.5)
(9.2)
0.9
0.4
—

317.9
—
7.9
(9.8)
(9.2)
(16.5)
0.4
290.7

The reconciliation of the opening and closing balances of the present value of the fair value of plan assets is as follows:
2020

2021

Fair value of plan assets at the beginning of theyear
Interest on plan assets
Contributions by employer
Benefits paid
Settlement payment
Administrative expenses
Actual return on assets excluding interest income
Exchange rate adjustment
Fair value of plan assets at the end of the year

UK
£m

US
£m

Total
£m

UK
£m

US
£m

Total
£m

321.4
8.1
15.9
(8.8)
—
(0.4)
4.0
—
340.2

—
—
—
—
—
—
—
—
—

321.4
8.1
15.9
(8.8)
—
(0.4)
4.0
—
340.2

306.3
7.6
7.6
(9.3)
—
(0.3)
9.5
—
321.4

5.1
0.3
2.8
(0.5)
(8.7)
(0.1)
0.7
0.4
—

311.4
7.9
10.4
(9.8)
(8.7)
(0.4)
10.2
0.4
321.4

2021
£m

2020
£m

(0.5)
4.0
3.5

0.4
3.6
4.0

The expense recognised in the Consolidated Statement of Income is:

Total defined benefit (income)/expense
Contributions to defined contribution schemes

Oxford Instruments plc | Report and Financial Statements 2021

167

Notes to the Financial Statements continued
Year ended 31 March 2021
25 Retirement benefit obligations continued
Pension costs are recorded in the following lines in the Consolidated Statement of Income:

Cost of sales
Research and development
Selling and marketing costs
Administration and shared services
Financial income

2021
£m

2020
£m

1.0
1.1
1.0
1.3
(0.9)
3.5

1.1
1.0
0.7
1.2
—
4.0

The Group has agreed a basis for deficit recovery payments with the trustees of the UK pension scheme. The deficit recovery
payments are payable through to and including 2026 and will rise by approximately 3% per annum. The annual deficit recovery
payment was £7.8m (2020: £7.6m) for the financial year. In addition, the Directors decided to make an additional one-off paymentof £8.1m (2020: £nil) to the UK pension scheme to reduce the Group’s exposure.
In the year to 31 March 2019 an allowance of £0.3m was made for the expected cost of equalising Guaranteed Minimum Pension(GMP) between males and females.
GMP is a portion of pension that was accrued by individuals who were contracted out of the UK State Second Pension prior to
6 April 1997. Historically, there was an inequality of benefits between male and female members who have GMP. A High Court caseconcluded on 26 October 2018 and confirmed that GMPs need to be equalised.
In 2018 the trustees of the UK defined benefit scheme, in consultation with the Company, reduced its exposure to on-risk assets(a portfolio of market-focused asset classes, the majority being equities) with a corresponding increase in its liability-driven
investments, with the objective of steering a more stable journey to being fully funded. The pension fund’s gross exposure to on-risk
assets fell from 85% to 45%; the majority of transactions required to make this change were completed in February 2018. As a result,the level of risk inherent in the investment strategy is now significantly lower than previously, in addition to a substantial reduction in
funding level volatility. Following investment outperformance and contributions made by the Group in the years to 31 March 2021
the allocation to on-risk assets has been further reduced to 40%, with a view to further reduction in funding level volatility.
The Group has considered the requirements of IFRIC 14. The terms of the scheme give the Group the right to recover any surplus
assets on the scheme upon wind-up and therefore management has concluded that there is no impact on the amounts recognised
in respect of retirement benefit obligations i.e. there is no need to apply the “asset ceiling”.
The Group expects to contribute approximately £8.0m to the UK defined benefit plan in the next financial year.
Remeasurement gains and losses shown in the Consolidated Statement of Comprehensive Income:Actual return on assets excluding interest income
Experience gain on scheme obligations
Changes in assumptions underlying the present value of scheme obligations:– Financial– Demographic
Cumulative actuarial loss recorded in the Statement of Comprehensive Income since 1 April 2004 (dateof transition to IFRS)

2021
£m

2020
£m

4.0
4.6

10.2
0.2

(40.0)
0.6

17.0
(0.8)

(30.8)

1.6

The table below shows the sensitivity of the Consolidated Statement of Financial Position to changes in the significant pension
assumptions:

Present value of funded obligations
Fair value of plan assets
Surplus

Balance at
31 March 2021£m

Discount
rate(-0.1% p.a.)£m

Inflation
rate(+0.1% p.a.)£mLife
expectancy(+one year)
£m

323.9
(340.2)(16.3)

329.4(340.2)(10.8)

328.4(340.2)(11.8)

338.4(340.2)(1.8)

The valuation of defined benefit liabilities is most sensitive to changes in the discount rate, inflation rate and mortality rate. The
sensitivities have been calculated by running the liability calculations in full using the alternative assumptions. In each case, only
the indicated assumption has changed by the amount stated. For the inflation sensitivity, the impact on the assumptions that are
based on RPI inflation, such as CPI inflation and the inflation-linked pension increases, has been included.

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Governance

Financial Statements

Company Information

Defined benefit scheme – UKA full actuarial valuation of the UK plan was carried out as at 31 March 2018 which, for reporting purposes, has been updated to
31 March 2021 by a qualified independent actuary.
The major assumptions used by the actuary for the purposes of IAS 19 were (in nominal terms):
2020
%

2021
%

Discount rate
Rate of increase in pensions in payment (“3LPI”)
Rate of increase in pensions in payment (“5LPI”)
Rate of inflation (“CPI”)
Mortality – pre and post-retirement

2.1
2.5
2.5
2.2
3.0
2.6
2.5
1.9
91% of S2PA tables
91% of S2PA tables(93% for females)(93% for females)
future improvement
future improvement
in line with CMI 2020 with in line with CMI 2019 with1.25% long-term trend
1.25% long-term trend

As at 31 March 2021 the weighted average duration of the defined benefit obligations was 18 years (2020: 18 years).
The mortality assumptions imply the following expected future lifetime from age 65:

Pre-retirement – males
Pre-retirement – females
Post-retirement – males
Post-retirement – females

2021
years

2020
years

23.6
25.7
22.3
24.2

23.6
25.6
22.3
24.1

The assumptions have been chosen by the Directors from a range of possible actuarial assumptions, which, due to the timescales
covered, may not be borne out in practice.
The assets in the plan were:
2020

2021

Equities
Corporate and emerging market bonds
Gilts
Property funds
Insurance-linked funds
Credit and global loan funds
Hedge funds
Liability hedge overlay
Cash
Fair value of plan assets at the end of the year

Quoted£m

Unquoted
£m

Total
£m

Quoted£m

Unquoted
£m

Total
£m

42.7
32.6
186.4
0.1
—
0.1
8.7
—
8.4
279.0

17.1
—
—
9.8
21.4
—
11.2
1.7
—
61.2

59.8
32.6
186.4
9.9
21.4
0.1
19.9
1.7
8.4
340.2

49.7
13.9
171.5
0.1
—
0.2
14.8
—
9.1
259.3

—
—
—
10.4
27.0
—
17.4
7.3
—
62.1

49.7
13.9
171.5
10.5
27.0
0.2
32.2
7.3
9.1
321.4

Where assets have no observable market price a valuation will be provided by the fund manager. The scheme’s investment
manager will accept that valuation if it is within the expected range of performance. Otherwise, the investment manager will querythe valuation with the fund manager. Complex financial instruments are valued by the scheme’s investment manager who uses
financial models which take as their input the characteristics of the instrument and observable market data such as swap rates.
The UK pension scheme implements a liability hedge strategy which is designed to protect the scheme’s funding level fromchanges in gilt yields and inflation expectations. The liability hedge strategy consists of a portfolio of gilts, gilt derivatives, interest
rate and inflation swaps. At 31 March 2019, the liability hedge strategy fully covered the scheme’s liabilities from changes in gilt
yields and inflation expectations. However, this is not a precise match for the IAS 19 defined benefit obligation, which is based on
corporate bond yields rather than gilt yields.

Defined benefit scheme – US
During the prior year the US defined benefit plan was terminated. Members were given the option of transferring out their benefits.
On 4 March 2020 an annuity was purchased for each of those members who chose not to transfer their benefits. Following thepurchase of the annuities the Group has no ongoing liability to the former members of the plan.

Oxford Instruments plc | Report and Financial Statements 2021

169

Notes to the Financial Statements continued
Year ended 31 March 2021
25 Retirement benefit obligations continued
Defined contribution schemes
In the UK, employees are offered participation in the defined contribution Oxford Instruments Stakeholder Plan. The Company
contribution rate and employee contribution rate varies between grades and whether the individual had previously been in thedefined benefit scheme. The Company contribution ranges between 4% and 14% of base salary. The Group also operates a 401k
defined distribution plan in the US. Details of pension schemes contributions made in respect of Directors can be found in the
Remuneration Report.

26 Trade and other payables
Trade payables
Customer deposits
Social security and other taxes
Accrued expenses
Deferred income
Other payables

2021
£m

2020
£m

21.6
41.9
3.8
32.8
16.5
9.5
126.1

20.6
45.3
3.3
34.2
13.9
7.8
125.1

27 Contract assets and liabilities
2020

2021
Contract asset

Balance at 1 April
Transfers in the period from contract assets
to trade receivables
Amounts included in contract liabilities thatwere recognised as revenue during the period
Excess of revenue recognised over cash
(or rights to cash) being recognised during
the period
Cash received in advance of performance andnot recognised as revenue during the period
Balance at 31 MarchContract asset

Contract liabilities

Contract liabilities

Accruedincome£m

Customer
deposits£m

Deferredincome£mAccruedincome£m

Customer
deposits£m

Deferredincome£m

1.2(45.3)(13.9)

2.4(38.5)(14.7)

(1.2)

—

—

(2.4)

—

—

—

33.8

13.6

—

19.0

9.9

2.9

—

—

1.2

—

—

—
2.9

(30.4)(41.9)(16.2)(16.5)—
1.2(25.8)(45.3)(9.1)(13.9)

Contract assets and contract liabilities are included within trade and other receivables and trade and other payables respectively
on the face of the Consolidated Statement of Financial Position.
Payment terms for the sale of large goods typically require payment of a deposit on order, with the remaining payments due on
shipment, and in some cases installation. For lower value goods, payment is typically required at shipment. Maintenance andservice contracts are generally paid in full at inception. There is no financing component in the arrangements, and contracts are for
specified, pre-agreed amounts with no variable element.

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Governance

Financial Statements

Company Information

28 Provisions for other liabilities and charges
Warranties£mIP-related
claims
£m

Other
£m

Total
£m

Balance as at 1 April 2020
Provisions made during the year
Provisions used during the year
Provisions released during the year
Effect of movement in foreign exchange
Balance as at 31 March 2021

3.6
4.0
(2.0)
(0.5)
(0.1)
5.0

1.2
—
(0.1)
(0.5)
—
0.6

3.6
1.5
(0.8)
(0.1)
(0.4)
3.8

8.4
5.5
(2.9)
(1.1)
(0.5)
9.4

Amounts falling due before one year
Amounts falling due after more than one year

5.0
—

0.6
—

3.1
0.7

8.7
0.7

Warranty provisions
Product warranty provisions reflect commitments made to customers on the sale of goods in the ordinary course of business andincluded within the Group companies’ standard terms and conditions. Warranty commitments typically apply for a twelve-month
period. The provision represents the Directors’ best estimate of the Group’s liability based on past experience.

Intellectual property-related claims
The Company has on occasion been required to take legal or other actions to defend itself against proceedings brought by otherparties. Provisions are made for the expected costs associated with such matters, based on past experience of similar items andother known factors, taking into account professional advice received, and represent the Directors’ best estimate of the likely
outcome. The timing of utilisation of these provisions is frequently uncertain, reflecting the complexity of issues and the outcomeof various court proceedings and negotiations. Contractual and other provisions represent the Directors’ best estimate of the future
cost of settling obligations arising from past activity and reflect the Directors’ assessment of the likely settlement method, which
may change over time. However, no provision is made for proceedings which have been brought by other parties against Group
companies unless the Directors, taking into account professional advice received, assess that it is more likely than not that suchproceedings may be successful. The Group’s expectation is that the other provisions are likely to be utilised within a twelve-month
period. In respect of the provision for IP-related claims the range of possible outcomes is between £nil and £0.6m.

Other provisions
Other provisions relate to various obligations including obligations in respect of onerous contracts, product-related liabilities
and dilapidation provisions. £0.7m of other provisions fall due after more than one year and are expected to fall due within the next
eight years.

29 Leases
The Group leases a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease
contracts to provide for payments to increase each year by inflation and in others to be reset periodically to market rental rates.
In some jurisdictions’ property leases, the periodic rent is fixed over the lease term.
The Group also leases certain items of plant and equipment. In some contracts for services with distributors, those contracts containa lease of vehicles. Leases of plant, equipment and vehicles comprise only fixed payments over the lease terms.
The Group sometimes negotiates break clauses in its property leases. On a case-by-case basis, the Group will consider whether theabsence of a break clause would exposes the Group to excessive risk. Typically factors considered in deciding to negotiate a breakclause include:•

the length of the lease term;•

the economic stability of the environment in which the property is located; and•whether the location represents a new area of operations for the Group.

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171

Notes to the Financial Statements continued
Year ended 31 March 2021
29 Leases continued
The Group leases assets including land and buildings, vehicles and machinery. Information about leases for which the Group is
a lessee is presented below.

Right-of-use assets
Property leases£mOther leases
£m

Total
£m

Cost
Balance at 1 April 2019
Additions – external
Disposals – sale of businesses
Disposals – external
Effect of movements in foreign exchange rates
Balance at 31 March 2020

10.9
4.9
(3.8)
—
0.3
12.3

1.2
0.6
—
(0.2)
0.1
1.7

12.1
5.5
(3.8)
(0.2)
0.4
14.0

Balance at 1 April 2020
Additions – external
Disposals – external
Effect of movements in foreign exchange rates
Balance at 31 March 2021

12.3
2.2
(0.1)
(1.1)
13.3

1.7
0.3
(0.1)
—
1.9

14.0
2.5
(0.2)
(1.1)
15.2

Depreciation and impairment losses
Balance at 1 April 2019
Depreciation charge for the year
Disposals – sale of businesses
Disposals – other
Effect of movements in foreign exchange rates
Balance at 31 March 2020

2.9
3.0
(1.1)
—
0.3
5.1

0.4
0.4
—
(0.1)
—
0.7

3.3
3.4
(1.1)
(0.1)
0.3
5.8

Balance at 1 April 2020
Depreciation charge for the year
Disposals – other
Effect of movements in foreign exchange rates
Balance at 31 March 2021

5.1
2.4
—
(0.6)
6.9

0.7
0.4
(0.1)
—
1.0

5.8
2.8
(0.1)
(0.6)
7.9

Carrying amounts
Balance at 1 April 2019
Balance at 31 March 2020 and 1 April 2020
Balance at 31 March 2021

8.0
7.2
6.4

0.8
1.0
0.9

8.8
8.2
7.3

2021
£m

2020
£m

8.6
2.5
—
(0.1)
(2.8)
0.1
(0.8)
7.5

9.0
5.5
(2.9)
—
(3.3)
0.1
0.2
8.6

Amounts falling due after more than one year

4.9

6.5

Amounts falling due in less than one year

2.6

2.1

Lease liabilities
Balance at beginning of year
Additions – external
Disposals – sale of businesses
Disposals – external
Payments made (cash flows from financing activities)
Interest charge
Effect of movements in foreign exchange rates

172

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Strategic Report

Governance

Financial Statements

Company Information

Amounts recognised in Statement of Income
Interest on lease liabilities
Depreciation of right-of-use assets
Expenses on short-term leases not capitalised
Expenses on low-value asset leases not capitalised
Income from sub-letting right-of-use assets

2021
£m

2020
£m

(0.1)
(2.8)
—
—
—

(0.1)
(3.4)
—
—
—

2021
£m

2020
£m

(2.8)

(3.3)

Amounts recognised in Statement of Cash Flows
Payments made in respect of lease liabilities

30 Capital commitments
Proposed lease for new Plasma Technology site
On 28 January 2021, the Group entered into an agreement for a lease in respect of a proposed new site for its Plasma Technology
business. If the landlord completes all appropriate ground and building works to schedule, the practical completion is anticipated tooccur in the year to 31 March 2022. At that point, the Group will enter into a 20-year lease. Ground was broken for the new buildingin April 2021.
During the prior year, the Group did not enter into any capital commitments.

31 Contingent liabilities
In an international group of companies, a variety of legal claims arise from time to time. The Board, having taken legal advice, is of
the opinion that any ongoing actions and investigations will not have a material impact on the Group’s financial position.

32 Related parties
All transactions with related parties are conducted on an arm’s length basis and in accordance with normal business terms.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note.
The remuneration of key management personnel is as follows:

Short-term employee benefits
Post-employment benefits
Share-based payment charges
Total

2021
£m

2020
£m

3.4
0.2
1.5
5.1

3.1
0.1
1.9
5.1

Short-term employee benefits comprise salary and benefits earned during the year and bonuses awarded for the year.
During the prior year the Group received £0.2m of interest on a loan receivable from its associate, Scienta Scientific AB. The Group
sold its associate on 28 January 2020 and the loan was repaid in February 2020.

Oxford Instruments plc | Report and Financial Statements 2021

173

Notes to the Financial Statements continued
Year ended 31 March 2021
33 Exchange rates
The principal exchange rates to Sterling used were:Year-end rates

2021

2020

US Dollar
Euro
Japanese Yen

1.38
1.17
152

1.24
1.13
134

US Dollar

Euro

Japanese Yen

1.25
1.25
1.24
1.27
1.33
1.32
1.29
1.34
1.35
1.37
1.39
1.39

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

134
134
133
136
140
139
136
139
140
142
146
151

US Dollar

Euro

Japanese Yen

1.30
1.28
1.27
1.26
1.23
1.23
1.26
1.28
1.30
1.32
1.30
1.27

1.16
1.15
1.13
1.12
1.11
1.12
1.14
1.16
1.17
1.18
1.19
1.16

144
142
138
136
132
132
136
139
142
143
144
139

Average translation rates
Year to 31 March 2021

April
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary
February
March
Average translation rates
Year to 31 March 2020

April
May
June
July
AugustSeptember
OctoberNovember
DecemberJanuary
February
March

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Strategic Report

Governance

Financial Statements

Company Information

Parent Company Statement of Financial Position
As at 31 March 2021
Notes

AssetsNon-current assets
Intangible assets
Tangible assets
Right-of-use assets
Investments in subsidiary undertakings
Debtors
Derivative financial instruments
Retirement benefit asset
Deferred tax assets
Current assets
Debtors
Cash and cash equivalents

d
c
e
f
j
i

f

Total assets
EquityCapital and reserves attributable to the Company’s equity Shareholders
Share capital
Share premium
Capital redemption reserve
Other reserves
Retained earnings

2021
£m

2020
as restated1
£m

1.3
0.4
—
322.8
29.8
1.1
3.7
1.7
360.8

1.3
0.6
0.1
322.2
37.0
—
7.0
0.3
368.5

20.6
77.3
97.9
458.7

21.8
80.7
102.5
471.0

2.9
62.4
0.1
7.6
260.8
333.8

2.9
62.2
0.1
7.6
253.4
326.2

Liabilities
Non-current liabilities
Derivative financial instruments

g

—
—

0.9
0.9

Current liabilities
Bank loans and overdrafts
Other creditors

h
g

7.8
117.1
124.9
124.9
458.7

36.3
107.6
143.9
144.8
471.0

Total liabilities
Total liabilities and equity
1.

Details of restatement of prior year numbers can be found in the accounting policies.

The Company’s profit for the financial year was £10.7m (2020: £134.3m). Other comprehensive expense in the year was £5.8m (2020:
income of £4.9m). The expense will not subsequently be reclassified to profit or loss.
The Financial Statements were approved by the Board of Directors on 7 June 2021 and signed on its behalf by:

Ian Barkshire

Gavin Hill

Director

Director

Company number: 775598

Oxford Instruments plc | Report and Financial Statements 2021

175

Parent Company Statement of Changes in Equity
Year ended 31 March 2021

As at 1 April 2020
Profit for the year
Other comprehensive income:– Remeasurement of defined benefit liability,
net of tax
Total comprehensive income for the year
– Share options awarded to employees– Share options awarded to employees ofsubsidiaries– Tax credit in respect of share options– Proceeds from shares issued
As at 31 March 2021
As at 1 April 2019
Profit for the year
Other comprehensive income:– Remeasurement of defined benefit liability,
net of tax
Total comprehensive income for the year
– Proceeds from exercise of share option– Share options awarded to employees– Share options awarded to employees ofsubsidiaries– Tax credit in respect of share options– Proceeds from shares issued– Dividends paid
As at 31 March 2020

Share capital£m

Share premium
account£m

Capitalredemption
reserve£m

Other reserves£mRetainedearnings
£m

Total
£m

2.9
—

62.2
—

0.1
—

7.6
—

253.4
10.7

326.2
10.7

—
—
—

—
—
—

—
—
—

—
—
—

(5.8)
4.9
1.2

(5.8)
4.9
1.2

—
—
—
2.9

—
—
0.2
62.4

—
—
—
0.1

—
—
—
7.6

0.6
0.7
—
260.8

0.6
0.7
0.2
333.8

2.9
—

61.7
—

0.1
—

7.6
—

118.9
134.3

191.2
134.3

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

4.9
139.2
0.2
2.0

4.9
139.2
0.2
2.0

—
—
—
—
2.9

—
—
0.5
—
62.2

—
—
—
—
0.1

—
—
—
—
7.6

1.1
0.2
—
(8.2)
253.4

1.1
0.2
0.5
(8.2)
326.2

Details of issued, authorised and allotted share capital are included in Note 23 to the Group Financial Statements.
Details of the Group’s share option schemes are included in Note 12 to the Group Financial Statements.
Details of the Group’s defined benefit pension scheme are included in Note 25 to the Group Financial Statements.
Details of dividends paid are included in Note 14 to the Group Financial Statements.
Other reserves relates to premium on shares issued as part of acquisitions made in the year to 31 March 1987.

176

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Strategic Report

Governance

Financial Statements

Company Information

Notes to the Parent Company Financial Statements
Year ended 31 March 2021
(a) Accounting policies
Basis of accounting
Oxford Instruments plc is a company
incorporated and domiciled in the UK.
These Financial Statements have been
prepared in accordance with Financial
Reporting Standard 101 Reduced
Disclosure Framework (FRS 101) on
the historical cost basis, except thatderivative financial instruments arestated at their fair value.
In preparing these Financial Statements,
the Company applied the recognition,measurement and disclosure
requirements of international accounting
standards in conformity with therequirements of the Companies Act 2006.
In these Financial Statements, theCompany has applied the exemptions
available under FRS 101 in respect of thefollowing disclosures:•a cash flow statement and related
notes;•

comparative period reconciliations
for share capital, tangible fixed assets,intangible assets and investment
properties;•

disclosures in respect of transactions
with wholly owned subsidiaries;•

disclosures in respect of capitalmanagement;•

the effects of new, but not yet effective,
accounting standards; and•disclosures in respect of thecompensation of key management
personnel.

As the consolidated Financial Statementsof Oxford Instruments plc include theequivalent disclosures, the Company has
also taken the exemptions under FRS 101
available in respect of the following
disclosures:••

IFRS 2 Share-based Payments in
respect of Group settled share-based
payments; andcertain disclosures required by IFRS 13
Fair Value Measurement and thedisclosures required by IFRS 7
Financial Instrument Disclosures.

As permitted by Section 408 of theCompanies Act 2006, a separate
statement of income for the Company
has not been included in these Financial
Statements.
The accounting policies set out below
have, unless otherwise stated, been
applied consistently to all periods
presented in these Financial Statements.

Going concern
The Financial Statements have been
prepared on a going concern basis,
based on the Directors’ opinion, after
making reasonable enquiries, that theCompany has adequate resources tocontinue in operational existence for theforeseeable future. Further details on theGroup’s going concern can be found on
pages 65 and 72.

Taxation
Income tax on the profit or loss for theyear comprises current and deferred tax.
Income tax is recognised in profit or loss
except to the extent that it relates to items
recognised directly in equity, in whichcase it is recognised in equity.
Current tax is the expected tax payable
on the taxable income for the year, using
tax rates enacted or substantively
enacted at the reporting date, and any
adjustment to tax payable in respect ofprevious years.
Deferred tax is recognised in respectof temporary differences between the
carrying amounts of assets and liabilities
for financial reporting purposes and theamounts used for taxation purposes. The
following temporary differences are notprovided for: the initial recognition of
goodwill; the initial recognition of assets
or liabilities that affect neither accounting
nor taxable profit; and differences relating
to investments in subsidiaries to theextent that they will probably not reversein the future.

A deferred tax asset is recognised only
to the extent that it is probable that futuretaxable profits will be available against
which the asset can be utilised. Deferred
tax assets are reduced to the extent that
it is no longer probable that the related
tax benefit will be realised.
Additional income taxes that arise
from the distribution of dividends arerecognised at the same time as theliability to pay the related dividend.

Non-derivative financial
instruments
Non-derivative financial instruments
comprise trade and other debtors,
cash and cash equivalents, loans andborrowings, and trade and other creditors.

Trade and other debtors
Trade and other debtors are recognised
initially at fair value. Subsequent to initialrecognition they are measured atamortised cost using the effective interest
method, less any impairment losses.

Trade and other creditors
Trade and other creditors are recognised
initially at fair value. Subsequent to initialrecognition they are measured atamortised cost using the effective
interest method.

Cash and cash equivalents
Cash and cash equivalents comprise
cash balances and call deposits.

Interest-bearing borrowings
Interest-bearing borrowings arerecognised initially at fair value lessattributable transaction costs.
Subsequent to initial recognition,interest-bearing borrowings are stated atamortised cost using the effective interest
method, less any impairment losses.
Details of the Group’s interest-bearing
borrowings are included in Note 24 to theGroup Financial Statements.

The amount of deferred tax provided
is based on the expected manner ofrealisation or settlement of the carrying
amount of assets and liabilities, using tax
rates enacted or substantively enacted at
the balance sheet date.

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177

Notes to the Parent Company Financial Statements continued
Year ended 31 March 2021
(a) Accounting policies continued
Intra-Group lending
The Company has lent funds to and fromits UK subsidiaries on interest-free terms.
These amounts are repayable on
demand. They are stated at cost lessany impairment losses.

Derivative financial instruments
The Company’s accounting policies forfinancial instruments are the same as theGroup’s accounting policies under IFRS,
namely IAS 32 Financial Instruments:
Presentation, IFRS 9 Financial Instruments
and IFRS 7 Financial Instruments:
Disclosures. These policies are set
out in accounting policy “(e) Financial
instruments” in the Group accounting
policies, on page 139.

Tangible fixed assets
Tangible fixed assets are stated atcost less accumulated depreciation andaccumulated impairment losses. Whereparts of an item of tangible fixed assets
have different useful lives, they areaccounted for as separate items oftangible fixed assets.
Depreciation is charged to the profit andloss account on a straight-line basis overthe estimated useful lives of each partof an item of tangible fixed assets. The
estimated useful lives are as follows:•

Computer equipment – 4 years•

Motor vehicles – 4 years

Depreciation methods, useful lives andresidual values are reviewed at eachbalance sheet date.

Intangible assets
Intangible assets represents internallydeveloped software. Amortisation ischarged to the profit and loss account on
a straight-line basis over the estimateduseful lives of intangible assets unlesssuch lives are indefinite. Intangible assets
are amortised from the date they areavailable for use. The estimated useful
lives are as follows:•

Impairment excluding deferred
tax assets
Financial assets (including tradeand other debtors)
Trade and other debtors are initiallyrecognised at fair value and subsequently
stated at their amortised cost lessappropriate provision for impairment.
The provision for impairment of debtors isbased on lifetime expected credit losses,
which is then updated for any reasonable
and supportable forward-looking
information and expectations. Lifetime
expected credit losses are calculated byassessing historic credit loss experience.
The movement in the provision isrecognised in the Company’s statementof income.

Non-financial assets
The carrying amounts of the Company’s
non-financial assets, other than deferred
tax assets, are reviewed at each reporting
date to determine whether there is any
indication of impairment. If any such
indication exists, then the asset’s
recoverable amount is estimated.
The recoverable amount of an asset or
cash generating unit is the greater of its
value in use and its fair value less costs
to sell. In assessing value in use, theestimated future cash flows are
discounted to their present value using a
pre-tax discount rate that reflects current
market assessments of the time value ofmoney and the risks specific to the asset.
For the purpose of impairment testing,assets that cannot be tested individuallyare grouped together into the smallest
group of assets that generates cash
inflows from continuing use that arelargely independent of the cash inflowsof other assets or groups of assets(the “cash generating unit” or CGU).

Impairment losses are recognised in profit
or loss. Impairment losses recognised in
respect of CGUs are allocated first to
reduce the carrying amount of any
goodwill allocated to the units, and thento reduce the carrying amounts of theother assets in the unit (group of units)
on a pro-rata basis.
Impairment losses recognised in priorperiods are assessed at each reporting
date for any indications that the loss has
decreased or no longer exists.
An impairment loss is reversed if there
has been a change in the estimates used
to determine the recoverable amount.
An impairment loss is reversed only
to the extent that the asset’s carrying
amount does not exceed the carrying
amount that would have been
determined, net of depreciation oramortisation, if no impairment loss
had been recognised.

Employee benefits
Defined contribution plans
A defined contribution plan is apost‑employment benefit planunder which the Company pays fixed
contributions into a separate entity
and will have no legal or constructive
obligation to pay further amounts.
Obligations for contributions to defined
contribution pension plans are recognised
as an expense in the profit and loss
account in the periods during which
services are rendered by employees.

An impairment loss is recognised if thecarrying amount of an asset or its CGU
exceeds its estimated recoverable
amount.

Software – 10 years

178

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

GovernanceDefined benefit plans
A defined benefit plan is apost‑employment benefit plan otherthan a defined contribution plan.
The Company’s net obligation in respectof defined benefit pension plans is
calculated by estimating the amount of
future benefit that employees haveearned in return for their service in thecurrent and prior periods; that benefit is
discounted to determine its present value,
and the fair value of any plan assets (atbid price) is deducted. The Company
determines the net interest on the net
defined benefit liability/(asset) for theperiod by applying the discount rate used
to measure the defined benefit obligation
at the beginning of the annual period tothe net defined benefit liability/(asset).
The discount rate is the yield at thereporting date on bonds that have acredit rating of at least AA that havematurity dates approximating the termsof the Company’s obligations and that are
denominated in the currency in which thebenefits are expected to be paid.
Remeasurements arising from defined
benefit plans comprise actuarial gains
and losses, the return on plan assets(excluding interest) and the effect of theasset ceiling (if any, excluding interest).
The Company recognises them
immediately in other comprehensive
income and all other expenses related todefined benefit plans in employee benefit
expenses in profit or loss. The calculationof the defined benefit obligations is
performed by a qualified actuary using
the projected unit credit method. Whenthe calculation results in a benefit to theCompany, the recognised asset is limited
to the present value of benefits available
in the form of any future refunds from theplan or reductions in future contributions
and takes into account the adverse effectof any minimum funding requirements.

Financial Statements

The Company is the sponsoring employer
of a Group-wide defined benefit pension
plan. The net defined benefit cost of theplan is charged to participating entities
on the basis of the proportion of scheme
membership attributable to each legal
entity at the reporting date. The
contributions payable by the participating
entities are determined using an agreed
ratio which has been in place forapproximately ten years.

Short-term benefits
Short-term employee benefit obligations
are measured on an undiscounted basis
and are expensed as the related service
is provided. A liability is recognised for theamount expected to be paid undershort-term cash bonus or profit-sharing
plans if the Company has a present legal
or constructive obligation to pay thisamount as a result of past service
provided by the employee and theobligation can be estimated reliably.

Termination benefits
Termination benefits are recognised
as an expense when the Company isdemonstrably committed, without
realistic possibility of withdrawal, to aformal detailed plan to either terminate
employment before the normal
retirement date, or to provide termination
benefits as a result of an offer made toencourage voluntary redundancy.
Termination benefits for voluntary
redundancies are recognised as an
expense if the Company has made anoffer of voluntary redundancy, it isprobable that the offer will be accepted,
and the number of acceptances can be
estimated reliably. If benefits are payable
more than twelve months after thereporting date, then they are discounted
to their present value.

Oxford Instruments plc | Report and Financial Statements 2021

Company Information

Share-based payment transactions
The grant date fair value of share-based
payments awards granted to employees
is recognised as an employee expense,with a corresponding increase in equity,
over the period in which the employees
become unconditionally entitled to theawards. The fair value of the awards
granted is measured using an option
valuation model, taking into account theterms and conditions upon which theawards were granted. The amountrecognised as an expense is adjusted toreflect the actual number of awards forwhich the related service and non-market
vesting conditions are expected to be
met, such that the amount ultimately
recognised as an expense is based on thenumber of awards that do meet therelated service and non-market
performance conditions at the vestingdate. For share-based payment awards
with non-vesting conditions, the grant
date fair value of the share-based
payment is measured to reflect suchconditions and there is no true-up fordifferences between expected and actual
outcomes.
Where the Company grants options overits own shares to the employees of its
subsidiaries, it recognises, in its individual
Financial Statements, an increase in thecost of investment in its subsidiaries
equivalent to the equity settled
share‑based payment charge recognised
in its consolidated Financial Statementswith the corresponding credit being
recognised directly in equity. Amounts
recharged to the subsidiary arerecognised as a reduction in the cost ofinvestment in subsidiary. If the amountrecharged exceeds the increase in thecost of investment, the excess isrecognised as a dividend.

Own shares held by ESOP trust
The policy with regard to transactions of
the Company-sponsored ESOP trust canbe found in the Group accounting policies.

179

Notes to the Parent Company Financial Statements continued
Year ended 31 March 2021
(a) Accounting policies continued
LeasesLeases under which the Company
acts as lessee
The Company recognises a right-of-use
asset and a lease liability at the leasecommencement date. The right-of-use
asset is initially measured at cost, which
comprises the initial amount of the leaseliability adjusted for any lease payments
made at or before the commencement
date, plus any initial direct costs incurredand an estimate of costs to dismantle andremove the underlying asset or to restore
the underlying asset or the site on which
it is located, less any lease incentives
received.
The right-of-use asset is subsequently
depreciated using the straight-line
method from the commencement date to
the earlier of the end of the useful life of
the right-of-use asset or the end of thelease term. The estimated useful lives ofright-of-use assets are determined on thesame basis as those of property andequipment. In addition, the right-of-use
asset is periodically reduced by
impairment losses, if any, and adjusted
for certain remeasurements of thelease liability.
The lease liability is initially measured at
the present value of the lease paymentsthat are not paid at the commencement
date, discounted using the interest rate
implicit in the lease or, if that rate cannot
be readily determined, the Company’s
incremental borrowing rate. Generally, theCompany uses its incremental borrowing
rate as the discount rate.
Lease payments included in themeasurement of the lease liability
comprise fixed payments.

180

The lease liability is measured atamortised cost using the effective interest
method. It is remeasured when there is achange in future lease payments arisingfrom a change in an index or rate, if there
is a change in the Company’s estimate of
the amount expected to be payable
under a residual value guarantee, or if theCompany changes its assessment of
whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured
in this way, a corresponding adjustment
is made to the carrying amount of theright-of-use asset, or is recorded in profit
or loss if the carrying amount of theright-of-use asset has been reduced
to zero.

Short-term leases and leases of
low-value assets
The Company has elected not torecognise right-of-use assets and leaseliabilities for short-term leases ofmachinery that have a lease term of
twelve months or less and leases of
low-value assets, including IT equipment.
The Company recognises the lease
payments associated with these leases
as an expense on a straight-line basis
over the lease term.

Investments
Investments in subsidiaries are stated atcost, less any provision for impairment,
where appropriate.

Dividends on shares presented
within Shareholders’ funds
Dividends unpaid at the balance sheet
date are only recognised as a liability atthat date to the extent that they areappropriately authorised and are nolonger at the discretion of the Company.
Unpaid dividends that do not meet thesecriteria are disclosed in the notes to the
Financial Statements.

Financial guarantee contracts
Where the Company enters into financial
guarantee contracts to guarantee theindebtedness of other companies within
its Group, the Company considers these
to be insurance arrangements andaccounts for them as such. In this respect,
the Company treats the guarantee
contract as a contingent liability until
such time as it becomes probable that
the Company will be required to make apayment under the guarantee.

Foreign currencies
The Company enters into forward
exchange contracts and options to
mitigate the currency exposures thatarise on sales and purchases
denominated in foreign currencies.
Transactions in foreign currencies areconverted into Sterling at the rate rulingon the date of the transaction. Monetary
assets and liabilities denominated inforeign currencies are translated at therates ruling at the balance sheet date.
Exchange profits and losses arising fromthe above are dealt with in the profit andloss account.

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

Prior year restatement
The Directors concluded that the amounts owed by subsidiary undertakings in the prior year should have been split between
amounts falling due after one year and amounts falling due within one year.
As a result, the Company Statement of Financial Position as at 31 March 2020 has been restated as follows:

Company Statement of Financial PositionNon-current assets
Debtors
Current assets
Debtors
Net assets

2020(as reported)£m

Restatement£m

2020(restated)
£m

—

37.0

37.0

58.8
58.8

(37.0)
—

21.8
58.8

The restatement did not result in any change to reported profit, earnings per share, net assets or cash flows reported in the 2020
financial year.
The impact on the opening Company Statement of Financial Position as at 31 March 2019, is as follows:

Company Statement of Financial PositionNon-current assets
Debtors
Current assets
Debtors
Net assets

2019(as reported)£m

Restatement£m2019(restated)
£m

—

27.0

27.0

47.9
47.9

(27.0)
—

20.9
47.9

This did not result in any change to reported profit, earnings per share, net assets or cash flows reported in the 2019 financial year.

(b) Profit for the year
The Company’s profit for the financial year was £10.7m (2020: £134.3m). Other comprehensive expense in the year was £5.8m (2020:
income of £4.9m). The expense will not subsequently be reclassified to profit or loss.
The auditor’s remuneration comprised £200,000 (2020: £215,000) for the statutory audit.
The average number of people employed by the Company (including Directors) during the year was 57 (2020: 52). All these
individuals were involved in administration.
The aggregate payroll costs (including Directors) of these people were as follows:

Wages and salaries
Social security costs
Other pension costs

2021
£m

2020
£m

5.4
1.6
0.4
7.4

5.4
1.2
0.2
6.8

The share-based payment charge was £1.2m (2020: £2.0m). Details of the Group’s share option schemes are included in Note 12 to
the Group Financial Statements.
Full details of the emoluments paid to Directors can be found in the Remuneration Report on pages 97 to 119.

Oxford Instruments plc | Report and Financial Statements 2021

181

Notes to the Parent Company Financial Statements continued
Year ended 31 March 2021
(c) Tangible fixed assets

Cost
Balance at 1 April 2020
Additions
Balance at 31 March 2021
Depreciation
Balance at 1 April 2020
Charge for year
Balance at 31 March 2021
Net book value
Balance at 31 March 2020
Balance at 31 March 2021

Computerequipment
£m

Total
£m

2.6
0.1
2.7

2.6
0.1
2.7

2.0
0.3
2.3

2.0
0.3
2.3

0.6
0.4

0.6
0.4

(d) Intangible assets
Software£m

Cost
Balance at 1 April 2020
Additions
Balance at 31 March 2021
Depreciation and impairment losses
Balance at 1 April 2020
Charge for year
Balance at 31 March 2021
Net book value
Balance at 31 March 2020
Balance at 31 March 2021

2.9
0.0
2.9
1.6
0.0
1.6
1.3
1.3

(e) Investments
Investments
in subsidiary
undertakings£m

Cost or valuation
Balance at 1 April 2020
Expense in respect of share options transferred to subsidiary undertakings
Balance at 31 March 2021
Impairment
Balance at 1 April 2020 and 31 March 2021
Net book value
Balance at 31 March 2020
Balance at 31 March 2021

340.9
0.6
341.5
18.7
322.2
322.8

The following is a full list of the subsidiaries and associates and their country of registration as at 31 March 2021. This information isprovided in accordance with Section 409 of the Companies Act 2006.
Entities listed below are wholly owned by either the Company or a subsidiary of the Company.
The direct undertakings in which the Company has an interest as at 31 March 2021 are as follows:
Subsidiaries

Oxford Instruments Industrial Products
Holdings Limited
Oxford Instruments Nanotechnology Tools
Holdings Limited
Oxford Instruments Overseas Holdings Limited

182

Registered office addressCountry ofincorporation

Tubney Woods, Abingdon, Oxon, OX13 5QX

UK

Tubney Woods, Abingdon, Oxon, OX13 5QX

UK

Tubney Woods, Abingdon, Oxon, OX13 5QX

UK

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Financial Statements

Company Information

The indirect undertakings in which the Company has an interest as at 31 March 2021 are as follows:
Subsidiaries

Andor Technology LimitedAndor Technology, Inc.
Bitplane AG
Bitplane Inc
Oxford Instruments AFM Limited
Oxford Instruments America Inc
Oxford Instruments Asylum Research Inc
Oxford Instruments Funding Limited
Oxford Instruments GmbH
Oxford Instruments Holdings 2013 Inc
Oxford Instruments Holdings Europe Limited
Oxford Instruments Holdings GmbH
Oxford Instruments India Private Limited
Oxford Instruments Industrial Products Limited
Oxford Instruments KK
Oxford Instruments Molecular Biotools Limited
Oxford Instruments Nanotechnology Tools
LimitedOxford Instruments Nordiska Ab
Oxford Instruments Overseas Holdings 2008
LimitedOxford Instruments Overseas Marketing GmbH
Oxford Instruments Overseas Marketing Limited
Oxford Instruments Pension Trustee Limited
Oxford Instruments Private Limited

Registered office address

7 Millennium Way, Springvale Business Park, Belfast, NI,
BT12 7AL
300 Baker Avenue, Suite 150, Concord MA 0174
Badenerstrasse 682, 8048, Zurich
300 Baker Avenue, Suite 150, Concord MA 0174
Tubney Woods, Abingdon, Oxon, OX13 5Q
300 Baker Avenue, Suite 150, Concord MA 0174
6310 Hollister Avenue, Santa Barbara CA 93117
PO Box 175, Frances House, Sir William Place, St Peter Port,GY1 4HQ
Borsigstrasse 15a, 65205, Wiesbaden
300 Baker Avenue, Suite 150, Concord MA 0174
Tubney Woods, Abingdon, Oxon, OX13 5QX, EnglandBorsigstrasse 15a, 65205, Wiesbaden
Plot No. A-279, Ground Floor Road No. 16A, Ambica Nagar,
Wagle Industrial Estate, Thane (West), Thane, MH, 400604
Tubney Woods, Abingdon, Oxon, OX13 5QX
IS Building, 3-32-42 Higashi-Shinagawa, Shinagawa-ku,
Tokyo, 140-0002,
Tubney Woods, Abingdon, Oxon, OX13 5QX
Tubney Woods, Abingdon, Oxon, OX13 5QX

Oxford Instruments SAS
Oxford Instruments Technologies Oy
Oxford Instruments Technology(Shanghai) Co. Ltd
Oxford Instruments UK 2013 Limited
Oxford Instruments X-Ray Technology Inc
Spectral Applied Research Inc
1.

Country ofincorporation

UK
US
Switzerland
US
UK
US
US
Guernsey1
Germany
US
UK
Germany
India
UK
Japan
UK
UK

C/o TMF Sweden AB, Sergels Torg 12, 111 57, Stockholm
Tubney Woods, Abingdon, Oxon, OX13 5QX

SwedenUK

Borsigstrasse 15a, 65205, Wiesbaden
Tubney Woods, Abingdon, Oxon, OX13 5QX
Tubney Woods, Abingdon, Oxon, OX13 5QX
Messrs Tan Rajah & Cheah, 80 Raffles Place,#58-01 UOB Plaza 1, 048624
77 Z.A. de Montvoisin, 91400 Gometz la Ville
Technopolis Innopoli 1, Tekniikantie 12, Espoo, 02150
Floor 1, Building 60, 461 Hongcao Road, Xuhui District,
Shanghai
Tubney Woods, Abingdon, Oxon, OX13 5QX
360 El Pueblo Road, Scotts Valley CA 95066
199 Bay Street, Suite 5300, Commerce Court West,
Toronto ON M5L 1B9

Germany
UK
UK
Singapore
FranceFinlandChina
UK
USCanadaUK tax resident.

Equity owned by the Company represents issued ordinary share capital. All subsidiaries are consolidated in the Group accounts.

Oxford Instruments plc | Report and Financial Statements 2021

183

Notes to the Parent Company Financial Statements continued
Year ended 31 March 2021
(f) Debtors
Amounts falling due after one year:
Amounts owed by subsidiary undertakings
Amounts falling due within one year:
Amounts owed by subsidiary undertakings
Other debtors
Prepayment and accrued income

2021
£m

2020
£m

29.8

37.0

12.4
7.6
0.6
50.4

15.7
5.3
0.8
58.8

Amounts owed by subsidiary undertakings are interest-free, unsecured and repayable on demand.
The Company has no immediate intention to recall £29.8m (2020: 37.0m) of these balances in the short term and so these amounts
are classified as amounts falling due after more than one year.

(g) Creditors
Amounts falling due after one year:
Derivative financial instruments
Amounts falling due within one year:
Trade creditors
Amounts owed to subsidiary undertakings
Tax, social security and sales-related taxes
Other financial liabilities
Accruals and deferred income

2021
£m

2020
£m

—

0.9

0.1
106.9
5.6
0.5
4.0
117.1

0.2
96.3
4.2
3.6
3.3
108.5

2021
£m

2020
£m

—
7.8
7.8

27.9
8.4
36.3

2021
£m

2020
£m

0.3
(0.6)
2.0
1.7

1.5
(0.4)
(0.8)
0.3

Amounts owed to subsidiary undertakings are interest-free and repayable on demand.

(h) Bank loans and overdrafts
Current
Loan notes – unsecured
Bank overdrafts
At the end of the year
Further details of the loan notes can be found in Note 24 to the Group Financial Statements.

(i) Deferred tax asset
Balance at 1 April
Profit and loss debit
Other comprehensive income credit/(debit)
Balance at 31 March
The amounts of deferred tax assets are as follows:
Recognised

Excess of depreciation over corresponding capital allowance
Employee benefits – pension and share scheme

2021
£m

2020
£m

0.4
1.3
1.7

0.5
(0.2)
0.3

The Company recognises deferred tax assets only to the extent that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.

184

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Strategic Report

Governance

Financial Statements

Company Information

Deferred tax assets have not been recognised in respect of the following items:Tax (losses)

2021
£m

2020
£m

—
—

—
—

A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantively enacted on
6 September 2016. However, in the Budget on 11 March 2020, it was announced that this reduction would be reversed, which wassubstantively enacted on 17 March 2020. Consequently, the UK corporation tax rate will remain at 19%. The UK deferred tax liability
at 31 March 2021 has been calculated based on that rate.
On 5 March 2021, it was announced that the rate of UK corporation tax would be increased to 25% from 1 April 2023; however, at thereporting date, this change has not been substantively enacted. As such, the UK deferred tax assets and liabilities have been
calculated based on the enacted rate of 19%.

(j) Pension commitments
The Company and its employees contribute to the Oxford Instruments Pension Scheme (“the Scheme”), a defined benefit pension
scheme, which offers pensions in retirement and death in service benefit to members. Pension benefits are related to members’
final salary at retirement and their length of service.
The Scheme was closed to new members from 1 April 2001. Since this date, new employees have been invited to join the
Oxford Instruments Stakeholder Plan, a defined contribution scheme. The Scheme is also closed to future accrual.
The Oxford Instruments Group policy for charging net defined benefit costs to participating entities states that member costs arecharged directly to a participating company if that member is also an employee of said participating company. The costs of scheme
members that are no longer employees of any participating company or directly affiliated with a Group company are allocated on
the basis of the participating company’s scheme members as a percentage of the total scheme members that are also employeesof participating companies.
The policy for determining contributions to be paid by participating companies is the same as that for charging net defined
benefit costs.
Details of the Scheme, its most recent actuarial valuation and its funding can be found in Note 25 to the Group Financial Statements.
The contributions paid by the Company to the Oxford Instruments Pension Scheme were £3.7m (2020: £1.8m).

(k) Guarantees
The Company has given a guarantee to the pension scheme in respect of the liability of its UK subsidiaries to the pension scheme.
The guarantee is for the excess of 105% of the liabilities of the scheme, calculated on the basis of Section 179 of the Pensions Act
2004, over the assets of the scheme.
The Company and its UK subsidiaries have entered into a cross-guarantee for £10.0m (2020: £10.0m) in respect of overdraft
facilities, of which £nil (2020: £nil) was drawn at the year end.

(l) Commitments
At 31 March 2021, capital commitments contracted were £nil (2020: £nil) and authorised were £nil (2020: £nil).

(m) Related party transactions
The Company has a related party relationship with its Directors and Executive Officers and with its wholly owned subsidiarycompanies.
Transactions with key management personnel are disclosed in the Remuneration Report on pages 97 to 119. There were no othersignificant transactions with key management personnel in either the current or preceding year.

Oxford Instruments plc | Report and Financial Statements 2021

185

Oxford Instruments Directory

Company/addressCountry

Telephone

Oxford Instruments Head OfficeTubney Woods, Abingdon,
Oxfordshire OX13 5QX, UK

Fax

Email

UK

+44 (0)1865 393200 +44 (0)1865 393333 info.oiplc@oxinst.com

UK+44 (0)1494 442255+44 (0)1494 524129

nanoanalysis@oxinst.com

Sweden+46 8 5448 1550

+46 8 5448 1558

nordiska@oxinst.com

Materials & Characterisation
Oxford Instruments NanoAnalysis
Halifax Road, High Wycombe,
Buckinghamshire HP12 3SE, UK

Systems for materials
analysis at thenanoscale

Arenavägen 41, 10th floor,
121 7 Johanneshov, Sweden
Asylum Research6310 Hollister Ave,
Santa Barbara, CA 93117 USA

Systems for materials
analysis at thenanoscaleUSA+1 (805) 696 6466

+1 (805) 696 6444

sba.sales@oxinst.com

Borsigstrasse 15A,
65205 Wiesbaden, Germany

Germany+49 6122 9370

+49 621 762117 11

sba.de.sales@oxinst.com

Room 304, Building 52, No. 195,
Section 4, ZhongXing Road,
ZhuDong Township, XinZhu County,
310 Taiwan

Taiwan+886 3 5788696+886 2 2794 2757

sba.tw.sales@oxinst.com

Halifax Road, High Wycombe,
Buckinghamshire HP12 3SE, UK

UK+44 (0)1494 442255+44 (0)1494 524129

sba.uk.sales@oxinst.com

UK+44 (0)1934 837000 +44 (0)1934 837001

Oxford Instruments
Plasma Technology
North End, Yatton,
Bristol BS49 4AP, UK

Tools fornanotechnology
fabrication

plasma@oxinst.com

Research & Discovery
Andor/Bitplane/Spectral
7 Millennium Way,
Springvale Business Park, Belfast,
BT12 7AL, UK

Scientific imaging
cameras, spectroscopy
solutions andmicroscopy systemsUK+44 (0)28 9023 7126 +44 (0)2890 310792 info@andor.com

Badenerstrasse 682,
CH-8048 Zürich

Switzerland +41 44 430 11 00+41 44 430 11 01

info@bitplane.com

2 East Beaver Creek Road,
Building 2, Richmond Hill,
ON L3B 2N3, Canada

Canada+1 (905) 326 5040

+1 (905) 326 5041

info@spectral.ca

Advanced tools forapplied researchUKnanoscience@oxinst.com+44 (0)1865 393200 +44 (0)1865 393333 magres@oxinst.com

X-ray tubes anddetectorsUSA+1 (831) 439 9729

+1 (831) 439 6051

xray-sales@oxinst.com

USA+1 (978) 369 9933

+1 (978) 369 8287

info@ma.oxinst.com

Floor 1, Building 60,
No. 461, Hongcao Road,
Xuhui District, Shanghai, 200233

China

400 678 0609

+86 21 6127 3828

china.info@oxinst.com

Building B2 West,No. 11 West Third Ring North Road,
Haidian District, Beijing, 100085

China

400 678 0609

+86 10 5884 7901

china.info@oxinst.com

Room 3312, Building B3,
Hanxi East Road, NanCun Town,
Panyu District, Guangdong Province,
511446, Guangzhou

China

400 678 0609

+86 20 8478 7349

china.info@oxinst.com

Czech
Republic+420 233 343 264+420 234 311 724

czech.info@oxinst.com

France+33 1 69 85 25 25+33 1 69 41 46 80

infofrance@oxinst.com

Oxford Instruments NanoScience& Magnetic Resonance
Tubney Woods, Abingdon, Oxfordshire
OX13 5QX, UK
Oxford X-Ray Technology
360 El Pueblo Road,
Scotts Valley, CA 95066, USA

Regional Sales and Service Offices
Oxford Instruments/Canada/Latin America
300 Baker Avenue, Suite 150,
Concord, MA 01742, USA
Oxford Instruments Technology, China

Oxford Instruments Czech Republic
Velvarska 13, CZ-160 00 Praha,
Czech Republic
Oxford Instruments France
77 ZA de Montvoisin,
91400 Gometz la Ville, France

186

Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report

Governance

Company/address

Financial Statements

Company Information

Country

Telephone

Fax

Email

Germany+49 6122 9370

+49 6122 937100

info-oiplc@oxinst.com

India+91 818 017017+91 224 4253 5110

india@oxinst.com

IS Building 3-32-42, Higashi-Shinagawa,Shinagawa-ku Tokyo 140-0002, JapanJapan+81 (0)3 6732 8961

+81 (0)3 6732 8937

info.jp@oxinst.com

Shin Osaka Sun R Building 10th Floor,
5-8-3 Nishi-Nakajima, Yodogawa,
Osaka, 532-0011, JapanJapan+81 (0)6 7639 1761

+81 (0)3 6732 8937

info.jp@oxinst.com

Republicof Korea+82 2 2008 4500

+82 2 2008 4555

nanoanalysis@oxinst.com

Russia+7 (095) 933 51 23+7 (095) 933 51 24

russia.info@oxinst.com

Singapore+65 6337 6848

+65 6337 6286

singapore.info@oxinst.com

Taiwan+886 3 5788696+886 3 5789993

taiwan.info@oxinst.com

Oxford Instruments Germany
Borsigstrasse 15a, 65205 Wiesbaden,
Germany
Oxford Instruments India
Plot No. A-279, Ground Floor, Road No. 16A,
Ambica Nagar, Wagle Industrial Estate,Thane (West), 400604
Oxford Instruments Japan

Oxford Instruments Korea
No. 8-S 26, 8F., 10 Chungmin-ro,
Songpa-gu, Seoul 05840, Korea(Republic of)Oxford Instruments Russia
Denisovskiy per. 26, Moscow 105005,
Russian Federation
Oxford Instruments Singapore
31 Kaki Bukit Road 3,#05-19 Techlink Building Lobby A,
Singapore, 417818
Republic of Singapore
Oxford Instruments Taiwan
Room 304, Building 52, No.195, Section 4
ZhongXing Road, ZhuDong Township,
XinZhu County, Taiwan 310, Taiwan, ROC

Oxford Instruments plc | Report and Financial Statements 2021

187

Historical Financial Summary

Consolidated Statement of Income
Revenue from continuing operations
Adjusted operating profit from continuing operations1
Other operating income
Acquisition-related costs
Loss on disposal of subsidiary undertakings
Restructuring costs
Restructuring costs – relating to associate
Past service cost on defined benefit pension scheme
Impairment of investment in associate
Share of impairment recognised by associate
Inventory impairment
Profit on disposal of associate
Impairment of internally generated intangible assets
Impairment of acquired intangibles
Amortisation of acquired intangibles
Fair value movement on financial derivatives
Operating (loss)/profit from continuing operations
Net financing costs(Loss)/profit before taxation from continuing operations
Income tax expense(Loss)/profit for the year from continuing operations
Adjusted profit before tax from continuing operations
Consolidated Statement of Financial Position
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment in associateLong-term receivables
Deferred and current tax
Inventories
Trade and other receivables
Trade and other payables
Current lease payables
Net assets excluding net cash
Cash and cash equivalents2
Bank overdrafts2
Bank borrowings
Net (debt)/cash
Non-current lease payables
Provisions
Retirement benefit obligations
Net assets employed/capital and reserves attributable to theCompany’s equity holders
Cash flows from continuing operations
Net cash from operating activities
Net cash (used in)/generated from investing activities
Net cash used in financing activities
Net increase/(decrease) in cash equivalents from continuing
operations
Per ordinary share
Earnings – continuing
Adjusted earnings1
Dividends
Employees
Average number of employees

2017
£m

2018
£m

2019
£m

2020
£m

2021
£m

275.8
37.6
—
(0.3)
(0.4)
(0.2)
(0.4)
—
(8.0)
—
—
—
(2.9)
(22.6)(10.6)
1.2
(6.6)
(6.7)
(13.3)(4.2)(17.5)
31.3

277.5
46.1
3.3
—
—
(0.4)
(0.4)
—
—
(2.0)
—
—
—
—
(9.8)
3.1
39.9
(4.2)
35.7
(12.0)
23.7
42.0

314.0
47.7
—
—
—
—
(0.3)
(0.3)
—
0.6
—
—
—
—
(8.8)
(1.5)
37.4
(3.1)
34.3
(6.5)
27.8
45.5

317.4
50.5
—
—
—
(0.2)
—
0.6
—
—
(0.4)
6.5
(7.1)
—
(8.7)
(1.4)
39.8
(1.0)
38.8
(6.8)
32.0
49.5

318.5
56.7
—
—
—
(0.4)
—
—
—
—
—
—
(1.3)
—
(8.4)
6.4
53.0
(0.8)
52.2
(10.4)
41.8
55.9

32.5
—
181.0
3.9
3.6
18.1
53.9
81.7
(98.0)—
276.7
46.5(20.0)(135.8)(109.3)—(9.8)(25.1)

22.8
—
158.7
4.1
1.4
3.6
45.9
73.9
(84.1)—
226.3
73.3(52.6)(40.4)(19.7)—(11.7)(15.3)

24.2
8.8
152.5
4.6
0.3
7.1
60.8
79.4
(118.0)
(3.0)
216.7
74.6
(39.4)(28.5)
6.7
(6.0)
(8.7)
(6.5)

21.8
8.2
135.5
—
—
2.7
58.8
72.0
(128.6)
(2.1)
168.3
119.5
(24.1)(27.9)
67.5
(6.5)
(8.4)
30.7

21.1
7.3
122.6
—
—
3.9
58.7
81.7
(126.1)
(2.6)
166.6
128.0
(30.4)
—
97.6
(4.9)
(9.4)
16.3

132.5

179.6

202.2

251.6

266.2

28.4
(6.8)
(20.2)

26.8
68.7(104.0)40.8(9.2)(22.1)

55.2
6.0(11.4)

41.8(4.9)(30.5)

1.4

(8.5)

9.5

49.8

6.4

pence

pence

pence

pence

pence

(30.3)
41.1
13.0

41.6
55.8
13.3

48.6
62.3
14.4

55.9
70.2
—

72.8
78.6
17.0

1,974

1,642

1,579

1,585

1,619

1.

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

2.

Prior year numbers have been restated. Details can be found in the accounting policies.

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Oxford Instruments plc | Report and Financial Statements 2021

Directors and Advisers

Honorary President

Auditor

Sir Martin Wood OBE FRS Hon FREng DL

BDO LLP

Company Secretary

Principal bankers

Susan Johnson-Brett ACISHSBC Bank plc
Santander plc

Company number
Registered in England and Wales
number 775598

Stockbroker

Board Committees

UK solicitors

Audit and Risk

Ashurst LLPMary Waldner, Chair
Steve Blair
Richard Friend
Thomas Geitner
Alison Wood

JPMorgan Cazenove

US counsel
Wilmer Hale LLP

Nomination
Neil Carson, Chair
Steve Blair
Richard Friend
Thomas GeitnerMary Waldner
Alison Wood

Remuneration
Alison Wood, Chair
Steve Blair
Neil Carson
Richard Friend
Thomas GeitnerMary Waldner

Administration
Any two Directors

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