Oxford Instruments : 2020-2021 Preliminary Results Annual and Half Year Reports

Oxford Instruments plc

Report and Financial Statements 2021

How do we make

• material difference?

Contents

Strategic Report		Governance
Our Purpose	1	Board Leadership and Company Purpose 74
Performance Highlights	2	Division of Responsibility	79
Financial Highlights	2	Composition, Succession and Evaluation	82
Operational Highlights	3	Audit, Risk and Internal Control	88
At a Glance	4	Remuneration	97
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	16
Market 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 Statement	71	Directors and Advisers	IBC

Financial Statements

Directors' Responsibilities	125
Independent Auditor's Report	126
Consolidated Statement of Income	132
Consolidated Statement of
Comprehensive Income	133
Consolidated Statement
of Financial Position	134
Consolidated Statement
of Changes in Equity	135
Consolidated Statement of Cash Flows	136
Accounting Policies	138
Notes to the Financial Statements	144
Parent Company Statement
of Financial Position	175
Parent Company Statement
of Changes in Equity	176
Notes to the Parent Company
Financial Statements	177

FTSE 250 constituent

Strategic Report	Governance		Financial Statements	Company Information

Our Purpose

Our core purpose is to support our customers in addressing some of the world's most pressing challenges, enabling a greener economy, increased connectivity, improved health, and leaps in scientific understanding.

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 manipulate materials down to the atomic and molecular level.

We make a material difference by…

... enabling		... increasing		... improving		... making leaps
a greener		connectivity		health		in scientific
economy						understanding

Find out more on page 10

Our solutions are being used to develop next generation batteries.

Find out more on page 11

We enable the development of more compact devices, faster processing and improved efficiency for data communications.

Find out more on page 12		Find out more on page 13
We play an important role		We are at the forefront of
in advancing knowledge		enabling quantum progress.
regarding the covid virus.

Oxford Instruments plc | Report and Financial Statements 2021

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Performance Highlights

Revenue	Adjusted1 profit before	Statutory profit before
(£m)	taxation (£m)	taxation (£m)

£318.5m £55.9m £52.2m

+0.3%

+12.9%

+34.5%

275.8	277.5	314.0	317.4	318.5			45.5	49.5	55.9					52.2
				42.0			35.7	34.3	38.8
					31.3
										(13.3)
2017	2018	2019	2020	2021	2017	2018	2019	2020	2021	2017	2018	2019	2020	2021

				% change
	Year ended	Year ended	% change	constant
Adjusted1 (continuing operations)	31 March 2021	31 March 2020	reported	currency5
Revenue	£318.5m	£317.4m	+0.3%	+1.7%
Adjusted operating profit	£56.7m	£50.5m	+12.3%	+13.3%
Adjusted operating profit margin	17.8%	15.9%	+190 bps
Adjusted profit before taxation	£55.9m	£49.5m	+12.9%
Adjusted basic earnings per share	78.6p	70.2p	+12.0%
Cash conversion3	101%	124%
Net cash4	£97.6m	£67.5m

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

1.7%

Revenue growth of 1.7% at constant currency against challenging backdrop.

Strong growth in orders of 5.3% to £353.7m (+6.7% at constant currency).

£198.1m

Reported order book grew by 13.2% (17.8% at constant currency) to £198.1m.

17.8%

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

£97.6m

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

17.0p

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

2	Oxford Instruments plc | Report and Financial Statements 2021

Strategic Report	Governance		Financial Statements	Company Information

Return on sales2	Basic adjusted1 earnings	Dividend per share
(%)	per share (pence)	(full year) (pence)

17.6% 78.6p 17.0p

	15.1	14.5	15.6	17.6			62.3	70.2	78.6		13.3	14.4		17.0
11.3			55.8		13.0
			41.1
													-
2017	2018	2019	2020	2021	2017	2018	2019	2020	2021	2017	2018	2019	2020	2021

	Year ended	Year ended	% change
Statutory (continuing operations)	31 March 2021	31 March 2020	reported
Revenue	£318.5m	£317.4m	+0.3%
Operating profit	£53.0m	£39.8m	+33.2%
Operating profit margin	16.6%	12.5%	+410 bps
Profit before taxation	£52.2m	£38.8m	+34.5%
Basic earnings per share	72.8p	55.9p	+30.2%
Dividend per share for the year	17.0p	-	n/a

Operational Highlights

Robust performance in the face of significant covid disruption reflects resilience of business model and strong position in diverse, 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.

Strengthened order book provides increased visibility for the year ahead.

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.

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

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

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

Oxford Instruments plc | Report and Financial Statements 2021

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